I have to be kind of careful with what I say and how I phrase them.
The Obama phone program is being abused. Everyone knows it. It is not a secret.
"In the old days" a cell phone, even a cheap cell phone, had a cost. For a cheap analog phone it was around $80. Now even a cheap flip phone has a cost. Lets say the cost of the phone is $50, which is the cheapest phone I know of from first hand knowledge.
The way it works is the dealer gets a kickback as commission for the sale. The lifeline program gave roughly an $18 discount back when I was doing the selling. A rate plan with an $18 monthly would give maybe a $20 kickback. Certainly not enough to cover the cost of a phone and certainly not enough to make money doing it. So the question is, what kind of kickback is the program giving? 500 minutes plus unlimited text for a normal plan would be around $30/month. We would pay our dealers $30 for that. Not nearly enough to give them a $50 phone and still make money.
Sorry friend but there are no $5 phones. $5 phones come from subsidies. What about the cheap prepaid phones you ask? Those are the ones I know the most about....