Mobile operators take federal subsidies and subsidised customers for granted, for now

by Steve Blum • , , ,

Innovative enough for lifeline subscribers.

The Federal Communications Commission runs a lifeline telephone program that provides subsidies to low income people in order to make sure they have access to at least a minimum level of telephone service. It’s more or less technology-neutral – wireless operators, and particularly re-sellers – have been enthusiastic participants. But as the FCC asks for comments on how its lifeline program should be changed, it notes that even as the mobile industry is constantly improving subscription offers and consumers are increasing use, the subsidised side of the business is stagnant…

It has been over three years since the Lifeline Reform Order, and the standard Lifeline market offering for prepaid wireless service has remained largely unchanged at 250 minutes at no cost to the recipient. Unlike competitive offerings for non-Lifeline customers, minutes and service plans for Lifeline customers have largely been stagnant…

Consumers average between 690 and 746 minutes per month, depending on the type of device they use. And according to Nielsen, the average monthly minutes-of-use for a postpaid consumer is 644. These figures suggest that a typical wireless voice consumer uses two-to-three times the amount of voice service offered on a standard plan by typical Lifeline wireless resellers and suggests that low-income consumers do not have comparable offerings.

That doesn’t include broadband, although the FCC is also looking at how to roll it into the program as well. Which means getting mobile operators and resellers to be as generous with subsidised customers as with market-rate subscribers takes on greater urgency…

We note that low-income consumers that are more likely to only have mobile broadband service, likely due to affordability issues, may rely on that service more heavily than the majority of consumers who can offload some of their usage onto their residential fixed connection. We seek comment on how, if at all, this dynamic should affect our choice of minimum service levels.

Comments are due next week, reply comments will be taken for two months after that.