Froot Loops Coupon

California has a longstanding goal of “Universal Service”—providing telephone service to every Californian. Now, that goal is in serious danger. First, some background:

Any program designed to achieve universal service must ensure the following:

  • Availability.  People can’t use phone service unless it’s available, i.e. they can actually access the phone network.  This can sometimes be difficult.  For example, it can be expensive to extend phone lines out to remote communities, and can be technically tricky to provide clear wireless signals in areas with lots of tall buildings.   And phone service needs to be reliable: The network must stay up during natural disasters, call quality must be  sufficient, etc..
  • Affordability.  In some instances, phone service may be available, but too expensive for people to afford.    Charges like installation fees, early termination fees and overage charges contribute heavily  to phone service being unavailable.
  • Awareness.  Finally, the fact that there’s affordable phone service available means nothing if customers don’t know that the service exists.  For example, a low-income consumer may not realize that there are programs to provide low-cost phone service, and may just believe they can’t afford a phone.

For most Californians, getting and paying for phone service isn’t a problem.  However, about three million low-income Californians have trouble affording phone service at the rates set by carriers.  As a result, we’ve created a reasonably successful regulatory program—LifeLine—that ensures those Californians can get phone service. We require carriers to offer phone service to everyone in their service area in order to make sure that low-income consumers have access.  LifeLine subscribers pay a set rate for phone service every month (about $7), and carriers get a ratepayer-funded subsidy to make up the difference between what carriers charge and what the subscriber can afford.   Carriers are required to inform potential LifeLine subscribers about the program and help them enroll.

Right now, this program does not apply to wireless phone services, which have transformed from a “neat thing” to a necessity for most families.  Additionally, there’s ample evidence that many low-income consumers prefer wireless service.Accordingly, the California Public Utilities Commission is revising the LifeLine program to allow wireless carriers to participate, and should have wireless LifeLine in place by the end of the year.  It’s going to be pretty similar to what we have now, and will guarantee that low-income consumers have access to available, reliable, affordable phone service.  Sounds pretty good, right?

Well, not to the Legislature.  Assembly Member Steven Bradford (D-Gardena) has introduced an industry-sponsored bill, AB 1407, that revises the LifeLine program to allow wireless carriers to participate.  Here’s what it ensures:

  • No Availability:  Carriers can pick and choose where they offer LifeLine service.  They can offer whatever service quality they choose.  They don’t have to provide free access to 1-800 numbers, 911, or customer service.  They can offer  as small a number of minutes as they want—typically, 8 minutes a day, but it could potentially be much fewer.
  • No Affordability.  There’s no fixed rate — carriers can charge whatever they want, and raise prices whenever they want. Instead of a guaranteed affordable rate,  subscribers get a coupon giving them $11.85 off their bill every month.  So if the lowest price plan a subscriber offers is $60 dollars, a LifeLine subscriber will pay $48.15 a month, plus installation fees, until the carrier raises the price.  At that point, the subscriber can either pay the monthly fee they can’t afford or pay the early termination fee that they can’t afford.  Either way, their phone service is disconnected.
  • No Awareness:  Carriers are required to notify potential customers about the LifeLine program one time, and only if the Carrier thinks the potential customer might be eligible.  And there’s no requirement that this notification be legible, clear or prominently displayed. It can be tiny writing buried in the middle of a contract.

AB 1407 does not do what Lifeline was intended to do. It does not ensure that phone service will be available to low-income consumers.  It does not ensure that phone service will be affordable.  It does not ensure that low-income consumers will even be aware of the program.  The only thing that AB 1407 ensures is the slow death of Universal Service, while siphoning  wealth from ordinary ratepayers and low-income consumers to carriers that have no accountability..

So, what can we do?  A lot.  You can contact Assemblymember Bradford and let him know that you oppose his bill.  Here’s the contact information for his field office:

One West Manchester Boulevard
Suite 601
Inglewood, CA 90301
Tel: (310) 412-6400
Fax: (310) 412-6354

 The Legislature is in recess right now, so he should be at his district office until August 5.  Office hours are Monday-Friday, 9-5.  So give him a call.  If you’re in the area, pay him a visit.  (If you do either of these things, please contact me at paulg@greenlining.org and let me know).  Ask him why he wants to punish Californians who have borne the brunt of the economic crisis.  Ask him why he’s sponsoring legislation that will pull the plug on millions of Californians.  Ask him how a twelve-dollar coupon will ensure that Californians can apply for jobs, call their doctor, or check in with their child’s teacher.

It’s the Legislature’s job to represent the interests of Californians, including low-income Californians.  AB 1407 is counter to those interests.  It needs to be stopped.