The latest FCC telephone Lifeline subscribership numbers are out, and the news is not good. For the first time since 1989, the number of low-income Lifeline customers in New York has dropped below 300,000. As of December 2008, the largest local exchange carriers in the state (Verizon-NY, Frontier Telephone of Rochester, and Citizens Communications) served a total of 290,283 Lifeline customers. This represents a drop of approximately 20,000 since December 2007 and over 60,000 since 2006. By way of comparison, Lifeline subscribership in New York peaked at 786,657 in 1996.
What is the reason for this loss? It certainly can not be a lack of low-income households, as the state Office of Temporary and Disability Assistance (“OTDA”) recently announced that a record number of families throughout New York State were served through the Home Energy Assistance Program (“HEAP”) this past winter:
OTDA Commissioner David A. Hansell said that the total number of HEAP benefits issued during the 2008-09 HEAP season, which officially concluded on May 15, grew by one-third over the previous year to nearly 1.5 million, bringing more than $400 million to New York families. That total, already a record high, will grow as applications submitted in the final week of the HEAP season are still being processed.So, the number of New York households eligible for Lifeline discount telephone service is surging, yet provision of the benefit intended by Congress and the FCC to help them afford phone service without hardship is falling. For another example, a record number 1.2 million New York households now receive Supplemental Nutrition Assistance Program (SNAP) benefits (formerly Food Stamps), as of March 2009, according to the caseload statistics of New York Office of Temporary and Disability Assistance.
Food Stamps and HEAP are only two of several alternative criteria used under New York State Public Service Commission (“PSC”) standards for Lifeline eligibility. Telephone customers are eligible for Lifeline assistance if they also receive benefits in any of the following programs:
- Safety Net Assistance
- Supplemental Security Income ("SSI")
- Temporary Assistance for Needy Families ("TANF")
- Veterans Disability Pension
- Veterans Surviving Spouse Pension
The New York PSC has not included other assistance categories permitted by the FCC (which include Section 8 housing assistance and families with children eligible for the federal school lunch program). This would further broaden the pool of eligible customers. Also, New York could expand eligibility beyond the list of federal programs is a state matching program through the Targeted Accessibility Fund (TAF).
With the ranks of the unemployed swelling and a growing number of families participating in need-based assistance programs – many for the first time – it is inexcusable that Lifeline subscribership continues to drop in New York. This is not an academic exercise – Lifeline means cash remains a little while longer in the pockets of low-income participants, available to be spent in the local economy on other needs. Not only is there is a reduction in the cost of the monthly service (ranging from charges of $1 a month for Basic Lifeline to about $15 a month for Flat Rate Lifeline), some taxes and surcharges that other telephone customers must pay are inapplicable, including the monthly $6.50 subscriber line charge. This results in about $20 in savings every month, which can be applied to other bills, medicine, rent, or food. For low-income families living from check to check, and often running out of funds for food and other needs before the end of the month, this can be a significant amount.
If all of New York's HEAP households received Lifeline assistance to which they are entitled, their purchasing power would increase by more than than $280 million. Instead, universal service surcharges collected from New Yorkers under FCC orders exceed the benefits received in New York by approximately $200 million per year. See All NY Phone Customers Lose Big $$ Due to PSC Lifeline Policies.
PULP attributes much of the responsibility for New York’s backsliding on Lifeline enrollment to the PSC's laissez faire approach to regulation and inaction on affordability of utility service. In addition, while the landline telephone companies can always do more to facilitate fuller Lifeline enrollment, their overall subscribership ranks are shrinking. Last month, the PSC found in a Verizon service quality order that the company is losing about 63,700 access lines a month in New York alone. Verizon’s total subscribership (as of December 2008) stood at 5.9 million, a drop from over 11 million as recently as 2002. Other local exchange carriers around the state are seeing similar, but not as stark, drops in recent years.
Wireless companies are offering Lifeline discounts today in New York, including Verizon Wireless, Sprint/Nextel, and TracFone, but these new Lifeline providers do not have enough Lifeline customers yet to make an impact on the totals. That said, the latest figures from the Universal Service Administrative Company – the entity charged with managing the Universal Service Fund (“USF”) – indicate that TracFone is anticipated to be the second largest recipient of low income support in New York, after Verizon. Since TracFone’s Lifeline customer base is proprietary, there is no way to know exactly how many Lifeline subscribers they have enrolled, but simple math (the total amount received divided by the $10 per month federal reimbursement from USAC) indicates the company will have over 21,000 Lifeline customers in New York during the third quarter 2009. While the time will come when the wireless Lifeline offerings will become major players, we do not anticipate that happening in the next year or two, primarily because, with the possible exception of TracFone, they do not significantly promote the discount.
On top of that, the largest competitive telephone service providers in the state – the cable companies – currently do not offer Lifeline. PULP believes that the cable providers should contribute to the state Targeted Accessibility Fund. See The Time Is Now - New York Should Begin Requiring VoIP Providers to Support State Universal Service. Cable providers currently are required by the FCC to contribute to the federal USF – which provides support for Lifeline – and begin to offer Lifeline themselves.
These number do not lie – New York’s Lifeline subscribership has plummeted in recent years and far too many low-income households are paying more for the telephone service than necessary. Much more can be done to ensure that all eligible customers know about Lifeline and can easily participate. Lifeline subscribership numbers are stable or up in other states, such as Texas, so what’s wrong in New York, whose customers and telephone companies are sending universal service surcharge funds to the Universal Service Administrative Company in Washington exceed by hundreds of millions of dollars the funds received.
Update July 7, 2009
We have learned that the latest available data indicate that there were 309,000 customers receiving telephone Lifeline assistance in 2008, not 300,000. The difference is due to smaller companies that were not included in the 300,000 count. Nevertheless, the falloff of enrollment since 1996, when it reached 757,000, is remarkable, and is reflective of the lack of attention given by the Commission to this issue. See PULP's Chart of Lifeline Enrollment, 1988 - 2007.