The companies that operate the tents around Modesto where people can get free government cell phones could soon face fines because all are operating without business license, according to the city.
Companies started marketing the phones in Modesto more than a year ago, and some got business licenses. But when the city started getting complaints about the locations of some of the tents, staff took a closer look at its policies for issuing licenses and realized these pop-up businesses did not comply with city code.
The phones offered through the Federal Communications Commission’s Lifeline Program are intended for individuals and families who are enrolled in any one of a number of public assistance programs or whose income is below 135 percent of the poverty line.
They are often referred to as Obama phones, but the Lifeline program began during Ronald Reagan’s administration to provide discounted home phone service to low-income Americans so that they could be connected to jobs, family and emergency services. The discount was extended to mobile phones in 1996, and the first free phone service was offered in the mid-2000s, before Barack Obama was elected.
The number of people with Lifeline phone service did grow during Obama’s first term, however, from 7.1 million to 12.5 million as free phones were offered in more states. They came to California in 2013, and people hired to market for service providers like Life Wireless, Assurance Wireless, Airvoice Wireless and Bluejay Wireless began setting up tents in Modesto a few years later.
The Lifeline program is paid for by the Universal Service Fund, made up of subsidies and fees from telecommunications providers based on earned revenues.
More than 1.8 million households in California are enrolled in the Lifeline program, according to the California Public Utilities Commission.
The commission decides which service providers can participate in the California Lifeline Program, but those providers are responsible for marketing, or finding people to apply for the program, and paying for those marketing efforts. It is also the service providers’ responsibility to comply with local and state laws, the commission said.
Modesto’s municipal code does not allow itinerant vendors, a business without a brick and mortar location, said Neighborhood Preservation Unit supervisor Chris Kemper. There are exceptions for vendors at festivals and farmers markets, but the service providers can’t get a business license, then set up shop anywhere in town.
Some of them erected tents in parking lots on private property without permission, in parks or on sidewalks, which elicited complaints.
The Neighborhood Preservation Unit responds to complaints on private property and Modesto police to calls on public property.
Police spokeswoman Heather Graves said that in addition to complaints about the location of tents, officers have responded to calls about tents damaging nearby vehicles and also to disputes between marketers who were set up near each other. The people marketing the phones get paid on commission per cell phone and plan issued, so the dispute was a turf war of sorts, she said.
Kemper said that over the past year, the police and Neighborhood Preservation Unit have responded to 30 to 40 complaints.
No citations have been issued at any of these calls, however, because two companies issuing the phones obtained business licenses before city staff realized that they were operating as itinerant vendors. With these licenses, one company had permission to operate tents in 14 locations and the other at two locations, said city Community and Economic Development director Cindy Birdsill.
Kemper said the city chose to wait until those licenses expired on July 1 before pursuing action against any of the companies, even those without licenses.
The companies that had the licenses were notified they would not receive a renewal, and those that have inquired since have been told they would not be issued a license.
Lawrence Quagliato, who markets for Airvoice wireless, said he signs up 20 to 30 people a day for the free phones.
He said about half of those people are walk-ups — the others come from word of mouth and social media — because he and other marketers place the tents in areas frequented by homeless or the low-income. They are in poorer neighborhoods or near facilities that offer other government services like the Stanislaus County Health Services Agency on Scenic Drive or in his case, the transit center in downtown Modesto.
Chad Boyer, who was working a tent next to Quagliato, marketing the Lifeline program for Feelsafe Wireless, said most of the people he encounters come from the buses.
They said not only are they helping people attain a service that connects them to family, emergency services and job prospects, they are sometimes the only human contact for the homeless in the area
“People look right through them,” Quagliato said. “We give them water and talk to them.”
He and Boyer said that if the city begins issuing citations, they already have contacts with some local business owners who said they could rent space in their storefronts.
Kemper said citations are likely if the vendors don’t comply when told to pack up shop.
He said, so far, he has only spoken with people at one tent that was in a park. He said he was met with hostility from the people, who accused him of harassing them.
Kemper said he is working with Modesto police “to make sure we do this correctly” before taking action.