Government told to look to American plan to increase phone penetration

The federal government should take an active role in combating phonelessness in Canada, a new report recommends. While several options are presented, the preferred solution would see adoption of the program currently operating in the United States. Last month, the Public Interest Advocacy Centre (PIAC) released the second edition of Eliminating Phonelessness in Canada: Possible Approaches. Written on behalf of Human Resources Development Canada, the study examined the state of phone service to low income people and looked at methods used in the U.S. and Britain to fight phonelessness. Even though Canada has a telephony penetration rate of over 98 per cent, the situation is still dire for significant sections of the population. The paper’s author, Philippa Lawson, mentions some obvious findings in her report, including that phonelessness is linked to income levels. "he most recent survey data indicates that 68 per cent of those who don’t subscribe to local phone service in Canada’s 10 provinces cite affordability as the reason," she writes. "Noting the restricted coverage, and therefore inherent bias, of these surveys, it can be conservatively concluded at least 0.8 per cent of Canadian households, or over 100,000 households, do not subscribe to residential telephone service because they can’t afford it . How many more can’t afford basic phone service is not clear, due to the significant gaps in survey samples." The reasons given for not having a phone are the basic monthly charge (an answer given by 69.3 per cent of those surveyed), the installation charge (60 per cent), security deposits (44.1 per cent), LD charges (29.7 percent), and optional features (27.8 per cent). The Federal Communications Commission (FCC) in Washington has established the Lifeline program, which reimburses telcos for discounting customers monthly bills. There is additional support through the Link-Up plan, which pays the companies for discounting connection charges to eligible clients by up to 50 per cent, with a limit of $30. Eligibility for both programs is set by state authorities. The two programs make up the FCC’s Low Income Support regime, which is financed by the federal universal service fund. All interstate service providers pay a specific percentage of interstate and international revenues into the pot. The FCC says that in 2000 about 5.9 million American households paid reduced local rates under the Lifeline scheme. Link-Up has helped about 10.6 million customers since it was begun in 1987, the regulator states. While PIAC looked at the system in the United Kingdom, it warned that making comparisons is not easy, since local service in Britain is not provided through regular fees. Rather, all calls are toll calls. British Telecom, the major ILEC, has the In Contact service that allows incoming calls but only permits outgoing calls to emergency services and toll-free numbers. The study notes that the penetration has been a dismal four per cent of the target audience. The telco is also offering prepaid cards for sale. The British regulator, Oftel, estimates that as of last August, 2,000 cards have been used on In Contact lines, representing about 40,000 calls. Lawson endorses the American approach. She allows that the adoption will not be without difficulties. She lists telco opposition to further subsidy plans; taxpayer hostility to additional government social spending; potential fraud; and coordinating the program between federal, provincial, and local authorities. "None of these challenges (to the development of a Lifeline-type program) are insurmountable," she concludes. "It is instructive that the U.S. Lifeline and Link-Up programs have not only survived, but been expanded over the last 16 years. Surveys show that there is in fact substantial public support in Canada for such a program."

Government told to look to American plan to increase phone penetration

News | April 23, 2002

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