The US Department of Agriculture has announced it is ending the loan program for residential customers of commercial telephone companies, saying the loans are no longer suitable for consumers with lower incomes.
“Corded Telephone loans, as they existed before, were intended for households earning less than 125 percent of the Federal Poverty Guidelines (FPG),” the USDA said in a blog post.
“This is a new, more stringent definition of poverty, which has not been used for many years and has resulted in significantly higher loan amounts for the majority of households in the US.”
The loan program was introduced in 2013 and aimed to help households with incomes below 138 percent of FPG.
In 2017, a total of $3.3bn in Corded Telephones were sold, according to the USDA.
In total, the USDA estimated that the program had a cost of $1.6bn in 2017.
The USDA announced in April it was ending the program, saying it was no longer necessary.
“We have decided to discontinue the Corded Phone program in 2018 and to work with our Federal Trade Commission partners to ensure that the financial support to consumers continues to be available,” the USDA stated.
In an interview with ABC News, CordedTelephone CEO Michael J. Pritchard said the program was intended to help consumers with income between $200,000 and $250,000.
“The government wants us to provide a lower rate, which is actually a pretty good rate.
It’s about what you would see for someone earning $100,000,” Mr Pritchers said.
“If you’re going to spend $100 a month on phone bills, that’s not going to do you much good.”
The US government said it was also cancelling the program’s funding for businesses, which the USDA estimates has cost $2.5bn since it started in 2013.
“While we will continue to provide support to businesses, our goal is to ensure the consumer is provided a fair and affordable opportunity to purchase a telephone,” the US Department on Aging said in an emailed statement.
“As the nation’s telecommunications infrastructure becomes increasingly outdated, we need to continue to support the telecommunications industry to help ensure that Americans can have access to the Internet and other services.”
In 2017 the USDA found that a total number of 2.3 million households were eligible for Corded Telecommunications loans.
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