More Free Cell Phones Needed for Low-Income Households in U.S. Says NMRC

The Federal Communications Commission's Lifeline Assistance program could deliver nearly $4 billion annually to eligible Americans, according to a study published today by the New Millennium Research Council (NMRC) commissioned by Tracfone's SafeLink service.

Low-income participants who receive free cell phones have improved their financial situation.  The report estimates that Americans with low-income could increase income by $3.70 if given free LifeLine subsidized cell phones. 

To learn more about SafeLink Wireless, including eligibility requirements for free cell phones for low-income households, please call 1-800-977-3768 or visit safelinkwireless.com.

Key findings from the Sullivan report include the following:

• About half of SafeLink users (49 percent) said the cell phone had "improved their financial situation by helping them find or keep work."  For those working or looking for work, the numbers were higher (63 percent); surprisingly, even the retired (39 percent) and disabled (38 percent) said the phone had helped improve their financial situation.   Significantly more African Americans (57 percent) than white Americans (43 percent) said the phone had improved their financial situation.
  
• The average amount of money earned in the last year by SafeLink users was $259, according to the survey results.   However, since a third of respondents have had their subsidized phones for less than six months, and there is a clear correlation between length of ownership and income gains, it is expected that over time that average is likely to exceed $300 (as it already does in several states).  In addition, the number of free minutes offered was initially 68, but has been increased in many states to 250; given the correlation between usage and income, this will also positively affect average earnings as the nascent Lifeline wireless program matures.
  
• Given the expected increase in eligible subscribers, based on the recent revamped numbers in poverty, and assuming the increased pay with increased usage and minutes, the actual potential benefits are more likely in the $5 billion range.
• In 10 of the 15 states currently without access to Lifeline-supported prepaid wireless, low-income individuals are missing out on an estimated $489.1 million in potential income: California ($307.6 million); Colorado ($40.1 million); Hawaii ($9.3 million); Montana ($13.1 million); Nebraska ($21.5 million); North Dakota ($10.4 million); Oklahoma ($60.7 million); South Dakota ($11.6 million); Vermont ($7.5 million); and Wyoming ($7.3 million).
• An estimated 30 percent of the annual $1.2 billion in Lifeline spending subsidies to low-income Americans is now allocated to wireless phones.  That means Lifeline's $360 million "investment" in information and communications technology (ICT) for the poor and a segment of the near poor generates a "return" of $388 million.

Lifeline Assistance is a joint federal program operated by the Federal Communications Commission and state public utility commissions that ensures telephone service is available and affordable for low-income subscribers within 135 percent of the federal poverty guidelines.

Wireless Lifeline support for prepaid wireless is now available to low-income Americans in 35 states, as well as the District of Columbia and Puerto Rico.  The 15 so-far non-participating states - which include California, Colorado, Hawaii, Montana, Nebraska, North Dakota, Oklahoma, South Dakota, Vermont and Wyoming - are missing out on a total of about $650 million in potential income for their poorest residents, according to the new study.

In 2008, recognizing the major national shift in phone usage away from landline and toward wireless, the FCC for the first time opened up the Lifeline Assistance program to prepaid mobile operators.   The FCC's same average $10 per month discount on service now applies to both wired and wireless phones

As the largest provider of free cell phones to Lifeline-eligible Americans, SafeLink Wireless currently operates in 31 states (plus Washington, D.C., and Puerto Rico) and has distributed more than 3 million subsidized cell phones.

Launched in 1999, the New Millennium Research Council is a Washington, D.C. think tank.  The work of NMRC focuses primarily on the fields of telecommunications and technology.  The contributors to NMRC reports develop workable, real-world solutions to the issues and challenges confronting policymakers. For more information, please visit http://www.thenmrc.org.

The Sullivan report is based on extensive survey data collected by Opinion Research Corporation (ORC) International, which polled 5,541 TracFone SafeLink Wireless customers in 22 states.  The new February 2011 analysis is a "bookend" to an earlier NMRC study by Sullivan on the economic benefits of cell phones for the roughly one-third of poor Americans without them.