Texas member proposes ending federally subsidized cellphones

Rep. Blake Farenthold (R-Texas) this week proposed new legislation that would terminate part of a Federal Communications Commission (FCC) program that Republicans say is improperly used by phone companies to offer customers free cellphone service.

Farenthold says his bill, the Lifeline Reform Act, would save about $500 million annually.

"These 'free' cellphones come at cost to hardworking American taxpayers because the program is funded by a tax on phone service," Farenthold said. "Ending duplicative and wasteful government programs will save taxpayers money and put our country back on a path to fiscal prosperity."

The FCC imposes a tax on phone bills, and has used the money collected to ensure phone service in rural areas of the United States. But part of this Universal Services Fund goes to the "Lifeline/Link-up" program, which subsidizes phone service for low-income customers.

According to Republicans, some phone companies have started to use that subsidy to offer free cell phones and wireless service to low-income customers. That led to some complaints among Republicans over the last few years about the free cellphones offered by the Obama administration, even though the FCC program was in effect before Obama took office.

In July, ending the Lifeline program was voted as a priority program to be shut down under the House Republicans' "YouCut" feature on the website of House Majority Leader Eric Cantor (R-Va.).

On Thursday, the FCC announced radical changes to its Universal Services Fund, and said it would start to use the fund to help improve broadband Internet access in the United States.