A Lifeline to Avoid Digital Divide

BBSJ thanks Hon. Deborah Taylor Tate for this contribution.

We celebrate National Lifeline Awareness Week every September, but few realize just how important it is. Lifeline refers to the modern “Lifeline” and “Linkup” programs created in 1996, but in fact, for over twenty-five years, our nation has insured that low-income Americans have access to the communications system that connects the entire country, and now increasingly the entire world. In our present day Telecommunications Act, Congress directed that “quality services be available at just, reasonable, and affordable rates” for all citizens. Since 1996, services and devices supported by Lifeline and Linkup have grown more varied and sophisticated as technology evolved, just as Congress intended.

Why Wireless is Important

We all want and need wireless services in order to navigate in today’s world, regardless of our economic status. It is a testament to Congressional foresight that both technology and thus assistance would be “evolving” and technology-neutral. What this means today is that this federal program is encompassing wireless services for low-income Americans, possibly the best tool available to combat a potential communications divide.

Wireless technology is now ubiquitous: 90 percent of Americans have a mobile device and 99.6 percent of Americans live and work where covered by one or more mobile providers. Wireline, on the other hand, has been declining; over a quarter of homes have “cut the cord,” relying solely on wireless. In fact, in 2009, wireless households exceeded wireline. Portable, ubiquitous, and certainly more cost efficient, there are literally hundreds of devices and service plans available, along with features such as texting, phone books, and voicemail. This dramatic rise is the result of millions of Americans — especially those on limited budgets — making a market decision in a highly competitive marketplace.

More recently, wireless providers have begun offering more prepaid plans, to the great benefit of low-income Americans. Prepaid plans provide a clear and effective means to keep communication costs within the family budget by paying for only the exact number of minutes necessary each month. Prepaid plans are often available to people who otherwise face credit history challenges, ensuring connectivity for critical needs such as providing security in emergency situations, a “lifeline” for the homeless, and of utmost importance: employment. By prepaying, low-income customers do not have to pay for more services than needed, or worry about “bill shock” or enormous early termination fees or long-term, multi-year contracts. Two out of three new wireless subscribers choose prepaid. A study in Florida shows that prepaid service to low income households doubled in just three years.

With minorities having a higher wireless penetration than the overall population, the availability of Lifeline and Linkup is particularly important in minority populations, which also have a disproportionately higher poverty rate: 23.2 percent for Latinos and 24.7 percent for African-Americans (compared to 13.2 percent overall).

Much-Needed Reform

Certainly, the Universal Service program, the bulk of which supports telephone providers in rural and other “high cost” areas, needs reform. However, Lifeline and Linkup are directly helping the poorest Americans, rather than funding inefficient, older technologies. Moreover, this program is underutilized at a time when many Americans could use help the most, with only 32 percent of the eligible households participating. Why? The FCC attributes this to state restrictions on wireless providers participating in the program, and the need for more consumer awareness.

Rather than denying access to wireless communications services to those Americans most in need — especially in today’s economy — the FCC, in concert with the industry, needs to establish a recognizable set of best practices. First, the FCC, states, and prepaid providers need to coordinate improved outreach efforts to ensure that low-income Americans do indeed reap the benefits that Congress intended. Second, prepaid cards should allow for rollover minutes into the next month. Third, companies should be encouraged to waive the balance of their activations fees not covered by Linkup funding, which would allow benefits such as free handsets reducing cost barriers further. Fourth, basic service packages should provide at least 250 minutes of free service (most already do). Fifth, the FCC should create a national certification and verification database to help eliminate fraud, waste and abuse by de-enrolling subscribers who do not use the handset for 60 days. Finally, states through their public service commissions or other human services agencies could assist with marketing wireless services, providing streamlined application and eligibility validation through existing eligibility processes.

Low-income consumers were among the first to recognize how well prepaid wireless meets their daily communications needs from mobility to security to budget controls, all of which were not being offered by traditional communications providers. Lifeline and Linkup can help more Americans get jobs and stay employed, better manage their budgets, and care for their families.

A Commitment to Change

Prepaid wireless providers have demonstrated a commitment to finally providing economical communications services along with consumer value while encouraging the adoption of innovative new services by our most needy citizens. Prepaid wireless will also likely be a very positive force in deploying broadband over wireless services in the future. Lifeline and Linkup may be the last best hope to truly connect all Americans in the digital age and insure no one is left on the other side of the digital divide.

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  Deborah Taylor Tate, former FCC Commissioner, served as Federal Chairman of the Joint Universal Service Board as well as the Joint Board on Advanced Services and remains active in the reform of the USF program, serves on the Board of the Minority Media Telecommunications Council, is an Adjunct Scholar at the Free State Foundation and Executive in Residence at Lipscomb University.

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