Federal Government's Free Cell Phone Program Cuts into Prepaid Cell Phone Industry Sales

IRVINE, Calif., Oct. 4, 2011 /PRNewswire/ -- (http://www.myprgenie.com) -- Lifeline Assistance, which was once a small, little-known federal program that offered landline phones to the poor, is burgeoning and giving stiff competition to the prepaid cell phone industry.

This may explain why prepaid sales have cooled this year and prepaid cell phone companies Tracfone, Leap Wireless and MetroPCS all reported disappointing results for the second quarter 2011. 

Experts say sales are being cannibalized by the federally-mandated Lifeline Assistance program and recent statistics seem to back them up.

"Our analysis shows that the government's free cell phone program is taking sales away from the prepaid cell phone industry," said Mark Henry, editor of FreeGovernmentCellPhones.net.

Henry explained that Lifeline has been around for decades, helping financially disadvantaged Americans afford phone service. "But it applied only to landline phones until mid-2008 when it was expanded to cover cell phones."

Now an estimated 8 million Americans have free cell phones compliments of this generous government program. "Those are 8 million people who may have purchased a prepaid cell phone if this government program wasn't competing with private industry," Henry added.

Three primary companies participate in the program and provide mobile phones and service in 37 states, D.C. and Puerto Rico: Tracfone's Safelink Wireless, Virgin Mobile's Assurance Wireless and Nexus Communication's ReachOut Wireless.  There are other regional players in some of these states as well. The program is expanding rapidly and will eventually come to all fifty states.

Lifeline offers low-end cell phones and most typically come with 250 minutes of airtime per month. Economically-disadvantaged Americans can qualify for the free cell phone if their annual income is less than 135-150% (depending upon their state) of the federal poverty level, or if they already participate in an approved public assistance program such as Medicaid, food stamps, National school lunch program, SSI, public housing, energy assistance, and others.

Mark Henry is editor of FreeGovernmentCellPhones.net, the nation's leading source of information on the government's Lifeline free cell phone program, and is dedicated to helping those in need understand how to get a free government cell phone.

Contact: Mark Henry, [email protected], 888-712-2227

SOURCE FreeGovernmentCellPhones.net