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Providing Cellphones For The Poor

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http://www.nytimes.com/2009/06/15/technolo...mp;ref=business

John Cobb, 59, a former commercial fisherman who is disabled with cirrhosis of the liver and emphysema, lives in a studio apartment in Greensboro, N.C., on a fixed monthly income of $674. He has been hoping to receive more government assistance, and in February, he did.

It came in the form of a free cellphone and free service.

Mr. Cobb became one of a small but rapidly growing number of low-income Americans benefiting from a new wrinkle to a decades-old federal law that provided them with subsidized landline telephone service.

In a twist, wireless carriers are receiving subsidies to provide people like Mr. Cobb with a phone and typically 68 minutes of talk time each month. It is a form of wireless welfare that puts a societal stamp on the central role played by the mobile device.

Mr. Cobb’s cellphone is a Motorola 175. “I feel so much safer when I drive. If I get sick, I can call someone. If I break down, I can call someone,†Mr. Cobb said. “It’s a necessity.â€

The users are not the only ones receiving government assistance. Telecommunications industry analysts said the program, while in its infancy, could benefit mobile phone carriers, who face a steep challenge of their own: most Americans already own a cellphone, so the poor represent a last untapped market.

“The low hanging fruit is gone, and the wireless companies are going after the nooks and crannies,†said Roger Entner, a wireless industry analyst with Nielsen. “Oh, the poor: How can we sign them up?â€

Carriers can receive up to $10 a month in government subsidies, sufficient to cover what amounts to about $3 in service, Mr. Entner said.

Since November, the number of customers receiving free or subsidized wireless service has doubled to 1.4 million, he said. To be eligible for the program, known as Lifeline, a person must meet federal low-income guidelines or qualify for one of a handful of social service programs, including food stamps or Medicaid.

Why not pay say $5 then rather than $10?

More govt subsidy to help improve stock price?

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