Here’s a Web site I stumbled on a while back touting free cell phones, sponsored by the government: SafeLink Wireless. The service also provides free airtime in certain circumstances.
The law required the FCC to create the Universal Service Fund, a pool of money subsidized by small charges on our phone bills (we checked our bill and found we kicked in $2.80 last month) and redistributed to the low-income service programs as well as programs that bring telecommunications services to rural areas and schools.
Customers who actually pay their phone bills are subsidizing those who do not. Like all other “free” government programs, in the end someone is paying.