John Cobb, 59, a former commercial fisherman who is disabled
with cirrhosis of the liver and emphysema, lives in a studio
apartment in Greensboro, N.C., on a fixed monthly income of $674.
He has been hoping to receive more government assistance, and in
February, he did.
In a twist, wireless carriers are receiving subsidies to provide
people like Mr. Cobb with a phone and typically 68 minutes of talk
time each month. It is a form of wireless welfare that puts a
societal stamp on the central role played by the mobile device.
Mr. Cobb’s cellphone is a Motorola 175. “I feel so much safer
when I drive. If I get sick, I can call someone. If I break down, I
can call someone,” Mr. Cobb said. “It’s a necessity.”
The users are not the only ones receiving government assistance.
Telecommunications industry analysts said the program, while in its
infancy, could benefit mobile phone carriers, who face a steep
challenge of their own: most Americans already own a cellphone, so
the poor represent a last untapped market.
“The low hanging fruit is gone, and the wireless companies are
going after the nooks and crannies,” said Roger Entner, a wireless
industry analyst with Nielsen. “Oh, the poor: How can we sign them
up?”
Carriers can receive up to $10 a month in government subsidies,
sufficient to cover what amounts to about $3 in service, Mr. Entner
said.
Since November, the number of customers receiving free or
subsidized wireless service has doubled to 1.4 million, he said. To
be eligible for the program, known as Lifeline, a person must meet
federal low-income guidelines or qualify for one of a handful of
social service programs, including food stamps or Medicaid.
The opportunity has prompted interest from the nation’s biggest
carriers, including Sprint Nextel and AT&T. But at the
forefront is a much smaller company, Tracfone, a Florida provider
of prepaid mobile service that has become the face of the fledgling
subsidized cellphone.
Tracfone began providing its service, called SafeLink, in
Tennessee in August and now does so in 16 states, including New
York, North Carolina and Pennsylvania, and the District of
Columbia, according to its Web site. Each time it enters a market —
which generally requires state approval — it runs television ads
telling people how easy it is to get a free Motorola phone, like
Mr. Cobb’s.
The company says the economy makes the audience particularly
receptive. “We’ll read that more people are signing up for food
stamps and look at our numbers and see volume rising,” said Jose
Fuentes, director of government relations for Tracfone. “It’s not
scientific proof,” he added. “But we know times are tough.”
He declined to say how many subscribers have signed up. But he
said Tracfone, whose paid service has 10 million subscribers, sees
the Lifeline service as an opportunity to make some money but, more
pointedly, to eventually convert the subsidized customers into
paying ones if their fortunes turn around and they no longer
qualify for a free phone.
“It could make for a good business,” Mr. Fuentes said.
According to Nielsen, 90 percent of Americans have at least one
cellphone. That leaves 32 million, including the infirm, still up
for grabs. “And the race is on to get them,” Mr. Entner said.
He said the overwhelming majority of Americans with subsidized
wireless service receive it through Tracfone.
One of them is Leon Simmons, 52, of the Bronx, N.Y., who did
stints in the Navy, at the Post Office and as a security guard
before becoming disabled with emphysema. His wife, who works a
minimum wage job at a laundry, heard about the Tracfone service and
he got a phone in April.
The free phone is not, as it is for some others in the program,
their sole form of telecommunications. Out of the roughly $1,600
they make each month after taxes, they pay $159 for a landline
telephone, high-speed Internet and cable television. But the
cellphone, Mr. Simmons says, gives him the flexibility to tell his
wife or daughter his comings and goings or to stay in touch when he
is at the doctor.
According to the Federal Communications Commission, Lifeline
service was started in 1984 to ensure that everyone had telephone
service for emergencies. The Telecommunications Act of 1996 opened
competition to new wireline and wireless providers.
More recently, companies, particularly Tracfone, have started
pursuing the wireless opportunity. Still, most of the $800 million
in subsidies last year went for landline service even as more
Americans cut the cord in favor of exclusively using a mobile
phone.
The subsidy money comes from a tax applied to phone bills.
Carriers seeking eligibility for it apply to state utility
commissions, though several states have ceded their jurisdiction in
the matter to the F.C.C.
The issue has created controversy in some states over how and
even whether to subsidize wireless service. In California, for
example, the public utilities commission plans to debate on
Thursday a proposal to extend Lifeline services to wireless — a
matter backed by companies like AT&T and Sprint and
T-Mobile.
The Greenlining Coalition, a nonprofit advocacy group for
low-income residents, has lobbied the state to “move the California
Lifeline program into the 21st century,” according to public
documents provided for the hearing on Thursday.
But State Assemblyman Felipe Fuentes, who represents a district
in Los Angeles, says the California legislature should ask some
tough questions before moving ahead — particularly if people
contemplate making wireless their only form of communication.
Chiefly, he wants to know whether wireless service satisfies
crucial aspects needed in lifeline, like reliability in an
emergency.
“What if the phone isn’t charged, or junior doesn’t know how to
use it?” Mr. Fuentes asked.
Across the country, Mr. Simmons from the Bronx says he likes
being able to communicate when he is on the go. And he does not see
what all the fuss is about when it comes to cellphones.
“People walk around with their head stuck into these things, not
paying attention to what’s going on around them,” he said. Even
though he thinks these people look silly, he said, he is going to
use his cellphone.
Why not? he said. “It’s free.”
