UF: Phone service discount benefits few low-income Floridians

March 29, 2006

GAINESVILLE, Fla. — Most low-income Florida households do not take advantage of a discount for telephone service offered through a government and telephone company collaboration, a University of Florida study found.

The UF Public Utility Research Center (PURC) conducted a study of the effectiveness of Lifeline, a 20-year-old national program created by the Federal Communications Commission that provides low-income households with discounts of $13.50 per month on basic local telephone service. A similar program, Link-up, provides a 50 percent discount on the price of service installation.

“We found that the participation rate in Florida is around 12 percent [of people who are eligible],” said PURC Director Mark Jamison, who worked on the study with policy analyst Lynne Holt.

The study, begun in April 2005 and completed in February, relied on analyses by UF’s Shimberg Center for Affordable Housing to determine how many people participate in the Lifeline program and how many are eligible. After determining the number of nonparticipants, the study used customer surveys and statistical studies to research why people do not take advantage of the discount. The study was funded by BellSouth Telecommunications Inc. and Sprint-Florida Inc.

Florida falls below the nationwide participant rate of 33 percent. However, national average results may be skewed because of California’s atypical 136 percent participation rate. Without California, the national rate drops to 19 percent.

“It turns out that the biggest reason people don’t participate in the program is that they don’t know about it,” Jamison said.

The fact that people are unaware of the program surprises Jamison. For the past two decades, it has been widely advertised in newspapers and on fliers and the radio.

“For the low-income households, as far as we’re able to tell, the advertising and the articles in the newspapers don’t have much impact, because for low-income households, they need to hear about this program from people they trust,” Jamison said. “They don’t always trust some of these sources. The people they trust are the social workers, social service agencies, the telephone companies or maybe a friend or family member.”

A similar study of discount phone service participation completed by the University of Tennessee and Georgetown University in 2005 found that low-income households are suspicious of government programs. But Jamison said that suspicion of the government was not a dominant theme in the PURC study.

Despite the low participation in the Lifeline program, the PURC study found that 90 percent of low-income households carry telephone service.

“So we have this large group of households, for whom we are trying to make telephone services more available, that can afford it anyway without the discount,” Jamison said. “A challenge for policy makers now is to decide what the goal should be: Do we try harder to get more people enrolled in the program, or do we focus on the 10 percent who don’t have a phone?”

Even if the program isn’t helping low-income houses afford telephone service, it may contribute in other ways. “If low-income households are saving money on their monthly phone service bill, they have more money to devote to other communications services like cable television or Internet access,” Jamison said.

Until last year, Lifeline only applied to local land telephone service in Florida, but it was expanded in 2005 to include some cellular services as well.

“For example, if someone in Florida from a low-income household went to Sprint Nextel to get their cellular phone, they could actually get their discount applied to their cell phone,” Jamison said.

The goal of the PURC report was to provide policy makers with important information, not to make policy recommendations, Jamison said. But the report does made some suggestions for marketing to the low-income households without phone service.

“If the goal is to get that last 10 percent of people signed up, then we need to find out what their demographics are, and target them with the marketing,” he said. “We suggest that the marketing efforts focus on the trusted agents – the social agencies, social workers and the telephone companies.”