For Sprint, Free Pays Off

Brenda Parker lives in government housing, can't work because of chronic medical problems and depends on federal disability checks. She is just the kind of customer Sprint Nextel is looking for. Parker, of Shallotte (NC), is one of millions of low-income Americans who get 250 minutes a month of free cellphone service through a little-known government subsidy program called Lifeline. The program, funded by charges levied on cellphone bills nationwide, pays carriers such as Sprint as much as $10 a month per customer to be used toward a free or discounted wireless plan. For Sprint, which offers free service under its Assurance Wireless brand, these plans provide a thin slice of profit and a chance to make more money if customers go over their small initial allotment and need to buy more minutes or texts. The program also brings in a precious commodity in the saturated U.S. wireless market: subscriber growth. In any given period, Sprint has said, more than 50% of its net new customers have come to the carrier via the free service. Lifeline has been growing rapidly in recent years, reflecting both the ferocity of the fight for U.S. wireless customers and the dire financial condition of many consumers as the economy continues its halting recovery.