Why do California and Oklahoma Lifeline Assistance plans offer so much more than other states?

Why do Lifeline Assistance companies in California and Oklahoma offer so many more minutes and texts than the plans in other states? Is it likely that other states will soon match those unlimited plans?

Consider the difference between what the companies are offering in California and Oklahoma versus what they’re offering anywhere else.

The typical free government cell phone plan in California offers unlimited voice minutes and an unlimited number of texts. In Oklahoma, many free government cell phone providers are also offering unlimited minutes and texts and others offer as many as 3000 minutes and 3000 texts plus 300Mb of data each month.

Unfortunately, the offerings in most other states offer far less — most often as few as 250 free minutes and 250 texts each month.

What accounts for this huge gap in service between those two states and the rest of the country? In a single word, money. Let’s look at the two states one at a time to find the explanation.

What makes California different?

The first thing you need to understand is that these cell phone plans are free to the customers, but they are hardly free. In 47 other states, the District of Columbia, and Puerto Rico, the United States government (through an organization called the USAC) pays free government cell phone providers a monthly subsidy of $9.25 per customer. In other words, the phone companies are getting paid, but not by the customers.

In California, the cell phone providers are paid a hefty additional incentive by the state government. The amount of that additional subsidy varies depending on how much the cell phone provider gives the customer.

CaliforniaLifeline.com says that if a Lifeline Assistance cell phone company provides its customers 500 or fewer minutes per month, it receives no additional state subsidy. However, if it offers between 501 and 1000 minutes per month, it receives an additional state subsidy of $5.75 per customer per month. If it offers more than 1000 minutes per month, the additional state subsidy jumps to $12.65 per customer per month.

In other words, a free government cell phone company can dramatically increase its income by offering customers 1000 or more minutes per month instead of a few minutes less.

This, of course, has had a huge impact on the Lifeline Assistance business in California and on the state’s free government cell phone customers. And it explains why the cell phone companies are rushing to California. As far as they’re concerned, it’s a gold rush where they are prospecting for poor people and the state sends them the gold.

Will the California Lifeline Assistance model spread to other states and help millions of other needy Americans. Unfortunately, we doubt it. California is an economic basket case that runs an annual deficit larger than most nations. But in today’s financially-stressed times, most states are scrambling to find the money to keep basic services going. It’s doubtful, in our opinion, that any other state will stumble upon an additional pot of money to fund more minutes. And when the economy improves, the number of people who need the program will decline, fueling critics demands that the program be curtailed instead of supplemented.

For a list of companies serving California, please Click Here.

What makes Oklahoma different?

Many free government cell phone companies in Oklahoma offer unlimited minutes and unlimited texts, but not for the same reason they’re offered in California.

In fact, Oklahoma’s largesse can only be explained by saying it’s a quirk of history and a screw-up by the people who designed the Lifeline Assistance program.

NewsOK.com explained the issue:

Oklahoma has an enhanced version of the federal Lifeline reimbursement to phone companies because of a provision for former Indian lands. The federal Lifeline program offers more than $34 in subsidies per household in most of Oklahoma, compared with about $9 in subsidies per household in other states…

The state has 41 phone companies eligible to receive Lifeline funds, said Corporation Commission Spokesman Matt Skinner. Twenty companies offer wireless Lifeline service, 14 offer landline service and seven companies offer both.

Let’s go over that again just to emphasize the startling stat: Forty-one phone companies participate in the free government cell phone program in Oklahoma, a state with just 3.9 million people.

FreeGovernmentCellPhones.net pored over all the statistics and decided to list just 15 of them on our Oklahoma page (we also listed three additional companies that offer Lifeline discounts). We determined that the rest of them were unworthy of inclusion because they are just too small with too few customers. (By way of comparison, we list just 11 free providers one more Lifeline discount company in California, a state with ten times the population of Oklahoma.)

So the question is why? Why so many companies in such a small state? And why do they offer so many more minutes and texts than companies in other states?

It’s all explained by that quirk of history and that screw-up by the people who designed the Lifeline Assistance program that we mentioned earlier. Here’s how we explained it in an earlier article.

For a list of companies serving Oklahoma, please Click Here.

Why is Oklahoma different?

The Tribal Lands Lifeline program discounts usually apply only to residents of current or former Native American Tribal Lands. In most states those lands (also known by the politically-incorrect term “Indian reservations”) cover relatively small geographic areas and have relatively few residents. But Oklahoma has a special status because the entire state was, at one time, a reservation.

Whoever wrote the law was clearly unaware that virtually all of Oklahoma was once an “Indian reservation”. That quirk means that almost every Oklahoma resident may legally qualify for special discounts that were intended only for Native Americans — if they meet the program’s other standard requirements.

For example, even if Tulsa resident Joe Blow’s mother was 100% Irish and his father was 100% German, he qualifies for special home phone discounts that in other states are reserved for Native Americans living on traditional tribal lands.

Here’s where the Oklahoma money gets crazy. In addition to paying the cell phone providers the standard $9.25 per customer per month, it pays them a bonus of $25 per customer per month for for virtually every customer — Native American or not, no matter where they live in the state. That surely makes even California’s generous $12.65 monthly subsidy look like chump change to the cell phone companies.

Consider this: If a Lifeline Assistance provider enrolls a customer in small town of Joe, Texas it will be paid $9.25 per month. But if it drives three miles north, crosses the Red River, and signs up an identical customer in Staley, Oklahoma, it will be paid $34.25 per month.

It’s no wonder Oklahoma is now home to so many free government cell phone companies.

Will California and Oklahoma plans spread to other states?

Probably not.

Lifeline Assistance free government phone companies offer bigger, better plans in each of those states due to conditions that do not and undoubtedly will not ever exist in other states.

Nothing would make us happier than seeing desperately needy Americans getting unlimited minutes and unlimited texts across the fruited plain. But unless your state treasurer suddenly stumbles upon a giant pot of money, or unless a historian uncovers an unknown, musty, dusty document proclaiming your entire state an Indian reservation, the odds are against it.

Until then, however, your best bet is checking the companies and plans available in your state by going to our States page.

Good hunting. We hope you find a plan that’s perfect for you even if it isn’t unlimited.