Executives from América Móvil's U.S. MVNO, TracFone Wireless, met last week with FCC officials to press their position on what reforms the agency should make to its Lifeline phone program. TracFone, one of the nation's largest providers of Lifeline service, proposed reforms that would make it easier to track Lifeline enrollees' information but in some cases make it tougher for them to be purged from customer rolls.
A survey paid for by a group that has financial ties to América Móvil's U.S. MVNO, TracFone Wireless, found that older Americans strongly support the federal government's Lifeline program. TracFone is one of the nation's largest providers of Lifeline phone service. The survey is being trumpeted as new questions are being raised about the Lifeline program's effectiveness.
América Móvil's U.S. MVNO, TracFone Wireless, lost 318,000 total customers in the first quarter, which it blamed largely on disconnections it had to make related to its participation in the federal Lifeline phone program.
T-Mobile US indicated it plans to discontinue its support for the federal Lifeline phone program, which provides subsidized phone service to low-income Americans, as of the end of 2014. The carrier said the move will impact its operations in Alabama, Connecticut, Delaware, New Hampshire, New York and Tennessee and Washington, D.C.
AT&T Mobility's Cricket prepaid brand is planning to phase out its support for the government's Lifeline service. The company said it will continue to support its existing Lifeline customers on CDMA phones for the next 18 months or so, and that it will not sign up any new Lifeline customers on Cricket GSM phones.
Poor Americans are driving the mobile-only trend, according to a survey by the Centers for Disease Control and Prevention.
In its ongoing effort to clean the Lifeline program of waste and fraud, the FCC came down hard on five carriers that use the service, including TracFone Wireless, and proposed around $14.4 million in fines against the companies accused of breaking the commission's rules. The Lifeline program helps provide wireless service to low-income Americans.
In the second quarter of 2013, the industry grew by 335,000 subscribers, which is the lowest subscriber-add number this millennium. A significant reason for the low growth is that approximately 1 million Lifeline connections had to be disconnected because the carriers were unable to verify eligibility. The industry make-up also changed considerably in Q2.
América Móvil's U.S. TracFone unit reported stronger subscriber growth and gains in average revenue per user in the first quarter. Though the parent company did not mention it, TracFone's Straight Talk launched support for Apple's iPhone in January, which likely helped boost its first quarter numbers.
The U.S. Senate voted against a proposal that would have cut cell phones out of the FCC's Lifeline program. The vote, largely along party lines, likely will generate a sigh of relief among the likes of TracFone, AT&T Mobility, Sprint Nextel and other wireless carriers that receive Lifeline funds in order to provide wireless service to low-income Americans.