The Low Income Support Mechanism - 2000 Annual Report

Assisting Low-Income Consumers

	More than 1,500 telephone companies in all states and territories have provided assistance to more than 5 million customers through the Low Income Support Mechanism.

The Low Income Support Mechanism assists eligible low income consumers in establishing and maintaining telephone service by discounting services provided by local telephone companies. In 1998, the Low Income Support Mechanism was expanded to make available a baseline amount of support to companies in all states. Since that time, more than 1,500 telephone companies in all 50 states, the United States territories, and the District of Columbia have provided assistance to more than 5 million customers. Support to low-income consumers totaled nearly $381 million in 1998, almost $488 million in 1999, and more than $553 million in 2000. Appendix B provides funding information by state.

There are four components to the Low Income Support Mechanism:

• Lifeline support reimburses local service providers for providing discounted telephone service to eligible subscribers. Lifeline support enables low-income customers to save at least $5.25 per month and up to $7.85 per month on their telephone bills. Consumers may also qualify for an additional $3.50 per month in matching support from their state.
• Link Up support reimburses local service providers for providing discounted connection charges to eligible low-income consumers. Customers qualifying for Linkup support are eligible to save up to 50% on installation fees (not to exceed $30).
• Toll Limitation Service support compensates local service providers for costs incurred in establishing the toll limitation service for low-income subscribers. Service providers are required to offer toll limitation service at no cost to low income consumers.
• PICC support reimburses interstate Presubscribed Interexchange Carrier Charges to local service providers in instances in which the low-income subscriber has selected toll limitation service. PICC support ended in July 2000, coincident with an increase to the Lifeline support for price cap carriers.

Beginning in 2000, the Low Income Support Mechanism was expanded to provide additional support to low income customers living on Native American reservations, consistent with the FCC's Tribal Lands Order. The Low Income Support Mechanism was enhanced in the following ways:

• An increase in the discount off the local phone bill, up to $25, that eligible low-income consumers on reservations can receive under the federal Lifeline program. Under the new rules, low income subscribers may save between $30.25 and $32.85 per subscriber per month in Lifeline support, depending on various factors such as state matching.
• An increase in the assistance available for the cost of initiating service provided under the Link Up program by $70 (to a total of $100) per qualifying low income subscriber living on a reservation. This will reduce the initial connection charges and line extension costs associated with initiating phone service to eligible low income customers on reservations.
• Broader consumer qualification criteria for Lifeline and Link Up to include means-tested or income-based programs in which low-income tribal members are more likely to participate.

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