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.
América Móvil's U.S. MVNO, TracFone Wireless, posted net subscriber gains of 753,000 customers in the fourth quarter, much higher than the year-ago period and better than its net subscriber additions in the first three quarters of 2012. It is unclear if the company was affected earlier this year by regulatory changes to the FCC's Lifeline program, in which TracFone is a key player.
Sprint Nextel's Virgin Mobile reduced the number of its Lifeline subscribers by almost half, according to the results of a Wall Street Journal investigation into changes in the FCC's Lifeline program. Although Virgin shed the largest number of subscribers, the carrier wasn't alone: According to the WSJ, AT&T Mobility, Verizon Wireless and others also reduced the number of subscribers eligible for Lifeline money.
América Móvil's U.S. MVNO, TracFone, offered additional details on its pilot program to deliver mobile broadband to low-income Americans as part of the FCC's Lifeline initiative. The action was a response to criticism that TracFone called in political favors in order to participate in the program, and that the program itself is not effective.
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