A free phone? Really?
If you've been watching late-night television in recent months you may have noticed commercials advertising free phones.
It's no joke.
The catch: They're for low-income residents (you have to qualify annually to receive the benefit) and the free air time maxes out at 60 minutes, meaning if you talk beyond that amount, you'll have to pay.
"Like any other deal on the market, it's a good opportunity for the right consumer," said Jim Chilsen, communications director with the Citizens Utility Board, the consumer advocacy group based in Chicago. That means: "know what you're getting into," he said.
The wireless service is called SafeLink, and it's being marketed in Illinois by a Miami-based company called TracFone.
TracFone launched the SafeLink program in the state last fall following approval from the Federal Communications Commission and the state of Illinois to become an eligible telecommunications carrier of Lifeline.
That's the federal program that provides discounted telephone service to individuals who qualify. Lifeline is funded by telecommunications carriers and the Universal Access Charge assessed on some phone bills.
But over the years, not many low-income residents knew about or participated in the Lifeline program.
In 2008, FCC commissioners decided to extend the Lifeline program to wireless service because "for some families a wireless phone fit their needs better than a wireline phone," spokesman Mark Wigfield said.
"Traditionally this segment of the population has been underserved for many years," said Jose Fuentes, director of government relations for TracFone. "With that in mind we created this," he said.
The federal Lifeline subsidy goes to the carrier, and the carrier then reduces the customer's bill by the amount of the subsidy, according to Wigfield. Instead of the wireless Lifeline participant receiving a discount on a telephone bill (which happens with the Lifeline program for wireline or landline phones), the company converts that discount (which varies by state, but is $10 in Illinois) into minutes: 60 minutes, Fuentes said.
The two phones available through the SafeLink program are Motorola and LG models. They have standard cell features: texting capability, caller ID, voicemail. They do not have Internet access.
The maximum time allotment, at no charge, is 60 minutes a month. Texting counts for one-third of a minute, Fuentes said. And the company does not round up minutes used. Talk for 45 seconds, 45 seconds are deducted from your monthly usage. Minutes are deducted when calling voice mail. Unused minutes do roll over, he said.
There is only one phone allowed per household, according to Wigfield. And you'll have to choose between receiving a Lifeline discount for a wireline or landline phone or for a wireless phone. You can't have both.
"It does seem like a good deal on its surface," Chilsen said.
"Sixty minutes is not a lot" of air time, Chilsen pointed out. "Heavy phone users should not think about getting this."
However, "it is a perfect option for an older couple who just want an emergency phone."
To receive more minutes, SafeLink customers can purchase a 60-minute card for $20, with a bonus of 40 additional minutes, Fuentes said.
Fuentes said the majority of SafeLink customers do not purchase additional minutes.
"They're using this phone for quick calls, if they have an emergency and need to call friends. They use the phone as it's intended: for people to get in touch with them," or for them to get in touch with other people.
In other words, the phone is not designed for someone who talks 500 minutes per month.
To qualify for the program in Illinois, residents need to participate in one of the following assistance programs: federal public housing assistance/Section 8, food stamps, Low Income Home Energy Assistance Program, Supplemental Security Income, the National School Lunch Program, Temporary Assistance for Needy Families or Medicaid.
Fuentes estimated more than 1 million households in Illinois qualify. In Champaign County, an estimated 21,459 people are eligible.
Fuentes declined to say how many customers in Illinois the company has signed up so far, but he did characterize the response as being "overwhelming."
"TracFone certainly is making it more popular," Wigfield said of the Lifeline program. Why it may be becoming more popular could be attributed to the free cost and the company's marketing campaigns, he said.
TracFone is planning on rolling out the program in Indiana sometime this year.
There is no credit check involved in enrollment, but customers have to have their information verified annually to participate in SafeLink. The customer can renew the service after a year, but will need to reapply.
TracFone, in business for about 10 years, is a seller of prepaid wireless service. Traditionally its client base has included individuals who do not want a long-term contract or do not use a lot of minutes, Fuentes said.
It is not the only company that offers Lifeline wireless service. Other telecommunications companies do offer the program, so Wigfield advised that customers check with their wireless provider to see if it's offered.
"To participate (in Lifeline) the person has to be income eligible and the provider has to be a participating company," Wigfield said.