‘Lifeline’ Service Gets Scant Use; Tax Trimmed

Because so few low-income Californians have taken advantage of subsidized “Lifeline” telephone service, the state Public Utilities Commission on Wednesday trimmed the tax that finances the program and, in effect, reduced long-distance rates.

The reduction from a 4% tax to one of 1.5% on the gross revenue of about 90 long-distance carriers operating within California will likely be passed on to customers in the form of lower intrastate tolls, effective July 1, said Joe Cabrera, a PUC financial examiner. The savings could reach $38.8 million in the first year. he said, but the amount will depend on individual calling habits.

Lifeline service was made available in July, 1984, to households with incomes of $11,000 or less to enable them to receive basic telephone service at half the normal monthly charge. But few consumers were using the service, so in 1985 the commission raised the threshold to $11,500.

The commission further liberalized the requirements again this year by adopting a sliding scale of income eligibility tied to federal poverty guidelines. In addition, the number of local calls included in the reduced monthly charge was doubled to 60.

A study released by the PUC last October revealed that only about half the nearly 1 million households eligible for the subsidized service had signed up for it by last June 30.