Released: October 02, 2014

Get the facts about the ‘Obamaphone’ in Maryland

Don't be fooled by Washington Examiner story!

Contact: .(JavaScript must be enabled to view this email address), Consumer Action, 202-544-3088 | Franz Schneiderman, MCRC, 410-624-8981

WASHINGTON, D.C. – October 2, 2014 – Two consumer groups—Consumer Action and the Maryland Consumer Rights Coalition—warned the public today against being confused by a highly misleading story about the federal wireless Lifeline program (often incorrectly referred to as the “Obamaphone”) in Maryland.

A thinly veiled political attack on the wireless Lifeline  program, the September 29th Washington Examiner article in question does not exhibit the hallmarks of good journalism, including fairness and fact checking. In particular, Consumer Action and the Maryland Consumer Rights Coalition highlighted the following problems with the Washington Examiner story:

• Untruth #1: Twice the number of eligible Maryland residents are participating in the wireless Lifeline program. This claim by the Washington Examiner is flat out false.  Wireless Lifeline eligibility is determined by participation in a number of federal programs, including the Supplemental Nutrition Assistance Program (SNAP).  There were 392,184 Maryland households participating in the SNAP program in fiscal year 2013. Just 224,826 Maryland households participate in the Lifeline wireless program as of the end of June 2014.   In reality, this means that the existing wireless Lifeline-eligible population in the state is far from being served … much less “over served,” as the Washington Examiner incorrectly claims.
• Untruth #2: Wireless Lifeline participation in Maryland has grown by 1,000 percent in recent years.  Here, the Washington Examiner engages in some creative accounting, “cooking the books” to compare an extremely low participation year (2009) with a higher-level participation year (2012).  What happens if we look at the two most recent years?  Wireless Lifeline payments have dropped by about a third – from $37 million in 2012 for the top five cell phone companies providing wireless Lifeline  services to $25 million in 2013 for the same group.  So, the actual trend on wireless Lifeline spending in Maryland is the precisely the opposite of what the Washington Examiner claims.
• Untruth #3: There is rampant abuse of the wireless Lifeline program.  In one of its most egregious lapses, the Washington Examiner story completely ignores the fact that the Federal Communications Commission (FCC) in 2012 instituted a complete program overhaul. Among other changes, the agency created a National Lifeline Accountability Database to prevent multiple carriers from receiving support for the same subscriber; required providers to de-enroll Lifeline wireless subscribers who have not used the service for a consecutive 60-day period; and mandated that providers annually verify the initial and continued eligibility of their lifeline subscribers, along with other enrollment safeguards. These reforms already have generated significant savings:  The Wireline Competition Bureau reported in January 2012 that the Commission’s Lifeline reforms generated more than $213 million in savings during 2012—significantly exceeding the Commission’s original goal. In February of 2013, the FCC announced that savings from these comprehensive reforms were on track to reach $400 million in 2013, and would “save the program more than $2 billion through 2014, fundamentally altering the course of the program.” The Washington Examiner gets it wrong again; any abuse that may exist is being sharply reduced – not expanding rapidly.
• Untruth #4:  Wireless Lifeline costs are so high that they are hurting middle-class families. Here, the Washington Examiner again ignores the fact that spending on Maryland wireless Lifeline is down, as is overall national spending on wireless Lifeline.  According to FactCheck.org, U.S. households currently spend an average of $2.50-$2.75 in total universal service fees each month. For a $140 family wireless plan, the fee amounts to about $3. Of that amount, about a quarter—less than a dollar a month and literally pennies a day – goes to pay for wireless Lifeline.   In short, the Washington Examiner is wildly far off the mark in suggesting this is a federal program that is somehow bankrupting middle-class families.

Ken McEldowney, Executive Director of Consumer Action, said: “The Washington Examiner completely missed the boat in its story. Plus, they ignored the fact that this is a critically needed program that helps to connect families and people to their health care and job opportunities. When Presidents Reagan and Bush oversaw the creation of the Lifeline program, they understood that telecommunications for all is vital to families, health and jobs.”

MCRC’s Executive Director Marceline White said: “Wireless Lifeline is an empowerment tool for Maryland families in need.  And this is about keeping the costs for taxpayers as low as possible: Unlike the majority of other programs that are funded out of the federal Universal Service Fund, with wireless Lifeline the benefits actually go directly to the people that are supposed to receive them.  So this is a much-needed program ... and one that reflects the best of thrifty government practices!”

The Maryland Consumer Rights Coalition (MCRC) advances fairness and justice for Maryland consumers through research, education, and advocacy. Find MCRC on the web at www.marylandconsumers.org, on Facebook at facebook.com/mdconsumers and on Twitter at twitter.com/mdconsumers.

Consumer Action has been a champion of underrepresented consumers nationwide since 1971. A non-profit 501(c)(3) organization, Consumer Action focuses on consumer education that empowers low- and moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers to advance consumer rights and promote industry-wide change. By providing consumer education materials in multiple languages, a free national hotline, a comprehensive website (www.consumer-action.org) and annual surveys of financial and consumer services, Consumer Action helps consumers assert their rights in the marketplace and make financially savvy choices. Nearly 7,500 community and grassroots organizations benefit annually from its extensive outreach programs, training materials and support.