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Coral Wireless d/b/a Mobi PCS; Cordova Wireless Communications, LLC

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Released: August 7, 2014
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Federal Communications Commission

DA 14-1146

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of

)

)

Coral Wireless d/b/a Mobi PCS Request for

)

Review of the Decision of the Universal Service

)

Administrator

)

)

Request for Review by Cordova Wireless

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Communications, LLC of a Decision of the

)

Universal Service Administrator

)

)

Federal-State Joint Board on Universal Service

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CC Docket No. 96-45

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Federal-State Joint Board on Universal Service

)

WC Docket No. 05-337

High-Cost Universal Service Support

)

ORDER

Adopted: August 7, 2014

Released:

August 7, 2014

By the Acting Chief, Wireline Competition Bureau:

I.

INTRODUCTION

1.

In this Order, we address two requests seeking review of decisions by the Universal

Service Administrative Company (USAC). Coral Wireless d/b/a Mobi PCS (Coral Wireless) and

Cordova Wireless Communications (Cordova) each challenge separate decisions by USAC to recover

high-cost support received under the rules governing support provided to competitive eligible

telecommunications carriers (ETCs).1 For Coral Wireless, we conclude that it was appropriate for USAC

to recover support for certain lines. In doing so, we also deny a request by Coral Wireless for waiver of

section 54.307(b) or section 54.307(e) of the Commission’s rules to permit Coral Wireless to receive

support for the lines in question. For Cordova, we remand the matter to USAC to determine the number

of lines ineligible for support because they are not working loops and to recover support for those lines.

II.

BACKGROUND

2.

Both Coral Wireless and Cordova seek review of USAC decisions pertaining to

competitive ETC support. 2 Both matters involve section 54.307(b) of the Commission’s rules, which

required competitive ETCs to report the number of working loops (also referred to as lines) in order to

receive universal service support. Prior to the USF/ICC Transformation Order, competitive ETCs

received universal service funding based on the identical support rule.3 Following the reforms contained

1 Coral Wireless, Request for Review and Petition for Waiver, WC Docket No. 96-45 et al. (filed Dec. 10, 2012)

(Coral Wireless Petition); Cordova Wireless Communications, Request for Review, WC Docket No. 96-45 et al.,

(filed July 5, 2013) (Cordova Petition).

2 Pursuant to section 54.723, we conduct de novo of review of such requests. 47 C.F.R. § 54.723.

3 See Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order et al., 26 FCC 17663, 17825,

para. 498 (2011) (USF/ICC Transformation Order), aff’d In re: FCC 11-161, 753 F.3d 1015 (10th Cir. 2014).

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Federal Communications Commission

DA 14-1146

in the USF/ICC Transformation Order, the identical support rule and the accompanying requirements of

section 54.307(b) were eliminated starting in January 2012. Most competitive ETCs stopped reporting

line counts at that time.4 However, competitive ETCs that serve remote areas of Alaska continue to report

line count information for purposes of receiving support.5

III.

DISCUSSION

A.

Coral Wireless

3.

Based on our review, we conclude that the lines reported by Coral Wireless were not

eligible for support under section 54.307(b) of the Commission’s rules. USAC therefore is directed to

recover support for these lines.

4.

Coral Wireless is a competitive ETC that sells prepaid wireless services in Hawaii.6 As

part of its internal policies, Coral Wireless routes non-emergency outbound calls to Coral Wireless’s

customer service center beginning 30 days after a customer has made his last prepayment.7 Ninety days

after the last prepayment, Coral Wireless closes the account.8 When reporting line counts for universal

service purposes under section 54.307, Coral Wireless included all open accounts, including those that

were between 30 and 90 days since the last prepayment (hereinafter, disputed lines).9

5.

In the course of an audit, USAC determined that these disputed lines should not have

been reported for the purposes of high-cost support under section 54.307 of the Commission’s rules, and

therefore sought to recover the support associated with those lines from Coral Wireless.10 In reaching this

conclusion, USAC relied upon the definition of working loop contained in Part 36 of the Commission’s

rules, which requires a loop to be revenue generating.11 As the disputed lines were not generating

revenue, USAC concluded that they were not eligible for support under section 54.307.12

6.

Under the governing requirements, we conclude the disputed lines were not working

loops. Section 54.307(b) of the Commission’s rules defines working loops “for universal services support

purposes” as “loops as used jointly for exchange and message telecommunications services.”13 Under

Commission regulations, telecommunications service is defined as “the offering of telecommunications

for a fee directly to the public.”14

Telecommunications, in turn, is defined as “the transmission, between

4 See id. at 17663, 17825-30, paras. 498-511, 47 C.F.R. § 54.307(e)(3).

5 Recently, the Commission proposed to freeze competitive ETC support for carriers serving the remote areas of

Alaska as of December 31, 2014. The Commission also proposed to remove the requirement for such competitive

ETCs to report line count information. Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order

et al., FCC 14-54, at para. 256 (rel. Jun. 10, 2014). The Commission proposed to eliminate section 54.307(b) and to

renumber and revise section 54.307(e) of the current rules.

6 Coral Wireless Petition at 2.

7 See id.

8 Id.

9 See id. at 3.

10 See id. at 4-5.

11 See id. at 8. 47 C.F.R. Pt. 36, App.

12 See Coral Wireless Petition at 8.

13 47 C.F.R. § 54.307(b) (emphasis added).

14 47 C.F.R. § 54.5 (emphasis added).

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Federal Communications Commission

DA 14-1146

or among points specified by the user, of information of the user’s choosing, without change in the form

or content of the information sent and received.”15 For the disputed lines, the transmission is not

occurring between or among points specified by the user: rather, the user indicates the point to which he

wishes to make the call, but Coral Wireless reroutes the call to its service center. This is not

telecommunications as defined by Commission regulations. We therefore conclude the disputed lines

were not being used for telecommunications services and were therefore not within the definition of

working loop contained in section 54.307(b) of the Commission’s rules. As the disputed lines were not

working loops under section 54.307(b), they were not eligible for universal service, and USAC correctly

sought to recover the support previously provided.

7.

We reject Coral Wireless’s argument that excluding these loops from funding is a

retroactive application of a new or changed policy. We are not persuaded that the InterCall Order cited

by Coral Wireless is applicable. 16

Nothing in the record before us indicates a prior stated policy or

widespread practice in the industry to receive support for lines that divert calls to call centers rather than

the desired party.

8.

We also reject Coral Wireless’s request for a one-time waiver of the requirement that

support is calculated based on working loops. Good cause must exist to grant a waiver. Good cause

requires that special circumstances warrant a deviation from the general rule, and such deviation would

service the public interest.17 Coral Wireless has not identified why the public interest would be served if

support is provided for these disputed loops. While Coral Wireless argues that the reduction in universal

service funding caused by excluding support for these loops would reduce service to customers, this

argument proves too much. Holding that the public interest prong of the waiver standard is met whenever

a carrier is faced with a reduction in support would effectively negate the public interest requirement, as

this criterion would be met any time application of a rule resulted in reduced support. Such an exception

would swallow the rule. Therefore, we deny Coral Wireless’s request for a waiver.

B.

Cordova

9.

Based on our review, we conclude that some of the lines for which Cordova seeks

support were not offered for a fee, and therefore were not eligible for support under section 54.307(b) of

the Commission’s rules. We remand the matter to USAC to determine which of the lines in question

were offered for no fee to customers. USAC is directed to recover support for the disputed lines that were

offered for no fee.

10.

In 2011, in the course of a routine data validation of submitted line counts, USAC

informed Cordova that a number of its reported lines were ineligible for high-cost support.18 USAC

determined that these lines did not qualify as working loops eligible for high-cost support because the

15 Id. (emphasis added).

16 Request for Review by InterCall, Inc. of Decision of the Universal Service Administrator, CC Docket No. 96-45,

Order, 23 FCC Rcd 10731 (2008) (InterCall Order). In the InterCall Order, the Commission deemed conference

calling services to be telecommunications services and required conference calling providers to directly contribute to

the universal service fund. Of the 40 providers offering conference calling services prior to the InterCall Order,

only 11 were directly contributing, and each of those had independent grounds for doing so other than the provision

of conference calling services. Id. at 10739, para. 23 n.62. The Commission noted that this evidenced a pattern of

industry practice that conference calling services were not telecommunications services, and thus, for this and other

reasons, only prospective application was warranted. Id. at 10739, para. 23.

17 Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (citing WAIT Radio v. FCC, 418

F.2d 1153, 1159 (D.C. Cir. 1969)).

18 Cordova Petition at 3.

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Federal Communications Commission

DA 14-1146

lines showed no activity or usage (hereinafter, disputed lines).19 In response, Cordova argued that the

disputed lines were for phones that Cordova donated to public safety for use in emergencies, which, by

their nature, are rarely if ever used.20 Cordova stated that it donates the handsets for the disputed lines

and provides a local-only service plan for no cost to the end user.21

11.

As noted above, section 54.307 defines working loops to be reported as “the number of

working Exchange Line C&WF loops used jointly for exchange and message telecommunications

services.”22 Section 54.5 of the Commission’s rules defines “telecommunications services” as “the

offering of telecommunications for a fee directly to the public.”23

12.

Based on Cordova’s statements in the record, we conclude that some of the disputed lines

were not offered “for a fee.” Cordova stated that it covers the cost of both the handset and local-only

service plan for at least some of the disputed lines.24 As those disputed lines were not offered “for a fee,”

they were not used for telecommunications services, and thus do not qualify as working loops eligible for

support under section 54.307 of the Commission’s rules.

13.

We cannot determine from the record before us which of the disputed lines were not

offered for a fee. We therefore remand this matter to USAC to determine the precise number of the

disputed lines that were not offered for a fee. USAC is directed to recover support for those disputed

lines not offered for a fee.

14.

If in conducting that review, USAC determines that some disputed lines were offered for

a fee, USAC is directed to cease recovery of support on those lines.

There is no rule requiring activity on

a line as a precondition for receiving high-cost support. Section 54.307 of the Commission’s rules does

not specify a requirement for customer usage.25 Given that the Commission has not articulated a

requirement for usage on lines receiving high-cost support, we conclude that USAC erred in requiring

Cordova to demonstrate activity on the disputed lines.26

19 Id. at 11.

20 Id. at 13-14.

21 Id. at 13 n.24. Cordova also filed a petition regarding lines on which support was withheld for failing to provide a

local billing address. We have addressed this matter in a separate order. Federal-State Joint Board on Universal

Service et al., CC Docket No. 96-45 et al., Order, DA 14-1075, paras. 19-23 (Wireline Comp. Bur. rel. July 28,

2014).

22 47 C.F.R. § 54.307. C&WF is an abbreviation for cable and wire facilities. 47 C.F.R. § 36.154.

23 47 C.F.R. § 54.5 (emphasis added).

24 Cordova Petition at 13 n.24.

25 We note that the Commission has adopted a specific usage requirement for Lifeline service when the carrier does

not assess and collect a monthly fee from subscribers. See 47 C.F.R. § 54.407(c) (2); Lifeline and Link Up Reform

and Modernization, WC Docket No. 11-42, Report and Order and Further Notice of Proposed Rulemaking, 27 FCC

Rcd 6656, 6768-69, para. 257 (2012) (concluding that prepaid eligible telecommunication carriers will not receive

Lifeline support for inactive subscribers who have not used the service for a consecutive 60-day period).

26 47 C.F.R. § 54.702(c).

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Federal Communications Commission

DA 14-1146

IV.

ORDERING CLAUSES

15.

ACCORDINGLY, IT IS ORDERED that, pursuant to the authority contained in section

1-4 and 254 of the Communications Act, 47 U.S.C. §§ 151-154, and 254, and pursuant to sections 0.91,

0.291, 1.3, and 54.722 of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, 1.3, and 54.722, the request

for review and waiver filed by Coral Wireless IS DENIED.

16.

IT IS FURTHER ORDERED that, pursuant to the authority contained in section 1-4 and

254 of the Communications Act, 47 U.S.C. §§ 151-154, and 254, and pursuant to sections 0.91, 0.291,

1.3, and 54.722 of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, 1.3, and 54.722, the request for

review filed by Cordova Wireless Communications IS REMANDED to the Universal Service

Administrative Company for decision consistent with this Order.

17.

IT IS FURTHER ORDERED that, pursuant to section 1.102(b)(1) of the Commission’s

rules, 47 C.F.R. § 1.102(b)(1), this order SHALL BE effective upon release.

FEDERAL COMMUNICATIONS COMMISSION

Carol E. Mattey

Acting Chief

Wireline Competition Bureau

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