AT&T Mobility's (NYSE: T) 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.
AT&T is working to transition its Cricket customers from Leap Wireless' aging CDMA network and onto its nationwide GSM-based network. The carrier said it will continue to support CDMA Cricket customers who apply for Lifeline support through next year, but that it won't provide Lifeline credit to Cricket customers on GSM phones.
"Cricket is upgrading its CDMA network to 4G GSM and expects to stop offering CDMA wireless service as early as March 2015. CDMA PHONES (including CDMA phones that provide Lifeline service) WILL NO LONGER WORK ON OUR WIRELESS NETWORK AFTER WE COMPLETE THIS UPGRADE," Cricket said on its website. "When you transition to the new Cricket GSM network and rate plan, you will not be able to keep your Lifeline credit."
Cricket pointed out it offers a $25 per month unlimited talk and text plan for feature phones that is similar in price to Lifeline services. "This plan is comparably priced to the monthly fee paid by Lifeline customers, and provides additional advantages such as: a nationwide GSM network, no roaming charges, all taxes and fees included, and no paperwork," said Cricket spokeswoman Nneoma Njoku.
Njoku could not immediately answer questions about why Cricket is discontinuing Lifeline support.
That AT&T is moving away from Lifeline is notable considering that Cricket counts around 671,000 Lifeline customers currently, according to a source familiar with the government's Lifeline program.
The federal government's Lifeline program is designed to provide telecommunications services to eligible, low-income Americans. The government gives participating Lifeline carriers a subsidy of up to $10 per month per subscriber; the program is part of the $9 billion Universal Service Fund. Customers who qualify for Lifeline are often those who qualify for other federal benefit programs such as the Supplemental Nutrition Assistance Program (SNAP, or food stamps).
The FCC in 2012 instituted a major Lifeline overhaul, via a new accountability database, geared toward stamping out waste and fraud by preventing people in the program from claiming subsidized handsets from multiple wireless carriers. That action dramatically affected the Lifeline business of some carriers. For example: "Sprint platform prepaid experienced net losses of 364,000 in the quarter driven primarily by the annual recertification of our Assurance (Wireless) Lifeline base, we expect a greater negative impact this quarter as more of the recertification deactivations occur and assurances impacted by the recent implementation of the national Lifeline accountability database," said Sprint CFO Joe Euteneuer in discussing the carrier's first-quarter results, according to a Seeking Alpha transcript of the carrier's earnings conference call. Assurance Wireless is Sprint's brand for Lifeline services.
Most of the nation's major carriers participate in the government's Lifeline program by signing up customers who are eligible for Lifeline discounts. Prior to being acquired by AT&T, Leap Wireless' Cricket received millions of dollars in Lifeline support from the government.
- see this Cricket page
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