Free Phones!

Every so often, I entertain myself during my lunch break by listening to conservative talk radio. The other day I tuned in just as the news at the top of the hour was finishing. It was followed by the usual commercials — Lifelock, Goldline. Then a commercial aired that I was shocked to hear.

I can’t remember it word for word, but the main part went like this:

Attention, state residents on welfare or other public assistance! You may be eligible for free cellphone service. You can even keep your existing number. Call Safelink.

A couple of questions entered my mind. Since when do welfare recipients make up any part of the conservative talk radio audience? More important, if this is an actual offer, who is paying for it?

I did some cursory research.

This free cellphone program has its origins in the “lifeline” program created by the Telecommunications Act of 1996. It was intended to ensure that quality telecommunications services were available to low-income customers at just, reasonable, and affordable rates. Basically, it was a discount on a low-income person’s landline bill. The act requires telecommunications service providers to contribute to federal universal service in some equitable and nondiscriminatory manner. In other words, they pay. In 1997, the Federal Communications Commission created the Universal Service Fund to collect, manage, and distribute these funds.

The Universal Service Fund is administered by the Universal Service Administrative Company. Its webpage provides a little information about where the money comes from: “Generally, companies that provide interstate telecommunications contribute to the fund. These providers are required to submit revenue data to USAC using the Telecommunications Reporting Worksheet (Form 499).”

The site states that the USAC invoices providers for the required contributions, and that the FCC extended universal service obligations to providers of interconnected Voice-Over-Internet Protocol services in 2006. Finally, it says, “Consumers may notice a ‘Universal Service’ line item on their telephone bills. This occurs when a provider chooses to recover its contributions directly from its customers through a line-item charge on its bills. The FCC does not require this. Each company makes a business decision about whether to directly assess its customers to recover its Universal Service Fund costs.”

So, who pays? We do. Through an underhanded tax on consumers.

No justification, to the effect that telecom companies simply make a business decision to pass these costs on, changes the fact that this is an additional tax on consumers. Personally, I am not a fan of big business and I believe that all business endeavors entail costs and risks, not all of which can or should be passed on to consumers. But the faux ignorance of the explanation is obnoxious. We in the government are just trying to get these companies to do good. So don’t blame us — we’re just trying to do the right thing. Blame the telecom companies that weasel out of paying their fair share under the guise of a business decision.

The result is that you and I are again stuck with a surreptitious tax. You and I are paying for someone else (and not a family member or friend, or even a designee of our choosing) to have a cellphone.  I am all for low-income people having access to phone services, but I’d like to see that access come through greater competition among telecommunications companies to reduce costs and increase service quality and convenience. Or through the work of private charitable institutions. There are ways to address low-income people’s needs for phone service other than a federal government program funded by an underhanded tax.

I looked at my phone bill and found a Universal Service Fee of $4.20. I’m calling and disputing it. I am taxed enough already. I’ll let you know AT&T’s response.