Consumer Federation of California

See: AT&T and Verizon attack on low-income consumers stopped

The California State Legislature is moving toward passing AB 1407, an AT&T-backed measure that would devastate the state’s LifeLine phone program. On July 8, the Senate Energy, Utilities and Communications Committee voted 6-1 with 4 non-voting members (in effect a 6-5 vote), so the bill passed that committee with the bare majority required. On August 19, the Senate Appropriations Committee placed the bill on suspense and will vote on August 30.

California LifeLine is a decades-old state program that provides basic home phone service at a discount to eligible low-income households. The program pays most of the monthly phone bill for people whose annual income is below $14,702.

For some people, having a phone means being able to be called back quickly on job applications and to keep up on appointments for government assistance. Homeless people will now be able to confirm shelter openings without walking miles and potentially missing out on beds. Those in dire straits can access emergency services and stay in touch with family and friends. That may sound simple to those with means, but for those in crisis it can mean life or death.

LifeLine subscribers pay a low, fixed amount for phone service every month, and carriers receive a ratepayer-funded subsidy to make up the difference between what carriers charge and what the subscriber can afford. Carriers are required by current law to inform potential LifeLine subscribers about the program and help them enroll.

The California Public Utilities Commission (CPUC) is in the final stages of updating LifeLine to accommodate customer choice and new technologies, including wireless services.

But this vital service now faces serious threats. Assemblymember Steven Bradford has introduced AB 1407, which would undermine the LifeLine program in several critical ways:

Eliminates Low-Income Affordability

• A fixed discount voucher guarantees that monthly bills will be unpredictable and potentially significantly higher than current bills.

• LifeLine customers would no longer be exempted from paying state and local surcharges and taxes, resulting in an automatic rate increase from this bill.

Eliminates Consumer Protections

• Carriers would no longer be required to offer customer service staffing and contracts in the same languages in which they conduct marketing and sales campaigns targeting non-English speaking communities.

• Low-income customers would lose their right to stand-alone LifeLine service (and can instead be offered expensive bundles as their only choice), as well as protections against deposits or extended contracts that carry early termination fees.

• Carriers choose where they offer LifeLine service; they don’t have to provide free access to 800 numbers, 911, or customer service; and they can offer as few available minutes to customers as they want.

Eliminates Carrier Accountability

• The CPUC would no longer be able to deny LifeLine participation to carriers such as TracFone that refuses to abide by requirements that they collect and pay into the Universal Service Fund that subsidizes LifeLine discounts.

• Voice over Internet Protocol (VoIP) carriers would be able to collect LifeLine subsidies without complying with CPUC regulation, due to provisions of SB 1161 that eliminated most CPUC authority over VoIP providers. VoIP and wireless are the new basic communications, and LifeLine needs to evolve with technology.

• Carriers are required to notify potential customers about the LifeLine program one time, and only if the carrier thinks the potential customer might be eligible. But there is no requirement that this notification has to be legible, clear, or prominently displayed. It can be small writing buried in the middle of a contract.

Shifts Authority Away from CPUC

• The authority to define minimum standards for low-income affordability, service quality, packages, and carrier participation will shift from the CPUC, which has the responsibility to serve the changing needs of Californians, to the federal government and private industry.

• Essential elements of the program that are currently determined by the CPUC would be permanently defined by the Legislature, which would hamstring the program.

California adopted a subsidy-based program because the needs of the low-income consumers had not been met by market forces, yet AB 1407 will leave Lifeline customers more vulnerable to the fluctuations of market forces and industry, without the protections that the CPUC currently provides.

Simply put, AB 1407 grossly favors telecom industry giants and allows them to place a stranglehold on low-income Californians.

Also see:
Growing Opposition to AT&T’s Attack on LifeLine Program
The Right to Phone Service
Why Aren’t Civil Rights Groups Standing Up to the Telecom Giants?

Organizations opposed to AB 1407 include:
California Labor Federation
Consumer Federation of California
TURN – The Utility Reform Network
Greenlining Institute
California Public Utilities Commission (CPUC)
Division of Ratepayer Advocates
Central City SRO Collaborative
Inland Empire Latino Coalition
Coalition for Economic Survival
Young Visionaries
Tenderloin Neighborhood Development Corporation
AARP California
African American Lutheran Association
Allen Chapel African Methodist Episcopal Church
BLU Educational Services
Congregations Organized for Prophetic Engagement (COPE)
Davis Media Access
El Concilio of San Mateo County
Faith Temple Apostolic Church
Greater Long Beach Interfaith Community Organization
Inland Congregations United for Change
Inland Empire Concerned African American Churches
Imani Temple Church
Knotts Family Agency
Media Alliance
Parents and Communities Engaged for Education
Talented and Gifted in the Inland Empire
Access Humboldt
Alliance for African Assistance
California’s One Million NIU Coalition
Cathedral of Praise
Centro La Familia Advocacy Service, Inc.
Chicana Latina Foundation
Communications Workers of America,#9
Eagles Wing Christian Church
Ephesians New Testament Church
Messiah Lutheran
Milestone Consulting
Predestined in Christ
San Diego Area Congregations for Change
San Diego Black Health Associates
San Diego Consumers’ Action Network
St. Paul A.M.E.
The Center of High Church
The Earth Center
The Kemet Coalition, Inc.
The Lord’s Gym
West Fresno Family Resources Center
Word in Action