The state’s Public Service Commission voted 3-2 Tuesday to require phone companies participating in the federal Lifeline program either charge the $5 fee or offer at least 500 minutes of monthly calling time. Phone companies say they cannot economically offer customers so generous a calling plan, forcing them to charge the fee or exit the market.
Under the system, the federal government pays phone companies $9.25 to serve most low-income customers eligible for the Lifeline program. Cellphone providers can typically provide service that costs them less than the government subsidy, meaning the customer pays no out-of-pocket expenses and the companies make a profit. Customers can also use the subsidy to pay for landline telephone service, though it usually does not cover all costs.
As the program expanded, opportunities for abuse grew. Before recent changes, the Federal Communications Commission estimated that up to 15 percent of Lifeline subscribers may be ineligible for the assistance, costing the government as much as $360 million annually.
Critics of the fee argued regulators should target phone companies that violate rules, not the poor. Federal and state governments and local phone providers are creating databases intended to prevent people from improperly enrolling for service.
Commissioner H. Doug Everett, a Republican who supported the change, said the fee was necessary because phone companies cannot be trusted to regulate themselves. The rules take effect Jan. 31.
“It’s almost like what’s happening now, the fox (is) guarding the henhouse,” he said. “.... Nobody is stepping up to say, ‘I’m going to make sure the telephone companies are doing right.’”
Gloria Bailey, 73, said the charge would hurt low-income seniors like her. Bailey said she uses her Lifeline cellphone to speak with her doctors and pharmacists and keep in contact with family and friends.
“I feel like that’s not fair for the seniors because we have our medicine we have to pay for, and it’s not costing no two pennies. And we have doctors’ bills we have to pay,” she said. “... I feel like they should be ashamed for doing this.”
Two commissioners voted against the proposal.
“Personally, I have yet to be convinced that the $5 charge will do anything to reduce the fraud,” said PSC Chairman Chuck Eaton, a Republican.
Companies that would collect the $5 fee say they do not want it. To charge customers, phone providers would have to spend money on billing and customer service systems. The Federal Communications Commission declined to impose minimum charges while reviewing the program last year.
“The Lifeline program is serving the truly neediest of the population in the most dire economic circumstances and for whom even a routine charge is an excessive financial burden,” the commission said in its January 2012 order.
The issue will probably be decided in federal court. An association of wireless phone companies filed a lawsuit in February seeking to block the move by Georgia regulators. A judge decided in June to delay the case until the new rules were formally approved.
Two other states have required fees in the past. California charged a minimum fee until abandoning it this year, said Mitchell Brecher, an attorney who represents TracFone Wireless. Wisconsin has waived minimum charge requirements for TracFone and other providers.