What is the Obama Phone?

The Obama Phone program gives struggling low income Americans free cell phones, voice minutes and texting. And now, with new rules in place since 12/2/16, most companies include hundreds of megabytes of mobile internet data usage!

This program to help needy Americans get free cell phones and free minutes was dubbed “Obama Phone” in recent years because of its rapid expansion during the Barack Obama presidency.

To clear up any possible confusion, it is important to state up front that the Obama Phone is the popular, unofficial name of the Lifeline Assistance program. It matters little, however, what the official name is, because the Obama Phone is the name people know, what they talk about, what they remember.

The Obama Phone made simple

The Obama Phone program was designed to put cell phones in the hands of needy Americans who cannot afford to buy them. Today the program continues to grow because, while cell phones and monthly plans have certainly come down in price, their cost is still out of reach for many Americans.

Initial reasoning behind the Obama Phone program was that the cell phones would pay for themselves many times over by helping needy Americans (1) get in touch with prospective employers and become less dependent on government aid programs, (2) stay in contact with medical professionals, reducing government medical costs, (3) remain closely connected with children and parents, and (4) have the ability to make emergency phone calls.

All of these are communications capabilities are enjoyed by millions of Americans who can afford to purchase and use cell phones in their everyday lives and it was believed that the nation would come out ahead if needy Americans had the same opportunities.

A quick history of Obama Phone

Let’s take a quick look back at the actual origins of the Obama Phone program. You may be surprised to learn that it all began long before cell phones were invented.

In the 1980s, during the Reagan administration, the Federal Communications Commission (FCC) created the Universal Access Initiative. The goal was to “promote the availability of quality services at just, reasonable and affordable rates for all consumers.” After years of study, they proposed what we now call the Obama Phone.

In the beginning, the Obama Phone offered subsidized phone service to Americans who were living at or below the poverty level. Please remember, this was in the early-to-mid-1980s, long before cell phones were invented, so this subsidy covered landlines only.

Later, the FCC introduced the Telecommunications Act of 1996, which proposed the Universal Service Fund requiring all providers of telecommunications services to contribute to a fund that would be used to increase nationwide access to advanced telecommunications services. The goal, according to the FCC, was to “advance the availability of such services to all consumers, including those in low income, rural, insular, and high-cost areas at rates that are reasonably comparable to those charged in urban areas.”

In other words, the FCC recognized that landlines were decreasing in importance as cell phones were increasing in use.

President Bill Clinton quickly signed the Telecommunications Act into law and President George Bush continued the program. President Barack Obama has followed in their footsteps, and there is widespread confidence that succeeding presidents will continue to support the Obama Phone program.

More about the cell phone companies

Now that you understand the Obama Phone program and how it came to be, let’s look at the cell phone companies that participate in the program. Many are smaller regional companies that were established strictly to compete in this business. But, three major companies offer the service on a nearly nationwide basis: Safelink Wireless, ReachOut Wireless and Assurance Wireless.

There are many other smaller, regional Lifeline providers. They include Assist Wireless, Budget Mobile, Cintex Wireless, Care Wireless, I-Wireless, Life Wireless, StandUp Wireless, Terracom Wireless, YourTel Wireless, True Wireless, Tag Mobile, Wireless for Hope, and Alaska Communications.

As the program expands, other regional companies are expected to enter the business, and the existing competitors are expected to begin competing in additional states.

Landlines versus cell phones

One of the most commonly asked questions is, Why does the government’s Lifeline Assistance program offer only partial subsidies on landlines, but full subsidies on cell phones?

The answer is that cell phone service costs far less than landline service. Consider the fact that landline service requires wire (or cable) to be run from a central location to every house, apartment, condominium, and business. Therefore, landlines require huge human and capital investments. Cell phones, on the other hand, require only a series of easy-to-install and relatively inexpensive towers. In addition, cell phone minutes can be capped at a certain level (250 minutes in these programs),

The Obama Phone: The right program for needy Americans

Landlines are quickly disappearing. In fact, many American households now have no landline service because cell phones are cheaper, easier to use, and do so much more.

The Obama Phone program responds to this situation by helping more and more needy Americans to obtain cell phone service during the troubling economic times. In fact, about 20 million people have signed up for the program.

It is expected that millions of additional needy Americans would sign up for an Obama Phone if they knew more about the program.

Want to find out if you qualify for the Obama Phone program? Click here.