To understand why there are free government phones, you need to first understand a little about the Lifeline and Link-Up programs. These programs set the groundwork for all of the existing free and government assisted phone programs.
Telephone Assistance (Pre Cell Phone Age)
When these programs were first instituted, the Lifeline Assistance program and Link-Up America which are supported by the federal Universal Service Fund (USF), the intent was to help low-income individuals by providing discounted home phone service. It helps offset the activation, installation and monthly service fees that can put a strain on families of low income.
The programs are administered by the Federal Communications Commission and the Universal Service Administrative Company.
Initially, this program applied to in-home landlines. Now with the advancement in technology, the programs also apply to cell phones.
Federal vs. State Lifeline Programs
You should know that there are Federal Lifeline/Link-up programs and there are state Lifeline/Link-up programs. Each state has the option of relying solely on the federal program or instituting its own program. For those states that rely solely on the government program, the eligibility is based on Federal guidelines.
However, those states that have instituted their own program, the eligibility requirements differ depending on state regulation.
Who Foots the Bill for These Free/Discounted Phones?
Each phone provider is required to contribute to the Universal Service Fund. Their contribution amount is based on a percentage of their revenues. The phone provider companies are not limited to the big name providers such as AT&T, Verizon and the like. Phone providers also include paging service companies, wireless companies and even VOIP companies such as Vonage (VoIP stands for voice over internet protocol: You know those phone companies that use the internet for making calls).
Who Really Pays for the Free Government Phones?
Well, here’s where it gets a bit tricky. Some phone providers will tack on a “Universal Service” item on your phone bill. If you see an item and a charge for Universal Service, that means your phone provider is passing some of the cost of the program on to you.
The Universal Service charge is not required by the Federal Communications Commission. The decision to pass the cost onto you is a business decision made by your phone carrier. Your phone provider cannot collect more in universal service charges than they actually paid, nor can they charge universal service fees to Lifeline customers.
If you want more information on the Federal Lifeline/Link-Up programs and the associated fees, visit the Federal Communications Commission website.