The method by which discounted phone services are made available to former foster youths may change in California, and the rest of the country.
But not this fiscal year.
Consumer advocates, including a group representing foster youths, assailed Assembly Bill 1407, arguing it removed protections for low-income citizens. Spending watchdogs said its expansion of subsidized coverage was tantamount to socialization, dubbing it “ObamaPhone.”
Both sides got what they wanted before the Labor Day weekend, when the state’s Senate Appropriations Committee declined to send the bill to the floor for a vote in the final two weeks of this legislative session. It could still be sent to the floor when the Senate reconvenes in January.
LifeLine is a program in each state, financed in part by the federal government, through which telephone providers offer low-income households a subsidized phone plan that permits for (at the least) emergency calls and a certain amount of local calling.
Each “household” is allowed to have one LifeLine participant, which means that most aging-out foster youths are eligible. As more states have included cell phone services in LifeLine, the cost of the program at the federal program has ballooned, to the dismay of Sen. Tom Coburn (R-Okla.) and other spending hawks on Capitol Hill.
AB 1407 would expand California LifeLine’s cell phone availability; the state’s current program offers mostly landline options with only four mobile providers offering limited Lifeline plans.
It would also eliminate the “fixed rate,” pre-registration structure of Lifeline, and replace it with a voucher discount system that kicked in upon service activation. The current fixed rate for LifeLine in California is $6.84. Under AB 1407, participants would receive a discount of $11.85 “that can be applied to any bundle or service that includes voice service.”
This would be in addition to the $9.25 federal subsidy for LifeLine customers, meaning that any plan costing more than $27.94 would reflect an increased cost for qualified participants.
There is no ceiling set on the monthly plans in this bill, which has some consumer advocates and social services groups lined up against it.
“A youth would need to qualify for and sign up for a carrier’s cellular program per the carrier’s discretion,” said iFoster founder Serita Cox, whose organization helps procure discounted prices on goods and services for foster youths.
“It also does not allow for pre-registration so they would only get the discount after they signed up and started service and paid their monthly bills,” she said in an e-mail to The Imprint. “Obviously, this is not what we want – we want a free, limited wireless solution with pre-registration.”
The bill analysis on the state legislative website suggests the same:
“It is possible that the $11.85 state support, plus the $9.25 federal subsidy, could equal more than a provider’s charge for service, leaving the customer with no charge. ….On the other hand…the elimination of a fixed rate, and with no cap on basic service rates, could make service unaffordable for low-income customers as basic rates increase.”
A 2011 commentary from Verizon to the Federal Communications Commission argued that the FCC should “adopt a voucher-based discount program and a centralized database managed by a national administrator.”
Verizon said in the statement that the system would limit the exposure of the providers to fraud in the form of multiple Lifeline accounts from one household. From Verizon:
“A voucher system would complement the national database because, with beneficiaries empowered to make service selections using all or part of a voucher with a pre-set value that can only be used once, claim duplication would be largely avoided, resulting in fund preservation.”
Other providers support the creation of a national database to curb fraud, but oppose the voucher model.
The FCC “would not likely be able to successfully administer” a voucher program “without enormous human and capital investments,” said a 2013 statement to the FCC from the Lifeline Reform 2.0 Coalition, which is comprised of smaller phone providers that specialize in state Lifeline programs and pre-paid services.
Plus, the coalition argues, a voucher model could lead to more fraud in the form of black market and counterfeit sales of a voucher certificate.
There is no argument in California against including mobile options in LifeLine. Participation in the program has declined from 3.1 million in 2006 to 1.5 million in 2012, even though the telecommunications industry estimated that 3.7 million Californians are eligible for the program.
The state should rely on its Public Utilities Commission (CPUC) to develop a plan for including cell phones, Cox said. “Our hope is that the CPUC implementing a revised LifeLine program…will cause the Senate Appropriations Committee to decide this bill does not need to go forward come January.”
A CPUC revamp of LifeLine has been in the works for a long time. The assembly indicated, in a statement on its decision to hold the bill, that it was growing weary of the commission’s delays on the subject.
“We need the CPUC to finalize its proceeding as quickly as possible and catch up with today’s voice technology,” said Senate President Pro Tem Darrell Steinberg and Senate Appropriations Committee Chairman Kevin de Leon. “The Legislature will not wait indefinitely for expansion of the LifeLine program to mobile phones.”
John Kelly is the editor-in-chief of The Imprint