California doubles down, offers Obama Phone companies more money

While politicians in some states talk about backing away from the Obama Phone program, California’s Public Utility Commission (PUC) is taking the opposite approach. The PUC just announced that it would ante up state funds and pay the companies more than double the federal subsidy for some accounts.

Although we are nearly six years past the world’s economic meltdown, poverty and unemployment remain at troubling high levels in California. That’s why the PUC has acted so boldly to bolster the Obama Phone program and help the state’s needy millions with this subsidy.

Thanks to these newly-approved regulations, California will soon begin paying this “bonus” money to the state’s Obama Phone companies. An old economic truism says, “Whenever you subsidize something, you get more of it.” As a result, we expect numerous Obama Phone companies to begin doing business in California, leading to increased competition and better service for the state’s financially-challenged residents.

Let’s get into the specifics of the California changes: California will now pay Obama Phone companies an extra $6.35-13.15 per month for each of their customers. That’s on top of the $9.25 those companies are currently paid from the federal fund.

The PUC issued a complex ruling full of acronyms and technical jargon, but we think it’s fair to summarize it thusly: More money means more companies will enter the California market to compete in the free government cell phone business.

California regulators are somewhat legendary for giving a little to get a lot. In this case, they may be paying an Obama Phone bonus, but they’re demanding a lot for customers in return. For example:

California Lifeline customers currently receive 250 free minutes per month. The new regulations will require California LifeLine accounts to include at least 501 minutes per month.

California Lifeline companies currently receive only a $9.25 federal fee per account per month. According to the new regulations, California will pay an additional $6.25 per month for any account that includes 501-999 minutes per month.

California Lifeline companies currently receive only a $9.25 federal fee per account per month. According to the new regulations, California will pay an additional $13.15 per month for any account that includes 1000+ minutes per month.

But the Public Utility Commission was just getting warmed up when it issued those regulations. It also said that calls to an Obama Phone company’s customer service can no longer be counted against a customer’s total monthly minutes, and that all Obama Phone companies shall henceforth be required to offer their customers all handsets that they offer to paying customers.

Source: LifelineLaw