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Mobtown Beat

Welfare Wireless

TracFone Wireless offers free cell phones in Maryland, possibly tapping into new customer market

By William Robinson | Posted 12/16/2009

A new program that provides cell phones for individuals who qualify for social services, such as Medicaid and food stamps, has officially been approved in Maryland.

SafeLink Wireless, a new service provided by cell phone provider TracFone Wireless, was approved last month to begin offering free prepaid cell-phone service as part of the Federal Communications Commission's Lifeline program, which provides discounts on phone services for qualifying individuals. In 2008, LifeLine approved TracFone as an "Eligible Telecommunications Carrier" to provide Lifeline services. The company currently offers the service in 20 states and added Maryland to the list in November.

Under the program, TracFone offers prepaid cell phones to low-income households. Under the Lifeline program, the discount households receive for land-line phone service is around $13 per month. TracFone converts that amount into about 64 minutes of airtime monthly for each SafeLink user. The service is good for one year and includes a number of other services most cell users take for granted: voicemail, caller ID, call waiting, and even texting.

The service is being provided under the premise that individuals who qualify for SafeLink need cell phones to use in case of emergency. "SafeLink provides a modern necessity that could help them secure employment, communicate with their child-care provider, reach hospitals, fire departments, or police in the event of an emergency and they would receive that help at absolutely no cost," announced Jose Fuentes, director of government relations for TracFone, in a press release from the company dated Nov. 12. "No other company is doing that."

There's something in it for TracFone, too: It's a way for the company to tap into the market of low-income households, often overlooked by traditional cell-phone carriers.

Wireless communications consultant Ben Levitan calls SafeLink a great "marketing ploy" for the TracFone company, which offers the free service for a year, after which customers must reapply.

"Clearly after a year, a cell phone gets to be such a strong need that most of the people who do accept these phones will likely find a way to pay for them," Levitan says. (Levitan has worked for Nextel, which also provides discounted phone services to low-income customers through LifeLine in other states.) "It is the old 'puppy-dog sale,' the oldest trick in the book. Put the puppy in someone's hands and tell them to take it home for a few days and that puppy is sold."

SafeLink's Fuentes doesn't necessarily contest that assertion. "Our hope is that [SafeLink customers] will continue to keep the benefits of TracFone once the SafeLink service expires," he says.

Potential qualifiers for SafeLink must be enrolled in one of several aid programs, such as food stamps, temporary cash assistance, Social Security, or temporary disability assistance. According to TracFone, the company has determined that based on 2000 census data, 378,609 homes in Maryland qualify for free phones--90,053 in Baltimore City.

TracFone determines eligibility for the free SafeLink service through a self-certification form completed by the user. The form can be obtained on SafeLink's web site or from the state's Utilities Commission. Potential customers must provide documentation proving their need for government aid, and a deal is underway for the state Department of Human Resources to provide TracFone with a list of individuals receiving aid in the state, to help prevent fraud. "There's a lot of checks and balances, which is fantastic," Fuentes says. If a user no longer qualifies for SafeLink services, they can continue to use the handset as a regular TracFone prepaid phone.

SafeLink is the only completely free service provided by Lifeline, a program created by the FCC in 1984 to ensure that low-income families had access to basic local and emergency communications services. SafeLink was approved in 2008 because cell phones have become so widely used, and often are used in place of traditional land lines. SafeLink and Lifeline are funded by the FCC's Universal Service Fund's Low Income Program, and participating companies receive a subsidy for their participation.

TracFone applied to the FCC to be a carrier for the LifeLine program five years ago. It was approved in April 2008 and joins Nextel as the only other provider of LifeLine wireless service, though Nextel only offers a discounted service to customers.

The company has applied to be a SafeLink provider to state regulators in all 50 states; 30 states have still not signed on. Fuentes says this is due to bureaucratic holdups.

"We always urge the commissions to approve us as quickly as possible," he says. "It's a much needed service, no question, though regulatory bureaucracy gets in the way."

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