Verizon Re-Launches Automatic Enrollment for Lifeline

In recent meetings with Verizon’s regulatory and Lifeline staffs, PULP has learned that automatic enrollment for Lifeline has returned. Although the automatic enrollment initiative, which compares public assistance recipient rolls with the carrier’s list of Lifeline customers, had been abandoned a few years back due to unexplained privacy concerns, the company has assured PULP that the program is back in place.

The return of automatic enrollment is good news for New Yorkers, as a successful Lifeline program promotes universal service and makes service available without hardship to the poor. In fact, in April 2004 the FCC stated that “Nationally, the telephone penetration rate is 94.7%, in large part due to the success of the Lifeline/Link-Up program and our other universal service programs.”

But, these numbers do not answer a most perplexing question about telephone subscribership. FCC statistics tell us that telephone penetration in New York in 1996 exceeded 94 percent and there were over three-quarters of a million Lifeline subscribers throughout the state. However, while overall subscribership in New York increased to over 96 percent by 2002, the number of Lifeline customers actually dwindled during the same time period. In fact, according to the FCC’s findings, in 2006 (the most recent year with results) there were 3.2 million households in the state with annual incomes under $20,000, but only 2.8 million of them had telephone service. That’s 400,000 households which could not reach 911 in an emergency. While the Lifeline totals for 2007 will not be available until March, with our state’s telephone subscribership back down to just about 94 percent (in the latest FCC figures from July 2007), it is not expected that Lifeline subscribership will approach the 1996 levels despite the return of automatic enrollment.

Why would that be?

Keep in mind that well over 900,000 households in New York are food stamp recipients, one of the primary eligibility categories for Lifeline. Shouldn’t actual Lifeline enrollment approach, or even exceed, this figure?

First of all, customers have left the incumbent carriers, Verizon, Frontier, Citizens, and Windstream (formerly ALLTEL), in unprecedented droves in the past few years. Some have cut the cord and have gone exclusively wireless. Access line counts have also decreased because many have cancelled second lines at their homes no longer needed for a separate fax line or for dial-up Internet access. Even more have switched to VoIP providers, primarily the local cable television company. These jumps have not just occurred in the biggest cities; rather, even in rural parts of the state, the cable companies have taken a significant number of independent telephone company customers as well. The figures for Verizon had been upwards of 100,000 access line losses per month in New York alone, but these have settled down to about 50,000 lines per month.

It is unclear whether services provided by wireless and cable operators are included in the FCC’s line count statistics. The specific question asked by the FCC in its three-times-per-year consumer surveys is: “Does this house, apartment, or mobile home have telephone service from which you can both make and receive calls? Please include cell phones, regular phones, and any other type of telephone.” However, through November 2004, this question had been worded: “Is there a telephone in this house/apartment?” Because of the increasing number of households that have selected alternative providers, there was concern that some of these households may not think of their phones when asked if they have a telephone. As a result of the “intermodal” shift, it is certainly conceivable that a two percent drop in telephone subscribership since 2002 could be attributable to misinterpreting this question. However, how many actual Lifeline customers and Lifeline-eligible customers have made this shift — and how many can afford to?

Has automatic enrollment brought about the boost in Lifeline enrollment that we envisioned?

A possible factor in answering these questions is the lack of Lifeline discounts with service bundles. Packages combine basic local service with a host of vertical services (such as call waiting, Caller ID, and voice mail) or even toll service, at a substantially reduced rate compared to subscribing to each on an a la carte basis. The traditional telephone companies offer packages and so do the wireless and cable companies. However, at least for Verizon, Lifeline customers are ineligible to participate in these package deals unless they abandon Lifeline.

Of course, low income customers would benefit from reduced prices for these service bundles. For example, they may be victims of domestic violence and harassment and would place a very high value on services such as Caller ID. Others living in crowded situations may want call waiting or voice mail for household members in order not to miss important calls. Customers with poor eyesight, language, or literacy difficulties may find service offerings with unlimited directory assistance to be of particular value to them.

Back in the mid-1980s, the New York State Public Service Commission required that Lifeline be offered regardless of the service package selected by the customer. In an October 11, 1985 decision the Commission held:

[W]e did not adopt the company’s proposal to limit Lifeline service to customers subscribing to basic budget service, finding it would be better to require telephone utilities to provide a Lifeline discount to any income-eligible customer, regardless of the type of residential service the customer had. . . . Accordingly, all residential customers, regardless of the type of service they take, are now eligible for a Lifeline discount.

Apparently, times have changed.

To what extent do Lifeline-eligible customers forego subscribing to Lifeline in order to take advantage of package offerings by Verizon, T-Mobile, or Cablevision? While Sprint and Nextel have recently rolled out wireless Lifeline in New York, (see Reduced Rate Wireless Lifeline Service Now Available in New York) generally, Lifeline is still a landline telephone company offering. Why can’t Verizon Lifeline customers retain their Lifeline discount and enroll in a service bundle? Frontier Telephone of Rochester does not bar customers from receiving Lifeline rate reductions when they have a service package.

A study published in the Journal of Telecommunications and High Technology Law in 2007 supports this result and found that “a more general low-income assistance program that lets consumers use the subsidy for whatever communications services they most value, might improve participation and would make it more economical for low-income households to migrate to more advanced technologies.” Isn’t such improved participation the purpose of the Lifeline program?

Accurate reporting of local service provided by all types of providers is a necessity in order to ensure that the underlying premise of the Lifeline program is met — that is, everyone who needs telephone service will be able to afford it. Is this basic tenet of universal service now being met? Based on the clients who come through PULP’s doors who either lack a home phone or have never heard of the Lifeline program, much more needs to be done. Perhaps the time has come for the Legislature to direct its own statewide survey of all types of telephone subscribers based on income and whether vertical or toll services are included in the price.

Lou Manuta

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