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As I suspected.

Let’s take a quick look back at the actual origins of the Obama Phone program. You may be surprised to learn that it all began long before cell phones were invented.

In the 1980s, during the Reagan administration, the Federal Communications Commission (FCC) created the Universal Access Initiative. The goal was to “promote the availability of quality services at just, reasonable and affordable rates for all consumers.” After years of study, they proposed what we now call the Obama Phone.

In the beginning, the Obama Phone offered subsidized phone service to Americans who were living at or below the poverty level. Please remember, this was in the early-to-mid-1980s, long before cell phones were invented, so this subsidy covered landlines only.

Later, the FCC introduced the Telecommunications Act of 1996, which proposed the Universal Service Fund requiring all providers of telecommunications services to contribute to a fund that would be used to increase nationwide access to advanced telecommunications services. The goal, according to the FCC, was to “advance the availability of such services to all consumers, including those in low income, rural, insular, and high-cost areas at rates that are reasonably comparable to those charged in urban areas.”

In other words, the FCC recognized that landlines were decreasing in importance as cell phones were increasing in use.

President Bill Clinton quickly signed the Telecommunications Act into law and President George Bush continued the program. President Barack Obama has followed in their footsteps, and there is widespread confidence that succeeding presidents will continue to support the Obama Phone program

http://www.freegovernmentcellphones.net/faq/obama-phone

(Here's some info from another company shilling the phones you buy:)

"Did Obama start the free phones program? The cell phone distribution program did begin in 2008, the year Obama was elected president, but that is a coincidence. Let’s look more closely at the facts. Notice that earlier we said Link-Up helps fund “installation.” What installation does a cell phone have? None. So why is installation part of Link-Up, which is under the Lifeline program umbrella? Because, the whole thing began back in 1996 when the Federal Communications Commission authorized the programs for landline phones. At that time it provided discounts on landline phones only, for obvious reasons. To this day the government provides discounts on landline phones for financially disadvantaged people in the United States and U.S. territories. The Link-Up portion helps with the installation and the Lifeline Assistance part helps with the monthly bills, to the tune of roughly ten dollars a month. So, the subsidization of phones began under President Clinton, and has continued under Presidents Bush and Obama. Over that time, the usage of cell phones rose and the costs came down. Assuming one believes in the Lifeline program in the first place, and remembering that the FCC has mandated the program, it only makes sense to expand the phone assistance program to include cell phones. So, in 2008 the first application of this program for mobile phones began when a company called Tracfone started their Safelink Wireless service in Tennessee. Aha, some say, that’s the same year Obama was elected! Well, that’s true. But the service in Tennessee was launched three months prior to Obama being elected. And that means the discussion and approval of the extension of the program occurred under President Bush’s watch...."