Georgia’s new $5 per month Obama Phone fee challenged by CTIA

The Lifeline Assistance program (popularly called the Obama Phone program) provides financially disadvantaged Americans with a free cell phone and 250 minutes of airtime each month. The service is free in order to help those who can’t afford a cell phone so they can keep in touch with employers, health care providers and family. But now the state of Georgia has begun charging each user a $5 fee each month for what is supposed to be a free service.

Georgia state Public Service Commissioner Doug Everett says that the fee is designed to reduce fraud in the program. Everett says that the cell phone providers are not adequately verifying low-income requirements and the one-phone-per-household rule.

While it’s true that fraud has been discovered in the Lifeline program, the FCC has already instituted strong measures to combat it. In Georgia’s case, there were over one million Obama phone recipients in 2011, but the FCC’s measures have reduced the number to about 740,000. Still, the state measure proceeded and obtained final approval in early October.

The cell phones are paid for and provided to the recipients by various telecommunications companies such as Safelink Wireless, Assurance Wireless and ReachOut Wireless, and the cost of the monthly service is subsidized by the FCC’s Lifeline Assistance program. The money for the subsidy comes from the Universal Service Fee charged in phone bills to paying landline and cell phone customers.

But the new $5 monthly charge is already being challenged by CTIA, the cell phone industry association that represents the vendors of these phones. In fact, the CTIA filed a lawsuit months ago when they heard of the potential new state measure.

The CTIA suit claims that the state of Georgia overstepping its authority by, in essence, setting cell phone rates thorugh the $5 fee. Senior vice-president and general counsel for CTIA said in a statement:

“CTIA will continue to challenge the Georgia Public Service Commission’s decision to set rates on wireless service, which would make Georgia’s consumers pay more than they do today”

Consumer advocacy groups are fighting back. Liz Coyle, spokeswoman for the non-profit Georgia Watch group said, “While we certainly recognize there are instances of fraud and abuse, we believe measures taken on the federal level to crack down on that are working.”