How Budget Mobile Phones Work


A federal program known as the Universal Service Fund (USF) makes cell phone service affordable for those with low incomes, or those living in areas where the cost of providing telephone service is high.
A federal program known as the Universal Service Fund (USF) makes cell phone service affordable for those with low incomes, or those living in areas where the cost of providing telephone service is high.
Photodisc/Thinkstock

Sharron Walters could care less about an iPhone or an Android. Smartphones might be brainy, but she doesn't need GPS, Bluetooth or a camera. What she does need is a way to call 911 in an emergency. For the 48-year-old Swissvale, Pa. resident, a cell phone is not a luxury, but a necessity, especially since she's confined to a wheelchair [source: Weaver].

Because she cannot afford another monthly bill, owning a cell phone seemed out of reach. But thanks to a government program that provides low-income Americans with access to free cell phone service, Walters can now find rides to the store or doctor, call 911 in an emergency or phone her son when the mood strikes. The cell phone brings peace of mind to a woman who often relies on others [source: Weaver].

Walters, like millions of Americans, takes advantage of a federal program known as the Universal Service Fund (USF). The USF makes phone service affordable for those with low incomes, or those living in areas where the cost of providing telephone service is high. Individuals who qualify receive discounted -- and often free -- monthly telephone service. Who foots the bill? Although the government receives its money for the subsidy from the phone companies, it's ultimately taxpayers who end up paying through a special fee on all home phone and cell phone bills, known as the Universal Service Charge [source: Federal Communications Commission]. You've probably seen it on your bill.

The idea of universal telephone coverage is nothing new. In the 1930s, the government started helping Americans, especially those in rural areas, connect to telephone. By 1984, the Feds were subsidizing landlines, and later, mobile phones [sources: Lajeunesse; Segan].

So how does the program work? Go to the next page to find out.

Budget Cell Phones and Service

While nearly 90 percent of Americans have at least one cell phone, millions of low-income residents cannot afford wireless service. To bridge that gap, the Universal Service Fund gives carriers -- through its Lifeline Assistance Program -- up to $10 a month per subscriber to provide free cell phone service for the underprivileged.

The number of minutes users get depends on the phone company providing the service. Some wireless carriers take that $10 and supply subscribers with as many as 250 free minutes, while others provide just 68. If customers want additional minutes, rollover minutes, texting or international calling, they can buy those services for an additional monthly fee. Some carriers provide text messaging, with each text equal to one minute [sources: Richtel; Free Government Cell Phones].

The government does not pay for the phones themselves; some companies give them away. The phones are basic, with ringtones, caller ID and call waiting. Most are brand names made by Samsung, Nokia and Motorola, and they don't have cameras, Web browsing or data services. Some carriers provide the discounted service, but not the phones, which customers have to purchase [sources: Richtel; Free Government Cell Phones; Segan].

For years, participation in the program dragged until TracFone, a company based in Miami, started using the subsidies to provide subscribers with a free phone and 60 minutes of free monthly service called Safelink. Within a short time, Safelink, which advertises on TV, grew to 2 million customers in 31 states, and the District of Columbia and Puerto Rico. In addition to Safelink, Assurance Wireless (a brand of Sprint/Nextel), AT&T and many regional carriers also participate in the program [sources: Lajeunesse; Free Government Cell Phones; Segan].

Today, roughly 8 million people take part in the Lifeline program [source: Free Government Cell Phones]. One of those subscribers is Leon Simmons of the Bronx, N.Y. Simmons, a Navy veteran, worked at the Post Office and as a security guard before becoming ill with emphysema, which left him disabled. His wife works a minimum wage job at a local Laundromat. When the couple heard of Lifeline, they signed up. The free cell phone provides Simmons with security. He can stay in touch with his wife and daughter, especially when he's at the doctor [source: Richtel].

Still, Lifeline is no stranger to controversy. Some see it as social welfare run amuck and think the government shouldn't be subsidizing for the poor [source: Richtel]. Others argue there's no way to verify that those who participate in the program actually qualify for the service [source: Lajeunesse].

Despite the debate, the program has been a boon for many wireless carriers. Although most Americans have a cell phone, Lifeline allows wireless companies to use the government subsidies to service a small, but untapped market -- the poor. Residents of Alaska, Oklahoma, Alabama, Georgia, North Carolina and Virginia use the free cell phone service the most, while those living in Hawaii and Indiana use it the least [source: Segan].

Go to the next page to see if you qualify.

Where can you get a free government cell phone?

The free government-provided cell phones give low-income families a feeling of security.
The free government-provided cell phones give low-income families a feeling of security.
AbleStock.com/Thinkstock

Where do you sign up? First, you have to be eligible for the program. That means those with a household family income that meets the federal government's poverty guidelines can participate. Those income guidelines include the following:

  • $14,702 annually for one person
  • $19,859 annually for a family of two
  • $25,016 annually for a family of three
  • $30,173 annually for a family of four

In addition, Lifeline is also open to those who take advantage of one of the following government programs:

  • Medicaid
  • Food stamps
  • Section 8 public assistance housing
  • National School Lunch Program
  • Low-Income Home Energy Assistance Program
  • Supplemental Security Income
  • Temporary Assistance to Needy Families

There are certain rules. Not everyone in the house gets a free phone. The program is limited to one free cell phone per household [source: Lifeline]. The cell phones themselves might not be smartphones, but they are up-to-date models.

Every state has its own application process. In some states, consumers can sign up by calling their local telephone company; in other states, a third party, such as a community-based organization, can help with the paperwork. And still other states let the Federal Communication Commission (FCC) handle the paperwork.

For those who sign up for Lifeline, the program is nothing short of wonderful. John Cobb, who lives in Greensboro, N.C., and suffers from a variety of illnesses, says the phone is like a security blanket, providing him with a way to contact people if he gets sick or gets in an accident [source: Richtel].

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More Great Links

Sources

  • Free Government Cell Phones. "You may qualify for a free cell phone from the government." (Nov. 11, 2011). http://www.freegovernmentcellphones.net/
  • Lajeunesse, William. "Tracking Your Taxes: Wireless Welfare." Fox News. Jan 7, 2010. (Nov. 9, 2011). http://www.foxnews.com/politics/2010/01/07/tracking-taxes-cell-phones-new-wireless-welfare/)/
  • Lifeline.gov. "Lifeline and Linkup: Affordable Telephone Service for Income-Eligible Consumers. (Nov. 9, 2011). http://www.lifeline.gov/lifeline_Consumers.html
  • Richtel, Matt. "Providing Cell phones for the Poor." The New York Times. June 14, 2009. (Nov. 9, 2011). http://www.nytimes.com/2009/06/15/technology/15cell.html
  • Segan, Sascha. "How to Get Free Cell Phone Service." PCMag.com. Aug. 12, 2011. (Nov. 9, 2011). http://www.pcmag.com/article2/0,2817,2391003,00.asp#fbid=OMmjQpLZbcg
  • Weaver, Rachel. "Free cell phones for the need drawing both cheers and jeers." Pittsburg Tribune-Review." Aug. 1, 2011. (Nov. 9, 2011). http://www.pittsburghlive.com/x/pittsburghtrib/news/s_749344.html