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March 9, 2012

County urges end to ‘free government cell phones’

— — The county Legislature has called on the area’s congressional delegation to help end a federal program that provides free cell phones for impoverished citizens.

A resolution by legislators John Syracuse, R-Newfane, and Kathryn Lance, R-North Tonawanda, requests repeal of a portion of the Universal Service Fund “tax” that’s raised to subsidize wired and wireless phone and Internet service for low-income and remote-area users nationwide.

The government raises the fund by charging telecommunication providers a quarterly percentage of their revenues. The charge in the first quarter of 2012 is 17.9 percent, up from 15.3 percent in the last quarter of 2011. In turn, many companies charge their customers a Universal Connectivity Fee, a percentage assessment on long distance and service charges. As of Jan. 1, AT&T hiked its connectivity fee to 17.9 percent, the same as the feds’ fee on it.

“These free phones are really a user tax on your phones,” Syracuse said in explaining the resolution.

The Universal Service Fund is one fund tapped to pay for four programs all aimed at making telecommunications “universal” in the United States. It subsidizes telecom services in remote areas, and for rural health care providers, so customers pay rates comparable to rates in urban/developed areas; it also picks up anywhere from 20 to 80 percent of telecom costs for schools and libraries in low-income and/or remote areas.

The program that inspires county lawmakers’ chagrin is called “Lifeline Assistance.” Through it, persons receiving state or federal assistance — food stamps, housing aid, Medicaid, free school lunches, et cetera — or whose household income is 135 percent or less of federal poverty guidelines, are eligible to receive a free cell phone and 250 cell minutes per month. In New York State, the major Lifeline provider is Tracfone/Safelink Wireless.

Lifeline providers are paid from the USF. In 2011, they tapped it for $1.6 billion in “free” phones and minutes for 12.5 million income-eligible users.

Lifeline program costs have more than doubled since 2008, according to various published reports.  Lifeline used to subsidize landline phone installation and monthly charges only for income-qualified households; cell phone distribution through Lifeline began in mid-2008., a web site that promotes the program, says demand for Lifeline is fed by joblessness and the lousy economy.

The site also suggests the free-cell-phone program has merit, for both economic and public safety reasons: It helps citizens be available to potential employers and able to communicate with emergency medical professionals at any time.

The Syracuse/Lance resolution hones in on a lack of controls over how the free phones are used.

“There is no oversight over the usage of monthly minutes and text services for Lifeline service, meaning that the ‘free’ minutes may be used for any activities, including the illicit, rather than ... job searches and emergencies,” the resolution says.

Meanwhile, Syracuse pointed out, large swaths of the country are desperate for investment in broadband infrastructure.

He said the language of the resolution arose from a recent meeting of the Niagara-Orleans Regional Alliance, a two-county group exploring cooperative measures and common interests. Both counties identify broadband access as critical to recruiting and retaining businesses/employers, he said.

“We’re calling on our (congressional) delegation to help find ways to improve broadband services to rural counties ... and repeal this Universal Service tax,” Syracuse said.

This past October, the Federal Communications Commission approved a six-year phase out of the Universal Service Fund and replacement by a new, $4.5 billion a year “Connect America Fund” dedicated to broadband Internet expansion.

The USF is mandated by the U.S. Telecommunications Act of 1996, whose goals were to promote the growth of information technology and better define “universal” service, which was called for in the Communications Act of 1934. All along the law sought to enable “rapid, efficient, nationwide ... communication service with adequate facilities at reasonable charges” and a universal service fund was created to subsidize phone service to low-income individuals and in high-cost areas. The 1996 law tacked on benefits for remote/rural regions, schools, libraries and rural health care facilities in addition.

The Syracuse/Lance resolution was adopted by a 12-0 vote of county lawmakers Tuesday. Copies are to be sent to U.S. House representatives Kathleen Hochul and Louise Slaughter, Senators Charles Schumer and Kirstin Gillibrand, President Obama and FCC Chairman Julius Genachowski.

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