More than 50% of Sprint’s net new subscriber additions at any given time utilize a government subsidy program called “Lifeline,” which provides low-income Americans with free wireless minutes each month. Sprint provides the service under its “Assurance Wireless” brand, and it makes money beyond the small government subsidies when Lifeline customers spill over their monthly pool of minutes. Actual figures are not available, but the carrier is reportedly nearing a total of 2 million Assurance Wireless subscribers according to The Wall Street Journal. Read on for more.
Sprint is not the only carrier involved in the program. Verizon Wireless and AT&T also participate, but it is unclear what percentage of new subscribers utilize Lifeline. In addition, TracFone has a SafeLink brand that also provides the service, and that brand already has more than 2 million subscribers. “Unfortunately, there’s a large market of customers who are eligible based on their poverty level,” Sprint senior vice president of consumer marketing John Carney said. “This is not a customer, without subsidy, we would have gone after originally. We wouldn’t have been able to make money.”
Many customers take advantage of the Lifeline option because the service is cheaper than signing up for a wireline bill, even if they spill over their monthly minute allowance. “Due to the fact that I do not have a house phone, I tend to use the minutes a lot faster,” Assurance Wireless subscriber Sharon Walters told The Wall Street Journal. “To add minutes, it’s still cheaper than a phone bill.”
Universal Service Administration Co., a non-profit that runs Lifeline’s fund, disbursed a total of $783 million during the first half of 2011, which is up 26% from the same period in 2010. It remains unclear exactly how much Sprint and the other U.S. wireless carriers are each receiving from the U.S. government for the program, but a chart from Universal Service Administration Co. shows that Sprint’s Assurance Wireless brand made between $50 million and $75 million so far this year. SafeLink made more than $100 million so far in 2011 from the Lifeline program.