Free Cell phones too good to be true?

Free cell phones! You may have seen the ads on TV or around town.

But is anything really free? And who's paying for the phones?

Pre-paid wireless phone companies are offering the deal -whether it's out of stores in strip malls and even out of the back of a van in a parking lot.

Nathan Samples went to YourTel America in a strip mall near 31st and Garnett in Tulsa.

Within five minutes, he had a phone - 2500 minutes of talk or text for the next month.

"I got a cell phone, just like that," he said.

All Nathan had to do was fill out some paperwork and show his ID and food stamp card.

"It was that easy," Nathan said.

There are 12 ways people can qualify for a free cell phone. If you get government assistance of any kind, you qualify. For example, if you live in public housing, get SSI, food stamps or your kids get a free or reduced lunch at school.

To put that in perspective, in the Tulsa Public School district, 80 percent of families qualify for a free or reduced lunch.

The employees signing up users at the YourTel America store told FOX23 almost everyone who comes in qualifies.

Even though it's advertised as free, the phone technically isn't free. But after taxes and fees, it's still cheap.

Nathan will pay about $9 a month for his plan. He was paying $65 a month for a cell phone before.

"You can't beat that," Nathan said.

So where does the money come from to pay for the free cell phones? If you're paying your cell phone bill, you're paying for them.

A portion of the fees taxes and fees you pay on your bill pays for the program - called Lifeline.

Local Tea Party Organizer Cris Kurtz with The USA Patriots gets riled up over taxes, including the extra fees and taxes she pays on her cell phone. Those fees and taxes add up to 17 percent of her bill, about $10 of her $61 bill.

"That's really outrageous. We complain about the nine percent sales tax," Cris said.

The FCC started Lifeline 25 years ago with landline phones.

But it's really taken off in the last four years when the feds allowed pre-paid wireless companies to get involved.

The number of subscribers jumped 57 percent to 12.5 million free phone lines last year.

That comes out to 1.75 billion dollars paid out last year.

But Oklahoma has seen one of the biggest jumps to 278,000 users last year - a 66 percent increase.

"It is a lot," Cris said.　

And here's why. Eighty-one companies have flooded Oklahoma with offers.

Because unlike neighboring states, where the FCC pays out an average of $8.24 per free phone plan, in Oklahoma, the average is more than $26 per person - more than any other state.

"Something is fishy about all of this," Cris said.

The difference is thanks to an additional $1.17 per month from the state for each subscriber. And in the 70 counties where there is tribal land, cell phone companies get an extra $25 dollars from the feds.

Making our state a gold mine for cell phones.

"It must be lucrative. Nobody does anything in America unless there's money," Cris said.

Cris questions the whole idea of giving away cell phones. She says food and clothing are necessities, not cell phones.

"I think of it as a luxury item," she said.

But Nathan says whether you're trying to get a job, track down your child or you need to call 911, everyone needs a cell phone.

"You can't find payphones anymore. You always need a cell phone when you're out and about," Nathan said.

He says the free cell phone will help him and his family avoid living paycheck to paycheck.

"Definitely support my family better, pay for necessities around the house, diapers," Nathan said.

"It's neat that we have assistance like this from the government," Nathan said. "This is huge opportunity."



The FCC admits the program has already had its share of corruption. Its investigation showed seven percent of customers were getting more than one free phone. That's a $33 million mistake.

The FCC says it's working to fix the problem, including creating a database so cell phone providers can check to make sure users don't already take part in the program.

Congressman John Sullivan sits on the committe with jurisdiction over the FCC.

"Our nation is $16 trillion in debt, and every single federal program needs to be under scrutiny for the waste, fraud and abuse of taxpayer dollars - the lifeline program is no exception... I assure you this is something we are looking into and taking seriuosly," Sullivan said in written statement.

Cell phone company representatives wouldn't tell FOX23 what providing the cell phones and plans cost them. But some of them will charge you per minute when you've used up your free monthly plan. So ask questions before you sign up.

And the FCC isn't finished. Its considering providing free high-speed internet to customers who qualify. That could be a couple years away.