Government sponsored programs always spin out of control because there is no incentive for efficiency.

Consumer Groups Fight $5 ‘Obama Phone’ Fee In Georgia

Atlanta (CBS ATLANTA) – Advocacy groups are fighting a Georgia policy that would charge the state’s nearly 800,000 users of taxpayer-funded cellphone service a $5 per month fee.

The Federal Communication Commission program, “Lifeline,” subsidizes the wireless service and allows carriers to dispense phones for no cost. Recipients of the free service are considered eligible if they do not earn more than 135 percent of the federal poverty level or if they participate in at least one other federal assistance program such as Medicaid, Temporary Assistance to Needy Families (TANF) or public housing.

Georgia alone has nearly 800,000 residents which use the service, but a new policy aimed at cracking down at fraud and wasteful spending forces companies to either increase free airtime to 500 hours or charge subscribers the $5 fee, according to the U.S. News & World Report.

But some advocacy groups say the new policy –which would go into effect on Jan. 31 of next year – is an attack on the poor.

“This represents one of the most direct attacks on low-income consumers in recent memory,” said a statement released Thursday by Consumer Action, the League of United Latin American Citizens, the Community Action Partnership, and the National Consumers League and the National Grange.

“There is no evidence of any kind that suggests imposing a monthly fee on wireless Lifeline users will result in reduced fraud or less abuse of the program,” said the groups to U.S. News & World Report. “[N]o other state should follow Georgia in attacking the pocketbooks of low-income Americans in this misguided fashion.”

According to the FCC, the Lifeline program was started in 1985 to provide a discount on phone service “for qualifying low-income consumers to ensure that all Americans have the opportunities and security that phone service brings, including being able to connect to jobs, family and emergency services.”

Contract-free carriers such as Carlos Slim’s Tracfone Wireless have received $2.2 billion in subsidies to provide phones for poor Americans, Bloomberg reports. Many wireless carriers have added prepaid subscribers to offset the costs of the federal program.

The non-profit Universal Service Administrative Company which administers the program reports that the percentage of low-income households with phone service increased from 80 percent in 1985 to 92 percent last year.

A new Centers for Disease Control and Prevention report shows that low-income Americans continue to lead the switch to abandon landlines and use only wireless phones.

The CDC survey shows that nearly 55 percent of American adults with income below the poverty line use only mobile phones in their homes – about a 3 percent increase from last year. That compares with only 35 percent of Americans whose income is more than double the poverty line.

The U.S. government pays companies $9.25 a month per customer to offer phone service to the poor.

Public Service Commissioner H. Doug Everett, a Republican who backed the reform, wants Lifeline users — many of whom currently pay nothing for cell service— to pay a $5 monthly fee for their service, essentially a 54 percent tax on their subsidy. Companies that don’t charge the fee would have to offer at least 500 minutes of calling time, potentially making it unprofitable to stay in the market.

In January 2012, the FCC set up several reforms to eliminate waste and fraud, including a national eligibility database and a savings target of $2 billion over three years.

The Lifeline program received national attention in 2012 when a viral video of a woman campaigning for President Barack Obama in Ohio enthusiastically declared that “low minorities” received free “Obama phones” from the president.