Maryland enrollment soars in federal phone program

Enrollment in a controversial program that provides free cell phone service to low-income families has increased faster in Maryland than any other state in the nation, jumping nearly 90-fold since 2008 — renewing scrutiny on Capitol Hill over its management.

The Lifeline program, created in 1984 to soften the impact of telephone deregulation on low-income families, had nearly 509,000 subscribers in the state last year, up from 5,821 in 2008. Growth in Maryland was nearly 40 times greater than the national average.

Critics and supporters of Lifeline raised concerns following a 2010 report from the Government Accountability Office that found subscribers who did not meet the program's eligibility requirements, and phones that were being resold on the Internet.

And when the Federal Communications Commission began targeted audits of the program — such as checking for people with more than the one phone allowed — it kicked more than 230,000 Marylanders off the program late last year.

"People were receiving duplicate phones — people were getting phones more than one to a household," Billy Jack Gregg, a communications consultant who presented the enrollment figures at a recent House subcommittee hearing on Lifeline, said in an interview. "It seems pretty clear from the numbers that more were being distributed than should have been."

The FCC already has tightened its review of applicants and subscribers, resulting in a 27 percent decrease in nationwide enrollment since last summer. And agency officials say they expect participation in both Maryland and other states to continue to decline.

Still, the program remains a target of conservative lawmakers, and Congress is considering several bills to limit its scope.

Participants and supporters say Lifeline provides a critical service for families who can't afford phones to call employers when they're running late to work, for instance, or to take emergency calls from family.

"Imagine being a poor person and trying to find a job without a phone," said Cleo Stamatos, a consumer advocate and consultant who works on telecommunications issues. "It is a program we know helps people find and keep employment."

Lifeline is funded through a surcharge on phone bills that tends to run between $1 and $2 a month, depending on usage. The money pays for $8.7 billion in programs administered by an independent non-profit overseen by the FCC.

Lifeline accounts for $2.2 billion of that spending. More than 13 million people are enrolled nationwide, according to FCC data.

Commercial phone carriers, which are reimbursed from the fund for participating, set up vans on city streets in Baltimore to accept Lifeline applications and distribute free phones. At least one group that serves low- and middle-income families has included information about the phone program in its mailings to clients.

But why the program exploded in Maryland in particular remains a mystery. One possible factor: The state had among the lowest participation rates in 2008, and so there was more room to grow.

Subscribers such as West Baltimore resident Latonya Walker say the program is useful because it provides a consistent number to give potential employers. Walker has her own cell phone, too, but loses service if she fails to pay the bill.

"It comes in handy," said Walker, 39, who is seeking help from the employment firm America Works to find a job.

Walker's free plan provides 250 minutes a month, which she says is easy to burn through.

"You have to budget the time," she said. "But you still have a number that you can use to at least get a message."

Walker said it was easy to enroll in Lifeline but that companies do verify eligibility.

Several groups, including the Maryland Consumer Rights Coalition and the Maryland Creating Assets, Savings and Hope (CASH) Campaign, have pushed to expand participation in recent years.

The CASH Campaign included fliers about the program along with its own mailings. Robin McKinney, director of the Baltimore-based group, said people use it to help find jobs and stay in touch with family.