U.S. Government paid $1.6 billion in 2011 to cover the cellular bill for 12.5 million Americans

Did you ever wonder what the Universal Service Fund is? Many of you are paying monthly into the fund when you receive the monthly invoice from your wireless carrier. The money goes toward a program that started in 2008 which has the U.S. Government shelling out some serious money to help pay the wireless bill for low-income Americans. That first year, the tab came to $772 million, and last year amounted to $1.6 billion to cover 12.5 million wireless accounts. This Lifeline program gives a free feature phone, like those made by Tracfone, and 250 free minutes each month to those qualifying for the plan. Nothing fancy here, folks, the handset is about as basic as you can get these days. The program is funded by the Universal Service Fund fee added to the bills of landline and wireless customers. All carriers pay into the fund, mostly by tacking on that charge to the monthly invoice.

Thanks to the Universal Service Fund, low-income Americans can get a discount or free service for a landline or a cellphone. The program gives a $30 discount for the activation of a handset, and covers $10 monthly on an actual wireless bill. This works out to about 250 free minutes with the kind of plan required for the basic handsets used in the program. Food Stamp recipients, those who receive Medicaid or other Federal Aid, or those who earn as much as 35% over the federal poverty guidelines, qualify for the program.

But as with any Government program, there are those who abuse the system. Businesweek says 269,000 Lifeline customers are getting free service from two or more carriers. Senator Claire McCaskill (D-Mo.) has requested that the FCC investigate and the agency has obliged by building a database to see if a subscriber has more than one subsidized phone. While that might have been a useful tool from the beginning of the program, the FCC says after "modernizing" Lifeline, it has set a target of saving $200 million this year by catching those using the system for more than one account. So far, after ridding the rolls of those 269,000 users with multiple accounts, the FCC says it has saved $33 million.

The next time you are complaining about how "laggy" your high-end smartphone is, or you are upset about the latest feature just added to the newest model which you missed out on buying (like that 3300mAh battery), be thankful that you don't have to qualify for a basic handset from Uncle Sam to obtain cellular service.

source: Time