https://www.safelinkwireless.com/EnrollmentPublic/benefits.aspx"The federal "Lifeline" program was created during the Reagan Administration. Lifeline is a federal program created by the Reagan era Federal Communications Commission (FCC) in 1984. The program was enhanced under Telecommunications Act of 1996, which was supported on a broadly bipartisan basis in Congress. The FCC’s Low Income Program of the Universal Service Fund, which is administered by the Universal Service Administrative Company (USAC), is designed to ensure that quality telecommunications services are available to low-income customers at just, reasonable, and affordable rates. Lifeline support reduces eligible low-income consumers' monthly charges for basic telephone service.
Thanks to SafeLink, Lifeline support is now available for wireless phones. Traditionally, the Lifeline program was only available as a discount on a consumer’s landline telephone bill. SafeLink Wireless was created by TracFone Wireless, Inc. when the Federal Communications Commission (FCC) recently approved the company to offer Lifeline -- a public assistance program that ensures telephone service is available and affordable for low-income subscribers. SafeLink Wireless applies the Universal Service Fund subsidy to an allotment of free airtime minutes and TracFone provides the wireless handset at the company’s expense. Instead of receiving a subsidized monthly telephone bill for Lifeline service, SafeLink converts the total amount of discounted service into minutes each month for one year. The cell phone offers in-demand features: voicemail, text, three-way calling, call waiting, caller ID and access to 911."There is a Federal Program, but it's been around for some time now. This is just wireless companies getting in on the program that was designed for traditional home phones. The phones they provide are therefore subsidized by the program, plus they are dirt cheap to begin with, and the companies end up making plenty of money through pre-paid minutes which customers routinely purchase to add to the minimum provided for free. Throw in extra services (customer pays) like messaging and data at exorbitant rates and the companies make out fine.