Public Permanently Shrink Internet and Cell Phone Purchases for Low-Income Californians

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

In July 2021, Gov. Gavin Newsom signed into law a $6 billion state plan to expand high-speed internet infrastructure in rural and other underserved areas.

And from May 2021 until March of this year, the state allowed low-income families to get $75 a month in rebates from state and federal aid programs to buy internet and cell phone service. Families could simply “stack” subsidies from three programs, two federal and one state, to capture those savings.

This month, state regulators are cutting some savings.

California’s Public Utilities Commission is expected to vote on a new rule that would limit how much telecommunications companies could make from the state’s Lifeline program, which provides discounts to low-income households for home phone and cell service.

Under the new rule, low-income California families who get federal help to pay for phone service and internet access would lose some or all of their monthly California Lifeline rebates. Results: Instead of being able to stack three discounts, most California Lifeline users are limited to two, for a total of up to $39.25 in discounts a month.

Companies that serve lifeline customers, and some of their customers, are fighting the change, which they argue will cost low-income consumers money and limit what cell and internet services they can buy.

The resulting bill is “perverse, elitist, discriminatory and deeply harmful to California’s low-income consumers,” six California Lifeline providers and the National Lifeline Association recently wrote to the commission.

‘falling to the wireless’

Some 1.7 million California residents are enrolled in the state’s Lifeline program, which is an offshoot of the federal Lifeline program. The commission’s staff said the proposed change would make more money available to provide services to low-income residents.

Public officials have also argued that the two federal discounts are sufficient to satisfy most consumer needs and, in many cases, such as premiums, unused data capacity. Placing three subsidies, the representative of the commission wrote, “it will fire on the obsolete wireless providers and establish waste, fraud and abuse.”

Most Californians who have a phone pay for these services through a 4.75% charge on their monthly bill.

The National Telephone Fund surcharges emergency services like 911 and what’s called the Universal Service Fund, which floats the federal Lifeline program. The federal government established its Lifeline Fund in 1984 to extend telephone service to poor Americans. Now the provider pays the company $9.25 a month to provide phone and cell service for families with incomes below 135% of the federal poverty line — or less than $37,463 for a family of four — and for people who receive public assistance.

During the pandemic, in May 2021, the federal government also created a $50-a-month Emergency Broadband benefit to help families connect to the Internet when schools were closed, people worked at home and many others lost their jobs. In late 2021, Congress passed the Infrastructure and Jobs Act as an emergency benefit for what is now called the Affordable Connectivity Plan, which provides a $30-a-month discount for $50.

Meanwhile, California continued its lifeline program — one of three states — along with a $16.23 monthly discount for low-income families or those receiving public assistance. A family of four making $40,600 or less is included, for example.

‘one expense’;

At the height of the pandemic, Californians could work out three discounts to purchase service from lifeline providers, but that ended in March.

Now, to get better, consumers can apply for one lifeline plan and one connectivity plan discount per family. The commission is considering making the term permanent.

Commissioner Genovefa Shiroma argued that the packaging of all three programs gives people more than the minimum required by law.

“California’s lifeline resources must be designed to ensure that state funds are used wisely and in a fiscally sound manner,” the proposal states. Shiroma’s staff said they were not ready to answer questions about the matter.

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

California’s lifeline resources are designed to ensure that taxpayers use their money wisely and in a fiscally sound manner.

– California Public Utilities Commission proposal

Christina Moore, a lifeline user in Los Angeles, pleaded with the commission.

“I use the phone for job hunting… I talk to my doctor about my condition… This phone is a blessing from the good Lord to me especially during the pandemic,” he wrote. “Please don’t cut our benefits and use the most valuable resources and benefits from all levels of government!”

Kristin Morris, from Mission Viejo, worried about losing options for her family.

“That’s why CA is finding new ways to make it harder for consumers to stay connected,” he wrote. “My kids need phones and tablets to stay in school and do their homework. By limiting the work plans that are available to low-income people – you’re making the problem worse for us, not better. This has been so important to my family – find a way to give us more and more to serve no less! With all the rise it is clear that we cannot afford this one thing more expensively.”

‘to provide for failure’

Todd Snyder of San Francisco said restricting internet options for low-income Californians would be unfair.

“This proposed policy exacerbates inequality and creates a digital divide for low-income Californians to compete in today’s rapidly changing digital economy,” he wrote.

A few consumer advocacy groups took the opposite position, supporting the commission’s decision. Some California Lifeline providers said providers were charging high monthly fees for data plans that varied for quality and service, and that consumers weren’t always getting what they were worth.

The proposed decision would exacerbate inequality and divide the digital divide for low-income Californians.

– Todd Snyder, San Francisco resident

“The failure of some providers to provide … Lifeline good value service to customers is part of the reason why the commission is considering not allowing some resources to stack with Lifeline California’s resources,” said Ashley Salas, attorney for the resources. consumer advocacy group The Utility Reform Network, based in San Francisco.

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

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

Some objectors to the committee’s plan said today’s Zoom meetings, online courses and telemedicine sessions already require more than 6GB a month.

State officials have argued that most lifeline users do not use all of their data, and the industry has failed to prove otherwise.

Nuanced views

Nathan Johnson, CEO of TruConnect, a Los Angeles-based wireless company that provides Lifeline, said many low-income people need more data and that’s why many don’t even sign up for Lifeline.

A 2019 report by the Legislative Analyst’s Office said only 40% of California families enroll in Lifeline. The report cited several reasons: Families may not know about the program, may not prefer lifeline policies or vehicles, or have difficulty with the program.

Johnson said TruConnect’s low-cost customers often use more than 6GB per month when given higher plans, adding that the commission is flexible.

“Why do Californians deserve less when they deserve more?” he asked.

Other consumer groups do not necessarily agree. Vinhcent Le, an attorney at the Oakland-based Greenlining Institute, said advocates’ opinions are more nuanced. In the life of the services, not only consumers, but other consumers who were paying surcharges.

“It was not an easy decision to support the commission,” he said. “It always looks bad when you can’t apply for more subsidies… But I think what the CPUC is proposing to do here — and why we’re supporting it — is to create a way where you can use your rebate more effectively and make sure there’s funding so we don’t have to increase surcharges on California consumers. “

And if the Lifeline funds were used more effectively, he said, perhaps California would lower its surcharge on other consumers.

The commission is set to vote on September 15.

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