Tennessee House Republican Leader Gerald McCormick

Tennessee State Senate Majority Leader Mark Norris, R-Collierville

NASHVILLE - An estimated 93,000 low-income Tennessee households would lose a $3.50 monthly subsidy on their landline telephones under an AT&T-backed bill moving in the General Assembly.

The legislation seeks to eliminate the state's Lifeline program, but would not affect an identically named federal program.

"It's a bill that AT&T brought to me," said House Majority Leader Gerald McCormick, R-Chattanooga, the bill's House sponsor. "It will keep them from forcing them to [fund] that. Poor people don't want landlines any more with copper wires on it. They all have cellphones now."

The Senate bill is sponsored by Majority Leader Mark Norris, R-Collierville. Both bills are moving even while the state's telecommunications regulator, the Tennessee Regulatory Authority, continues to ponder similar changes requested last year by an AT&T-led coalition of telecommunications companies.

State Attorney General Bob Cooper's office has suggested alternatives to the "sudden elimination of a program that is important to many Tennesseans," according to a statement. The Consumer Advocate Division in Cooper's office represents consumers' interests before the TRA, which regulates many for-profit utilities.

"For example, we suggested to the TRA an option to protect thousands of households with seniors and children," according to the statement.

The attorney general's office said it has not taken a position on the bill because "the future of Tennessee's Lifeline has been argued in front of the TRA and a decision is pending."

The TRA has not taken a position on the legislation either.

Tangle of arguments

Telephone companies fund the state landline subsidy. Last year the federal government cut its monthly subsidy for low-income phone users from $10 a month to $9.25. The feds also cut incentives to states that support the federal program.

If the state subsidy is eliminated, low-income cellphone and landline users still would receive the $9.25 federal discount. The state program only affects landline users, and AT&T spokesman Bob Corney argued in an email that "most Tennessee Lifeline customers are wireless customers -- more than 80 percent and growing."

Consumer advocates say ending the state subsidy could hurt hundreds of thousands of Tennessee families who only have landlines to call 911.

State AARP spokeswoman Karin Miller said Friday that "telephone service is critical to the health and safety of Tennesseans."

She said, "AARP is fighting to preserve access to basic service, whether by landline or mobile phone."

Corney said when the federal Lifeline program was established in the 1990s, Tennessee's Public Service Commission established a state program that provided an additional $3.50 discount.

At the time, the telecoms' rates were regulated by the PSC and the program was funded by excess company profits.

In 2009, AT&T successfully pushed a "market regulation" bill through the legislature, with the result that its rates are no longer regulated by the PSC's successor, the TRA.

Corney said that in 2012, the FCC "substantially reformed the Lifeline program to eliminate waste, fraud and abuse." He said the federal agency established a flat $9.25 discount for lifeline service in every state and eliminated the impact of the state program.

Since then, five other states have stopped unreimbursed programs, and only Mississippi and Tennessee require telecommunications companies to provide service without reimbursement.

The bill, which contains several other provisions, easily passed the House Business and Utilities Subcommittee last week and comes before the full Business and Utilities Committee on Wednesday.

"This bill does not end the state program," Corney said. "It just says the TRA can't require telephone companies to fund a social program without being reimbursed."

He did not say whether landline customers will see lower charges if the measure passes.