Dropping like flies: AT&T ends Lifeline landline discounts, T-Mobile may be next

It’s been a rough couple of years for the Lifeline free government cell phone program. And life is even tougher in the Lifeline home landline discount arena.

AT&T is pulling the plug on discounted Lifeline landline service, and T-Mobile is also making noises about abandoning the program.

AT&T got the ball rolling by sending notices to thousands of low-income customers in Illinois. They were told that the $10 per month Lifeline discount they’ve been getting on their landline bills will end November. A little quick math tells us that the termination will add an extra $120 to their phone bills every year.

An AT&T spokesman explained the customers’ options to the Chicago Tribune:

“Customers can keep our traditional voice service without the Lifeline discount, or they can obtain Lifeline discounts from another provider,” AT&T spokesman Eric Robinson said in an emailed statement.

In Chicago, AT&T lists seven alternative Lifeline providers, including Access Wireless, Life Wireless and SafeLink Wireless. AT&T’s own wireless service is not an approved Lifeline provider.

Walking away from the home phone discounts came about for one simple reason — AT&T backed legislation that would allow it to walk away.

AT&T’s decision to exit the Lifeline program comes more than a year after state legislators approved a bill to end traditional landline telephone service in Illinois, pending approval from the Federal Communications Commission.

Illinois passed the AT&T-backed telecom modernization bill in July 2017, joining 19 other states in allowing the legacy telephone provider to eventually get out of the landline business. California is the only state in AT&T’s territory that has not passed such legislation.

Dogpiling onto AT&T’s decision to abandon the Lifeline discount business, T-Mobile has hinted that it also wants to walk away.

That comes as a major blow to a lot of people because T-Mobile has approximately 4.4 million Lifeline customers in Florida, Kentucky, Minnesota, Mississippi, New Mexico, Pennsylvania, Texas, Virginia, Washington, and Puerto Rico.

Braxton Carter, T-Mobile’s Chief Financial Officer, coldheartedly told Barclay’s High Yield Bond & Syndicated Loan Conference that, “We’re going to eliminate them from the base.”

Unfortunately, AT&T and T-Mobile aren’t the only landline companies that are leaving Lifeline customers in the lurch. They’re just the latest to join the parade.

Other major carriers that have opted not to participate in the program or to participate on a limited basis include AT&T, Cox, Windstream, Charter, CenturyLink, FairPoint, Frontier and Verizon. AT&T opted to limit participation in the program because an initial FCC plan to establish an eligibility verification database has been delayed and the carrier apparently didn’t want the liability associated with making those decisions on its own.

Meanwhile, smaller rural carriers have been reluctant to offer Lifeline broadband because the rate they would have to charge for the service would be in the range of $100, which the $9.25 discount wouldn’t go far to cover – a situation the rural carriers attribute to an insufficient USF program budget.

Add those companies to the long list of free government cell phone companies that have dropped out of the Lifeline business and you quickly realize that these are tough times for Lifeline customers.

Fewer competitors mean fewer choices. And fewer choices mean poorer service.

Call us crazy, but we think low-income American deserve more.