The headline on a recent San Francisco Chronicle article only hints at the real problem with the free government cell phone program as constituted in California: “As subsidized phone program grows, so do its costs”.
Had we been editing the Chronicle’s story, it would have had the same headline we put at the top of this article. We’re not coming down on the Chronicle, a fine newspaper, but the same reporter who writes about Lifeline Assistance, the free government cell phone program, today will undoubtedly be writing about High Sierra fishing expeditions or the state’s drought or any other unrelated subject tomorrow. Since FreeGovernmentCellPhones.net specializes in the Lifeline Assistance program, we see details that other reporters never notice.
Here’s how the Chronicle reports the story:
Participation in the state’s LifeLine program, which subsidizes phone service for low-income consumers, has skyrocketed since the California Public Utilities Commission expanded it to cover wireless as well as landline phones. And so have the costs, which are covered by a fee charged on all phone bills in California.
To keep the program solvent, the commission has had to increase this fee by a factor of almost five this year. After holding steady at 1.15 percent of applicable charges since early 2007, it was raised twice this year, in January and August. It now stands at 3.8 percent. Late last month, the commission decided to raise it again, to 5.5 percent, effective Oct. 1.
The fee applies to in-state voice services, including landline, wireless and Internet. People getting LifeLine discounts are exempt from the fee. It is the largest of six state-mandated surcharges that show up on phone bills to support various public programs in California.
We doubt that the Chronicle reporter is aware of the fact that California provides the most generous Lifeline Assistance benefits in the entire nation. By far.
While needy customers in most other states typically receive a free cell phone, 250 free voice minutes and 250 texts per month, California Lifeline customers receive unlimited talk and text plans along with their free cell phones.
And while Lifeline Assistance companies in other states get a federal subsidy of $9.25 per customer per month, companies doing business in California receive an additional state subsidy. As we reported back in February 2014, “California will now pay those companies an additional $6.35 to $13.15 per month for some customers.”
Why are costs rising? Well, it doesn’t take an economist to figure out that more companies will set up shop in California if the state will pay them double or triple what they can earn per customer in other states. The other half of the economic double whammy is that more customers will be incentivized to sign up for free government cell phones if they’re offered far more minutes than are available in other states.
It’s an economic endless loop: More money per customer attracts more companies, more minutes bring in more customers, more customers mean the state spends more money on subsidies, more subsidies means the state needs to raise taxes.
Sure enough. The Chronicle reports:
As of July 31, there were almost 2.2 million households enrolled, two-thirds in wireless. That’s up from 1.2 million in January 2014.
The budget for the program has also grown — from $204 million in fiscal 2014-15 to $346 million this year and an estimated $628 million next year. Most of that is subsidies paid to participating carriers, which pass them along to LifeLine customers, but it also includes some overhead.
As far as we’re concerned, there are two major problems with the Lifeline Assistance free government cell phone program. One is eliminating waste, fraud an abuse. The other is the well-meaning but incompetent bureaucrat who screws things up in an attempt to help.
Remember that California is the same state that is currently building a “high-speed” rail system that will take a low-speed, meandering route from Los Angeles to San Francisco, and has increased in price from an initial estimate of $10 billion to a current estimate of $100 billion and no one believes it will stop there nor that it will ever make enough money to pay for itself.
Why do we bring up this seemingly unrelated topic? Just to point out that California has a long history of regulatory red tape, over-promising and under-delivering.
Consider the fact that California is the only state we’re aware of that has a website dedicated to the Lifeline program.
A quick glance at the website tells an informed consumer (or an eagle-eyed website) that it is rife with errors. We would love to link to that site in order to give our readers an additional source of free government cell phone information, but the website is so poorly researched and so difficult to navigate that we cannot in good conscience do so.
In fact, we recently published an article that attempts to straighten out the confusion caused by the well-meaning but incompetently-prepared information at that state website.
We’re not surprised that California has screwed up the free government cell phone program. The state (and most levels of government, for that matter) is incapable of getting out of its own way, whether the subject be Lifeline Assistance, high-speed rail, the on-going drought, or anything else it touches.
C’mon, California. Millions of Golden State residents desperately need the help that can be provided by the Lifeline program. Get your fingers out of your collective bellybuttons and make the program work like it’s supposed to.