AT&T ends monthly federal subsidy for low-income landline customers

By Robert Channick, Chicago Tribune. October 19, 2018

AT&T has yet to pull the plug on landline telephone service in Illinois, but it may be pushing its neediest customers to go wireless by abandoning a federally subsidized discount.

The carrier began sending notices last month to about 5,400 low-income subscribers in the Chicago area and downstate that they will no longer receive the monthly Lifeline credit on their landline bills as of November, adding about $120 per year to the cost of the service.

Ending the Lifeline discount, despite having no immediate plans to discontinue landline service, leaves those AT&T customers with a stark choice: pay more or switch to one of a handful of mostly wireless providers participating in the program.

“Customers can keep our traditional voice service without the Lifeline discount, or they can obtain Lifeline discounts from another provider,” AT&T spokesman Eric Robinson said in an emailed statement.

In Chicago, AT&T lists seven alternative Lifeline providers, including Access Wireless, Life Wireless and SafeLink Wireless. AT&T’s own wireless service is not an approved Lifeline provider.

Launched in 1985, Lifeline is a federal program that gives eligible low-income customers a discount of at least $9.25 per month on phone or internet service. The discount is available only through designated providers.

To be eligible for the Lifeline discount, subscribers must have an income at or below 135 percent of the federal poverty guidelines — $33,885 annually for a family of four — or participate in assistance programs such as food stamps.

AT&T’s decision to exit the Lifeline program comes more than a year after state legislators approved a bill to end traditional landline telephone service in Illinois, pending approval from the Federal Communications Commission.

Illinois passed the AT&T-backed telecom modernization bill in July 2017, joining 19 other states in allowing the legacy telephone provider to eventually get out of the landline business. California is the only state in AT&T’s territory that has not passed such legislation.

While AT&T has yet to seek FCC approval to discontinue landline service — something that may still be years away — the carrier filed a petition with the Illinois Commerce Commission in April to relinquish its obligation to provide the Lifeline discount.

State regulators approved the request in August, and AT&T began notifying Lifeline customers the following month that the discount would end on Nov. 20.

“This is unnecessary at this time,” said Bryan McDaniel, director of governmental affairs for the Citizens Utility Board, an Illinois nonprofit watchdog group. “You do not need to yank these poor people’s credit away until the FCC (approves) ending landlines.”

CUB, which has been contacted by a number of concerned Lifeline customers, is calling on AT&T to reinstate the credit for as long as it continues to offer landline service in Illinois.

Illinois is the 15th state to approve AT&T’s Lifeline relinquishment request, Robinson said.

“This reflects a much larger trend in the market where consumers are making the move to wireless services — and applying their Lifeline discounts to those services, rather than our traditional landline service,” Robinson said.

With customers switching to internet-based and wireless phone services, AT&T has seen its landline business fall precipitously in recent years, dropping to 1.2 million customers statewide as of last year, or less than 10 percent of households in its service areas.

The company said in its ICC application that its Lifeline customer base in Illinois shrank by 93 percent between 2008 and 2017. By the end of 2017, AT&T was serving just 1.8 percent of Lifeline subscribers in the state.

The notice that AT&T was pulling the Lifeline credit as of November will effectively reduce the percentage to zero, sending low-income landline users scrambling for alternatives.

“I’m sure it was a rude awakening for a lot of people,” McDaniel said.

For remaining landline users, many of whom are elderly, switching to internet-based or wireless phone services is not always a viable option.

One area of particular concern is 911 calling. While more than 70 percent of 911 calls come from wireless phones, according to the FCC, they present challenges for emergency personnel to pinpoint location.

In addition, some medical monitoring devices and home alarm systems work only on traditional landlines.

No less important, landlines are the trusted connection for many longtime customers to family and friends.

While landline attrition will likely continue in the years ahead, with or without FCC approval, accelerating the process by removing the Lifeline credit is going to needlessly hurt AT&T’s most vulnerable customers, McDaniel said.

“We’re not saying landlines are the future,” he said. “But these people made a choice to keep their landlines and until they choose to give it up, taking poor people off your network is not a great look.”

Read the full article from the Chicago Tribune here.