Friday, June 04, 2010

The Topsy Turvy World of Lifeline Enrollment in New York

As PULP has reported on numerous times in recent years, telephone Lifeline enrollment for reduced price telephone Lifeline service in New York State with the landline providers has dropped by more than 50% since its peak in 1996 . However, according to the latest postings from the Universal Service Administrative Company ("USAC"), the FCC's designated administrator of the federal Universal Service Funds, while Verizon's Lifeline enrollment totals have been on a roller coaster for the past year, TracFone's numbers are reaching ever higher.

Among its many quarterly reports to the FCC, USAC includes a table (Table LI01) showing the amount of money paid to Lifeline providers in a given quarter. These figures can be divided by three to calculate the monthly amount and then divided by 10 to determine the number of customers served (the federal reimbursement rate for New York State is $10 a month per Lifeline customer). Thus, a seven million dollar figure for a particular quarter would translate to approximately 233,333 Lifeline customers.

For the first two quarters of 2009, USAC reported that Verizon's Lifeline enrollment grew from nearly 235,000 to about 239,000, while TracFone did not have any Lifeline customers to report. Then, in the third quarter of 2009, Verizon counted about 246,000 Lifeline customers and TracFone began with 21,414. Through the current quarter (second quarter of 2010), Verizon has gone from 255,000 to 269,000 and back to 240,500. Meanwhile, TracFone's subscribership exploded: 181,000 to 329,000 to 403,000 during the same time period. According to USAC's projections, the third quarter of this year will yield nearly 236,000 Verizon Lifeline customers and over 399,000 TracFone Lifeline customers. That's right: since the beginning of the year, TracFone has been the largest Lifeline provider in New York and has gone from 21,414 Lifeline customers to 399,000, which translates to nearly $4 million a month in revenue just from New York. They are followed by Verizon, and then much further back, Virgin Mobile (operating as Assurance Wireless), Frontier Telephone of Rochester, Citizens Telecommunications, XChange Telecom, and AT&T.

While TracFone's success is unprecedented, it comes at a steep price to its customers. The company does offer a free handset and free minutes, but only 68 minutes a month for both incoming and outgoing calls. Once a customer exceeds that amount, they will need to purchase additional minutes at a premium. Meanwhile, Virgin Mobile offers a free handset and 200 minutes a month - all with the same $10 monthly reimbursement from USAC that TracFone receives.

These results reveal incredible growth in wireless Lifeline service and some variability in Verizon's Lifeline customer count. The state's Office of Temporary and Disability Assistance reported in March (at Table 16) that there are over 1.4 million Food Stamps households in New York (one of the primary eligibility criteria for Lifeline) and we now have a little over 700,000 Lifeline subscribers across the state, including all landline and wireless Lifeline providers. While this is certainly a great improvement, it is a mixed blessing. Virtually all of the subscribership growth is in an area outside the state Public Service Commission's ("PSC") current regulation of terms and conditions, meaning that no enforceable service quality or consumer protections apply to protect either TracFone or Virgin Mobile's customers. This giant step forward may end up leaving thousands of our most at-risk people behind. When will the PSC act to boost Lifeline enrollment to include more persons living in poverty or take the step to exert jurisdiction over terms and conditions of wireless service, which can be accomplished under state law by conducting a hearing and deciding that doing so is in the public interest? When more Lifeline customers are wireless customers than landline customers, the time for this hearing may have finally arrived.

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