$1.5 Billion For Free Phones

“It’s easy to get your free government cell phone service and a free mobile phone,” declares a website that offers phones on behalf of six wireless providers. “Fill out the form… You should receive your phone in just a few days. You’ll never receive a bill and your minutes will replenish every month.”

Thanks to Congress and the Federal Communications Commission (FCC), some Americans are entitled to free or reduced-price cell phone service, and the program is ballooning out of control. What began as an effort in the 1930s to ensure all Americans had access to telecommunications service has morphed into a massive entitlement.

Funding comes through the “universal service charge” tacked on to the phone bills of most Americans. As more people sign up for the subsidized phones, the charge increases, and for some cell phone users amounts to over $10 per year. Americans are now paying $1.5 billion annually for the subsidized cell phone program, called Lifeline. Just in the last year, enrollment grew 43 percent to 16.5 million participants.

With providers incentivized to maximize the number of phones they hand out, significant fraud and abuse have plagued the program in recent years. One of the most prominent flaws in the program has been the high number of people with more than one free cellphone. An audit of 3.6 million Lifeline subscribers discovered 269,000 duplicates — seven percent of the subscribers signed up for service with more than one carrier. In other instances, households had multiple people each with free phones. Some customers may have both subsidized landline service and cell phone service.