About That “Wonderful” Federal Lifeline Phone Program . . .

| November 6, 2013 | 39 Comments

Many of you doubtless have doubts and misgivings about the “Lifeline” program – the Federally subsidized program to provide basic phone service to the “poor”.  I for one certainly do.

The program is sometimes derisively referred to as the “Obama phone” program.  That’s a misnomer.  The program dates to 1985, during the Reagan administration.  It was begun as a way to subsidize emergency phone service for the poorest of the poor.

It’s funded from the “universal service fee” – one of those incomprehensible mandatory fees tacked onto the phone bills of paying customers.  (IMO those fees are intentionally incomprehensible to hide what they’re being used to fund, but that’s another story . . . . )

Originally the Lifeline program was landline-only.  But in 2005, the Bush administration opened the program to cell phones.

Really bad idea, sir.”

From there, soon things began to go off the rails – badly.  During the last few years, program costs have skyrocketed.  Costs went from around $800 million in 2008 to roughly $2.2 billion in 2012.

The expansion of the program to cell phone service was not only a bad idea from square one.  It was also, well, monumentally stupidly run.  Applicants were allowed to self-certify that they met program requirements.  No documentation was required to back up their self-certification.  No periodic re-certification was required.  And there were also no effective checks to ensure the “one family, one phone” rule was followed.  With cell phones and undocumented self-certification, that’s virtually impossible to do.

That all changed last year, when annual cross-checking and re-certification were first required.  The changes produced results that demonstrated just why the program costs had nearly tripled in 4 years – along with showing how rife with fraud the program truly was.

You can probably guess the results.  And you’d be right.

There appear to have been roughly18 million Lifeline program participants in 2012.  I say “appear to have been” because the exact number of subscribers wasn’t released.  It seems some carriers wanted the FCC to keep their individual numbers confidential.  However, it was revealed that 6 million subscribers constitute 34% of the program’s subscribers – or about 1/3.  And last time I checked, 3 x 6 million = 18 million.

When re-certification was required last year, an . . . interesting thing happened. Regarding the 1/3 of Lifeline subscribers for data was released, 41% of those subscribers asked to re-certify either never responded or were found not to qualify for continued participation.

41% of 6 million works out to a bit short of 2.5 million fraudulent subscribers.   Apply that proportion to the overall program, and that means that very likely about 7.4 million out of the 18 million total Lifeline subscribers were getting a fraudulent free phone, courtesy of Uncle Sugar.

Or, more precisely:  courtesy of mandatory fees forcibly collected from paying US phone customers, then redistributed by the Federal government.  Paying customers like you and me.

Yeah, that’s great.  Just freaking great

I’ll give the current Administration credit.  They do seem to have made a start on fixing something that’s badly broken.  (I can suggest an even better fix:  scrap the program entirely and let those who want phones pay for them, like all the rest of us do.  But that would probably be “unfair to” or an “undue burden on” someone.) It’s just a pity they couldn’t have done that before pissing away literally billions in fees collected from productive members of society that ended up subsidizing cell phone service to pimps, frauds, criminals, drug dealers, and various other ne’er-do-wells.

Because you know that’s exactly who ended up with many of those fraudulently-obtained Lifeline phones.

Category: "Teh Stoopid", "Your Tax Dollars At Work", Crime

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  1. Reaperman says:

    So we’re buying them cell phones for emergency use only? I thought that any cell phone, activated or not, could dial 911 or even make collect calls. Problem solved.

  2. DefendUSA says:

    Hondo…somewhere, I read a report of some investigative reporter and the Obamaphones. She was approached three times and signed up!! The problem with the program now is that Obama promoted it to garner votes and apparently gave those offering the program incentives for sign-ups.
    I defend Bush for opening it to cell phones because the majority of the people, even the poor were attempting to lose the land-lines and it was the future. I don’t defend the lack of proper certifying and fraud.

  3. FrostyCWO says:

    Hondo, to me, the program makes overall sense. The execution was obviously flawed. We ask people to pick themselves up, but do we expect them to fill out a job application without a telephone number if they can’t afford one?

  4. 2/17 Air Cav says:

    @3. Your view well explains why obama remains in the WH. We ask people to pick themselves up? Who is “we?” On the contrary, it’s cradle-to-grave care for millions with no expectation that they fend for themselves. I don’t expect people to, as you say, pick themselves up. I don’t give a rat’s ass. They can either perish or prosper. It’s their choice.

  5. Hondo says:

    FrostyCWO: by that logic, then we should give everybody free food, medical, clothing, lodging, and transportation. After all, how can we expect someone to “pick themselves up” if they’re (a) hungry, (b) wearing shabby clothes, (c) depressed, (d) living in a dump, or (e) have to walk to work?

    Sorry – I have no problem with someone living on the street if that’s what they want. I do have a problem with paying them to do so. And I especially have a problem with them doing so while wearing stylish clothes – and using an EBT to buy food, then pulling cash out of their pocket to buy beer, then driving off in a late-model luxury car (Chrystler convertable). Saw that personally some years ago (foodstamps vice EBT at the time, but otherwise saw it with my own eyes).

    A cheap TracPhone or other pay-as-you-go cell phone costs maybe $15-20 to purchase and about $10 per month for replacement minutes (for emergency use, you don’t need more than 30 or so minutes). That’s the cost of 2 six-packs of beer a month.

    If the beer’s more important than having a phone, they can find someone else besides me to pay for their damn phone.

  6. James in Gulf Breeze says:

    IF you cannot provide for yourself or your family, I think there should be barracks style housing provided with mess hall style food. And that’s it. No money given to somebody. No cellphones. Shelter and food. And a lot of encouragement to leave. The only exception should be to make allowances for the kids, i.e. busing to schools. But that is it.

  7. Hondo says:

    Reaperman: I believe you’re correct regarding 911 and out-of-service or suspended cell phones. Dunno if cells that have never been activated before can do that “out of the box” or not.

    Have no clue about the collect call issue. I don’t think they can – if the phone’s suspended for non-payment, typically no incoming calls can be received. But I could easily be wrong.

    – break –

    James in Gulf Breeze: I might add a source of secondhand clothing (on a demonstrated-need basis only) and childhood immunizations (to protect the public health). Otherwise, I’m in full agreement with ya. I don’t want to see folks starve. But I’ll be damned if I want to continue to pay for folks to sit on their hands in a rent-free apartment and eat Cheetos while watching cable on a big-screen TV instead of working.

    Three hots, a cot, and a dayroom. Don’t like it? Find a job and leave as soon as you can afford something better. Get out of line and get thrown out – tough. You’re on the streets for a few weeks, minimum.

  8. AW1 Tim says:

    I bought a tracfone for me & one for my daughter. The up front cost was $19.99/each, and they came with 10 minutes on them. They also came with a “free double minutes for life” upgrade which is handy indeed.

    I spend another $40/month for minutes for each phone. With the free double minutes deal, that gives each phone 120 minutes, and they roll over too. :)

    Anyway, we don’t need any data plans, etc. We use them to call a cab when we are out, find each other when shopping at big box stores, check in when running errands, etc. In that regard, they’re VERY handy. My daughter uses hers to text with her friends, but mostly talks to them when at home through Skype or online chats.

    I like them, and for our needs, we don’t have to have 4G phones with lots of apps, etc.

  9. Ex-PH2 says:

    Oh, but think — how many lives have been saved with those free phones, Hondo?

    Back in them there hollers in coal country, ain’t no phone lines no mo’. (Not true)

    (Apologies to all the dignified people who live in the hills of Appalachia)

    Just out of curiosity, if you guys had been around when the TVA was started to bring electricity to the rural poor, would you have felt the same way about that?

    I think the FCC tax on my land line was $.75 per month, maybe a little more.

    On my Sprint bill, Sprint lists surcharges as well as Government Taxes and Fees.

    Surcharges: Federal-Universal Service Assess Non-ID $1.64
    and the Admin Charge $1.99.
    Govt Taxes/Fees: $6.68 (not broken down)
    This is a whole lot more than I used to pay AT&T.

    Oh, yeah, remember those porn shots someone sent me by mistake? I got charged for those, too.

  10. 2/17 Air Cav says:

    @9. It’s not the individual cost of these freebies, as I see it. It’s the aggregate cost of ALL of the freebies and the resultant entitlement mindset, combined with the once-esteemed individual being quashed or supplanted by the collective and an omnipotent centralized government. It is the proverbial straw and camel’s back issue.

  11. AW1 Tim says:

    Hondo:

    I have seen the fraud as well. I volunteer at our local soup kitchen and other places in the community & schools.

    Here’s the way it works, normally: A female goes to the welfare office (that’s a general term, not actually it’s name) and applies for food stamps, section-8 housing, medicaid, etc. She hits up SS for SSI as well. She brings her pay stubs, utility bills, rent receipt, etc, all showing her entire household income. She gets qualified and the “benefits” start rolling in.

    What she fails to reveal, and this is WAY more often than not, is that her boyfriend/ex/whomever is also living with her and working full time, usually bringing in sufficient to pay all their expenses. Thus, to the State, which RARELY goes to visit and see for themselves, she’s a single mother trying to get by. In actuality, they’re a family with now TWO incomes. One legit, and the other fraudulently obtained.

    This is especially rampant in the illegals community, and up here in Maine, amongst the newly-arrived Somalis who are used to corruption back home and have no problems with it here either. That’s a fact, and again, what I’ve seen first-hand.

    I’ve reported time and again with names, dates, addresses, etc, but to no avail. The state is willfully blind to this rampant fraud. They know that as long as they are kicking out “benefits” that the welfare queens will keep voting for them. Oh sure, once a year they’ll bust a couple and have these show trials, with much angst and hand-wringing and lots of PR, but in the end, 99% of the fraud goes undealt with.

  12. NHSparky says:

    James–a lot of the Depression-era programs did just that with the WPA, CCC, etc.

    Can you imagine if Obama did a jobs program like that today? Oh, you want us to WORK for our “gimmes”? You racist!

  13. Sparks says:

    My wife works for the State of Washington, collecting child support from deadbeats. T-Mobile has been in the parking lot with a tent several times to give away these phones to the welfare people. Welfare shares the same office building. It makes me sick every time I see it. My tax dollars giving them free phones. But, it is to be used to help them get a job, don’t you know. Yea, right. Don’t piss down my leg and tell me it’s raining.

  14. Hondo says:

    Ex-PH2: TVA and the rural phone program (which was the original purpose of the universal service concept) were far different animals than the “Lifeline” program is today.

    The phone service provided via landline in Appalachia and other rural areas – often as a party line due to capacity limits – was indeed subsidized. It was subsidized by design, in that the long-distance carriers were allowed to charge intentionally larger than necessary long-distance rates – PROVIDED they used a large fraction of the income from those rates to defray the cost of rural telephone installation. That’s why you could get a phone “out in the sticks” without having to pay literally thousands – which is sometimes what it cost to run the lines.

    In essence, long distance and urban customers subsidized the “wiring up” of America with the full approval of the FCC. That approval ended with the court decisions of the early 1980s that “broke up” the Bell System and deregulated long distance phone service. By then, there was no longer the need; virtually all of the US was sufficiently “wired” to no longer need the subsidy.

    The TVA was the same concept (albeit with a huge chunk of political pork added), except in that case the government subsidy was more direct. It also had the side benefit of flood control for the TN/Ohio river basins. The same principal was seen in many rural electric co-ops in the South (and possibly other areas) in the 1930s and 1940s. As I recall, they got substantial tax bennies unavailble to other commercial firms – with the proviso they used the proceeds from said bennies to “wire up” the rural areas in which they were to sell their electricity.

    In both cases, the resulting service (phone, electricity) was NOT provided free to anyone who asked and/or qualified. The people receiving the service had to pay for the cost of the service provided to them. Both were subsidized in terms of building the infrastructure required to deliver that service.

    The Lifeline program doesn’t do that, as the required infrastructure is fully in place today. What it does is “deem” that the service is somehow a “right” or a “necessity”, and provides it to qualifying individuals gratis. Sorry, but having a phone is NOT a freaking absolute necessity or God-given right. And if it’s not important enough to come up with $10 a month, well, sorry – I guess that means you don’t really want one all that bad.

  15. 68W58 says:

    Given yesterday’s Virginia governors race results I’d like to point out that there is a reason a lot of us don’t trust the Republicans when they talk about reducing government and this is a prime example. Bush II (who I voted for, gave donations to and supported through his presidency) was the first Republican President for 70 years to have (just barely) a Republican congress and what did we get? Medicare part D.

    Look, I know that the Pubbies are better than the Dems. But that really isn’t good enough, in fact it’s pretty bad in and of itself. For most of my adult life they have talked a good game about reducing government, but then we get more of the same. Now, if I were in Virginia, I would have voted for Cuccinelli, but I understand why others wouldn’t and didn’t, they’d had enough of the empty promises of the GOP.

    As to some of the other issues raised here, just let me say that my family comes from deep in the Appalachian mountains, Mitchell county N.C.-outside the area covered by the TVA. Duke energy and Carolina Power and Light managed to get power to the deepest hollers and highest mountaintop, all of my family had electricity from the 1920s.

    The market will work, if we let it.

  16. Hondo says:

    AW1 Tim: you forgot one thing, amigo. The state actually benefits from that fraud. In almost all cases other than Medicaid, it’s not the state’s money being passed out to the perpetrators of fraud – it’s Uncle Sam’s. So that means that the state gets the bennies (sales taxes and additional business revenues) while someone else is paying the bills.

    It’s really easy to sit by and watch fraud involving OPM (other people’s money) and not give a damn. When it’s your own cash, however, somehow it’s a different story.

  17. Perry Gaskill says:

    At the risk of sounding like some sort of drooling libtard, it seems to me that to get a handle on the Lifeline program, you need to answer the following question:

    If a welfare mom in, say, Detroit gets a free phone so she can look for a job, and the phone company can add her service at almost zero incremental cost, but still generate more profit by charging other rate payers for her service, who’s the real welfare queen?

    It’s also true, if memory serves, that as a matter of perspective, AT&T and Verizon, made up of former Baby Bells, now control roughly 80 percent of the phone market in the U.S., and each generates about $100 Billion per year in revenue. Which makes the $2.2 Billion per year for Lifeline a relative drop in the bucket.

    Personally, I can wrap my head around the advantages of capitalism and free enterprise, except that there is no such thing as a level playing field when it comes to the telecommunications business. That horse left the barn during the CLEC/ILEC wars starting in the late ’90s when the FCC, to mix a metaphor, rolled over like a big dog.

  18. Arby says:

    What’s worse is that Carlos Slim, a Mexican billionaire and owner of tracfone, makes $10 for every obama phone sold. http://www.myfoxdc.com/story/19792114/carlos-slim-worlds-richest-man-gets-richer-supplying-obamaphones-to-poor#axzz2jsVpk200

  19. Ex-PH2 says:

    Hondo, I know those histories, but the programs were meant to provide the benefits to rural areas, especially in the mid-South where it was almost nonexistent, AND no one was expected to get it for free.

    I don’t think anyone actually expected to not pay for those things. But those people all had a ‘work your way out’ ethic, which has disappeared with welfare. How many CW singers came out of coal mining country?

    And do you remember that brief hit ‘Welfare Cadillac’? I’m trying to remember when it was popular. I think it was right around the time LBJ started his ‘War on Poverty’, which has 50 years of loud backfiring behind it.

    It would have made much more sense for the government to fund a grants program similar to Doctors Without Borders, which does provide free 3-day clinics to rural areas where nothing is available. But that’s a charity group. I don’t think they get grants.

    And let’s remember that the outbreak of WWII provided lots of jobs that paid real wages, and drew people out of the hill country to places like Chicago and Detroit and my home town, Decatur. There was no welfar. You worked and got paid, or else. The ‘work your way out’ ethic was what drove people to succeed, in some cases brilliantly, e.g., Andrew Carnegie.

    You know as well as I do that there is no lack of jobs. It’s the laziness mentality that has to change, and the predatory for-profit schools that make promises to ‘get you a job’ in fields that are shrinking have to be stopped, too. There’s always room for A/R people and accoutants. Not so much for CNAs, with this ‘modified’ health care thingy. And I’m just as fed up with my money going to feed laziness as you are.

    In regard to the Lifeline program, how come the Amish aren’t using it? Ooooops!

  20. Ex-PH2 says:

    Durn, I cnat sepll htis rmnining. That should be ‘accountants’. Geez!

    There’s another thing. This whole ‘baby boomer’ bunch, including me and some of you, does not wish to sit on our butts reading the newspaper and watching TV. (OK, writing books is sitting on my butt, but I have two done already, and working on more, so I am NOT staring at the TV.)

    My point is that we all expected to be busy in retirement and some expected to go on working until we reached the ‘take it or get penalized’ age (70) for Social Security. Becuase of the recsssion, in many cases that didn’t work out. But we’re keeping ourselves busy and not just goofing off. A surprising number of ‘old’ people have become self-starters and are thriving.

    So why is it so obvious to us, and yet those others are so blind to it?

  21. Hondo says:

    Perry Gaskill: except it’s not the phone companies charging their customers more, amigo. It’s the FCC mandating that fee be collected and sent to them. The funds are then dispersed to pay for the “Lifeline” and other programs.

    In short: it’s the Federal government extorting the funds from paying telephone customers. They’re just using all existing phone companies as their “muscle”. And the FCC has the hammer – refuse to collect, and lose FCC approval to use the airwaves. Or pay the fee out of profits.

    I have no objection to the phone companies taking Uncle Sam’s dollars; they’re in business to make money. If Uncle Sam is stupid and wants to throw away the money, well, they might as well take it.

    I am, however, pissed at Uncle Sam for being an idiot. And I’m getting damn sick and tired of being the one that’s forced to pay the bill.

  22. OWB says:

    There are so many things wrong with this program that it defies easy explanation. One of the original selling points of the free phone program was to provide victims of domestic violence with a means of communication. As is usual when bureaucrats become involved, it quickly morphed into something unrecognizable.

    Yes, we have tents set up with private companies (contractors?) coming in, handing out phones to anyone who will take them. These employees get paid per each, as does corporate. They are also reimbursed for the tables, chairs and tents that they buy (and leave) in each city to set up, and the rental vans and hotel rooms while there. By the government. Administered by bureaucrats, who “need” to look for ways to expand the program to justify their own jobs and the hiring of additional personnel.

    It’s a crazy system.

  23. MCPO NYC USN (Ret.) says:

    “Dogs and Sailors Keep Off the Grass” was an attitude not a sign on someone’s grass. The attitude was perpetuated by senior ranking Naval Officers who did not allow Sailors to leave ships and stations in civilian clothes. So on occassion drunken Sailors would be seen, these sightings were then used to further punish Sailors and often a senior ranking officer would say, “it is so bad (drunken behavior), in Norfolk and Virginia Beach, there are signs that say, SAILORS AND DOGS – KEEP OFF THE GRASS.”

    Never is a million years, would such a sign ever have been used to insult the very institution that built those towns.

    Any other questions?

    Carry on!

  24. David says:

    I’m always amazed when people talk about ‘emergency’ cell phone use… I have never had a carrier/cell phone that worked that damn well, other than the old Nextels. My current phone is a TMobile Blackberry (company phone) that drops calls as I walk around my house. Emergencies? I’d rather depend on a .22 to stop Godzilla. Might happen… but when Allison hit Houston, my Sprint cell was out of sevice longer than my electricity. My landline, however, worked fine. Emergencies? My wife’s T-Mobile service always gets her voice mails to her – within maybe 12 hours. That’s probably 4 carriers and 25 phones between us.

    And as long as I am ranting – you used to pay about a $30 deposit and received a phone, it was hooked up within 24-48 hours, cost about $5-7 a month, and ALWAYS worked. I was appalled when I was in Germany and a phone cost $70/month and I was charged by the minute (or less if long distance/overseas). While I was over there they broke up ATT – and when I came back I had to buy a phone, pay $70 to get it installed, and my monthly bill was about $25 before long distance. Tell me again about progress?

  25. NHSparky says:

    David–there’s your problem–T-Mobile.

  26. David says:

    Except it also happens with Verizon and Sprint… if I have an important call I have to pace the sidewalk in front of the house. They all suck. I want my Nextel Motorola flip phone back with the R/T link…. that was a phone. Not a fru-fru social networking ca,mera, but a freakin’ phone.

  27. Hondo says:

    MCPO: as I said in a earlier comment elsewhere, my father regrettably is no longer around for me to confirm that he personally ever saw such a sign with his own eyes. But before he passed, he mentioned the existence of such a sign to me at least once, at either Norfolk or San Diego (he was assigned to ships based in both at different times during World War II). And I think it was Norfolk – he NEVER had anything good to say about the time his ship was based at Norfolk during World War II.

    Prior to the 1970s or 1980s, Norfolk was NOT a particularly “Navy friendly” town. During World War II, the relationship between the city of Norfolk and Norfolk Naval Base was decidedly testy at times. The relationship has become much better today.

    There are simply too many eyewitness accounts of such signs for me to believe that the infamous “Sailors and Dogs . . . ” sign was an urban legend. They may not have been common, but I’m personally convinced they existed during and for a while after World War II.

  28. MCPO NYC USN (Ret.) says:

    HONDO … this has been debated for years. It is MORE legend than truth. Although your assertion regarding relationships between Norfolk and Virginia Beach government were strained over the years (certainly merit there) … it never got so bad that VB passed a law forbidding Sailors from using a grass covered area. That is what is suggested with the sign.

    But if somone can show me the law or ordinance along with authorized art copy of sign … I will eat my mouse pad with lettuce, tomato and mayo!

  29. Hondo says:

    MCPO: I don’t believe anyone here ever suggested it was actual local law – only that the signs, though rare, did indeed exist. Most references I’ve seen were to hand-printed or stenciled signs on people’s lawns.

  30. That Guy says:

    The people in charge of handing out ‘Obamaphones’ often hand out multiples to individuals, who later sell them for drug money. And I know of a drug dealer in Northern Kentucky who has, at last count, a dozen goddamn Obamaphones.
    A. DOZEN.

  31. Hondo says:

    David: I’ve actually used my cell to call 911 a few times – from the highway, to advise local LE of accidents or seriously hazardous situations. It seems to work very well along most major highways east of the Mississippi, and fairly well west of the Mississippi. A few regions in West TX, NM, and AZ were problematic, though – as can mountains. But even in the Appalachians, service seemed OK.

    In short: on the road, no real problems except in REALLY remote areas.

    On the other hand, I’ve had real problems with cell service at my home. I apparently live in the fringe overlap area between two towers, and signal strength is (a) just low enough to be sometimes unreliable, but (b) just high enough that the phone sometimes won’t switch over to my personal cell repeater operating thru my WAN connection. Oh well.

  32. That Guy says:

    @3
    BULLSHIT. This has gone far beyond ‘oh, we’ll help you pay for a phone line’. This is ‘oh, we’ll pay for your phone line (and by we, I mean those of us who actually pay for our lines), plus we’ll give you a free phone and one of Obama’s favorite donors will get a kickback on each phone. And by ‘a free phone’ we mean you can easily get upwards of 4 or 5 before anyone catches on.

  33. AW1 Tim says:

    FWIW, I still have a landline at my home, and I intend to keep it for as long as I can still buy service. As others have said, it still works when the power goes out, and it doesn’t need charging. :)

    It’s also how I get my DSL delivered.

  34. David says:

    Hindo – I too have had better luck when traveling – once called 911 to report a coil of steel apparently headed for a stamping house that had fallen off a trailer. Hitting that at speed would be like hitting a wall. (Yet I can’t complete a call from my recliner…)

  35. UpNorth says:

    If being a “participant” in Medicaid, or the EBT or Sec 8 programs qualify someone for an “Obamaphone”, they’re about to get flooded with requests from those who sign up for Medicaid, rather than O-care. Which seems to be most people right now.
    @32. Hondo, I get pretty good service from Sprint, considering I live in the middle of farm country. I get 3 or 4 bars, depending on the time of day, and which way the wind is blowing, and no problems with dropped calls.

  36. USMCE8Ret says:

    This’ll make your blood boil. Discuss.

  37. Veritas Omnia Vincit says:

    You can buy an awful lot of anything for 2.2 billion dollars, and if 41% of that number was fraud….

    As for the smart phone, I love mine and I have great service just about everywhere. But I pay for what I want with money I earned….spend money how you like if you earn it….however, if you are sucking on the public teat your whole life you should expect to be told what flavor you’re going to get and like it or f#ck off…

  38. sal marino says:

    For poor people, you can get free cell phones and service. Look at http://freegovernmentcellphones.org

    Jonn: check out the content of this spam from my “Lifeline Phone Program” article. (smile)

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