Sprint (NYSE:S) urged the FCC this week to give Lifeline subscribers the option of applying the program's subsidies to either voice or broadband service, saying end-user co-pays for broadband service severely limit participation in the program.
The nation's fourth-largest mobile operator provides federally subsidized Lifeline phone services under the brand Assurance Wireless, which is part of its Virgin Mobile division. The program offers a free phone, 250 local and domestic long distance voice minutes and unlimited texts to low-income users in participating states.
Sprint said the annual income of an average Assurance Wireless household (including an adult and at least one child under the age of 18) is roughly $14,000. Sixty-one percent of Assurance users are temporarily unemployed or disabled, 89 percent don't have fixed-line phone service, and more than one-third had experienced an interruption in their mobile service before signing on with Assurance. Nearly 60 percent are more than 45 years old.
"In short, these subscribers are severely cash-constrained and cannot readily afford out-of-pocket payments," Sprint said.
The carrier went on to say that implementing end user co-pays sharply limited participation in a recent Lifeline pilot program of broadband services. Assurance's least expensive option cost $30 upfront and had no recurring charges but only saw 526 users in its most active month. The most expensive option – which cost $50 upfront and a $20 monthly charge – had only 56 users in its most active month.
"Each of these options was offered to 64,000 existing Lifeline customers," Sprint explained. "While the pilot did involve some additional paperwork for participants, it also offered extensive outreach and training, and unusually (and likely unsustainably) high device and service subsidies, to encourage maximum participation."
The FCC voted last year to expand the Lifeline program to include support for broadband services. While the move has largely been applauded, some mobile carriers are concerned they'll receive less funding under new rules.
AT&T (NYSE: T) and Verizon (NYSE: VZ) were among 23 companies that voiced support this week for an overhaul of the Lifeline program in an open letter to the FCC. Sprint was not among that group.
"A Lifeline program that continues to support a voice-only option will help ensure that Lifeline subscribers have access to essential and affordable voice service," Sprint lobbied. "Today, approximately 143 million households rely upon the federal Lifeline program that enables them to call 911, their doctors, their child's school, their employers, and their family and friends. To take away this option for those extremely vulnerable Americans who cannot afford a broadband Lifeline plan would undermine the most basic goals of the Universal Service program."
The FCC is expected to discuss Lifeline's expansion to broadband at its March 31 meeting.
For more:
- see this Sprint letter
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