Georgia Fee on Phone Subsidies Eliminated

ATLANTA (CN) - Low-income Georgians will not have to pay a minimum fee of $5 per month for federally subsidized phone service, a federal judge ruled.

Low-income households in Georgia get access to discounted or free telephone services by signing up with telecommunications carriers enrolled in the federal Lifeline phone program.

Universal Service Administrative Co., the nonprofit organization that administers the program, estimates that 14 million households nationwide participate in it.

Eligible consumers are limited to one line per household, and each qualified household gets 250 minutes per month of free air time. The federal Universal Service Fund (USF), which relies on fees charged to all land line and cellphone customers, supports Lifeline.

Concerned that some eligible households use multiple subsidized lines, the Georgia Public Service Commission adopted a rule imposing a minimum service rate of $5 per month or a minimum of 500 minutes of use per month. It said the rule was designed to prevent fraud by discouraging customers from signing up with multiple subsidized carriers.

CTIA, the cellphone industry trade association, sued Georgia earlier this year to stop the rule from going into effect on Jan. 31, 2014. Teltrite Corp. and i-Wireless LLC have since intervened as plaintiffs in the lawsuit.

They argued that Georgia's rule was an attempt to set cell phone rates, which is illegal under the Federal Communications Act of 1934.

Georgia has countered meanwhile that the amended rule set alternative requirements and did not regulate rates.

Agreeing that CTIA and the carriers are likely to succeed on their challenge, U.S. District Judge Richard Story in Atlanta temporarily blocked the rule last week pending the outcome of the lawsuit.

Story found that the requirement to collect a minimum fee per month qualifies as rate regulation, as does the alternative minimum service requirement of 500 minutes per month.

CTIA has also shown that it is likely to lose customers and goodwill if it must raise rates to comply with the rule, according to the ruling.

While the preliminary injunction will not harm the public interest, allowing the rule to take effect will likely harm plaintiffs' business and its members' ability to participate in the Lifeline program, the order adds.

"Finally, while the status quo may permit some level of fraud to continue, the public interest tilts in favor of providing telephone services to low-income households that otherwise would be unable to afford mobile phones," Story wrote.

The rule would have made Georgia the only U.S. state to charge for the federally subsidized phone service.

The Georgia Public Service Commission would not say much as the case is ongoing.

"Our only comment at this time is that we are consulting with our attorneys on how to move forward," commission chairman Chuck Eaton said in a statement.

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