According to research from Consumer Reports magazine, consumers who pay for their own mobile telephone service also pay taxes according to how much service they purchase. “The bigger your bill, the more you get tapped for service taxes and surcharges, which tack on an average of 14.5 percent,” the publication reports.
In Idaho there are plenty of opportunities for residents to receive free or reduced-price mobile telephone service through government programs that are funded with some of the same taxes and surcharges noted by Consumer Reports. In fact, when an individual applies for food stamps in the Gem State, an application is automatically filed on his or her behalf to verify eligibility for one of the taxpayer-funded telephone programs.
Taxpayer-subsidized communications services can be traced back to the passage of the Communications Act of 1934. Signed by President Franklin Roosevelt, the law’s intended purpose was in part to allow for “regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States a rapid, efficient, nationwide, and worldwide wire and radio communication service with adequate facilities at reasonable charges.”
The law also provided for the creation of the Federal Communications Commission (FCC), an agency to replace the previous Federal Radio Commission, and then in turn placed the regulation of interstate telephone service under the auspices of the FCC.
During the presidency of Ronald Reagan in the 1980s, the FCC sought to de-regulate telephone companies and in 1985 established the Lifeline telephone financial assistance program. According to the FCC’s website, the Lifeline program provides a “discount on phone service for qualifying low-income consumers to ensure that all Americans have the opportunities and security that phone service brings, including being able to connect to jobs, family and emergency services.”
A decade later the Telecommunications Act of 1996, signed by President Bill Clinton, allowed for similar programs that provide subsidized Internet access.
In 2005, the Lifeline program was amended to include the subsidizing of mobile telephones. And today the funding for both landline and mobile telephone subsidies comes directly from taxes that levied against cash-paying telephone service consumers.
According to Lindsey Nothern, spokesperson for U.S. Sen. Mike Crapo, the amount of money collected on a national level from paying telephone customers and re-distributed in the form of subsidies has nearly tripled in recent years.
“The cost of the program has gone from $819 million in 2008 to $2.2 billion in 2012,” he told IdahoReporter.com. “Sen. Crapo believes that the coming fiscal year budget brings the opportunity to stop out-of-control spending on programs like free phones that have more than doubled in cost to taxpayers over the past five years.”
In Idaho, both subsidized mobile and landline telephone service are available to qualified applicants, and are funded with taxes that are levied under both national and statewide authority. In accordance with the Idaho Telecommunications Act of 1988, the Idaho Public Utilities Commission (IPUC) levies a “surcharge” (IPUC does not refer to it as a “tax”) on cash-paying telephone customers and then, in turn, uses the revenues to fund an in-state subsidized telephone service called the Idaho Telecommunications Assistance Program (ITSAP).
“We’re talking about a real basic sort of service,” said Gene Fadness, spokesperson for IPUC. “ITSAP provides a dial tone and the ability to make emergency calls, and usually not much more.”
ITSAP is a separate program from the federal Lifeline service, but the two services are often combined, according to Niki Forbing-Orr, spokesperson for the Idaho Department of Health and Welfare (DHW). “ITSAP is separate from Lifeline, but it works in conjunction with the federal program for the overall total benefit,” she told IdahoReporter.com. “ITSAP pays about $2.50 and Lifeline pays about $9.25 for a total possible monthly benefit of $11.75 if a person is able to get both.”
She added that “there are some cellphone companies that don’t participate in ITSAP, which reduces the monthly benefit for their customers who might be eligible. Those customers can only get Lifeline benefits.”
Individuals in Idaho can apply for ITSAP and Lifeline when they go to apply for other welfare benefits, namely the food stamps program, through the DHW. When an application is filed for food stamps, the state automatically files an application on that person’s behalf to see if he or she qualify for the ITSAP program. Working under a contract with the private, nonprofit organization Community Action Partnership Association of Idaho (CAPA), DHW sends applications for ITSAP services to CAPA for review. If CAPA approves an applicant for the statewide ITSAP service, that person is then automatically qualified to receive the federal Lifeline benefit as well.
Century Link, a provider of landline telephone service in Idaho, is currently advertising the availability of subsidized telephone service and provides a toll free number that prospective recipients can call for more information. But, according to Sheri Davis, Century Link spokesperson, the company doesn’t actually field these calls. Rather, the number rings directly to CAPA so eligibility can be verified before Century Link gets involved.
According to Forbing-Orr, the number of Idaho households receiving the ITSAP benefit has been decreasing since 2009. Yet given the near tripling of the cost of the program at the federal level in recent years, members of the U.S. Congress—in particular members of the U.S. House of Representatives—have engaged in serious discussions about reducing the amount of taxes that the program can collect from paying telephone customers.
“The Lifeline program is another example of the inability of the federal government to manage taxpayer money” U.S. Sen. Jim Risch told IdahoReporter.com. “I am pleased to see my colleagues in the House of Representatives working to defund this fraudulent and abusive program and I would support this effort in the Senate should it come to the floor.”