The blog is a view of life, science, politics and education from an engineering perspective. As engineers, we are taught to view the world objectively. We can hope, believe and calculate a particular outcome, but natural laws are inflexible and pay no heed to who we are or what we believe. We must approach the objective dispassionately, while compensating for our own distorted perceptions. Balance is also a key element; balancing between the ideal and the pragmatic, balancing cost and functionality, balancing analysis with action, etc.
Scheduling routine critical self-analysis is the foundation to objectivity. If we do not fully understand and compensate for our own failures, tendencies, habits and skewed thought processes, we will not see the world as it is. Without a regular critical self-analysis we will see the world as we are and then fall prey to self-delusion.
Failure is a great teacher. When failure is coupled with perseverance, it produces the fruit of patience and humility. An engineer, fresh out of engineering school is typically set up for failure early and often. The failure breaks the new engineer of any ideas of self-importance, arrogance and book smarts. Only then can the new engineer be formed and molded into a productive element in the industry.
The original idea of providing low-income individuals with subsidized phones had its origins in the Reagan administration in 1984 following the break-up of AT&T. AT&T was deemed to be a monopoly and broken into multiple segments. Prior to the break-up, they had, as a public service, provided low cost phone service to low income customers. The Reagan administration wanted that program continued.
The Telecommunications Act of 1996 formalized the discount service based on land lines. In section 104, under the ‘Non-discrimination principle’ heading, all individuals, regardless of the ability to pay, would be able to make emergency or essential calls.
In 2008, FCC expanded the LifeLine program, to offer one hour’s worth of calling time per month, and other wireless services like voice mail to eligible low-income households. Applicants have to apply and prove that they are either receiving certain types of government benefits, such as Medicaid, or have household incomes at or below 135 percent of the poverty line. Using 2009 poverty guidelines, that’s $14,620 for an individual and a little under $30,000 for a family of four.
TracFone Wireless, Inc., America’s leading prepaid cell phone provider, announced the launch of SafeLink Wireless in 2009. SafeLink Wireless is the first and only completely free offering of LifeLine.
The SafeLink Wireless service will provide eligible low-income households a free cell phone valued at $120, mobile access to emergency services and free 60 minutes of airtime, monthly, for one year. The cell phone offers in-demand features: voicemail, text, call waiting, international calling to more than 60 destinations and caller ID.
The program has exploded in growth. In 2011, LifeLine accounted for 20% of the $8.1 billion Universal Service Fund distributed to support connections for rural areas, schools, hospitals and low-income individuals.
There are 17 million households currently signed up for the program, up from under 1 million just four years ago when $772 million was distributed by USF.
The program is paid primarily through service fees to the wireless service providers.
For example: A Verizon Wireless bill will include the following language
Our Surcharges include:
· A Regulatory Charge (which helps defray various government charges we pay including government number administration and license fees)
· A Federal Universal Service Charge (and, if applicable, a State Universal Service Charge) to recover charges imposed on us by the government to support universal service.
· Taxes, governmental surcharges and fees include sales, excise and other taxes and governmental surcharges and fees that we are required by law to bill to customers. These taxes, surcharges and fees may change from time to time without notice.
In my bill (family plan), these charges add up to $31 per month.
There is a political connection to the service provider. TracFone Wireless CEO F.J. Pollak “has donated at least $156,500 to Democratic candidates and committees this cycle (2012), including at least $50,000 to the Obama campaign,” while his wife Abigail has bundled over $632,000 in Obama donations during this campaign cycle. In return Tracfone maintains an exclusive contract through LifeLine. (Of course, the campaign cash did not overtly buy political favors, but I am sure that there is some link between the money and the contract.)
From the Huffington Post, “The world’s richest man, Carlos Slim, is apparently making a lot of money off a government program aimed at helping the poor Americans. Every time someone gets a phone through LifeLine, a government program that gives phones to low-income Americans, Tracfone, a company in which Carlos Slim has a controlling stake, nets $10.” With tens of millions of phone already handed out, Carlos Slim has been able to add to his net worth of $67 billion.
The LifeLine program came under scrutiny when Jillian Kay Melchior, a reporter with The National Review received three brand new phones, though her income completely disqualified her. She also signed up for two different phones, from two different vendors, who shared the same vending spot, outside of a welfare office.
With such little scrutiny welfare recipients can receive more phones than they need. Some use these benefits for illegal activity, reports The Daily Mail. One video, taken by an undercover reporter shows an actor asking a vendor in Philadelphia if he can sell the phone for drugs. The vendor’s reply was, “Hey, I don’t judge.”
According to the Washington Times, 50 congressional members have signed on to legislation that would put a stop to the government's free phone program, citing up to $1 billion in fraud in the program. But this is not a real effort. The program is safe and no measures will be taken to curb any of the excesses.
In truth, this program is no different than Social Security, Medicare, Public housing, Food Stamps, etc in that the program starts small and innocently, but grows rapidly and is soon over run by fraud and corruption. In each case, the well-meaning government entity is at a loss to explain what had happened to the program and then scrambles to manage the expectations and fraud. However, there is one thing that the government never takes into account when creating these programs: human nature. Human nature is hard to quantify and objectify.
- We will take as much rope as we are given (no rope is left over, even if it is not needed)
- We will push the envelope of what we are given (initially a $30k cap was imposed on the participants, it was pushed to $35k very quickly and now there are apparently no caps on the income levels for the participants)
- Government imposes little accountability (since someone else is paying for it, the scope of cost matters little)
- Politically connected individuals always profit nicely from government programs
- Once the program has gained a foot hold it will never die (the free phone program is here to stay and no politician will make a real attempt to kill it; the recipients, politicians and providers will insure that it remains viable)
- We are lazy and want to take as little responsibility for ourselves as possible, while demanding more rights (why work for something when we can get it for free, i.e. someone else pay for it)
- We want to make all the poor choices that are available to us and have someone else suffer with the consequences of our poor choices
- Self-governance without self-restraint will lead to self-destruction
In 2011, about 16.8 million phones were handed out through the LifeLine programs. A substantial percentage of these new phones made their way onto Ebay and Craig’s list, effectively driving down the cost of new phones being sold through retailers. The supply of new phones on these sites outpaced the demand. Carlos Slim made his $10 and the phone recipient also profited from the sales, but the retailer was forced to sell at a loss in order to compete.
Part of the reason for the wide spread usage of this Federal program is the heavy advertizing and easy access to stores handing out the product. From the SafeLink website: 'How to qualify: If you already participate in other state or federal assistance programs such as federal public housing,' you're qualified.
The advertisement goes on to say, "You can get an additional free 100 minutes if you recommend a friend. Pay nothing! No bills, no contracts, no credit checks, no hidden fees."
In the end the rich get richer, the poor get something for nothing and the middle class ends up paying for all of it.
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