Are Americans getting more government than they ordered?

One of the perks of my job is that I get to talk to plant managers. If you like people who are grounded in reality and used to having a job to do, factory people are great company. If you enjoy people who think America may be getting a little more government than we ordered, factory people are pretty much your crowd, as they are mine.

The crew around the Plant Services coffee pot is a lot like the folks we write for, so it isn’t surprising that we’ve had some heated discussions about Washington hijinks. The widely reported “Obamaphone Free Cell Program,” (OFCP) came up this week as a case in point. Some participants were annoyed because of the president’s alleged reckless spending of their tax dollars. Others were annoyed because it sounded like a campaign to grab credit for the low-cost/no-cost home phones that have been available for a couple of decades. Since I needed a blog topic that would interest our readers and I didn’t need another cup of coffee, I volunteered to research the issue.

Beginning in 1984 under President Reagan and expanded by the 1996 Federal Telecommunications Act under President Clinton, United States telecommunications companies have provided discounted and free telephone service to low-income households. The program is called “Lifeline,” and it is funded by the Universal Service Fund (USF), which is made up of mandatory (under FCC rules) contributions from the telecommunications companies. The fund has been administered since 1996 by the Universal Service Administrative Company, an independent management firm. In 2008, while George W. Busch was President, the service was expanded to cellular phones. There was a 2012 overhaul of the Federal Telecommunications Act to reduce abuse and graft in the system. Lifeline has had, by some accounts, 1,700 participating telephone service providers over the years.

J. Stanton McGroarty, CMfgE, CMRP, is senior technical editor of Plant Services. He was formerly consulting manager for Strategic Asset Management International (SAMI), where he focused on project management and training for manufacturing, maintenance and reliability engineering. He has more than 30 years of manufacturing and maintenance experience in the automotive, defense, consumer products and process manufacturing industries. He holds a bachelor of science degree in mechanical engineering from the Detroit Institute of Technology and a master’s degree in management from Central Michigan University. He can be reached at smcgroarty@putman.net or check out his .

The 2012 overhaul included the creation of a set of goals, including “to increase access to advanced telecommunications services throughout the Nation and 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.” This may be where the Obamaphone myth began, but that isn’t what it says.

My monthly cell bill has a “UTF Contribution” line that runs between $2.00 and 2.25. My VOIP home phone line is charged $2.77 per month for USF. The charge is supposed to work out to 15.7% of interstate phone cost, as of Q4, 2012. Programs other than Lifeline are also supported by USF. The phone companies are free to decide whether to bill their USF contributions back to customers or to simply absorb them. I suspect that was a short meeting.

Households that are participants in any of the public aid programs listed below are generally eligible to participate in the Lifeline program.

  • Medicaid
  • Supplemental Nutrition Assistance Program (Food Stamps or SNAP).
  • Supplemental Security Income (SSI).
  • Federal Public Housing Assistance (Section 8).
  • Low-Income Home Energy Assistance Program (LIHEAP).
  • Temporary Assistance to Needy Families (TANF).
  • The National School Lunch Program's Free Lunch Program.

Benefits vary by state. Here in the Midwest phones are often free, and 250 minutes of free time are typically provided monthly. The program is popular with the less chic cell service providers for two reasons: First, the “free” service is billable back to the USF. Second, the carriers are allowed to sell additional minutes to users at normal rates.

There we have it. The “Obamaphone” per se is a myth. Low-income households do, however, get some help with phone service much as they get help with food purchases. Neither is a recent development, and both are consistent with human services programs of recent decades.

Never fear, factory amigos. It isn’t less government, but it isn’t more. And the inventor has long since left the capitol.

Read Stanton McGroarty's monthly column, Strategic Maintenance.