Teletruth’s Previous examination of Lifeline Customers from Survey Data.

 

IN our surveys of New York, New Jersey, Pennsylvania and Califormia, where we not only collected the customers actual phone bills but also did follow up phone interviews, it was clear that most on Lifeline were still having problems with the cost of service.

 

The primary reason is simple --- while some of the costs of service in these states are discounted, when the total bill is examined, it is clear that if the customer uses the phones or has any features, they can still have high phone bills. This is because most services, from Call Waiting to inside wire maintenance or even the cost of making a call, are all at retail rates.

 

While each state is different, the results were the same – as prices increase it harms low income families.

 

From Phone Bill Independence Report, 2003:  (New York and New Jersey)

 

33)       Lifeline Services Are Still Not “Cheap”

 

Lifeline is a service that was supposed to be designed to help those who need assistance pay for their phone service. See: The Nationwide Support information, part of the Universal Service Fund, website: http://www.lifelinesupport.org/li/lls/

 

“Consumer qualifications for participation in the Low Income Program vary by state. Consumers in states that provide state support must meet the criteria established by the state commission. State commissions are required to establish narrowly targeted eligibility criteria based on income or factors directly related to income. In states that do not provide state support, consumers may be eligible for Lifeline if they currently participate in one or more of the following programs:

 

  • Low-Income Home Energy Assistance Program (LIHEAP) or any official Home Energy Assistance Program
  • Federal Public Housing Assistance or Section 8
  • Medicaid
  • Food Stamps
  • Supplemental Security Income (SSI)”

 

Once again, while the customer may not be paying for some of the local services used, the telephone companies are not doing this out of the goodness of their heart but are having the original costs reimbursed.

 

“Lifeline reimburses telephone companies for discounting consumers' monthly phone bills. Lifeline support enables low-income consumers to save at least $5.25 per month and up to $10.00 per month on their telephone bills. Consumers may also qualify for an additional $3.50 per month in matching support from their state. Moreover, low-income consumers living on reservations may qualify for monthly discounts ranging from $30.25 to $35.00.”

 

In our survey, we found that the Lifeline is only $1 and the customers are excluded from having to pay the FCC Line Charge or FUSF charges.  Ironically, because the customers actually use the telephone, the phone bill can be $40-$50 or more a month.  The discounts do not apply to any of the Calling Features or the costs associated with actually using the phone to make calls.

 

In the example below, this customer’s local phone calls cost $27.45 alone, while two calling features added $13.29 to the bill.  This does not include related taxes and surcharges.  A study in the 1990’s found that the largest reason customers dropped off of Lifeline was because when they actually used the telephone to make calls, the charges still came to more than they had to spend on telephone service.

 
Exhibit 20
New York City LifeLine Customer Bill, May 2003

 

 

Lifeline

 $ 1.00

Local Call

 $27.45

Surcharges

 $ 2.53

Calling Waiting

 $ 5.30

Caller ID

 $ 7.99

Fed.

 $ 1.33

State

 $ 3.65

Total

 $49.25

 

To our knowledge, the FCC’s own data on this topic has never questioned the actual charges Lifeline customers pay.

 

Secondly, as we point out elsewhere, the phone companies’ profits in many states are no longer examined for the calling features, and though it cost less than one cent to offer Call Waiting, this customer is paying $5.30.

 

One would think that a different type of rate — cost plus some profit — would be a sufficient return for products such as this being applied to Lifeline customers.  We also bring this up in future sections dealing with the USF fund because while funded by customers through additional fees on phone bills, the phone company still gets to charge schools and libraries the full business rates, which have large profit margins.

 

California Survey from 2004:

 

59)       Lifeline Service Does Not Include Most Services.

 

Lifeline does NOT include most services customers use. This includes “calling features”, such as Caller ID and Call Waiting, inside wiring (wirepro), directory assistance, or even making “Zone 3”, toll or long distance calls.

 

It’s like buying a car, but the hubcaps, air conditioning and windshield wipers are extra.

 

60)       At Least 90% of Customers Have One or More Additional Services, or 

            Make Calls Not Included with the “Lifeline” Service Discounts.

 

While Lifeline sets up a situation where some items are free, others are charged a separate fee.  In San Diego, 90% of Lifeline customers had some charge not included with the service or not discounted. This includes calling features but also paying for calls outside the calling area, such as Zone 3 or Toll calls.

 

  • 54% had some calling feature or service.
  • 39% had inside wiring (wirepro).
  • 46% had at least two features, usually Call Waiting or Caller ID.

 

ifeline Customers Use More Services than the Average Customer.

 

We find it odd that Lifeline customers had a higher percentage of calling features, even though they had to pay extra for these services. 54% of Lifeline customers had some calling feature or inside wiring, as compared to 42% of the regular SBC Local service users. While 39% of Lifeline customers had inside wire maintenance, only 31% of regular customers had this feature.

 

62)        The Average Lifeline Customer Falls into Two Groups.

 

  • Low use group that primarily uses only the basic local service (with some calls) — around $4 - $5; representing about 40% of users.
  • Higher use group, with multiple features, including inside wiring, but also makes calls— around $16 a month; representing about 60% of the users.

 

63)       Lifeline Is Not Cheap for Customers Who Use the Phone.

 

 With an average bill of $16 a month after the discounts are applied, Lifeline can be expensive because every charge is at retail prices. For example, Caller ID is $6.17 and Call Waiting is $3.23. (We note that studies in various states have shown that Call Waiting costs less than a penny to provide.)