Georgia could become the first state to charge low-income residents $5 a month for what is now free cellphone service aimed at assuring the poor have access to basic communications.
The proposal before the state Public Service Commission comes after reports of fraud and abuse in the federal cellphone program, called Lifeline.
The charge has drawn criticism from consumers groups who say the state’s poorest residents should not have to pay $60 a year for phone service. Phone companies that participate in Lifeline say they do not have the systems in place to bill Lifeline consumers.
Some of the companies object because they fear it would reduce usage and cost them federal revenue they get for providing the service.
The PSC is scheduled to vote on the issue Tuesday. The commission voted 3-2 last winter to proceed with planning how the charge would work.
The charge idea, pushed mainly by commission member Doug Everett, came after a U.S. Government Accountability Office reported that as many as one in six people receiving free cell phones did not meet income or other need-based requirements to receive the free or discounted phone service.
The Federal Communications Commission overhauled Lifeline in 2012, requiring consumers to reapply for the program annually and to provide better documentation of income. A national database that lets phone companies cross-check and see whether someone already has a Lifeline phone is scheduled to be released to all 50 states next year.
In Georgia, the number of Lifeline customers has dropped 35 percent from 1.1 million in September 2012 to roughly 717,000 in August 2013 because of the FCC reforms and the improved economy. A group of phone companies who provide Lifeline phones to Georgians also have started their own database to keep track of customers.
Everett said those steps aren’t enough.
“The FCC is not doing all the jobs that they could be doing, and we’re having to take up the slack,” he said during a PSC hearing last week.
Lifeline was created during the Reagan Administration and expanded in 2005 to cover mobile phones. The program is funded through the Universal Service Fund, a surcharge on nearly everyone’s landline and wireless phone bill each month. The money is handled by a third-party company, which the FCC oversees.
Recipients get a cellphone and 250 minutes of monthly talk time for free. One phone per household is allowed, but the federal audit found that some homes had more than one phone.
If a state doesn’t use all of its allotted Universal Service Fund money, the funds go to other states. Opponents of the proposed charge say it will force some Georgians off the Lifeline rolls here and send money to other states.
“We’ll be paying that charge for Lifeline customers in the other 49 states,” said Anne Lewis, a lawyer for Covington-based Telrite Corp., a wireless company operating in 17 states.
Many pre-paid phone companies created a business model around receiving the monthly government subsidy. The companies use that subsidy to buy bare-bones cellphones and offset the cost of service.
The PSC’s new $5 fee would not reduce the Universal Service Fee. Rather, it would go to the phone provider, something that phone company officials testified they do not want.
“You would be taking $5 a month, $60 a year from the poorest people in the state of Georgia and transferring that money to telecommunications companies, companies that don’t need the money, companies that never asked for the money, companies that don’t want the money,” said Mitchell Brecher, an attorney representing Tracfone Wireless, a major Lifeline phone provider.
Everett sharply disagreed.
“You’re taking money now from some of the poorest people in the world and giving it to other people that have not worked for it,” he said.
Participation nationwide ballooned after 2008 when the nation’s economy was in free fall and states became more aggressive in marketing and signing up customers. All helped the program grow beyond the government’s ability to keep track of its participants.
California and other states have considered a fee but have not implemented one.
Liz Coyle, deputy director of the consumer rights group Georgia Watch, said the proposed $5 fee would punish Georgians who need every penny.
“I can tell you there are families in Georgia who literally struggle from paycheck to paycheck or whatever means they have to meet their monthly need for food and medicine,” she said.
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