The most prominent misunderstanding of the program comes from widespread use of the partisan nickname “Obama Phone,” implying the current president is somehow responsible for a new program. In reality, the Lifeline program was created under President Reagan as a way for low-income families to get a basic landline telephone connection.
In the wake of Hurricane Katrina, the FCC, during presidency of George W. Bush, leveraged the Lifeline program to provide pre-paid phone service for households devastated by the storm. Following those recovery efforts, the program was more broadly expanded to support pre-paid wireless service. This shift created a new business opportunity for these providers, as well as a new, effective service option for low-income users. Unfortunately, the failure to implement any corresponding oversight to monitor eligibility and duplication allowed some companies to exploit the program for additional profits, and contributed to many of the program’s current problems.
All of this led the current Obama FCC, to reevaluate the program and ultimately implement significant targeted reforms. These reforms include: the establishment of centralized databases through which Lifeline service providers can instantly confirm user eligibility and check for duplication; additional certification and annual recertification requirements for Lifeline recipients; and specific marketing requirements for service providers that mandate clearer, more accurate disclosures about the program.
President Obama’s real legacy in the Lifeline program is thus overseeing its aggressive reform, not masterminding its ballooning growth.
Another distortion of the program propagated by some House Republicans: the portrait of the program’s recipients. A YouTube video circulated by Rep. Tim Griffin features a young woman with a purse full of phones that she explains she can get any time, even multiple times from the same location. The real portrait of Lifeline recipients can be found in the hundreds of letters submitted in the record and from the testimony of Jessica Gonzalez, vice president of Policy and Legal Affairs at the National Hispanic Media Coalition. Lifeline’s core beneficiaries include the neediest – homeless veterans using the phones to secure living arrangements and employment, families of three struggling to live on $26,366 or less per year, and pediatricians trying to provide follow-up care for children in low-income households.
Finally, other Lifeline critics repeatedly characterized the program as a federal tax, implying that cuts to the program could be used as a tool for reducing the deficit and balancing the budget. But budget hawks should know that fully eliminating Lifeline would not reduce the federal deficit by a single dollar.
The program is funded through the Universal Service Fund, a program that receives contributions from telecommunication companies providing interstate and international telephone service. The FCC allows these companies to recover the fees that they pay into the fund directly from their customers, which shows up as a small surcharge on a customer’s monthly bill. The companies’ contributions then go to USAC, an independent, not-for-profit corporation that administers the Lifeline program. Companies who participate in Lifeline receive a modest monthly payment from USAC to subsidize the cost of providing service to an eligible subscriber.
The FCC’s reforms to the Lifeline program aren’t perfect, and implementation of the various components is ongoing. However, efforts to restrict Lifeline’s funding won’t improve the program’s efficiency. Rather, it will reduce the program’s ability to serve the nation’s most vulnerable at a time when the number of families and veterans falling into poverty are increasing. Congress should vigilantly monitor the progress of the FCC’s reforms, but it should not unnecessarily place such a critical program in the cross fire of the budget debate or use it to launch partisan attacks against the current Administration.
Morris is the policy counsel for the New America Foundation’s Open Technology Institute, where she advises on a wide range of technology issues.
Lennett is the policy director for the Open Technology Institute at the New America Foundation.