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Government Provided Phone Services, Subsidies And Their Abuse

November 20, 2013

by Brittany Shaddix


Ever wonder why there is a “universal service charge” tacked on to your phone bill? Turns out that little fee, added on to the bills of many Americans, goes to fund subsidized phones and service plans from our government. As participation in the subsidized cell phone program Lifeline increases, that “universal service charge” on your bill goes up. Individuals who are eligible for the “free cell phones” also currently participate in any number of federal programs, including food stamps, low-income housing and Medicaid.


About 1.5 billion tax dollars goes to Lifeline each year to fund these “free” cell phones. According to reports, these wireless subsidies now consume 70 percent of the Lifeline budget, with three pre-paid cell phone providers receiving 40 percent of the total budget. The federal government reimburses every company involved, for every discounted phone and service plan they distribute for free.


So in order to receive more federal funds, these companies are “encouraged” to maximize the number of phones they hand out. As with most government programs and subsidization, fraud and abuse run rampant. Research shows that an audit of 3.6 million Lifeline subscribers discovered 269,000 duplicates, as well as the fact that 70% of subscribers had signed up for service with multiple carriers. Many households were found to have multiple people with the “free phones.” Reports also show that a number of Lifeline users are not even eligible for the service.


This government program (along with most others) is plagued by mismanagement, fraud and abuse. When politicians such as House Minority Leader Nancy Pelosi insist that “the cupboard is bare” and “there’s no more cuts to make”, one must wonder what budget they are truly looking at.




You can find out about the government’s definition of the program here: http://www.fcc.gov/lifeline

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