T-Mobile, with eye on USF money, expands Lifeline offerings
T-Mobile USA is working to increase the amount of Universal Service Fund money it receives from the government, and as a result has expanded its government-subsidized wireless offerings to low-income subscribers.
T-Mobile currently sells government-subsidized wireless service in Florida, Kentucky, North Carolina, Puerto Rico and--most recently--Washington state. The offerings stem from the government's Lifeline program, which provides money for wireless service to Americans who can't afford it.
For example, in Florida, low-income customers who apply and are accepted to the Lifeline program can receive monthly wireless services from T-Mobile (145 "whenever" minutes, 500 night minutes and 500 weekend minutes) for $6.49 per month. The plan is valued at $19.99 by T-Mobile, but customers pay only $6.49 due to the $13.50 Lifeline subsidy.
Dave Conn, national director of state regulatory for T-Mobile, said the carrier offers Lifeline services in order to receive Eligible Telecommunications Carrier status from the FCC--a prerequisite to receiving money from the government's USF program. The USF program was designed to help fund the buildout of telecommunications services in rural areas.
Conn said T-Mobile receives roughly $15-20 million a year in Puerto Rico via the USF program, which he said is the carrier's largest USF market. (T-Mobile in 2008 acquired SunCom, which operated in Puerto Rico and received USF money.)
T-Mobile is not the only major carrier to tap into the government's USF and Lifeline programs. For example, TracFone, Sprint Nextel (NYSE:S) (through its Assurance Wireless brand) and other carriers also offer government-subsidized wireless services through Lifeline.
However, the FCC is currently looking at ways to restructure the USF program, which critics have argued is inefficient and outdated.