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State may reduce internet and cell phone cuts for low-income Californians

By Lil Kalish | CalMatters

During the pandemic, California has taken major steps to boost cellphone and Internet access to vulnerable communities across the state, especially to low-income families.

In July 2021, Governor Gavin Newsom signed off on a statewide $6 billion plan to expand high-speed internet infrastructure in rural and other resource-strapped areas.

From May 2021 through March of this year, the state allowed low-income families to take advantage of discounts of up to $75 per month from state and federal support programs, to purchase Internet and mobile phone services. Eligible families can “stack” benefits from three programs, two federal and one state, to reap those savings.

This month, state regulators are considering cutting back on some of their savings.

The California Public Utilities Commission is expected to vote on a new rule that would limit how much carriers can earn from the state’s Lifeline program, which provides discounts to low-income families for home and cell phone services.

Under the new law, low-income California families who qualify for federal assistance to pay for phone service and Internet access will lose some or all of the California Lifeline monthly deductions. The result: Instead of being able to stack three discounts, most California Lifeline users will be limited to two, for a total of $39.25 in discounts per month.

The companies that serve Lifeline and some of its customers oppose the change, arguing that it will cost low-income consumers money and limit the cellular and internet services they can buy.

The result of the proposal is “harmful, elitist, discriminatory, and severely harmful to low-income consumers in California,” six California Lifeline providers and the National Lifeline Association wrote to the committee recently.

Unexpected gains for wireless communications

About 1.7 million Californians are enrolled in the state’s Lifeline Program, an offshoot of the federal Lifeline Program. Commission staff expected that the proposed change could lead to more funds being made available to roll out services to more low-income residents.

State officials have also argued that the two federal discounts are sufficient to meet most consumer needs and in many cases they pay for excess and unused data capacity. Commission staff wrote that accumulating three subsidies “would lead to windfall for wireless service providers and constitute waste, fraud and abuse.”

Most Californians who own a phone pay for these benefits via a 4.75% fee on their monthly bill.

The nationwide phone surcharge funds emergency services like 911 and the so-called Universal Service Fund, which keeps the federal Lifeline program in place. The federal government created the Lifeline Benefit in 1984 to extend telephone service to the poorest Americans. Now it pays providers $9.25 a month to help fund phone and mobile services for families with incomes below 135% of the federal poverty line — or less than $37,463 for a family of four — and for people receiving public assistance.

During the pandemic, in May 2021, the federal government also created a $50 per month emergency broadband benefit to help keep families online as schools close, people work from home and many others lose their jobs. In late 2021, the Infrastructure and Jobs Act of Congress replaced that emergency benefit with what’s now known as the Affordable Calling Plan, which offers a $30 per month discount instead of $50.

Meanwhile, California continued its Lifeline program — one of three states to do so — with a deduction of $16.23 per month for low-income families or those receiving public assistance. A family of four earning $40,600 or less qualifies, for example.

“Other expenses”

At the height of the pandemic, Californians could stack the three discounts to purchase the service from Lifeline providers, but that expired in March.

Now, at best, consumers can apply for one life line plan and one discount to an affordable calling plan per household. The committee is considering making this limit permanent.

Commissioner Genevieve Shiroma argued that the combination of the three programs provides people with more data than the minimum required by law.

The proposal states that “California’s lifeline benefits should be designed to ensure that taxpayer funds are used wisely and in a financially sound manner.” Shiroma staff said she was not available to answer questions about the proposal.

At least 30 members of the public have written to the committee opposing changes to the deductions and defending their use of the data.

Christina Moore, a Lifeline user in Los Angeles, appealed to the committee.

She wrote, “I use my phone to look for work…I use it to talk to my doctor about my condition…This phone has been a blessing from the Lord for me especially in the event of an epidemic.” “Please don’t cut out our benefits and please allow us to use the maximum number of minutes and benefits from all levels of government!”

Kristen Morris, of Mission Viejo, is worried about losing options to her family.

“How CA is finding new ways that make it difficult for consumers to stay connected,” she wrote. “My kids need phones and tablets to keep studying and complete their homework. By limiting service plans available to low-income people – you are making the problem worse for us, not better. This has been so important to my family – please find a way to give us more and better service, not less!” With all the increased costs, this is just another expense that we cannot afford.”

“not present”

Todd Snyder of San Francisco said it would be unfair to restrict internet options to low-income Californians.

“This proposed decision will exacerbate inequality and widen the digital divide for low-income Californians struggling to compete in today’s rapidly changing digital economy,” he wrote.

Some consumer advocacy groups have taken the opposite position, supporting the commission’s plan. They said that some Lifeline providers in California were charging high monthly fees for data plans that varied widely in quality and services, and consumers didn’t always get what they paid for.

Ashley Salas, an attorney for consumer advocacy group The Utility Reform Network, based in San Francisco.

The Federal Communications Commission and the California Public Utilities Commission set minimum service standards for lifeline plans. They currently require unlimited text and text calls and 6 GB of data per month.

The 6GB plan allows you to surf the Internet for three days, stream 1,200 songs, or watch 12 hours of standard videos, according to Reviews, a Paris-based product review website. The average American smartphone user consumed 11 gigabytes or more of data per month in 2020, but that is expected to rise with the spread of 5G, according to Ericsson, the Swedish telecommunications giant.

Some opponents of the commission’s plan said today’s Zoom meetings, online courses, and telemedicine sessions already require more than 6GB per month.

State officials responded that most Lifeline users do not use all of their data and that the industry has failed to prove otherwise.

accurate opinions

Many low-income people need more data and that’s why not many sign up for Lifeline, said Nathan Johnson, CEO of TruConnect, the Los Angeles-based wireless company that offers Lifeline.

A 2019 Office of Legislative Analyst report said that only 40% of eligible California families enroll on Lifeline. The report put forward several reasons: Families may know nothing about the program, may prefer non-Lifeline or carrier plans, or they may have difficulty with the program.


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