The Obama Phone?
Q: Has the Obama administration started a program to use "taxpayer money" to give free cell phones to welfare recipients?
A: No. Low-income households have been eligible for discounted telephone service for more than a decade. But the program is funded by telecom companies, not by taxes, and the president has nothing to do with it.
Is this e-mail true?
I had a former employee call me earlier today inquiring about a job, and at the end of the conversation he gave me his phone number. I asked the former employee if this was a new cell phone number and he told me yes this was his "Obama phone."
Welfare recipients, and others, can receive a free cell phone, but the program is not funded by the government or taxpayer money, as the e-mail alleges. And it’s hardly new.
How It Works
SafeLink Wireless, the program mentioned in the e-mail, does indeed offer a cell phone, about one hour’s worth of calling time per month, and other wireless services like voice mail to eligible low-income households. Applicants have to apply and prove that they are either receiving certain types of government benefits, such as Medicaid, or have household incomes at or below 135 percent of the poverty line. Using 2009 poverty guidelines, that’s $14,620 for an individual and a little under $30,000 for a family of four, with slightly higher amounts for Alaska and Hawaii.
SafeLink is run by a subsidiary of América Móvil, the world’s fourth largest wireless company in terms of subscribers, but it is not paid for directly by the company. Nor is it paid for with "tax payer money," as the e-mail claims. Rather, it is funded through the Universal Service Fund, which is administered by the Universal Service Administrative Company, an independent, not-for-profit corporation set up by the Federal Communications Commission. The USF is sustained by contributions from telecommunications companies such as "long distance companies, local telephone companies, wireless telephone companies, paging companies, and payphone providers." The companies often charge customers to fund their contributions in the form of a universal service fee you might see on your monthly phone bill. The fund is then parceled out to companies, such as América Móvil, that create programs, such as SafeLink, to provide telecommunications service to rural areas and low-income households.
The SafeLink program has actually been offering cell phones to low-income households in some states since 2008, not beginning "earlier this year," as the e-mail claims. But the program is rooted in a deeper history.
When phone lines were first laid out in the late 19th century, they were not always inter-operable. That is to say the phone service created by one company to serve one town may not have been compatible with the phone service of another company serving a different town nearby. The telecom companies themselves saw the folly in this arrangement, and so in 1913, AT&T committed itself to resolving interconnection problems as part of the "Kingsbury Commitment."
That common goal of universal service became a goal of universal access to service when Congress passed The Telecommunications Act of 1934. The act created the FCC and also included in its preamble a promise "to make available, so far as possible, to all the people of the United States, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.” There was a fear, expressed by telecom companies themselves, that market forces alone might encourage companies to pass on providing service to hard-to-reach places. This would both hurt the people who wouldn’t have service as well as existing customers who wouldn’t be able to reach them. So the new FCC was tasked with promoting this principle of "universal service."
This informal practice was codified when the Universal Service Administrative Company (USAC) was created as part of the 1996 Telecommunications Act to "ensure all Americans, including low-income consumers and those who live in rural, insular, high cost areas, shall have affordable service and [to] help to connect eligible schools, libraries, and rural health care providers to the global telecommunications network." The USAC includes four programs to serve rural areas, high cost areas, rural health care providers, and schools and libraries. Since 1997, USAC has provided discounted land line service to low-income individuals. (A more limited program to offer assistance to low-income individuals was created a decade earlier; the telecommunications act expanded and formalized it.) According to Eric Iversen, USAC director of external relations, the Universal Service Fund more recently began funding programs that provide wireless service, such as the pre-paid cellular SafeLink program mentioned in the chain e-mail.
The president has no direct impact on the program, and one could hardly call these devices "Obama Phones," as the e-mail author does. This specific program, SafeLink, started under President George Bush, with grants from an independent company created under President Bill Clinton, which was a legacy of an act passed under President Franklin Roosevelt, which was influenced by an agreement reached between telecommunications companies and the administration of President Woodrow Wilson.
Wilson Phones, anyone?
– Justin Bank
Update, Nov. 5: A public relations representative from SafeLink Wireless contacted us to note that the América Móvil subsidiary that operates the SafeLink program and receives funds from the USF is TracFone Wireless, based in Miami, Fla.
Mueller, Milton. Universal Service: Competition, Interconnection, and Monopoly in the Making of the American Telephone System. Cambridge: The MIT Press, 1997.
Press Release, "Research and Markets: America Movil, S.A. de C.V. – Financial and Strategic Analysis Review," Business Wire. 24 Mar 2009.
Government Printing Office, "Federal Register: January 23, 2009 (Volume 74, Number 14)] [Notices] [Page 4199-4201]."