There has been much discussion about free government phone service the past several years. You have your pros and cons on the subject. Some say government spending is out of hand, and giving out free phones to the poor, is the last straw.  So angered are some about the program and the current President, they have mockingly named

So angered are some about the program and the current President, they have mockingly named “Obama Phones“.  Have you ever considered,  the free government phone program, may help the economy?

It is understandable for people to feel this program is a waste because the government is all too often wasteful.  Have you heard about the $5 million spent on Stemware, for the U.S. State Department, or the $2 billion in salaries that had  paid to federal employees, for the 16 days they could not work during the recent shutdown? 

Please don’t forget about the $12 billion in cash the U.S. sent to Iraq, that  disappeared, completely. We never heard about heads rolling, or committees created to find out what happened.  These are the tax dollars of hard-working  Americans being wasted every day.  At least, the Lifeline assistance program is helping struggling Americans, who also pay taxes.

Where is Fraud and Abuse Found?

There has definitely been a lot of money lost due to the fraud, and abuse associated with the free phone program.  In the past. most of the attention have been on dishonest poor, getting extra phones, and then selling them.  You seldom hear about the greedy phone providers who are pushing these phones to anyone with a pulse. 

On the other hand, you have some who feel the program is a great benefit, as long as they can stop the  fraud and waste in this subsidized program.  Have you ever wondered, if once they stop the bleeding, that the free government phone program, may actually help the economy?

 Free Government Phones May Help Economy –  Yea or Nay?

You say, “but the services are free. How can that help the economy?”  This is true in theory.  Most program providers offer about 250 free minutes and text messaging a month, with the occasional company offering more.  So on the average, most Lifeline recipients get about 250 talk and text-messaging minutes, with these plans.  This is the bait because free is a pretty good deal, right?    But, in actuality, most will have to dish out money to extend the minutes to last a month.

Recipients are given a little over four hours of phone service a month. If you are looking for a job, have a disability, or elderly parents, you can easily use up 250 minutes in less than a week.  When the airtime runs out, what do you think will happen? Most of these low-income consumers will find an extra $10 or $20 to purchase more minutes, and some even will upgrade to a better phone.  So you see, it is the phone companies that gain new customers and additional revenue.

Lifeline Helping the Poor

Today, because of the Lifeline program,  a decades-old benefits program that make affordable and free phone service available to the poor. The very poor now have access to services, they might not be possible before.  However, through this subsidy millions of new customers are funneled to phone carriers all across America!  That’s more money for the phone companies; money they might not have received, if Lifeline Assistance was no available.

Government Subsidies Help the Program

Additionally, the federally funded program gives the participating companies a $9.25 subsidy for each one enrolled in the program.   The program is supported by an FCC Universal Service Fee on your phone bill. So, keep in mind, it is not a tax as some have misrepresented. The money collected, is then put into the Universal Service Fund, which is overseen by a non-profit corporation, the Universal Service Administrative Company.

There have been problems with fraud in the program, that has been a great concern to many.  The government has now put in place safeguards, to stop phone companies from fraudulently enrolling members, and recipients from are getting more than the allotted  one phone per household. 

The overhaul of the program requires proof of income, or enrollment with a government assistance agency when applying. The FCC believes this will save up to $2 billion in the next few years and extend the reach of the program.

Cellular Phones are Big Business

In a recent report, by Asymco’s Horace Dediu, an industry analyst stated, the mobile phone business netted $215 billion in  the last six years, and of that sum, Samsung, and Apple accounted for 88% of mobile phone profits. Cell phone sales is a booming business.

That is why so many phone companies are becoming Lifeline providers. Small cellular companies can not compete with Samsung and Apple, but they can get a little boost for when they become a provider for the free government phone program.

Let’s face it, money makes the world go around.  The dance has always between the manufacturers and the consumer.  When a company produces a product, it is worthless, unless there is someone to buy what they are selling. 

The public is always demanding bigger, better ways to connect.  Technology is evolving at breakneck speed and dominated the market.  People are always willing to buy the next best thing!

Sales Help the Economy

Whenever Apple comes out with a new product; people camp out all night to be the first in line to buy it.  Whenever consumers spend, whether rich or poor  it is good for business!  When companies make more money, the government collects increased taxes revenues.

In the long run,  government cell phones may help the economy!  That is why, with all the fuss about government spending, and the government phone program, as long as the corporations are making a profit, the program, is probably not going anywhere any ime soon.