A lot of homes still rely on the FCC’s Lifeline program to get a discount on their telecom bills. The program is funded through the Universal Service Fund and administered through USAC. The lifeline program provides a $9.25 discount per household that can be applied to landline telephone, cellular telephone or landline data – assuming customers use a provider that participates in the Lifeline program.

AT&T still touts that they participate in the Lifeline program, but numerous customers around the country received notifications this year notifying them that they were no longer eligible for the Lifeline program. This particular notification was from a customer in Houston, Texas. If you visit the USAC website and look for Lifeline providers in Houston, AT&T is the only company that is listed for landline service. There are numerous cellular providers listed in Houston, but AT&T is not among them.

People might wonder why landline Lifeline is still important. Landline penetration rates are reported each year by the Center for Disease Control. (CDC). They track landline and cellular penetration rates through a huge annual survey that studies the topic to understand how the medical community can communicate best with the public during a medical emergency. They reported last year that the nationwide landline penetration rate was at 45% of households – a number far greater than many people would guess.

I hadn’t looked at residential phone rates in a while and just looked at AT&T’s residential rates. In case you haven’t looked at landline rates, they are not cheap. AT&T has three packages: Complete Choice comes with Caller ID and 9 other features (not including Voice Mail) for $40 per month. Complete Choice Basic is a basic line plus Caller ID and Call Waiting for $36. A basic phone line with no features is $28 per month. None of these prices include taxes and fees that add at least another $10 per month. None of these packages includes long distance. AT&T offers lower rates for those that bundle telephone with Internet or cable TV (although they are actively knocking people off their TV product).

In Texas, AT&T mitigated the Lifeline discontinuation notices somewhat by offering discounts of between $8 and $12 per month for qualifying customers who will sign a term contract, and who know to ask for the discount. But since this wasn’t widely advertised there is a good chance that few people asked for the discount. Discount plans like this also come and go and there is no guarantee of this discount surviving into the future.

I can’t see that there are any penalties for AT&T no longer offering Lifeline. There was a time when the big telcos had to participate in the program, but as state Commissions have deregulated telephone service any such requirement probably no longer applies.

What’s shameful about this is that I am sure that any AT&T executive will say that the company supports the Lifeline program. It certainly says so on their website. Both the AT&T and the USAC website imply that customers in Texas can still enroll in Lifeline, but numerous reports on complaint sites show this not to be the case. Perhaps a really persistent customer can still fight through the customer service gauntlet to get the Lifeline discount, but many customers report they’ve lost the discount.

What’s also disturbing about this is that AT&T doesn’t even have to go through the process of qualifying customers for Lifeline eligibility. In Texas customers must certify eligibility by going through the Public Utility Commission. The big telcos complained in the past that certifying customers was expensive and exposed them to liability if they granted eligibility to unqualified households. But Texas and a number of other states took over the certification process, meaning the telcos have little cost or liability for participating in the program, since USAC reimburses them for discount granted to customers. Why would a big telco stop giving the discounts when it costs them so little?