Assembly Passes Bill to Expand Low-Income Telephone Lifeline Assistance

Background
Telephone Lifeline and Linkup assistance can provide meaningful reductions in the cost of telephone service for low-income persons. For example, the monthly bills of a low-income Verizon Lifeline customer are reduced by approximately $13.50. Linkup can reduce the Verizon charge for a premises visit to install phone service from approximately $91 to $5.

All states were required to provide Lifeline assistance in the federal Telecommunications Act of 1996. Under that statue, the FCC adopted regulations which establish minimum federal Lifeline and Linkup benefits and which give states incentives to supplement the federal. States are allowed to devise their own list of categories of eligible customers. The New York PSC oversees the state Lifeline and Linkup program. The PSC fostered creation of the Targeted Accessibility Fund of New York, Incorporated (TAF) in 1998 to administer the collection and distribution of the state portion of certain universal service programs, including Lifeline, emergency services E911, Public Interest Pay Phones, and the Relay System.

Eligibility for Lifeline and Linkup is based upon the customer's income or receipt of benefits in a list of programs that have an income test. For New York Verizon customers, the assistance programs that currently trigger eligibility for Lifeline and Linkup are:

• Supplemental Security Income (SSI)
• Home Energy Assistance Program (HEAP)
  
• Food Stamps
• Medicaid
• Veteran's Disability or Surviving Spouse Pension
• Family Assistance (TANF)
• Safety Net Assistance
  

PSC Inattention
In contrast to other states, the New York PSC has issued no official regulations defining Lifeline eligibility. Over the course of many years, the PSC has issued several orders regarding the Lifeline and Linkup programs and approved Lifeline and Linkup tariffs of the various telephone companies as they arose in rate cases. As a result, there are different Lifeline eligibility standards and different price reductions for telephone customers in New York state, depending on their telephone company. The Universal Service Administrative Company (USAC) has a web page where one can look up the Lifeline program details of each New York Telephone Company.,

The New York PSC issues no regular reports on universal service issues and Lifeline program enrollment.

New York Lifeline Enrollment Plunging
As a result of changes in the state public assistance laws and the absence of any adjustment of public assistance levels in the past eighteen years, many people are no longer eligible for assistance in programs such as TANF, which confer Lifeline eligibility. It appears that this -- coupled with other important factors -- contributes to the plunging enrollment in New York's Lifeline program. Low-income New York telephone customers are missing out on important Lifeline and Linkup benefits, as demonstrated by the chart below: [Click on Chart to enlarge]

At its peak in 1999, the Lifeline program assisted approximately 746,000 New York customers, not even half of the number of persons financially eligible then. In recent years, the number of Lifeline customers has been shrinking, to about 310,000 at the end of 2007. As a result of the shrinkage since 1999, we estimate that low income telephone customers in New York who once received Lifeline assistance are now paying $60,000,000 per year more than they would if Lifeline enrollment had not declined.

Other major factors affecting the enrollment downturn may be Verizon's refusal to provide Lifeline assistance to eligible customers who purchase their local telephone service as part of packages that also include long distance or other services, and the migration of customers to cable telephone service providers who do not now provide Lifeline rate reductions. See Verizon Re-Launches Automatic Enrollment for Lifeline. Also, some customers eligible for Lifeline may have migrated to certain wireless service providers, such as Verizon Wireless, who do not offer any Lifeline rate reduction. See Reduced Rate Wireless Lifeline Service Now Available in New York.

PULP estimates that less than 15% of the telephone customers in New York state who are financially eligible for Lifeline actually receive the benefit today .

Adding Eligibility Categories
One solution to reaching more low income households with assistance to make their telephone service affordable is to increase the eligibility-conferring categories that qualify a customer for the reduced rates. In a 2004 order, the FCC increased categorical eligibility for Lifeline assistance to include recipients of HUD Section 8 housing assistance and the National Free School Lunch Program.

The New York PSC, however, did not follow suit.

Legislative Action
The New York Assembly on May 14, 2008 passed a bill, A02533 designed to address, in part, the severe shrinkage in the number of customers receiving reduced price telephone service.The new bill would establish Lifeline and Linkup eligibility for customers who receive benefits in the following additional categories:

• National School Lunch Program
• New York State Earned Income Tax Credit
• Child Health Plus, Family Health Plus, or other similar health insurance programs
• Additional programs designated by the PSC
  

In an era of rising costs and stagnating incomes for lower income households, the New York PSC, apart from costly but ineffective advertising campaigns, has made no real progress toward making telephone service more affordable to customers eligible for, but not receiving Lifeline assistance. Indeed, the state is losing ground. New York state needs to reverse the downward trend in the number of customers receiving Lifeline assistance, and to establish a goal of providing the benefit of reduced Lifeline rates to all eligible customers. Improving the program will enable households to afford telephone service without hardship.