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Tags: FCC | Lifeline

Feds 'Free' Phones Cost Taxpayers

Michael Shannon By Wednesday, 26 November 2014 02:30 PM EST Current | Bio | Archive

Wouldn’t you know big government leftists have found a way to combine the worst aspects of federal compassion — regulation from yesteryear and capitalist incentives — in a package that costs taxpayers $2.2 billion a year.

The program’s official name is Lifeline, run by the Federal Communications Commission. The new, improved goal is to give free cell phone service to low–income citizens. I say current because these missions have a tendency to creep. Right now Seattle is considering giving the homeless free Internet, and some eager beaver at the FCC is no doubt paying attention.

Although the program was formalized in the 90’s it’s based on bad precedent from another century. I wouldn’t be surprised if the beginning of the program didn’t date back to the Spanish American War, where some musty regulation originally guaranteed each rural resident a free Western Union death notification telegram.

Once AT&T monopolized telephone service early regulators required Ma Bell to provide rural residents with a land-line at greatly subsidized cost. This program was later modernized to give rural, low–income families access to cell phones so they could run their vehicles into the ditch while driving distracted — just like suburbanites.

Now the program is Obamaphones. In typical government fashion it overpays and under–verifies. If you’re wondering where the inspectors went that failed to find Saddam’s WMDs — they’re now in the FCC inspector general’s office.

The Washington Examiner reports the “profits to telecom companies from the free, government-provided phone service are so great that in Nebraska alone, 51 corporations, many of them who are not even traditional phone companies building infrastructure and attracting paying subscribers, fought for a piece of the pie.”

Instead these companies are traditional tax dollar leeches with a business plan built around lobbyists and extracting ever more money from Uncle Sam. The left views this as government stimulating job creation and it is in the same sense that motorists picking up bags of money that have fallen out of an armored car are volunteering for Adopt–a–Highway.

Because these companies are guaranteed a fee for each signup, volume, not neediness, is the determining factor. The companies use incentives to drive signups by paying salespeople a commission for each complete application.

CBS in Los Angeles reports, “The program exploded under President Barack Obama: 14 million American have the free phones, costing $2.2 billion in subsidies nationwide in 2013.” Curious about the program’s mechanics, the station sent an undercover team to investigate Obamaphone sales tactics in front of welfare offices, liquor stores and other gathering places.

To qualify legally an applicant must prove they’re already receiving some form of welfare or they meet the lack of income requirements. What the station found were “plenty of salespeople, many of whom work on commission, willing to offer advice on how to bend the rules.”

One suggested the reporter have a friend who already qualified sign up again and the salesman would issue the phone in the reporter’s name. Another said she would make up a Social Security number and waive any other requirements.

No wonder the Examiner found that in Maryland alone double the number of people have Obamaphones (645,000) than should be qualified based on income records. Maryland oversight is so myopic the program has had a 10,000 percent increase in the last three years.

The FCC claims it’s cracking down on fraud and abuse and 2 million phones have been silenced. Of course of those 2 million exactly no one has been prosecuted for fraud — so there is no penalty for trying again.

Now if you’re wondering why the government is paying people to sell something that’s free, you don’t know much about the federal government.

A sensible way to run the program, assuming it’s necessary in the first place, would be to have wireless companies bid for the right to provide Obamaphone service with distribution being handled by state DMV or food stamp offices.

Competitive bidding would keep the price down. DMV employees wouldn’t have any motivation to work faster than they already do. Which means another potential saving for taxpayers. Instead government experts set a price that’s so high an entire industry has sprung up to feed at the tax trough.

The temptation for us is to shrug and say who cares? Since Chinese loan money is funding the program. But that’s not true. You pay for the program out of your own pocket every month. On my cell phone bill there is a line item for “Fed Universal Service Charge” and on our family plan we pay $2.72 each month and $32.64 each year into a program — that’s a slush fund for tax leeches and fraudsters.

The question is when are taxpayers going to stop letting politicians spend tax money to feel good about themselves?

Michael R. Shannon is a commentator, researcher (for the League of American Voters), and an award-winning political and advertising consultant with nationwide and international experience. He is author of "Conservative Christian’s Guidebook for Living in Secular Times (Now with added humor!)." Read more of Michael Shannon's reports — Go Here Now.


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If you’re wondering why the government is paying people to sell something that’s free, you don’t know much about the federal government.
FCC, Lifeline
Wednesday, 26 November 2014 02:30 PM
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