FCC Reforms, Modernizes Lifeline Program for Low-Income Americans
Attachments
Federal Communications Commission
FCC 12-11
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
)
)
Lifeline and Link Up Reform and
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WC Docket No. 11-42
Modernization
)
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Lifeline and Link Up
)
WC Docket No. 03-109
)
Federal-State Joint Board on Universal
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CC Docket No. 96-45
Service
)
)
WC Docket No. 12-23
Advancing Broadband Availability Through
)
Digital Literacy Training
)
REPORT AND ORDER AND FURTHER NOTICE OF PROPOSED RULEMAKING
Adopted: January 31, 2012
Released: February 6, 2012
Comment Date: (30 days after date of publication in the Federal Register)
Reply Comment Date:
(60 days after date of publication in the Federal Register)
By the Commission: Chairman Genachowski issuing a statement; Commissioner Clyburn
approving in part, concurring in part and issuing a statement; Commissioner McDowell
approving in part, concurring in part, dissenting in part and issuing a statement.
TABLE OF CONTENTS
Heading Paragraph#
I. INTRODUCTION .....................................................................................................................1
II. BACKGROUND .......................................................................................................................5
III. PERFORMANCE GOALS AND MEASURES......................................................................24
A. Ensure the Availability of Voice Service for Low-Income Americans .............................27
B. Ensure the Availability of Broadband Service for Low-Income Americans .....................33
C. Minimize the Contribution Burden on Consumers and Businesses...................................37
IV. VOICE SERVICES ELIGIBLE FOR DISCOUNTS ..............................................................44
V. SUPPORT AMOUNTS FOR VOICE SERVICE ...................................................................51
VI. CONSUMER ELIGIBILITY & ENROLLMENT...................................................................60
A. Uniform Eligibility Criteria ...............................................................................................62
B. One-Per-Household............................................................................................................69
1. Background ..................................................................................................................70
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2. Discussion ....................................................................................................................74
C. Certification of Consumer Eligibility for Lifeline .............................................................91
1. Background ..................................................................................................................93
2. Discussion ....................................................................................................................97
a. Initial and Annual Certification Requirements ......................................................97
b. Annual Re-Certification of Consumer Eligibility................................................129
D. Tribal Lifeline Eligibility.................................................................................................149
1. Background ................................................................................................................150
2. Discussion ..................................................................................................................153
E. Electronic Signature and Interactive Voice Response Systems.......................................167
F. Automatic and Coordinated Enrollment ..........................................................................170
VII. REFORMS TO ELIMINATE WASTE, FRAUD & ABUSE.............................................179
A. National Lifeline Accountability Database......................................................................179
1. Background ................................................................................................................180
2. Discussion ..................................................................................................................182
a. Functionality of Database and Obligations of ETCs ...........................................188
b. USAC’s Additional Duties To Eliminate Duplicative Claims ............................210
c. Other
Issues..........................................................................................................218
d. Cost ......................................................................................................................225
B. Toll Limitation Service Support ......................................................................................226
C. Link Up ............................................................................................................................240
1. Background ................................................................................................................240
2. Discussion ..................................................................................................................245
D. Subscriber Usage of Lifeline-Supported Service.............................................................255
1. Background ................................................................................................................255
2. Discussion ..................................................................................................................257
E. Minimum Consumer Charges ..........................................................................................264
1. Background ................................................................................................................264
2. Discussion ..................................................................................................................266
F. Marketing & Outreach .....................................................................................................271
1. Background ................................................................................................................271
2. Discussion ..................................................................................................................274
G. Audits and Enforcement ..................................................................................................283
1. Background ................................................................................................................283
2. Discussion ..................................................................................................................285
VIII. PAYMENT OF LOW-INCOME SUPPORT ..................................................................300
IX. MODERNIZING THE PROGRAM......................................................................................310
A. Bundled Services .............................................................................................................310
B. Support for Broadband.....................................................................................................321
1. Background ................................................................................................................321
2. Creation of a Pilot Program .......................................................................................323
3. Legal
Authority..........................................................................................................328
4. Structure of the Pilot Program ...................................................................................333
a. Service Provider Qualifications ...........................................................................334
b. Data Gathering and Sharing.................................................................................336
c. Duration of Pilot Program....................................................................................337
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d. Services to Be Supported .....................................................................................339
e. Consumer
Qualifications .....................................................................................343
f. Use of Pilot Program Funds.................................................................................345
g. Other Factors To Be Considered..........................................................................350
2. Pilot Project Data Gathering and Evaluation .............................................................354
X. MANAGING THE SIZE OF THE LOW-INCOME FUND .................................................355
XI. ELIGIBLE TELECOMMUNICATIONS CARRIER REQUIREMENTS ...........................361
A. Facilities-Based Requirements for Lifeline-Only ETCs..................................................361
1. Background. ...............................................................................................................361
2. Discussion. .................................................................................................................368
B. Impact of New Rules on Prior Forbearance Conditions ..................................................382
C. Additional Rule Amendments..........................................................................................384
XII. APCC PETITION FOR RULEMAKING AND INTERIM RELIEF .................................392
XIII. FURTHER NOTICE OF PROPOSED RULEMAKING ...................................................399
A. Establishing an Eligibility Database ................................................................................399
B. Advancing Broadband Availability for Low-Income Americans through Digital
Literacy Training .............................................................................................................416
1. Background ................................................................................................................417
2. Discussion ..................................................................................................................421
C. Limits on Resale of Lifeline-Supported Services ............................................................448
1. Background ................................................................................................................448
2. Discussion ..................................................................................................................449
a. Limiting Lifeline Support to the ETCs Directly Serving the Lifeline
Customers ............................................................................................................451
b. Re-examining the Scope of the Incumbent LEC Resale Obligation....................452
c. Implementation
Issues .........................................................................................458
D. Lifeline Support Amount for Voice Service....................................................................462
E. Tribal Lands Lifeline and Link Up Support ....................................................................474
F. Adding Women, Infants, and Children Program to the Eligibility Criteria.....................483
G. Establishing Eligibility for Homeless Veterans...............................................................486
H. Mandatory Application of Lifeline Discount to Bundled Service Offerings...................488
I. “Own Facilities” Requirements .......................................................................................494
J. Eligible Telecommunications Carrier Requirements.......................................................502
K. Record Retention Requirements ......................................................................................505
XIV. DELEGATION TO REVISE RULES .............................................................................507
XV. PROCEDURAL
MATTERS ...........................................................................................508
A. Filing Requirements.........................................................................................................508
B. Paperwork Reduction Act Analysis .................................................................................509
C. Congressional Review Act...............................................................................................511
D. Final Regulatory Flexibility Analysis..............................................................................512
E. Initial Regulatory Flexibility Analysis.............................................................................513
XVI. ORDERING
CLAUSES ..................................................................................................514
APPENDIX A – Final Rules
APPENDIX B – Proposed Rules
APPENDIX C – Certification Requirements for Lifeline Subscribers
APPENDIX D – Lifeline Verification Survey Results for 2011 and 2007
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APPENDIX E – Initial Commenters
APPENDIX F – Reply Commenters
APPENDIX G – Further Inquiry Public Notice Commenters
APPENDIX H – Further Inquiry Public Notice Reply Commenters
APPENDIX I – USAC Disbursement Public Notice Commenters and Reply Commenters
APPENDIX J – Final Regulatory Flexibility Analysis
APPENDIX K – Initial Regulatory Flexibility Analysis
I.
INTRODUCTION
1.In this Order, we comprehensively reform and begin to modernize the Universal
Service Fund’s Lifeline program (Lifeline or the program). Building on recommendations from
the Federal-State Joint Board on Universal Service (Joint Board), proposals in the National
Broadband Plan, input from the Government Accountability Office (GAO), and comments
received in response to the Commission’s March 2011 Notice of Proposed Rulemaking,1 the
reforms adopted in this Report and Order (Order) substantially strengthen protections against
waste, fraud, and abuse; improve program administration and accountability; improve enrollment
and consumer disclosures; initiate modernization of the program for broadband; and constrain
the growth of the program in order to reduce the burden on all who contribute to the Universal
Service Fund (USF or the Fund). We take these significant actions, while ensuring that eligible
low-income consumers who do not have the means to pay for telephone service can maintain
their current voice service through the Lifeline program and those who are not currently
connected to the networks will have the opportunity to benefit from this program and the
numerous opportunities and security that telephone service affords.
2.
This Order is another step in the Commission’s ongoing efforts to overhaul all
USF programs to promote the availability of modern networks and the capability of all American
consumers to access and use those networks. Consistent with previous efforts, we act here to
eliminate waste and inefficiency, increase accountability, and transition the Fund from
supporting standalone telephone service to broadband.2 In June 2011, the Commission adopted
1 Federal-State Joint Board on Universal Service et al., CC Dkt. No. 96-45 et al., Recommended Decision, 25 FCC
Rcd 15598 (Jt. Bd. 2010) (2010 Joint Board Recommended Decision); FEDERAL COMMUNICATIONS COMMISSION,
OMNIBUS BROADBAND INITIATIVE, CONNECTING AMERICA: THE NATIONAL BROADBAND PLAN (2010) (NATIONAL
BROADBAND PLAN), available at http://www.broadband.gov/plan; U.S. GOVERNMENT ACCOUNTABILITY OFFICE,
REPORT TO CONGRESSIONAL REQUESTERS, GAO 11-11, TELECOMMUNICATIONS: IMPROVED MANAGEMENT CAN
ENHANCE FCC DECISION MAKING FOR THE UNIVERSAL SERVICE FUND LOW-INCOME PROGRAM (2010) (2010 GAO
REPORT); Lifeline and Link Up Reform and Modernization et al.,WC Dkt. No. 11-42 et al., Notice of Proposed
Rulemaking, 26 FCC Rcd 2770 (2011) (NPRM or Lifeline and Link Up NPRM). See also infra Appendices E & F
listing comments and replies.
2 See Joint Statement on Broadband, GN Dkt. No. 10-66, Joint Statement on Broadband, 25 FCC Rcd 3420 (2010).
The Commission has already made important strides in this area: the Commission has modernized the E-rate
program, by enabling schools and libraries to get faster Internet connections at lower cost. Schools and Libraries
Universal Service Support Mechanism et al., CC Dkt. No. 02-6 et al., Sixth Report and Order, 25 FCC Rcd 18762
(2010) (E-rate Sixth Report and Order). The Commission has established a Connect America Fund (CAF) to spur
the build out of broadband networks, both mobile and fixed, in areas of the country that are uneconomic to serve.
See Connect America Fund et al., WC Dkt. No. 10-90 et al., Report and Order and Further Notice of Proposed
Rulemaking, FCC 11-161 (rel. Nov. 18, 2011) (USF/ICC Transformation Order and FNPRM), pets. for review
pending, Direct Commc'ns Cedar Valley, LLC v. FCC, No. 11-9581 (10th Cir. filed Dec. 8, 2011) (and consolidated
(continued….)
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the Duplicative Program Payments Order, which made clear that an eligible consumer may only
receive one Lifeline-supported service, established procedures to detect and de-enroll subscribers
receiving duplicative Lifeline-supported services, and directed the Universal Service
Administrative Company (USAC) to implement a process to detect and eliminate duplicative
Lifeline support—a process now completed in 12 states and expanding to other states in the near
future.3 Building on those efforts, the unprecedented reforms adopted in today’s Order could
save the Fund up to an estimated $2 billion over the next three years, keeping money in the
pockets of American consumers that otherwise would have been wasted on duplicative benefits,
subsidies for ineligible consumers, or fraudulent misuse of Lifeline funds.
3.
These savings will reduce growth in the Fund, while providing telephone service
to consumers who remain disconnected from the voice networks of the twentieth century.
Moreover, by using a fraction of the savings from eliminating waste and abuse in the program to
create a broadband pilot program, we explore how Lifeline can best be used to help low-income
consumers access the networks of the twenty-first century by closing the broadband adoption
gap. This complements the recent USF/ICC Transformation Order and FNPRM, which
reoriented intercarrier compensation and the high-cost fund toward increasing the availability of
broadband networks, as well as the recently launched Connect to Compete private-sector
initiative to increase access to affordable broadband service for low-income consumers.
4.
To make the program more accountable, the Order establishes clear goals and
measures and establishes national eligibility criteria to allow low-income consumers to qualify
for Lifeline based on either income or participation in certain government benefit programs. The
Order adopts rules for Lifeline enrollment, including enhanced initial and annual certification
requirements, and confirms the program’s one-per-household requirement. The Order simplifies
Lifeline reimbursement and makes it more transparent. The Commission adopts a number of
reforms to eliminate waste, fraud and abuse in the program, including creating a National
Lifeline Accountability Database to prevent multiple carriers from receiving support for the same
subscribers; phasing out toll limitation service (TLS) support; eliminating Link Up support
except for recipients on Tribal lands that are served by eligible telecommunications carriers
(ETCs) that participate in both Lifeline and the high-cost program;4 reducing the number of
(Continued from previous page)
cases). The Commission has proposed changes to the rural health care program so patients at rural clinics can
benefit from broadband-enabled care, such as remote consultations with specialists anywhere in the country. Rural
Health Care Universal Service Support Mechanism, WC Dkt. No. 02-60, Notice of Proposed Rulemaking, 25 FCC
Rcd 9371 (2010) (Rural Health Care NPRM).
3 Lifeline and Link Up Reform and Modernization et al, Report and Order, WC Dkt. No. 11-42 et al., 26 FCC Rcd
9022 (2011) (2011 Duplicative Program Payments Order); Letter from Sharon E. Gillett, Chief, Wireline
Competition Bureau, Federal Communications Commission, to D. Scott Barash, Acting Chief Executive Officer,
Universal Service Administrative Company (USAC), WC Dkt. Nos. 11-42 et al., 26 FCC Rcd 9022 (Wireline
Comp. Bur. Jun. 21, 2011) (June Guidance Letter); Letter from Sharon E. Gillett, Chief, Wireline Competition
Bureau, Federal Communications Commission, to D. Scott Barash, Acting Chief Executive Officer, Universal
Service Administrative Company (USAC), WC Dkt. No. 11-42 et al., DA 11-1986 (2011) (December Guidance
Letter).
4 Throughout this document, “Tribal lands” include any federally recognized Indian tribe’s reservation, pueblo or
colony, including former reservations in Oklahoma, Alaska Native regions established pursuant to the Alaska Native
Claims Settlement Act (85 Stat. 688), and Indian Allotments, as well as Hawaiian Home Lands—areas held in trust
(continued….)
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ineligible subscribers in the program; and imposing independent audit requirements on carriers
receiving more than $5 million in annual support. These reforms are estimated to save the Fund
up to $2 billion over the next three years. As part of these reforms we establish a savings target
of $200 million in 2012 versus the program’s status quo path in the absence of reform, create a
mechanism for ensuring that target is met, and put the Commission in a position to determine the
appropriate budget for Lifeline in early 2013 after monitoring the impact of today’s fundamental
overhaul of the program and addressing key issues in the Further Notice of Proposed
Rulemaking (FNPRM), including the appropriate monthly support amount for the program.
Using savings from the reforms, the Order establishes a Broadband Adoption Pilot Program to
test and determine how Lifeline can best be used to increase broadband adoption among Lifeline-
eligible consumers. We also establish an interim base of uniform support amount of $9.25 per
month for non-Tribal subscribers to simplify program administration.
II.
BACKGROUND
5.Procedural History. Ensuring the availability of communications services for
low-income households has long been a partnership among, and a significant priority for, the
states, the federal government, and the private sector.5 In May 2010, the Commission sought the
Joint Board’s input on the Commission’s program rules governing eligibility, verification, and
outreach.6
6.
In its 2010 Joint Board Recommended Decision, the Joint Board recommended
that the Commission: (1) encourage automatic enrollment as a best practice for all states; (2)
adopt uniform minimum verification procedures and sampling criteria that would apply to all
ETCs in all states; (3) allow states to utilize different and/or additional verification procedures so
long as those procedures are at least as effective in detecting waste, fraud, and abuse as the
uniform federal procedures; (4) require ETCs to submit the data results of their verification
sampling to the Commission, the states, and USAC and make the results available to the public;
(Continued from previous page)
for native Hawaiians by the state of Hawaii, pursuant to the Hawaiian Homes Commission Act, 1920, Pub. L. No.
67-34, 42 Stat. 108, et.seq., as amended (1921). This definition is consistent with the definition of Tribal lands
recently adopted in our order establishing the Connect America Fund. USF/ICC Transformation Order and
FNPRM, FCC 11-161 at para. 197. We accordingly amend the current definition of Tribal lands for purposes of the
low-income program in section 54.400(e).
5 The Commission originally established the Lifeline and Link Up programs pursuant to its general authority under
sections 1, 4(i), 201, and 205 of the Communications Act of 1934. See Federal-State Joint Board on Universal
Service, CC Dkt. No. 96-45, Report and Order, 12 FCC Rcd 8776, 8952-53, para. 329 (1997) (subsequent history
omitted) (Universal Service First Report and Order).
6 The Commission asked the Joint Board to recommend any changes to these aspects of the program given
significant technological and marketplace changes since the current rules were adopted. Specifically, the
Commission asked the Joint Board to review: (1) the combination of federal and state rules that govern which
customers are eligible to receive discounts through the Lifeline and Link Up programs; (2) best practices among
states for effective and efficient verification of customer eligibility, both at initial customer sign-up and periodically
thereafter; (3) the appropriateness of various outreach and enrollment programs; and (4) the potential expansion of
the low-income program to broadband, as recommended in the National Broadband Plan. See Federal-State Joint
Board on Universal Service et al., CC Dkt. No. 96-45 et al., 25 FCC Rcd 5079 (2010) (2010 Joint Board Referral
Order).
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and (5) adopt mandatory outreach requirements for all ETCs that receive low-income support.7
Additionally, the Joint Board asked the Commission to seek further comment on whether the
current eligibility requirements of household income at or below 135 percent of the federal
poverty guidelines should be raised to 150 percent; the costs and benefits of minimum uniform
eligibility requirements; the costs and benefits of database certification and verification of
eligibility; whether to expand the program to include broadband; and whether a minimum
monthly rate should apply to all Lifeline subscribers.8 The Joint Board also recommended that
the Commission adopt a principle pursuant to its section 254(b)(7) authority “that universal
service support should be directed where possible to networks that provide advanced services, as
well as voice services.”9
7.
In March 2011, the Commission incorporated the Joint Board’s recommendations
in a comprehensive rulemaking to reform and modernize Lifeline.10 In addition to the specific
recommendations and issues raised by the Joint Board, the Commission sought public comment
on a number of additional ways to strengthen the program, including establishing performance
goals for the program, strengthening the program’s audit regime, granting blanket forbearance
from the Act’s facilities requirement, establishing a flat rate of reimbursement, reforming TLS
and Link Up support, and expanding Tribal Lifeline eligibility.11
8.
Subsequently, the Wireline Competition Bureau (Bureau) issued a public notice in
August 2011 to develop a more complete record on certain issues raised in the rulemaking
proceeding, including reforming the current verification methodology to better protect against
waste, fraud, and abuse; limiting the availability of Lifeline support to one discount per
residential address; ensuring that only eligible costs are supported by Link Up; and determining
whether and how the program could effectively support broadband adoption by low-income
households.12
9.
The Commission adopted the additional universal service principle recommended
by the Joint Board in the USF/ICC Transformation Order and FNPRM.13 In addition, the
Commission revised the definition of the supported service to be “voice telephony services.”14
7 See generally 2010 Joint Board Recommended Decision.
8 See id.
9 Id, at 15625, para. 75.
10 See generally Lifeline and Link Up NPRM.
11 Id. at 26 FCC Rcd at 2782-86, 2793-96, 2800-03, 2863-64, 2811-15, paras 28-45, 65-79, 95-102, 306-309, 126-
41.
12 Further Inquiry Into Four Issues in the Universal Service Lifeline and Link Up Reform and Modernization
Proceeding, Public Notice, WC Dkt. No. 11-42 et al., 26 FCC Rcd 11098 (Wireline Comp. Bur. Aug. 5, 2011)
(Lifeline and Link Up Public Notice).
13 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at paras. 43-45. Section 254(a)(2) of the Act
requires the Commission to act on recommendations of the Federal-State Joint Board on Universal Service within
one year. See 47 U.S.C. § 254(a)(2). In this Order, we are acting on the remaining recommendations in the 2010
Joint Board Recommended Decision.
14 USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 77.
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10.
Since the release of the NPRM, we have made significant improvements to the
administration of the program to reduce waste. As noted above, the Commission’s 2011
Duplicative Program Payments Order made clear that an eligible consumer may only receive
one Lifeline-supported service,15 established procedures to detect and de-enroll subscribers with
duplicate Lifeline-supported services, and directed USAC to implement a process to detect and
eliminate duplicative Lifeline support—a process completed in 12 states which will expand to
cover a majority of states over the course of this year.16 In addition, we have worked closely
with the states and the Administrator, USAC, to strengthen enforcement and oversight of
Lifeline.17
11.
History and Purpose of Low-Income Program. Universal service has been a
national objective at least since the enactment of the Communications Act of 1934, in which
Congress stated its intention to “make available, so far as possible, to all the people of the United
States . . . a rapid, efficient, Nation-wide, and world-wide wire and radio communication service
with adequate facilities at reasonable charges.”18
12.
The Lifeline program was implemented in 1985 in the wake of the 1984
divestiture of AT&T. Its initial purpose was to ensure that any increase in local rates that
occurred following major changes in the marketplace would not put local phone service out of
reach for low-income households and result in service disconnections.19 At the time, the
Commission was concerned that the implementation of subscriber line charge (SLC) would force
low-income consumers to drop voice service, which, the Commission found, had “become
crucial to full participation in our society and economy[,] which are increasingly dependent upon
the rapid exchange of information.”20 The program made carriers whole after waiving the SLC
for low-income consumers.21 Link Up was established to offset the high, non-recurring charges
assessed by incumbent local exchange carriers for commencing telephone service.22
13.
In 1996, Congress codified the Commission’s and the states’ commitment to
advancing the availability of telecommunications services to all Americans, and established
15 2011 Duplicative Program Payments Order, 26 FCC Rcd at 9026, para. 7 (amending sections 54.401 and 54.405
to codify the restriction that an eligible low-income consumer cannot receive more than one Lifeline-supported
service at a time).
16 Id. at 9030-31, paras. 15-16.
17 See Letter from Chairman Julius Genachowski, Chairman, Federal Communications Commission, to State
Commissioners, WC Dkt. No. 11-42 (Dec. 12, 2011).
18 47 U.S.C. § 151 (creating the Federal Communications Commission).
19 MTS and WATS Market Structure, and Amendment of Parts 67 & 69 of the Commission’s Rules and
Establishment of a Joint Board, Report and Order, 50 Fed. Reg. 939 (Jan. 8, 1985) (MTS and WATS Market
Structure Report and Order).
20 Id. at 942, para. 11. (“We adopt the Joint Board’s recommendation concerning measures to offset the effect of
subscriber line charges on low income houses. In this regard, we agree with their conclusion that the proposed
subscriber line charges should not have an adverse effect on universal service.”).
21 See id.
22 See MTS and WATS Market Structure et al., CC Dkt. No. 78-72 et al., Recommended Decision and Order, 2 FCC
Rcd 2324, 2332, para. 68 (1987) (MTS and WATS Market Structure Recommended Decision and Order).
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principles upon which “the Commission shall base policies for the preservation and advancement
of universal service.”23 Among other things, Congress articulated national goals that services
should be available at “affordable” rates and that “consumers in all regions of the nation,
including low-income consumers, . . . should have access to telecommunications and information
services.”24 Based on recommendations of the Joint Board, the Commission revised and
expanded the Lifeline program after passage of the Telecommunications Act of 1996 (1996
Act).25 After implementation of the 1996 Act, all states participated in the program and the level
of federal Lifeline/Link Up support steadily increased.26
14.
Since the 1996 Act, the program has been administered by USAC under
Commission direction, although many key attributes of the program are implemented at the state
level, including consumer eligibility, ETC designations, outreach, and verification. Moreover,
ETCs have been integral in the offering of the program to low-income consumers. Lifeline
support is passed on to the subscriber by the ETC, which provides discounts to eligible
households and receives reimbursement from the Universal Service Fund for the provision of
such discounts.27 Lifeline now provides a discount to non-Tribal subscribers averaging $9.25 per
month for telephone charges, and Link Up provides a discount of up to $30 on the cost of
commencing telephone service for qualifying low-income households.28 For residents of Tribal
lands, Lifeline provides an additional $25 discount on monthly telephone charges, and Link Up
provides up to an additional $70 discount on the cost of commencing telephone service for low-
23 47 U.S.C. § 254(b).
24 See 47 U.S.C. § 254(b)(1),(3); see also 47 U.S.C. § 151.
25 See Universal Service First Report and Order, 12 FCC Rcd at 8952, paras. 326-28. The Joint Board is comprised
of FCC commissioners, state utility commissioners, and a state consumer advocate representative. See 47 U.S.C. §§
254(a)(1), 410(c).
26 See Universal Service Administrative Company, 1Q 2012 Filing, Appendices at LI 06 (Historical Data Support
Amounts Claimed by ETCs Each Month - January 1998 through June 2011), available at
http://www.usac.org/about/governance/fcc-filings/2012/quarter-1.aspx.
27 Carriers file FCC Forms 497 to receive reimbursement for providing support to eligible subscribers. See
Universal Service Administrative Company, Low-Income, Step 6: Submit Lifeline and Link Up Worksheet,
http://usac.org/li/telecom/step06/default.aspx (last visited Feb. 1, 2012). ETCs may file their Forms 497 on either a
monthly or quarterly basis, and are reimbursed by USAC on a monthly basis. These disbursements may be based on
a projection for the prior month’s support. Universal Service Administrative Company, Low-Income, Step 7:
Payment Process and Status, http://usac.org/li/telecom/step07/default.aspx (last visited Feb. 1, 2012). In order to
promote greater accuracy in low-income program payment-processing, the Commission’s Office of the Managing
Director (OMD) directed USAC to propose an administrative process for disbursing low-income support to ETCs
based on verified claims for reimbursement, rather than projected claims. In response, USAC developed and filed a
proposed plan to disburse support to ETCs based on actual claims, rather than projections. In September 2011, the
Wireline Competition Bureau sought comment on USAC’s proposal. See Inquiry into Disbursement Process for the
Universal Service Low Income Program, WC Dkt. No. 11-42 et al., Public Notice, 26 FCC Rcd 13131 (Wireline
Comp. Bur. 2011); Erratum (rel. Oct. 3, 2011) (Lifeline Disbursement Public Notice).
28 See Letter from Karen Majcher, Vice President, High Cost and Low Income Division, Universal Service
Administrative Company, to Sharon Gillett, Chief, Wireline Competition Bureau, Federal Communications
Commission, WC Dkt. No. 11-42 et al., (filed Jan. 10, 2012) (USAC 2011 Support Amounts Letter) (stating that the
vast majority of Lifeline subscribers receive support in the $8-10 range with an average amount of $9.25 in
September 2011). In addition, ETCs may be reimbursed for the incremental costs of their provision of Toll
Limitation Service to eligible households. 47 C.F.R. § 54.403(c).
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income households.29 These amounts may be supplemented by additional funding provided from
state universal service funds in some states.
15.
Evidence suggests that Lifeline has been instrumental in increasing the
availability of quality voice service to low-income consumers. Indeed, many low-income
consumers have stated in our record that without a Lifeline subsidy, they would be unable to
afford service.30 They have also noted the hardships they would face without access to phone
service.31 Telephone subscribership among low-income Americans has grown significantly since
the Lifeline program was initiated in 1984. Eighty percent of low-income households had
telephone service in 1984, compared to 95.4 percent of non-low-income households.32 Since the
inception of Lifeline, the gap between telephone penetration rates for low-income and non-low-
income households has narrowed from about 12 percent in 1984 to 4 percent in 2011.33
Moreover, states that provide higher monthly Lifeline subsidies per household exhibited greater
growth in phone subscribership from 1997 to the present.34
16.
There is also evidence that Lifeline has increased the penetration rate of voice
service by keeping low-income consumers connected to the network.35 As shown in Chart 1, the
gap in penetration rates between households earning less than $10,000 and all households has
29 See 47 C.F.R. §§ 54.403(a)(4) (Lifeline); 54.411(a)(3) (Link Up).
30 The Commission received many letters from Lifeline subscribers, which have been placed in the record of this
proceeding, expressing their need for Lifeline as their only connection to family, health care providers, and work
opportunities. One disabled Lifeline subscriber in Tennessee describes her Lifeline service as exactly that – a
“lifeline”: “I have a 17-year old daughter with Down Syndrome. We help each other everyday [sic]. I do the
thinking and she does what she can understand...[Lifeline] provides me a way to contact help if something happens
and my daughter doesn’t understand what we might need help for... but she does understand if I tell her ‘Mommy
needs the phone.’ … it gives me peace of mind to know I can always call for help.”
31 Id.
32 See FEDERAL COMMUNICATIONS COMMISSION, INDUSTRY ANALYSIS AND TECHNOLOGY DIVISION, UNIVERSAL
SERVICE MONITORING REPORT at text accompanying table 3.2 (2011) (2011 MONITORING REPORT) (where “low-
income” is defined as households making $9,999 or less), available at
http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db1229/DOC-311775A1.pdf.
33 The Commission’s telephone subscription penetration rate is based on the Census Bureau’s Current Population
Survey (CPS). The specific questions asked in the CPS are: “Does this house, apartment, or mobile home have
telephone service from which you can both make and receive calls? Please include cell phones, regular phones, and
any other type of telephone.” And, if the answer to the first question is “no,” this is followed up with, “Is there a
telephone elsewhere on which people in this household can be called?” If the answer to the first question is “yes,”
the household is counted as having a telephone “in unit.” If the answer to either the first or second question is “yes,”
the household is counted as having a telephone “available.” FEDERAL COMMUNICATIONS COMMISSION, WIRELINE
COMPETITION BUREAU, INDUSTRY ANALYSIS AND TECHNOLOGY DIVISION, TELEPHONE SUBSCRIBERSHIP IN THE
UNITED STATES at 2 (Dec. 2011) (2011 WCB SUBSCRIBERSHIP REPORT).
34 See 2011 MONITORING REPORT at Chart 3.12.
35 See Letter from Matthew Brill, Counsel, Cricket, to Marlene H. Dortch, Secretary, Federal Communications
Commission,WC Dkt. No. 11-42 et al. (filed Dec. 1, 2011) (noting that, in any given month, a substantially smaller
percentage of Cricket’s Lifeline subscribers deactivate their accounts—as compared to Cricket’s non-Lifeline
subscribers and arguing that “this disparity confirms that the Lifeline subsidy has a significant positive impact on the
ability of Cricket’s low-income subscriber base to maintain continuous access to the PSTN.”) (Cricket Dec. 1 ex
parte Letter).
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steadily narrowed since the inception of Lifeline. When consumers are able to only
intermittently remain on the network, they are not fully connected to society and the economy
because, among other things, they are unable to apply for and receive call-backs for jobs or reach
important social services, health care, and public safety agencies on a constant basis. The
Commission has found that the low-income program “provide[s] the best source of assistance for
individuals to obtain and retain universal service, and, therefore, help maintain and improve
telephone subscribership”36 and fulfill our obligations under section 254 of the Act.
Chart 137
17.
There are substantial benefits to increasing the availability of communications
services, including both voice and broadband service, for low-income Americans. As an initial
matter, all consumers, not just low-income consumers, receive value from the network effects of
widespread voice and broadband subscribership.38 Moreover, voice service remains a
prerequisite for full participation in our economy and society.39 Those consumers without
36 Universal Service First Report and Order, 12 FCC Rcd at 8845, para. 124 (emphasis added).
37 2011 MONITORING REPORT at Table 3.2 (for 1997 to 2011 data); 2011 WCB SUBSCRIBERSHIP REPORT at Table
6.14 (for 1984-1996 data). In FCC statistical reports, “low-income” is defined as those subscribers earning $9,999
or less in 1984 dollars. See 2011 MONITORING REPORT AT 3-12. $9,999 in 1984 dollars is equal to $21,780 in 2011
dollars. See id. at Table 3.3.
38 See One Economy Comments at 12 (“While individuals will discover personal socioeconomic gains from
adoption of broadband, a population of broadband adopters will lead to significant progress around strengthening
educational outcomes, increasing innovation and entrepreneurship, reducing healthcare costs, and improving the
efficiency of government services.”).
39 See, e.g., Letter from Olivia Wein, National Consumer Law Center, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 1 (filed Aug. 26, 2011) (NCLC Aug. 26 ex parte Letter)
(noting that “access to phone service is a necessity in modern times.”); Letter of Dr. George Korn, Rainbow/Push
Coalition, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 1-2
(continued….)
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affordable, quality voice services are at a disadvantage in accessing social and economic
resources and opportunities. Voice service allows consumers to connect with public safety and
health care resources.40 As many commenters note, voice service is particularly important for
low-income consumers, who often must juggle multiple jobs and interviews for new employment
as well as keep in contact with social service agencies.41 As noted by several members of
Congress, “a cell phone can literally be a Lifeline for families and provide low-income families,
in particular, the means to empower themselves.”42 If quality voice service is not affordable,
low-income consumers may subscribe to voice service at the expense of other critical necessities,
such as food and medicine, or may be unable to purchase sufficient voice service to obtain
adequate access to critical employment, health care, or educational opportunities.43 And if low-
income consumers initially subscribe to phone service, but intermittently lose access because
they cannot consistently pay for the service, many of the benefits for individuals and the positive
externalities for the economy and society will be lost.
18.
Access to affordable, robust broadband service is equally important.44 As stated
in the USF/ICC Transformation Order and FNPRM, “[a]ll Americans should have access to
broadband that is capable of enabling the kinds of key applications [that drive broadband
adoption] . . . including education (e.g., distance/online learning), health care (e.g., remote health
monitoring) and person-to-person communications (e.g., VoIP or online video chat with loved
ones serving overseas).” Indeed, the evidence indicates that increased broadband adoption and
usage increases educational and economic outcomes for low-income consumers.45 As one
(Continued from previous page)
(arguing that “[w]ithout phone service, the most basic processes and activities become difficult, limiting options and
possibilities for the poor and pushing them to the fringe of society.”).
40 Alaska Commission Reply Comments at 9 (noting the importance of voice service for public safety); Letter from
Professor David Super, Georgetown Law, to Marlene H. Dortch, Secretary, Federal Communications Commission,
WC Dkt. No. 11-42 et al., at 3-4 (filed Nov. 7, 2011) (Prof. Super Nov. 7 ex parte Letter); see also MTS and WATS
Market Structure Report and Order, 50 Fed. Reg. at 941 (“Significant increases in the price of basic telephone
service could isolate many of the elderly and poor by depriving them of the ability to obtain medical and police
assistance or communicate with family and friends.”).
41 See, e.g., NCLC Aug. 26 ex parte Letter at 1 (noting that “phone service is key to helping low-income consumers
find work, housing, access and maintain contact with health care professionals and education providers, accessing
emergency services, as well as remaining connected to support networks such as family and friends and community
services.”).
42 Letter from Senators Robert Menendez, Kirsten E. Gillibrand, Sherrod Brown, and & Jeanne Shaheen, to Hon.
Julius Genachowski, Chairman, Federal Communications Commission, OL Dkt. No. 11-9 (filed Sept. 13, 2011).
43 See generally Prof. Super Nov. 7 ex parte Letter; see also Letter from Debra R. Berlyn, Chairperson, Federal
Communications Commission Consumer Advisory Committee, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 3 (noting the importance of the low income program to
“ease connections” to health care, education and potential employers).
44 See, e.g., One Economy Comments at 33; AT&T Reply Comments, Attachment (Attach.) at 1 (“access to
broadband leads to improved education, better health care delivery and other societal advances.”).
45 See, e.g., AT&T Reply Comments, Attach. at 1; MAG-Net Comments, Attach. A at 4 (“In some low-income areas
where laptops or netbook-like devices and home broadband connections have been provided to children, and the
technology was thoughtfully integrated into learning and instruction, research shows positive effects on student
academic performance, engagement, and attitude.”).
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commenter argues, “broadband access is a prerequisite of social and economic inclusion.”46
However, the latest census data indicates that there is a substantial gap in broadband adoption by
income.47 The Commission has recognized this challenge and has started to help narrow the
adoption gap.48 Connect to Compete is a private-sector initiative through which the largest cable
companies will be offering low-cost broadband to families with school-aged children receiving
free school lunches.49 These actions, while important, are only first steps in addressing the
adoption gap that low-income consumers face, and we continue to encourage and support those
programs that are well underway. In this Order, we adopt an additional approach—a pilot
program to explore the most effective way to modernize the Lifeline program to provide low-
income consumers access to broadband service.
19.
Role of the States. Currently, the program operates under a patchwork of state
and federal requirements. Within the framework established by the 1996 Act and the Universal
Service First Report and Order, each state administers its own program, which has provided the
states the freedom to experiment and to develop new ways of making the program more effective
and efficient. Although Lifeline is a federal program, its administration varies significantly
among the states, including on key policies such as eligibility and verification. There is
significant variation among the states in the percentage of eligible households participating in the
program, which may be due to differing state eligibility and verification requirements, the extent
of outreach, the process for enrolling subscribers, the number and type of ETCs in the state,
support levels, and other factors.50
20.
Lifeline Providers & Subscribers. The telecommunications marketplace has
changed significantly over the last fifteen years, with a wide array of wireline and wireless
services that compete with traditional incumbent telephone companies to provide voice service51
46 MAG-Net Comments at 2.
47 U.S. DEP’T OF COMMERCE, ECONS. & STATISTICS ADMIN. & NAT’L TELECOMM. & INFO. ADMIN., EXPLORING THE
DIGITAL NATION: HOME BROADBAND INTERNET ADOPTION IN THE UNITED STATES 8, available at
http://www.ntia.doc.gov/files/ntia/publications/esa_ntia_us_broadband_adoption_report_11082010_1.pdf (Nov.
2011) (EXPLORING THE DIGITAL NATION).
48 See, e.g., Applications filed by Qwest Communications International Inc. and CenturyTel, Inc. d/b/a CenturyLink
for Consent to Transfer Control, WC Dkt. No. 10-110, Memorandum Opinion and Order, 26 FCC Rcd 4194, 4211,
4219, paras. 35-37 (2011); Applications of Comcast Corporation, General Electric Company and NBC Universal,
Inc., Memorandum Opinion and Order, 26 FCC Rcd 4238, 4333, para. 233 (2011).
49 Press Release, Federal Communications Commission, FCC “Connect to Compete” Tackle Barriers to Broadband
Adoption (Nov. 9, 2011), available at http://www.fcc.gov/document/fcc-and-connect-compete-broadband-fact-sheet
(detailing private/non-profit partnership providing qualifying families with $9.95 monthly broadband service and
reduced price equipment).
50 See NATIONAL BROADBAND PLAN at 172 (citing Mark Burton et al., Understanding Participation in Social
Programs: Why Don’t Households Pick up the Lifeline?, 7 B.E. J. ECON. ANAL. & POL’Y 57 (2007), available at
http://faculty.msb.edu/jtm4/Papers/BEJEAP.2007.pdf; Janice A. Hauge et al., Whose Call Is It? Targeting Universal
Service Programs to Low-Income Households’ Telecommunications Preferences, 33 TELECOMM. POL’Y 129, 136-38
(2009), available at http://warrington.ufl.edu/purc/purcdocs/papers/0805_Hauge_Whose_Call_Is.pdf).
51 The Commission promulgated rules under the 1996 Act that enabled competitive wireless and wireline carriers to
be designated as ETCs eligible to receive federal universal service support. See Universal Service First Report and
Order, 12 FCC Rcd at 8969-73, paras. 364-72.
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When the program was first established in the 1980s, mobile phones and voice over internet
protocol (VoIP) did not exist as a retail consumer product, only incumbent telephone companies
provided local telephone service, and the program was designed for carriers whose rates were
regulated. Today, consumers have various options for fixed or mobile voice services, many of
which are not rate regulated.
21.
As the telecommunications industry has evolved, so too has the program.
Beginning in 2005, the Commission permitted on a case-by-case basis non-facilities based
providers, including prepaid wireless carriers, to obtain low-income support from the Universal
Service Fund.52 Since 2006, the program has experienced a measurable shift in support
distribution. In 2010, competitive providers (the vast majority of which are mobile wireless
providers) received nearly 55 percent of total program support.53 Wireless Lifeline enrollment
has greatly increased, consistent with the same trend toward wireless service in the general
population. The Commission recently found that 92 percent of Americans subscribed to mobile
phone service.54 More than 30 percent of adults in the general population live in households
with only wireless phones,55 while more than 45 percent of 18-24 year olds have “cut the cord.”56
Wireless services have taken on particular importance to low-income consumers, who are more
likely to reside in wireless-only households than consumers at higher income levels.57
22.
Low-income consumers currently qualify for the program through various means,
depending upon which state the consumer resides. They either can certify or demonstrate that
they are enrolled in specific assistance programs or that their annual income falls below a
specified percentage of the Federal Poverty Guidelines (FPG). As shown in Table 1 below, the
qualifying income threshold for Lifeline varies depending on size of the household and the
particular qualifying income threshold for that state. In eight states and two territories,
households with income at or below 135 percent of the Federal Poverty Guidelines are eligible.
52 See Federal-State Joint Board on Universal Service; Telecommunications Carriers Eligible for Universal Service
Support; i-wireless Petition for Forbearance from 47 U.S.C. § 214(e)(1)(A), CC Dkt. No. 96-45 et al., WC Dkt. No.
09-197, Order, 25 FCC Rcd 8784 (2010) (i-wireless Forbearance Order); Telecommunications Carriers Eligible for
Universal Service Support; Virgin Mobile USA, L.P. Petitions for Designation as an Eligible Telecommunications
Carrier in the State of Alabama et al., WC Dkt. No. 09-197, Order, 25 FCC Rcd 17797 (2010) (Virgin Mobile 2010
ETC Order); Virgin Mobile USA, L.P. Petition for Forbearance from 47 U.S.C. § 214(e)(1)(A) et al., CC Dkt. No.
96-45, Order, 24 FCC Rcd 3381 (2009) (Virgin Mobile Forbearance Order); Federal-State Joint Board on
Universal Service; Petition of TracFone Wireless, Inc. for Forbearance, CC Dkt. No. 96-45, Order, 20 FCC Rcd
15095 (2005) (TracFone Forbearance Order). These carriers are not eligible to receive high-cost support.
53 2011 MONITORING REPORT at 2-9.
54 See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993 et al., Fifteenth Report,
WT Dkt. No. 10-133, 26 FCC Rcd 9664, para 168 (2011).
55 See STEPHEN J. BLUMBERG & JULIAN V. LUKE, CENTERS FOR DISEASE CONTROL, NATIONAL CENTER FOR HEALTH
STATISTICS, WIRELESS SUBSTITUTION: EARLY RELEASE OF ESTIMATES FROM THE NATIONAL HEALTH INTERVIEW
SURVEY, JANUARY – JUNE 2011, at 1 (2011), available at
http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201106.pdf.
56 Id. at 2-3.
57 See id. at 3 (finding that adults living in or near poverty were more likely than higher income adults to be living in
wireless-only households). Furthermore, consumers today often purchase packages of services that allow them to
call anywhere in the country, with no additional charge for long distance calling.
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In twelve states and the District of Columbia, households with income at 150 percent of the FPG
are eligible. Other states, including Oregon, do not permit enrollment based on income; in these
states, consumers may enroll only if they are enrolled in certain other public benefits programs.
Table 1 – Federal Poverty Guidelines58
Annual Income of
Annual Income of
Persons in Family or Household135 percent FPG
150 percent FPG
1 $14,702
$16,336
2 $19,859
$22,066
3 $25,016
$27,796
4 $30,173
$33,526
23.
The Lifeline-eligible population has increased significantly over the past decade.
Since 1999, real median household income in the U.S. has declined by 7.1 percent, while
households at the bottom of the income scale have seen their income decline by 12.1 percent.59
In 2010, 46.2 million Americans were living in poverty, defined as living at or below the
benchmark established in the FPG, compared to 31.6 million in 2000.60 As household income
has declined and more carriers have offered Lifeline-supported service, the program has
experienced significant growth.61 In the absence of today’s Order, which manages the size of the
Fund in part by establishing a savings target, the program would provide an estimated $2.4
billion in support in 2012;62 that compares to an inflation-adjusted $582 million it provided in
1998 when five million subscribers participated in the program.63 The initial growth in the
program after the implementation of the 1996 Act was due in large part to the expansion of the
program to all fifty states and the increased level of monthly per household support compared to
levels prior to the 1996 Act.64 In 2000, the Commission began providing enhanced support to
58 Annual Update of the HHS Poverty Guidelines, 76 Fed. Reg., 3637-38 (Jan. 20, 2011).
59 UNITED STATES CENSUS BUREAU, INCOME, POVERTY, AND HEALTH INSURANCE COVERAGE IN THE UNITED
STATES: 2010, at 5 (Sept. 2011), available at http://www.census.gov/prod/2011pubs/p60-239.pdf.
60 Id. at 62.
61 Other factors have also contributed to growth in the program – for instance, some subscribers have received
duplicate support and some may have received the subsidy even though they were not eligible.
62 See infra note 956.
63 See 2011 MONITORING REPORT at Table 2.1. Adjustments for inflation were calculated using the Bureau of Labor
Statistics’ Consumer Price Index Inflation Calendar. See http://www.bls.gov/data/inflation_calculator.htm (last
visited Feb. 2, 2012).
64 See 2010 UNIVERSAL SERVICE MONITORING REPORT at Chart 2-2.
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households on Tribal lands.65 The program continued to grow between 2001 and 2004 due, in
part, to increases in the federal subscriber line charge, to which Lifeline support levels have
historically been tied.66 Meanwhile, over the years, wireless companies increasingly sought ETC
designations, providing additional options for and reaching more low-income consumers with
Lifeline service. Since 2005, a number of pre-paid wireless providers have become Lifeline-only
ETCs,67 competing for low-income subscribers by marketing telephone service that provides a
specified number of minutes at no charge to the consumer.68 This development has expanded
choices in many states for low-income consumers, who now have greater access to mobile
services than a decade ago,69 but it has also led to significant growth in the Fund in the last
several years, and has likely contributed to the increasing telephone penetration rate of
consumers making less than $10,000 a year.70 Pre-paid wireless ETCs now account for more
than 40 percent of all Lifeline support.71 Link Up support has also increased significantly–
approximately 230 percent over the last three years. USAC projects that it will distribute $180
million in Link Up support to ETCs in 2012 compared to $122.9 million in Link Up
disbursements in 2011 and $37.2 million in 2008.72 It is against this backdrop that we institute
the reforms below to ensure that qualifying low-income consumers can access the voice and
65 See Federal-State Joint Board on Universal Service; Promoting Deployment and Subscribership in Unserved and
Underserved Areas, Including Tribal and Insular Areas, CC Dkt. No. 96-45, Twelfth Report and Order,
Memorandum Opinion and Order, and Further Notice of Proposed Rulemaking, 15 FCC Rcd 12208 (2000) (2000
Tribal Lifeline Order). In 2010, $102.7 million was provided to households on Tribal lands. 2011 MONITORING
REPORT at Table 2.2.
66 Support levels grew from an inflation-adjusted $819 million in 2002 to $927 million in 2004. See 2010
UNIVERSAL SERVICE MONITORING REPORT at Chart 2-2.
67 See, e.g., TracFone Forbearance Order, 20 FCC Rcd at 15095; Federal-State Joint Board on Universal Service;
TracFone Wireless, Inc., Petition for Designation as an Eligible Telecommunications Carrier in New York et al.,
Order, 23 FCC Rcd 6206 (2008) (TracFone ETC Designation Order); Virgin Mobile Forbearance Order, 24 FCC
Rcd at 3381.
68 For example, TracFone noted that the initial SafeLink Wireless offering was 68 free minutes per month until a
competitor offered 200 free minutes, to which TracFone responded with its 250-minute per month offer. See Letter
from Mitchell F. Brecher, Counsel, TracFone Wireless, to Marlene H. Dortch, Secretary, Federal Communications
Commission, Attach. at 5 (filed Dec. 7, 2010) (TracFone Dec. 7 Ex Parte Presentation).
69 NATIONAL BROADBAND PLAN at 173. According to some, mobile phones are becoming more essential than
landline phones for low-income consumers. See, e.g., Hauge et al., supra note 50, at 2. Pre-paid wireless offerings
are often preferred by low-income or unemployed/under-employed consumers because they enable consumers to
better manage expenses. See, e.g., Nexus TracFone Link Up Comments, at Attach. 1, 6 (Declaration of August
Ankum and Olesya Denney, QSI Consulting).
70 See supra Chart 1.
71 See Universal Service Administrative Company, 1Q 2012 Filing, Appendices at LI04 (Quarterly Low-Income
Disbursement Amounts by Company (3Q2011), available at http://www.usac.org/about/governance/fcc-
filings/2012/quarter-1.aspx. For the first three quarters of 2011, two ETCs that operate as prepaid wireless resellers,
TracFone, and Virgin Mobile, together account for 40.8% of program support as of year end 2011. See id.
72 See Universal Service Administrative Company, 1Q Filing, Fund Size Projections for First Quarter 2012, at 19
(Nov. 2, 2011), ,available at http://www.usac.org/about/governance/fcc-
filings/2012/Q1/1Q2012%20Quarterly%20Demand%20Filing.pdf (detailing that USAC projects total annual 2012
Link Up support to be approximately $183.48 million); USAC 2011 Support Amounts Letter at 3; 2011 Monitoring
Report at Table 2-2.
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broadband networks of this nation to fulfill Congress’ goal of providing universal service, and
the Commission’s goal of modernizing the program, while safeguarding it from waste, fraud, and
abuse and constraining the growth of the Fund to make it more efficient and effective to better
serve consumers.
III.
PERFORMANCE GOALS AND MEASURES
24.In the Lifeline and Link Up NPRM, the Commission recognized that “[c]lear
performance goals and measures should enable the Commission to determine not just whether
federal funding is used for intended purposes, but whether that funding is accomplishing the
program’s ultimate objectives.”73 The GAO previously noted in 2010 that while the Commission
had adopted some performance measures for the low-income program, it had not quantified its
goal of increasing telephone subscribership among low-income households and had not
developed and implemented specific outcome-based performance goals and measures for the
program.74 In the Lifeline and Link Up NPRM, the Commission sought comment on program
goals and measures related to ensuring low-income Americans have access to voice and
broadband service while minimizing the size of the program.75
25.
Clear performance goals and measures will enable the Commission to determine
whether Lifeline is being used for its intended purpose and is accomplishing the program’s
objectives. We adopt the following performance goals for both voice and broadband, as well as
associated measurements, reflecting our ongoing commitment to preserve and advance universal
service: (1) ensure the availability of voice service for low-income Americans; (2) ensure the
availability of broadband service for low-income Americans; and (3) minimize the contribution
burden on consumers and businesses.
26.
While we adopt separate goals for voice and broadband service today, we are
mindful of the emergence of voice capability offered as an application over broadband service.76
A significant and growing number of consumers are subscribing to broadband service in the
home and for mobile devices. Some consumers also are using over-the-top voice offerings such
as Skype and Google Voice, with their broadband connections for some, if not all, of their voice
service needs.77 As the market evolves towards “voice as an application” over broadband
73 Lifeline and Link Up NPRM, 26 FCC Rcd at 2783, para 32. In 2007, the Commission adopted measures to
improve the efficiency and effectiveness of the program and noted that the key goal of the Lifeline program was to
increase phone service subscribership among low-income households. The Commission did not, however, adopt
comprehensive performance goals for the Low Income program at that time because it did not have sufficient data
available to determine what those goals should be. Comprehensive Review of the Universal Service Fund
Management, Administration, and Oversight et al., WC Dkt. No. 05-195 et al., Report and Order, 22 FCC Rcd
16372, 16394-95, paras. 50-51 (2007) (2007 Comprehensive Review Order).
74 2010 GAO REPORT at 24-26.
75 See Lifeline and Link Up NPRM, at 2783, 2786, paras. 34, 43-45.
76 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 750.
77 See id. at n.1320 (noting that the transition to bill and keep will result in the development and extension of a “wide
range of IP calling services” including Google Voice and Skype, “a process that may ultimately result in the sale of
broadband services that incorporate voice at a zero or nominal charge”).
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service, we believe it is appropriate for the Commission to examine in the future whether it is
appropriate to retain separate goals for voice and broadband service.
A.
Ensure the Availability of Voice Service for Low-Income Americans
27.Goal. We adopt as our first goal ensuring the availability of voice service for
low-income Americans. We find that this goal helps effectuate Congress’s universal service
directives in sections 254(b)(1) and 254(b)(3) of the 1996 Act that quality services should be
available at affordable rates and to consumers throughout the nation.78
28.
We note that “availability” of voice service includes, but is a broader concept
than, the physical deployment of voice networks. Consistent with the Commission’s proposals
in the Lifeline and Link Up NPRM, we find that voice service is only available to low-income
consumers to the extent that it is affordable.79
29.
Measurements. We will evaluate progress towards our first goal by measuring the
extent to which low-income consumers are subscribing to voice service, based on the Census
Bureau’s Current Population Survey (CPS) penetration data.80 We find that subscription rates are
a reasonable proxy for availability generally. Because subscription rates show the extent to
which low-income consumers subscribe to voice service, they provide a reasonable indication
that service is in fact available – i.e.,. sufficiently robust and affordable and there are sufficient
networks in place – to serve those consumers.81
30.
We therefore adopt as an outcome measure for our first goal the voice service
penetration levels of low-income households.82 Progress towards our goal of ensuring the
availability of voice service to low-income consumers will be indicated by a narrowing of the
78 47 U.S.C. § 254(b)(1), (b)(3); see also Lifeline and Link Up NPRM, 26 FCC Rcd at 2780, para 29 (noting that
Section 254 includes principles that “services should be available at ‘just, reasonable and affordable’ rates, and that
consumers in all regions of the nation, including low-income consumers, should have access to telecommunications
and information services that are reasonably comparable to services in urban areas at reasonably comparable rates”).
79 In the NPRM, we proposed availability and affordability as separate goals. See Lifeline and Link Up NPRM, 26
FCC Rcd at 2784, 2785-86, paras. 36, 42, 43. There was substantial support in the record for both concepts (See,
e.g. Consumer Groups Comments at 13-14, GCI Comments at 13-14.) We agree with commenters that both
concepts are important, but find that ensuring voice service is affordable is a component of ensuring it is available.
80 We note that, under CPS’s survey methodology, all consumers of voice service, including those consumers who
may only subscribe to broadband along with “over the top” VoIP service, would be counted as having voice service
“available.” See 2010 WCB SUBSCRIBERSHIP STUDY.
81 See USF-ICC Transformation Order and FNRPM, FCC 11-161 at para. 50 (“The first performance goal we adopt
is to preserve and advance voice service…. As a performance measure for this goal, we will use the telephone
penetration rate, which measures subscription to telephone service. The telephone penetration rate has historically
been used by the Commission as a proxy for network deployment and, as a result, will a consistent measure of the
programs’ effects.”). Consumers, including low-income consumers, may not subscribe to a service if it is not of
sufficiently high quality and does not provide the features that they need, because consumers face transaction costs
in obtaining even free Lifeline service.
82 Some ETCs and other commenters argue that, pursuant to the Commission’s first goal, the Commission should
promote and measure the availability of voice service for every person, not just every household. See GCI
Comments at 13; Cricket Comments at 2. However, because we adopt a one-per-household rule below and the
census data is only available on the household level, we decline to adopt this approach.
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difference between this outcome measure and the voice service penetration levels of non-low-
income households. We conclude that comparing penetration levels for low-income households
and the “next-highest income” bracket is the correct approach to evaluating the extent to which
the Lifeline program is succeeding in mitigating the effects of low income as a barrier to
telephone service subscription.83
31.
There are several plausible ways of defining “low-income” and the “next-highest
income” bracket. For example, “low-income” could be defined as households at 0 to 135 percent
of the FPG, and the “next-highest income” bracket could be households at 135 to 175 percent of
the FPG (which may include some Lifeline subscribers) or households at 175 percent to 200
percent of the FPG (which would be less likely to include Lifeline subscribers). We recognize
that there may be trade-offs with any approach adopted. We therefore delegate authority to the
Bureau to define “low-income” and the “next highest income” bracket for the purpose of
comparing penetration rates that balances the goal of accurately measuring the impact of the
Lifeline program with administrative feasibility.84
83 The record reflects disagreement regarding the standard the Commission should use for a comparison of
penetration rates. While there is some support for the Commission’s proposal in the Lifeline and Link Up NPRM to
compare the voice penetration rates of low-income households eligible for low-income support with penetration
rates of households in the next highest income group, others suggest a different approach. For example, some
commenters argue for a comparison of the voice penetration rate for low-income households to the penetration rate
for all other households. Compare GCI Reply Comments at 11-12 (“GCI and others support the FCC’s proposal to
establish, as an outcome measure of the first performance goal (availability), the difference between voice service
subscribership rates for low-income households eligible for the Lifeline and voice subscribership rates for the
households in the next higher income level”) with Consumer Groups at 15 (arguing that the Commission should
compare the penetration rate of low-income consumers to all other consumers). We do not adopt a comparison of
the penetration rates of low-income households to all other households because we believe such a measurement
would not be consistent with our goals. Penetration rates for the highest income households are significantly higher
than the penetration rates of households between, for example, 135 percent and 175 percent of the poverty line. See
2011 MONITORING REPORT at Chart 3.2. Therefore, the average penetration rate of all households above 135
percent of the poverty line is higher than the average penetration rate for households between 135 percent and 175
percent of the poverty line. If the Commission compared and adopted as an outcome measure the equalization of the
penetration rates of low-income households to all other households, the low-income penetration rate target would
always be higher than penetration rate for households in the next higher income bracket. Such an outcome measure
would imply that Commission favors higher telecommunications penetration for low-income consumers than for the
next highest income group. No party argued explicitly for such an approach and we do not believe that it is
consistent with our goal to ensure the availability of voice service for low-income Americans.
84 We conclude that it is important to measure telephone penetration for low-income consumers on Tribal lands in
light of the unique needs of those consumers and the fact that telephone penetration on Tribal lands has historically
lagged telephone penetration for the nation as a whole. However, we do not adopt a separate measurement for low-
income penetration on Tribal lands at this time because the necessary data is not available from the Census Bureau.
For example, the current yearly Census survey sample size on Tribal lands is not sufficiently large to produce a
statistically significant penetration rate for Tribal lands for low-income consumers or the “next highest” income
bracket. We expect the Bureau to continue to monitor the available Tribal lands telephone penetration data. If data
is sufficient to create a statistically valid estimate of low-income penetration and the “next highest” income bracket
on Tribal lands becomes available, we direct the Bureau to establish a separate measurement for progress towards
our first goal with respect to Tribal lands. We also direct the Bureau to publish Tribal penetration data in its
statistical reports to the extent that such information is reliable and statistically significant.
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32.
We decline to adopt the take rate of the program as the outcome measure for our
goal of ensuring voice service availability to low-income consumers.85 The goal of the program
is to increase the availability of voice service, which we will measure through the extent to
which low-income consumers subscribe to phone service. This measure is more directly relevant
to this goal than the take-rate of the Lifeline program.86
B.
Ensure the Availability of Broadband Service for Low-Income Americans
33.Goal. As we recently did for the high-cost fund in the USF/ICC Transformation
Order and FNPRM, we establish an express broadband service goal for Lifeline, in addition to
Lifeline’s voice service goal. We adopt as our second program performance goal ensuring the
availability of broadband service for low-income Americans. We find that this goal implements
Congress’s directives in sections 254(b)(2) and (b)(3) that all consumers, including low-income
consumers, should have access to information services, and is consistent with the Recovery Act
and the National Broadband Plan’s recommendations.87 There is also substantial support in the
record for this goal.88 It also implements Congress’s direction in section 706 of the
Telecommunications Act of 1996 that we “utiliz[e] … regulating methods that remove barriers to
infrastructure investment.”89
34.
For broadband to be “available” to a low-income consumer, a broadband network
(or networks) must have been deployed to the consumer, and the broadband service offered over
the network must be affordable and provide a sufficient level of robustness (e.g., bandwidth) to
meet basic broadband needs. Many low-income consumers cannot subscribe to fixed or mobile
broadband because it is not affordable or does not provide the features that they believe they
need at a price they can afford.90 Some low-income consumers, including some residing on
85 See, e.g., IN URC Comments at 9 (arguing for the importance of increasing the take rate).
86 Lifeline take rates may change because of exogenous factors (such as business model and marketing by Lifeline
operators) that are unrelated to the design or implementation of the program. See Letter from Dr. George Korn,
Communications Consultant, Rainbow PUSH Coalition, to Marlene H. Dortch, Secretary, Federal Communications
Commission, at 2 (filed Sept. 23, 2011) (Rainbow PUSH Sept. 23 ex parte Letter) (noting that “45 million
Americans are currently receiving food stamps. This equates to an increase of 64% percent since January 2008”).
Take rates also increase with the size of the benefit available under the program, and Lifeline provides a relatively
small benefit compared to other programs, indicating that at least some consumers will not sign up due to transaction
costs. See Hauge et al., supra note 50, at 8-9.
87 47 U.S.C. § 254(b)(2), (b)(3); 47 U.S.C. 1305; American Recovery and Investment Act of 2009 § 6001(b)(3), 47
U.S.C. § 1305(b)(3) (noting that the purpose of the broadband technology opportunities program is to, among other
things, to provide funding to organizations “to facilitate greater use of broadband service by low-income,
unemployed, aged, and otherwise vulnerable populations); Broadband Plan at XIII (noting a key goal of the plan is
to ensure low-income Americans can afford broadband); Chapter IX (Adoption and Utilization).
88 See, e.g., NASUCA Comments at 8-10; cf. Consumer Groups Comments at 16; GCI Comments at 18, 21; NJ
DRC Comments at 8.
89 47 U.S.C. § 1302(a). As discussed in paragraph 332, infra, we do expect federal support for low-income
consumers’ purchase of broadband services to remove barriers to infrastructure investment.
90 See, e.g., John Horrigan, Federal Communications Commission, Omnibus Broadband Initiative, Broadband
Adoption and Use in America 3-7 (OBI Working Paper No. 1, 2010) (Broadband Adoption and Use in America),
available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-296442A1.pdf.
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Tribal lands, cannot subscribe to fixed or mobile broadband because such services are not
available in their communities.91 This understanding of the goal that we adopt today is consistent
with the plain meaning of “available” and is consistent with (although distinct from) our findings
in our recent Broadband Progress Reports, in which we have observed that an inquiry into
availability requires us to examine more than strict physical deployment.92
35.
Measurements. As with our first goal, as an outcome measure of the availability
of broadband service to low-income consumers, we adopt the broadband penetration rate of low-
income consumers, i.e. the extent to which low-income consumers are subscribing to broadband.
Progress towards our goal of ensuring the availability of broadband service to low-income
consumers will be indicated by a narrowing of the difference between this outcome measure and
the broadband service penetration levels of non-low-income consumers in the “next highest
income” bracket. Also consistent with our first goal, we delegate authority to the Bureau to
define the “low-income” and the “next-highest income” brackets for the purpose of comparing
broadband penetration rates in a way that balances accuracy with administrative feasibility.93 We
decline to adopt alternative or additional measures for this goal at this time for the same reasons
discussed above with respect to voice service.94
36.
As with our first goal, we do not find that it is appropriate at this time to establish
a minimum standard of robustness or measure the extent to which low-income consumers are
purchasing broadband service which meets such a standard. This approach is consistent with the
purpose of the Lifeline program, namely to offset the cost of services purchased by low-income
consumers, rather than the network provider’s cost to construct a network.95 In the USF/ICC
Transformation Order and FNPRM, the Commission adopted a speed benchmark for fixed
91 See Improving Communications Services for Native Nations, CG Dkt. No. 11-41, Notice of Inquiry, 26 FCC Rcd
2672, 2673, para. 1 (2011) (Native Nations NOI).
92 See 2011 Seventh Broadband Progress Report, 26 FCC Rcd at 8020-21, paras. 18-20.
93 We note that NTIA, in cooperation with the Census Bureau, currently publishes information on broadband
penetration by income level. See EXPLORING THE DIGITAL NATION, supra note 47. We also note that the Census
Bureau, in consultation with the Commission, is developing questions regarding broadband adoption for possible
inclusion in the American Community Survey starting in 2013. See Proposed Information Collection; Comment
Request; The American Community Survey 2013 Content Changes and Internet Response Mode, 76 Fed Reg. 81474
(Dec. 28, 2011). The ACS currently collects information on income level and the Bureau, may, as necessary,
analyze the broadband data sets in context with other social, housing, and economic data available from the ACS.
94 As with telephone penetration, we conclude that it is important to measure broadband penetration for low-income
consumers on Tribal lands in light of the unique needs of those consumers and the fact that broadband penetration
on Tribal lands has historically lagged broadband penetration for the nation as a whole. However, we do not adopt a
separate measurement for low-income broadband penetration on Tribal lands at this time because, as with telephone
penetration, the necessary data is not available from the Census Bureau or NTIA. If data sufficient to create a
statistically valid estimate of low-income broadband penetration and the “next highest” income bracket on Tribal
lands becomes available, we direct the Bureau to establish a separate measurement for progress towards our second
goal with respect to Tribal lands. We also direct the Bureau to publish Tribal broadband penetration data in its
statistical reports to the extent that such information is reliable and statistically significant.
95 See MTS and WATS Market Structure Report and Order, 50 Fed. Reg. at 941-42 (noting that the purpose of the
Lifeline program is to offset the cost of an increased SLC on low-income consumers).
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broadband provided by CAF recipients. The purpose of the benchmark is to ensure that the fixed
networks funded will be capable of providing a particular level of service, but carriers can offer,
and consumers can purchase, a lower (or higher) level of fixed or mobile broadband service if
they so choose.96 As part of the broadband pilot program described below, we will collect
information regarding affordability and the robustness of broadband available to low-income
consumers. We will revisit whether standards for the robustness for service broadband for low-
income households are appropriate when we have a better understanding of the factors driving
broadband adoption among low-income consumers.
C.
Minimize the Contribution Burden on Consumers and Businesses
37.Goal. We adopt as our third program performance goal minimizing the
contribution burden on consumers and businesses. This goal is consistent with our longstanding
recognition that our efforts to advance universal service must be balanced against the universal
service contribution burden on all consumers, particularly those consumers who are just above
the threshold of “low-income” that we adopt as a uniform floor for the program in this Order.97
Indeed, as the Commission has found and the courts have recently reiterated, if the universal
service burden is too high, the affordability of service will be placed in jeopardy, undermining
the very purpose of the universal service program.98
38.
Consistent with this third goal, at this time, we decline to distinguish between
fixed and mobile services in our goals of ensuring the availability of voice and broadband service
to low-income Americans. The Lifeline program is designed to ensure that low-income
Americans remain connected to essential communications while minimizing the contribution
burden on all other Americans so that the broader goals of universal service are not jeopardized.
While low-income consumers may derive utility from both fixed and mobile services, we find
that our combined goals are best satisfied by ensuring that Lifeline affords consumers a choice to
determine which of the communications offerings is essential for them—either fixed or mobile
service.99
39.
Measurements. In the Lifeline and Link Up NPRM, the Commission sought
comment on several metrics to measure progress towards increasing the efficiency of the
96 See USF/ICC Transformation Order, FCC 11-161, at para. 94.
97 For example, the burden of a particular contribution factor is greater on a household between 135 percent and 175
percent of the federal poverty guidelines than on a household at 300 percent of the federal poverty guidelines.
98 See, e.g., Vermont Pub. Serv. Bd. v. Fed. Commc’n Comm’n, 661 F.3d 54, 65 (D.C. Cir. 2011) (finding that, in the
context of section 254, “as the Commission rightly observed, it has a responsibility to be a prudent guardian of the
public’s resources.”); Universal Service First Report and Order, 12 FCC Rcd at 8845-46, para. 125; see also High-
Cost Universal Service Support et al., CC Dkt. No. 96-45, Order on Remand and Memorandum Opinion and Order,
25 FCC Rcd 4072, 4087, para. 28 (2010) (stating that “if the universal service fund grows too large, it will
jeopardize other statutory mandates, such as ensuring affordable rates in all parts of the country.”).
99 We believe that the USF/ICC Transformation Order and FNPRM will increase the reach of fixed and mobile
networks to ensure that both are physically available to consumers. Without such availability, low-income
consumers would have limited choice between fixed or mobile service.
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program and the elimination of waste.100 We find the measures outlined below are appropriate to
measure progress towards our third goal and adopt them.
40.
First, the Commission sought comment on whether it should measure the burden
the program places on all consumers over time by measuring the inflation-adjusted Lifeline/Link
Up expenditure per American household.101 We note that we recently adopted a similar measure
with respect to the high-cost program in the USF/ICC Transformation Order and FNPRM.102
We adopt the proposed measure, which will divide the total inflation-adjusted expenditures of
the low-income program each year by the number of American households and express the
measure as a monthly dollar figure. This calculation will rely on publicly available data and will
therefore be transparent and easily verifiable. Through this measure and the similar measures
adopted in the USF/ICC Transformation Order and FNPRM, we will be able to determine
whether the overall universal service contribution burden is increasing or decreasing for the
typical American household.103
41.
Second, the Commission sought comment on whether it should monitor the extent
to which the actions we take in this Order will eliminate waste, fraud, and abuse—factors that
increase the burden on contributors without a countervailing benefit.104 In the NPRM, the
Commission proposed establishing an erroneous payments benchmark and focusing on keeping
erroneous payments below that benchmark.105 Commenters disagree on whether such a
benchmark is appropriate.106 We expect that the duplicates database adopted in this Order will
eliminate a substantial amount of payments to ineligible and duplicative subscribers.107 It is
appropriate to measure the extent of savings from elimination of these duplicative payments. We
delegate authority to the Bureau to determine the detailed design and implementation of this
calculation.
42.
Third, the Commission inquired whether there is a way to measure increases in
the percentage of low-income voice subscribership relative to the amount of funding spent per
100 Lifeline and Link Up NPRM, 26 FCC Rcd at 2785, paras. 38-41.
101 See id. at 2785, para. 38.
102 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para 58.
103 For example, in 2010, this was $0.95 per household per month. See Lifeline and Link Up NPRM, 26 FCC Rcd at
2785, para. 38.
104 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2875, para 39.
105 See id.
106 See GCI Comments at 16 (“The FCC’s proposed performance measure suggests that the FCC should conclude
that funding is excessive if the number or percentage of ineligible subscribers surpasses a certain threshold—even
though the ETCs that provide Lifeline service have no choice when it comes to providing service to consumers who
self-certify their eligibility and also cannot tell if individual consumers subscribe from more than one provider.”); NJ
DRC Comments at 16.
107 Consumer Cellular Comments at 6 (“Most importantly, all of the Commission’s goals—to maximize the value of
the fund to low income consumers, to maximize the efficiency of fund administration, and to eliminate the potential
for waste, fraud, and abuse—can be realized as the natural and expected consequence of expeditiously moving to
implement the database described in Section VII of the NPRM.”).
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household receiving a Lifeline subsidy.108 Such a comparison would be an appropriate measure
to determine if Lifeline funding is being used consistent with our third goal. We will make such
a comparison by examining the relationship between the aggregate spending on the low-income
program and changes in low-income penetration rates. We delegate to the Bureau the authority
to determine the detailed design and implementation of this calculation.
43.
Using the adopted goals and measures, the Commission will, as required by the
Government Performance and Results Act (GPRA), monitor the performance of our low-income
program as we implement the changes outlined in this Order.109 If the program is not meeting
these performance goals, we will consider corrective actions. Likewise, to the extent that the
adopted measures do not help us assess program performance, we will revisit them as well. We
recognize that the many rule changes and reforms in this Order may affect the ongoing utility of
these goals and measures. We therefore may need to adjust the goals and measurements adopted
here once the Commission, consumers, ETCs, and other stakeholders have had experience with
the revised rules.
IV.
VOICE SERVICES ELIGIBLE FOR DISCOUNTS
44.Background. In 1997, pursuant to section 254 of the Act, the Commission
established nine services supported by the federal universal service mechanisms, including the
low-income program.110 In light of the changes in technology and in the marketplace, the
Commission sought comment in the USF/ICC Transformation NPRM on simplifying the core
functionalities of the supported services into the overarching concept, “voice telephony
service.”111 Subsequently, in the Lifeline and Link Up NPRM, the Commission sought comment
on similarly amending the definition of “Lifeline” supported services in section 54.401 to
provide support for “voice telephony service.”112
45.
In the USF/ICC Transformation Order and FNPRM, the Commission eliminated
its former list of nine supported services and amended section 54.101(a) of its rules to specify
that “voice telephony service” is supported by the federal universal service mechanisms.113 The
Commission found this to be a more technologically neutral approach that focuses on the
108 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2785, para 40.
109 If the Commission identifies an outcome as a “priority goal,” then it must review progress quarterly. Otherwise
performance must only be reviewed annually. See 31 U.S.C. §§ 1116, 1120-1121, as amended by GPRA
Modernization Act of 2010, Pub. L. No. 111-352 §§ 4-5 (2010). Agencies are currently working with OMB to
define their priority goals, which will be published in February 2012.
110 47 U.S.C. § 254(c)(1); 47 C.F.R. §§ 54.101(a)(1)-(9), 54.401(a)(3). At that time, the Commission defined the
supported services in functional terms to encompass voice grade access to the public switched network; local usage;
dual tone multi-frequency (DTMF) signaling or its functional equivalent; single-party service or its functional
equivalent; access to emergency services; access to operator services; access to interexchange service; access to
directory assistance; and toll limitation to qualifying low-income consumers. See Universal Service First Report
and Order, 12 FCC Rcd 8776 at 8810, para. 61.
111 Connect America Fund et al., WC Dkt. No. 10-90 et al., Notice of Proposed Rulemaking and Further Notice of
Proposed Rulemaking, 26 FCC Rcd. 4554, 4590, para. 96 (2011).
112 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2843, paras. 239, 243.
113 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 78.
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functionality offered, and not on the specific technology used to provide the supported service,
while allowing services to be provided over any technology platform.114 In adopting the new
definition of “voice telephony,” the Commission eliminated certain services and functionalities
from the list of supported services, consistent with its findings regarding the evolution of the
marketplace.115
46.
In 2005, the Commission concluded that an applicant seeking ETC designation by
the Commission must demonstrate that it offers local usage comparable to that offered by the
incumbent LEC.116 In its 2010 Joint Board Recommended Decision, the Joint Board urged the
Commission to consider prepaid wireless Lifeline issues, including the need for minimum
standards of service for Lifeline recipients.117 Additionally, the National Association of State
Utility Consumer Advocates (NASUCA) adopted a resolution recommending that the
Commission consider establishing minimum standards of service for pre-paid wireless Lifeline
service, expressing concerns that “free” Lifeline calling plans offered by some wireless ETCs
include limited usage minutes and require subscribers needing additional minutes to purchase
those minutes from the carrier, and indicating that it is not evident whether such calling plans
offer local usage comparable to available incumbent carriers’ calling plans.118 Accordingly, the
Commission sought comment on adopting minimum standards for all ETCs offering Lifeline
service.119
47.
Discussion. We now update the definition of Lifeline to be consistent with our
newly revised definition of the supported service as “voice telephony service.”120 As we recently
noted in the USF/ICC Transformation Order and FNPRM, voice telephony may be provisioned
over broadband (IP-enabled) networks.121 By updating the definition, we allow carriers to
114 Id.
115 Id. at para. 77 & n.114. To more clearly reflect the Commission’s intent to specify the attributes of “voice
telephony” in the new definition, the Commission subsequently further revised section 54.101 on its own motion to
eliminate language stating that voice telephony service “include[s] certain functionalities” to eliminate the
possibility that the list could be interpreted as non-exhaustive. See Connect America Fund et al., WC Dkt. No. 10-
90 et al., Order on Reconsideration, FCC 11-189, para. 3, n. 8 (rel. Dec. 23, 2011) (USF/ICC Transformation Order
on Reconsideration).
116 Federal-State Joint Board on Universal Service, CC Dkt. No. 96-45, Report and Order, 20 FCC Rcd 6371, 6380,
para. 20 (2005) (ETC Designation Order).
117 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15627, para. 80.
118 National Association of State Utility Consumer Advocates, Resolution 2010-02, Calling for Reform of the
Lifeline Program, Including Reform for Prepaid Wireless Lifeline Services, at 2-3 (June 15, 2010) (NASUCA
Resolution).
119 Lifeline and Link Up NPRM, 26 FCC Rcd at 2817, para. 253 (inquiring whether the Commission should establish
national parameters for a basic Lifeline service).
120 See USF/ICC Transformation Order on Reconsideration, FCC 11-189 at para. 3. In response to the Lifeline and
Link Up NPRM, some commenters supported amending the definition of Lifeline to provide support for “voice
telephony service.” See Cricket Comments at 15-16; Florida PSC Comments at 29.
121 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 63 (explaining how consumers are
increasingly obtaining voice services over broadband networks as well as over traditional circuit switched telephone
networks).
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provide service using new technologies that will result in additional options and benefits to
Lifeline consumers. At this time, we do not find it necessary to require ETCs that offer service
at no charge to Lifeline subscribers to adhere to additional service requirements.
48.
Consistent with our recent amendment to section 54.101, eligible Lifeline
telephony services therefore must provide voice grade access to the public switched telephone
network or its functional equivalent; minutes of use for local service provided at no additional
charge to end users;122 access to emergency 911 and enhanced 911 service to the extent the local
government in an eligible carrier’s service area has implemented 911 or enhanced 911 systems;
and toll limitation at no charge to qualifying low-income consumers subject to the requirements
and limitations discussed more fully below.123 As explained in the USF/ICC Transformation
Order and FNPRM, this approach simply shifts to a technologically neutral approach by defining
supported services in functional terms, ensuring that voice service can be provided over any
platform.124 Under this revised definition of Lifeline, we expect low-income consumers will
receive the same quality voice service that they receive today.125
49.
In the USF/ICC Transformation Order and FNPRM, the Commission noted that
many providers do not distinguish between local and long distance usage, and concluded that
carriers may satisfy the obligation to provide local usage via service offerings that bundle local
and long distance minutes. We conclude this finding is also applicable to Lifeline service
offerings.126 We therefore conclude that it is appropriate to eliminate the “local” qualifier from
the current definition of Lifeline,127 and we amend section 54.401 of our rules as provided in
122 We note that the Vermont Public Service Board has filed a Motion for Clarification regarding this aspect of the
definition adopted in the USF/ICC Transformation Order and FNPRM, which will be addressed after receipt of
public comment on this petition. See Vermont Public Service Board Motion For Clarification, WC Dkt. No. 10-90
et al., at 3 (filed Dec. 28, 2012).
123 See infra section VII.B (discussing the requirements and limitations of toll limitation service).
124 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at paras. 77-78.
125 See Windstream USF/ICC Transformation NPRM Comments at 20 (urging Commission to amend the definition
of supported services to focus on functionality offered, not the specific technology used to provide supported
services). Some commenters, however, argue that the term “voice telephony” is too vague, and that such a
modification may result in a lower standard of voice service despite the fact that many consumers already receive
voice service over broadband networks. See Alaska Commission Reply Comments at 8-9 (arguing that redefining
the currently supported services could lead to lower standards for voice services); NASUCA Comments at 26-27
(stating that the term “voice telephony” is unnecessarily vague); NJ DRC Comments at 24; compare AT&T
USF/ICC Transformation NPRM Comments at 10 (noting that circuit-switched networks are rapidly yielding to
packet-switched networks, which offer voice as well as other types of services as demonstrated through significant
increase in VoIP subscriptions).
126 See revised section 54.401(a) of the Commission rules (defining Lifeline as amended in this Order).
127 Distinctions between local and long distance calling are becoming irrelevant in light of flat rate service offerings
that do not distinguish between local and long distance calling. Lifeline and Link Up NPRM, 26 FCC Rcd at 2844,
para. 242; FL PSC Comments at 29 (supporting amendment to replace “basic local service” with the term “voice
telephony service” based on changes in the marketplace); but see OH PUC Comments at 23 (supporting redefining
Lifeline and maintaining “local” qualifier in the new definition).
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Appendix A of this Order.128 We also note that, as discussed more fully below, ETCs are not
required to offer toll limitation service to low-income consumers if the Lifeline offering provides
a set amount of minutes that do not distinguish between toll and non-toll calls.129 We make both
of these changes in recognition of the changing way services are provided in today’s
marketplace.
50.
While we applaud the work the states have done to require pre-paid ETCs to offer
a minimum set of monthly minutes, we do not find it necessary to impose minimum federal
service standards. To the extent possible, service standards should be determined by the
communications marketplace.130 Based on the record, the market is increasing the number of
minutes that pre-paid wireless ETCs are offering. For example, TracFone initially provided
approximately 68 minutes of airtime per month to subscribers, but due to competition from other
providers, it now provides up to 250 minutes a month. As soon as another wireless ETC began
offering Lifeline programs that included 200 free monthly minutes, TracFone reassessed its
offerings and added a new 250 minute calling plan.131 TracFone notes that within days of
announcing its revised calling plan, competing ETCs increased their service offerings to include
250 minutes.132 Our determination not to impose minimum federal service requirements is
consistent with the USF/ICC Transformation Order and FNPRM, where we noted that the
Commission has never prescribed a minimum amount of local access minutes, and therefore
declined to do so in that Order.133 The Commission will monitor service levels and if necessary,
reassess the need to establish minimum service requirements for Lifeline providers.134 While we
128 See USF/ICC Transformation Order on Reconsideration, FCC 11-189, para. 3. Revised section 54.401(a)(3)
states: “That provides voice telephony service to subscribers as provided in § 54.101(a).”
129 See infra section VII.B. In the event a Lifeline-only ETC provides to subscribers a set amount of “all distance”
minutes whereby the subscriber can make local or toll calls without incurring additional charges, that Lifeline-only
ETC does not meet the “facilities” requirement of section 214(e)(1)(a) if the only facilities used enables a subscriber
to access a call center to purchase additional minutes when the set amount of all distance minutes are exhausted.
Likewise, if the subscriber must purchase additional minutes to make international calls, such facilities used by the
ETC to permit the subscriber to purchase additional international minutes cannot be relied upon to meet the facilities
requirement of section 214.
130 See Sprint Comments at 17; see also TracFone Comments at 40.
131 See TracFone Comments at 40.
132 See id.
133 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 78 n.115.
134 Given both the Commission and states’ shared interest in this matter, we encourage federal and state staff to
continue to share information regarding ETCs matters, including ETC service levels. Section 54.401(d) requires
newly designated ETCs to provide information to USAC demonstrating that their Lifeline plan meets the
requirements of the Lifeline rules prior to receiving reimbursement. We amend section 401(d) to specify more
clearly that newly designated ETCs must provide information to USAC about their Lifeline service plans prior to
receiving reimbursement. In the event ETCs choose to offer, as an additional option to low income consumers, the
Lifeline discount to other retail service offerings, including bundles, that are available to the general public, ETCs
are not required to submit the terms and conditions of each such retail service offering to the Commission or USAC,
but rather may provide links to public websites outlining the terms and conditions of such plans. In addition, as set
forth more fully below, see supra section XI.C, we require all ETCs to submit annually information regarding the
terms and conditions of the Lifeline plans for voice telephony service offered specifically to qualified low income
(continued….)
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do not adopt minimum service requirements for any ETCs offering Lifeline service, we expect
all ETCs to continue to offer low-income subscribers innovative and sufficient service plans.
V.
SUPPORT AMOUNTS FOR VOICE SERVICE
51.Background. In the Lifeline & Link Up NPRM, the Commission sought comment
on whether there is a more appropriate reimbursement framework than the current four-tier
system for determining federal support amounts for Lifeline.135 The Commission asked whether
it should adopt a different framework for carriers that do not charge a subscriber line charge or
that do not allocate their costs between the intrastate and interstate jurisdictions.136
52.
Lifeline was originally implemented in 1985 to ensure that the federal Subscriber
Line Charge (SLC), imposed in the aftermath of the breakup of AT&T, would not put local
phone service out of reach for low-income households. Since its inception, the amount of
support has been tied to the SLC, a flat monthly charge that incumbent local exchange carriers
assess on their subscribers to recover some of their network costs assigned to the interstate
jurisdiction. Support levels for competitive ETCs are based on the SLC of the incumbent
carriers in the relevant service area.
53.
Lifeline support today consists of four tiers, each of which must be passed directly
from the ETC to the qualifying low-income consumer in the form of discounts off the
subscriber’s monthly service.137 All ETCs receive Tier One support for each qualifying
(Continued from previous page)
consumers through the program during the previous year, including the number of minutes provided and whether
there are additional charges to the consumer for service including minutes of use and/or toll calls.
135 See Lifeline & Link Up NPRM, 26 FCC Rcd at 2846, para. 248; see 47 C.F.R. § 54.403.
136 See Lifeline & Link Up NPRM, 26 FCC Rcd at 2847, para. 249. We note that TracFone filed a petition for
rulemaking and a waiver request in 2009 that raised some of these issues. In its petition for rulemaking, TracFone
sought to amend the definition of Tier One Lifeline support as defined in section 54.403(a)(1). TracFone Wireless,
Inc.’s Petition for Waiver of 47 C.F.R. § 54.403(a)(i), CC Dkt. No. 96-45, Petition (filed May 4, 2009) (TracFone
Tier One Petition). On March 30, 2009, the Commission released a public notice seeking comment on TracFone’s
petition for rulemaking. Public Notice, Report No. 2885, RM-11526 (rel. March 30, 2009),
http://fjallfoss.fcc.gov/ecfs/document/view?id=6520204555. TracFone requested that the Commission detach Tier
One support from the SLC in effect for the ILEC and allow all ETCs to receive the maximum available ($6.50 per
household) in all service areas. TracFone Tier One Petition at 7-10. Additionally, TracFone requested that the
Commission require ETCs claiming the maximum Tier One amount because of the rule amendment to provide an
additional, unreimbursed $3.50 in Lifeline benefits per month. Id. Two parties commented on the proceeding.
YourTel, a small carrier based in Missouri and a participant in the Lifeline program, concurred with TracFone that
Tier One support should be disconnected from the SLC. See YourTel TracFone Tier One Petition Comments at 1.
YourTel contended that the current Tier One support system is “no longer valid in today’s wireline environment
where niche carriers have higher costs.” Id. The Independent Telephone & Telecommunications Alliance (ITTA)
disagreed, and stated that the Tier One support “is intended to be a proxy for interstate loop costs, and relies upon
the determination that the SLC represents a fair approximation of that amount.” ITTA TracFone Tier One Petition
Comments at 4.
137 See 47 C.F.R. § 54.403; see also Universal Service First Report and Order, 12 FCC Rcd at 8971, para. 368. The
amount the household pays for phone service depends on the price charged by the carrier for Lifeline service and the
amount of federal Lifeline support that a household receives, which in turn depends in part on the state and (if
applicable) Tribal land in which the household is located. Some ETCs, such as TracFone and Virgin Mobile, offer
service at no charge to customers. The net result is that households pay significantly different amounts for their
Lifeline-supported service dependent upon their Lifeline carrier and in which state they reside.
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consumer, which equals the incumbent local exchange carrier’s Subscriber Line Charge, capped
at $6.50.138 Tier Two support provides an additional $1.75 per month in federal support, which
is available in all states and made available to the ETC if it certifies with USAC that it will pass
through the full amount of support to qualifying consumers.139 Tier Three support provides an
amount equal to one-half the amount of any state-mandated Lifeline support or Lifeline support
otherwise provided by the carrier, up to a maximum of $1.75 per month in federal support, if the
ETC passes through the full amount of support to the consumer.140 Finally, Tier Four support
provides eligible subscribers living on Tribal lands up to an additional $25 per month towards
reducing basic local service rates.141 In September 2011, non-Tribal Lifeline subscribers
received an average monthly benefit of $9.25.142
54.
Discussion. In order to simplify administration of the program and revise our
rules in light of current marketplace conditions, we now change the Lifeline reimbursement
structure for non-Tribal support and seek further comment in the FNPRM on the establishment of
an appropriate amount for Lifeline reimbursement. Here, on an interim basis, we replace Tiers
One, Two and Three with a uniform flat-rate reimbursement.143
55.
As an initial matter, we find that an incumbent telephone company’s SLC is no
longer the appropriate metric for determining the amount of Lifeline reimbursement.144 In
particular, the prices consumers face in the marketplace are what determine affordability and
adoption decisions, not the network costs of the incumbent LEC (the original basis for the SLC).
138 See 47 C.F.R. § 54.403(a)(1). The SLC is a flat, monthly charge that incumbent local exchange carriers assess
directly on end users of telecommunications service to recover a portion of their revenue assigned to the interstate
jurisdiction. Not all ILECs are at the $6.50 cap and the SLC varies among ILECs. Federal-State Joint Board on
Universal Service, CC Dkt. No. 96-45, Further Notice of Proposed Rulemaking and Report and Order, 17 FCC Rcd
3752, 3767, para. 35 n. 81 (2002). USAC, Step 1: Lifeline Support, http://usac.org/li/telecom/step01/Lifeline.aspx
(last visited Feb. 2, 2012).
139 47 C.F.R. § 54.403(a)(2). When adopting Tier Two support in 1997, the Commission sought to increase
subscribership in those states that previously did not participate in the program. See Universal Service First Report
and Order, 12 FCC Rcd at 8962-64, paras. 350-53.
140 47 C.F.R. § 54.403(a)(3). When adopting Tier Three support in 1997, the Commission sought to increase
subscribership and encourage states to provide matching discounts to eligible consumers. See Universal Service
First Report and Order, 12 FCC Rcd at 8963-64, para. 353. We understand that some states do not provide
matching state discounts through explicit support, but rather mandate that the carrier reduce its rates by such
amounts to qualify for Tier Three support.
141 47 C.F.R. § 54.403(a)(4).
142 See USAC 2011 Support Amounts Letter. Support ranges from a low of $4.25 per month to a high of $10.00 per
month. See id.
143 See, e.g., Cincinnati Bell Comments at 13-14; COMPTEL Comments at 25; CTIA Comments at 18-19; OH PUC
Comments at 26; AT&T Comments at 3-4, 6; Cricket Reply Comments at 13; Sprint Reply Comments at 2, 12.
144 See, e.g., Cincinnati Bell Comments at 13-14; COMPTEL Comments at 25; CTIA Comments at 18-19; OH PUC
Comments at 26; AT&T Comments at 3-4; Cricket Reply Comments at 13; Sprint Reply Comments at 2, 12. See
TracFone Tier One Petition; YourTel Comments on TracFone Tier One Petition at 1. But see MI PSC Comments at
10; NASUCA Comments at 28.
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56.
In addition, since the Commission adopted the tiered structure of support in 1997
and revised it in 2000,145 significant marketplace changes have occurred. Many low-income
consumers take Lifeline service from competitive ETCs, who do not assess SLCs on their
subscribers and whose cost structures are wholly unrelated to the SLC.146 The majority of
Lifeline support is provided to wireless carriers, whose rates are not regulated by the
Commission or the states, and who do not participate in jurisdictional separations.147
57.
For wireless ETCs, Lifeline support is determined by the SLC of the ILEC in the
area they serve. Given that wireless ETCs typically serve a state with multiple ILECs, it is
administratively burdensome for both the ETC and USAC to determine the correct amount of
Tier 1 support. As commenters note, the variation in the SLC makes it difficult for ETCs to offer
rates that apply nationwide or even to determine the Lifeline discount for a given consumer.148
For example, in Florida, wireless carriers such as TracFone and T-Mobile must submit a
weighted average of the SLCs that their subscribers would face if service were purchased from
their local ILEC for Tier One reimbursement.149 This administrative burden causes wireless
carriers to incur significant costs in ascertaining ILEC SLCs across the ETC’s service area.
58.
Given this evolution, there are two aspects of reimbursement that must be
changed to better reflect the realities of the telecommunications marketplace: the structure of the
reimbursement mechanism, be it tiered or flat, and the level of reimbursement. We do not have a
basis in the record before us to determine at this time the appropriate total level of Lifeline
support that should be provided to each low-income consumer to meet our universal service
goals established above. However, we agree with commenters that the current structure based on
the SLC and Tiers One through Three is administratively burdensome and would benefit from
simplification. Therefore, we eliminate Tiers One, Two and Three and replace them with a flat
rate. Currently, Tier One support, which is equivalent to the relevant SLC, ranges from $2.24
per month to $6.50 per month, while Tier Two support ranges from $0 to $1.75 per month, with
the vast majority of ETCs receiving the maximum Tier Two support.150 Tier Three support
145 Universal Service First Report and Order, 12 FCC Rcd 8776 at para. 367; 2000 Tribal Lifeline Order, 15 FCC
Rcd at 12302-03.
146 UNIVERSAL SERVICE ADMINISTRATIVE COMPANY, 2010 ANNUAL REPORT 13, available at
http://usac.org/about/governance/annual-reports/2010.html. See 47 C.F.R. §§ 69.104, 69.152(d)(1), 69.152(q). The
Commission acknowledged that non-incumbents do not charge SLCs in the Universal Service First Report and
Order, but ultimately opted to require that all ETCs pass Lifeline discounts in the amount of the SLC through to
eligible consumers. See Universal Service First Report and Order, 12 FCC Rcd at 8970-71, paras. 366-67.
147 47 U.S.C. § 332.
148 Cincinnati Bell Comments at 13-14; COMPTEL Comments at 25; Cricket Nov. 22 ex parte Letter at 1.
Commenters also point out that the tiered structure complicates comparison of Lifeline plans. CTIA Comments at
19; AT&T Comments at 10.
149 See Universal Service Administrative Company, 1Q 2012 Filing, Appendices at LI 10 (Tier One Amounts
Reported by All Companies - 2Q2011), available at http://www.usac.org/about/governance/fcc-filings/2012/quarter-
1.aspx.
150 USAC 2011 Support Amounts Letter.
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ranges from $0 to $1.75 and the average combined support is $9.25. Therefore, on an interim
basis, beginning with April 2012 disbursements, we set the flat rate to the current average
amount of non-Tribal Lifeline support provided today, i.e., $9.25 per line per month.151 This flat
rate will be provided for all subscribers equally, regardless of whether they subscribe to wireline
or wireless Lifeline service, and will significantly simplify administration for ETCs.152 In the
attached FNPRM, we seek comment on what amount of support should be provided to ETCs
over the long term.
59.
In the Lifeline and Link Up NPRM, the Commission sought comment on whether
Tier Four support is reasonable or whether it creates a price floor for carriers serving Tribal
lands.153 We received little comment on whether Tier Four support is sufficient, excessive, or
insufficient. In light of the limited record on this issue, we decline to make any changes to Tier
Four support (i.e., support for low-income consumers residing on Tribal lands) (hereinafter
Tribal Lands support) or its structure at this time. Therefore, subscribers who receive Tribal
Lands support will continue to receive Tribal Lands support plus the interim flat rate in lieu of
Tiers One, Two and Three support.
VI.
CONSUMER ELIGIBILITY & ENROLLMENT
60.In the 2010 Joint Board Recommended Decision, the Joint Board recommended
that the Commission adopt uniform minimum verification procedures and sampling criteria that
would apply to all ETCs in all states and that the Commission seek comment on adopting
uniform minimum program- and income-based eligibility criteria for ETCs in all states.154 In
light of the Joint Board’s recommendations and the record before us, we adopt uniform
eligibility criteria applicable in all states. We codify a rule limiting Lifeline support to a single
discount per household and adopt policies to assist in the implementation of this rule. We
modify the Lifeline certification rules to adopt a uniform set of requirements that will increase
consistency in certification practices across states and encourage accountability by consumers
and ETCs. We also replace the current methodology employed by ETCs to annually verify
consumer eligibility with an annual self-certification of continued eligibility that will serve as a
minimum threshold process to be performed in all states. We take several steps to advance the
availability of Lifeline and Link Up support for low-income consumers living on or near Tribal
lands. We will also continue to encourage coordinated enrollment while placing restrictions on
automatic enrollment consistent with our measures to eliminate waste. Finally, in order to
further modernize the program, we permit the use of electronic signatures, including interactive
voice responses, for the purposes of consumer certification.
151 We chose $9.25 per line per month based on September Lifeline reimbursement data from USAC, which is the
latest month in which all ETCs sought reimbursement for Lifeline. We note that this amount is $0.07 higher than
the average 2010 reimbursement amount set forth in the 2011 Monitoring Report at Table 2.3.
152 We note that some ETCs will receive more support under a flat rate of $9.25 per month, and some will receive
less. See 2011 MONITORING REPORT at Table 2.3 (showing a range of support by state.) Regardless, we do not
expect that the interim flat rate reimbursement of $9.25 per month to increase the size of the Fund.
153 Lifeline and Link Up NPRM, 26 FCC Rcd at 2847, para. 250.
154 See 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15601, 15607, paras. 8-9, 26.
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61.
The specific eligibility and certification requirements adopted below are a
minimum floor for determining and verifying consumer eligibility for the federal Lifeline
program. The rules we adopt in this Order are a core set of requirements necessary to make the
program more accountable and to ensure that the program operates efficiently and effectively.
State commissions may include additional qualifying eligibility criteria and impose additional
certification requirements that they believe are necessary to ensure that ETCs are using support
consistent with the statute and our implementing regulations, so long as those additional
reporting requirements do not create burdens that thwart achievement of the objectives of our
universal service policies and regulations, including those set forth in this Report and Order, or
otherwise conflict with federal law.
A.
Uniform Eligibility Criteria
62.Background. Today, eligibility requirements for the Lifeline program vary from
state to state.155 Lifeline eligibility is based upon participation in certain means-tested programs
and, in most states, upon income. The federal default Lifeline eligibility criteria—which apply
in eight states and two territories (i.e., “federal default states”)—require consumers to either: (1)
have a household income at or below 135 percent of the Federal Poverty Guidelines;156 or (2)
participate in at least one of a number of federal assistance programs.157 Commission rules
currently permit the District of Columbia and the 42 remaining states and three territories with
their own programs to establish their own eligibility criteria, provided that qualification criteria
are based solely on income or factors directly related to income.158 Many states have adopted
eligibility criteria very similar to the federal default criteria,159 but some states have not.160 This
155 Compare Washington Telephone Assistance Program,
http://www.utc.wa.gov/consumers/telephone/Pages/telephoneAssistanceProgram.aspx (last visited Feb. 2, 2012),
with 47 C.F.R. § 54.409(b), (c) (federal default eligibility criteria). The State of Washington’s Telephone Assistance
Program uses a mix of federal (SNAP, TANF, Supplemental Security Income) and state eligibility criteria (Medical
Assistance, Refugee Assistance, DSHS Chore Services, Community Options Program, and General Assistance).
156 See 47 C.F.R. § 54.409(b). Based on the current Federal Poverty Guidelines for the 48 contiguous states and
Washington, DC, annual income of 135 percent of the guidelines is $14,702 for a one-person household or family;
$19,859 for a two-person household or family; $25,016 for a three-person household or family; and $30,173 for a
four-person household or family. For each additional member of a household above four, $5,157 is added, so for an
eight-person household, the maximum annual income would be $50,801. Annual Update of the U.S. Dep’t. of
Health and Human Servs. Poverty Guidelines, 76 Fed. Reg. 3,367, 3,637-38 (Jan. 20, 2011).
157 Federal programs qualifying consumers for the low-income program are: Medicaid; Supplemental Nutrition
Assistance Program (SNAP), formerly known as Food Stamps; Supplemental Security Income (SSI); Federal Public
Housing Assistance; Low-Income Home Energy Assistance Program (LIHEAP); National School Lunch Program’s
free lunch program; and Temporary Assistance for Needy Families (TANF). Low-income consumers living on
Tribal lands may also qualify by participation in one of several additional assistance programs: Bureau of Indian
Affairs general assistance; Tribally-administered TANF; or Head Start (only those meeting its income-qualifying
standards). See 47 C.F.R. § 54.409(c).
158 47 C.F.R. §§ 54.409, 54.415.
159 Currently, every state, with the exception of Idaho, Virginia, Colorado, and Montana, uses at least four of the
seven programs utilized by the federal default states.
160 For example, Oregon and Colorado do not have income-based Lifeline eligibility, while Ohio sets income
eligibility at 150% of the Federal Poverty Guidelines. Oregon Telephone Assistance Program,
(continued….)
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current patchwork of eligibility criteria means that consumers in some states qualify for Lifeline
support while similarly situated consumers in states without those same qualifying criteria may
not be eligible for federal support.
63.
In the 2010 Joint Board Referral Order, the Commission asked the Joint Board
“to undertake a thorough review of the existing consumer eligibility requirements, as well as the
certification and documentation requirements imposed on ETCs.”161 During its deliberations, the
Joint Board recommended that the Commission seek comment on whether to adopt uniform
federal minimum income- and program-based eligibility standards that would apply in all states,
provided that the impact of uniformity is reasonable.162 The Joint Board noted that uniform
eligibility requirements could be burdensome on some states in terms of cost and administration,
but recognized that such uniformity could simplify ETC certification of consumer eligibility and
may increase program participation.163 The Joint Board also recommended that the Commission
seek comment on raising the program’s income eligibility criterion of 135 percent or below of
FPG to 150 percent or below of FPG.164
64.
In the Lifeline and Link Up NPRM, the Commission proposed a core set of federal
eligibility requirements that would apply in all states, and sought comment on permitting states
to adopt additional measures that could complement the federal standards.165 As recommended
by the Joint Board, the Commission also sought comment on raising the minimum income
eligibility to 150 percent.166
65.
Discussion. We amend our rules to require all states to utilize, at a minimum, the
income and program criteria currently utilized by federal default states.167 In so doing, we
establish baseline eligibility requirements on top of which states may adopt additional program
or income criteria to address the unique circumstances facing consumers in their states.168
(Continued from previous page)
http://www.oregon.gov/PUC/rspf/otap.shtml (last visited Feb. 2, 2012); Colorado Department of Human Services,
Low-Income Telephone Assistance, http://www.colorado.gov/cs/Satellite/CDHS-SelfSuff/CBON/1251589753838
(last visited Feb. 2, 2012); OH PUC Comments at 15.
161 2010 Joint Board Referral Order, 25 FCC Rcd at 5081, para. 6.
162 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15601, paras. 8-9.
163 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15601, paras. 8-9.
164 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15601, para. 10.
165 Lifeline and Link Up NPRM, 26 FCC Rcd at 2820-21, paras. 152-56.
166 Lifeline and Link Up NPRM, 26 FCC Rcd at 2821-22, para. 157.
167 See 47 C.F.R. § 54.409(a), (b).
168 For example, if a state wishes to adopt participation in a certain federal or state assistance program not included
in the Commission’s list of eligible programs, the state may do so, provided the program is based on income or
factors directly related to income. See Georgia Public Service Commission – Lifeline Assistance Program & Link-
Up Georgia, http://www.psc.state.ga.us/consumer_corner/cc_telecom/advisory/lifeline.asp (last visited Feb. 2,
2012); see also Florida Public Service Commission – Lifeline Assistance and Link-Up Florida Brochure,
http://www.floridapsc.com/utilities/telecomm/lifeline/engbrochure.aspx (last visited Feb. 2, 2012); Kansas
Corporation Commission – Kansas Lifeline Program, http://www.kcc.state.ks.us/pi/lifeline.htm (last visited Feb. 2,
(continued….)
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66.
Uniform eligibility criteria would simplify the development of an eligibility
database, an important tool in preventing ineligible consumers from enrolling in the federal
program.169 Moreover, together with an eligibility database, uniform eligibility criteria will
facilitate the auditing process because all ETCs will operate under a set of baseline rules.170
There is also widespread support for uniformity of eligibility criteria from various consumer
groups, states, and ETCs.171 Commenters, including consumer advocates and ETCs, agree that
uniformity ensures that consumers in all states have comparable access to the program.172
Currently, ETCs operating in multiple states have to develop state-specific policies and
procedures to ensure compliance with state-specific program eligibility requirements, but with
uniform eligibility requirements, consumers will face more streamlined enrollment procedures,
while there would be fewer regulatory burdens on service providers. 173
67.
A few state commissions that commented oppose uniform eligibility criteria.174
For example, two state commissions note that state laws may need to be changed due to adoption
of uniform eligibility requirements.175 One state commission argues that a uniform federal floor
of eligibility criteria could place a financial burden on states that have stricter eligibility criteria
than the federal default states.176 We believe that such a burden, while not quantified in the
record, may be overstated. It is important to note that such a burden would only fall on states
that choose to allocate state funds for Lifeline support, which are then matched through federal
Tier Three support.177 Thus, a state would only be burdened insofar as the state has its own
(Continued from previous page)
2012); 47 C.F.R. § 54.409 (permitting “narrowly targeted qualification criteria that are based solely on income or
factors directly related to income”).
169 COMPTEL Comments at 19.
170 COMPTEL Comments at 19-20.
171 AARP Comments at 5-6; Benton/PK/UCC Comments at 5; CA PUC Reply Comments at 6-7; CenturyLink
Comments at 16-18; COMPTEL Comments at 18-19; Conexions Comments at 8; Consumer Groups Reply
Comments at 6-8; Cricket Comments at 11-12; CTIA Comments at 18-19; DC PSC Comments at 4-5; GCI
Comments at 45-46; NASUCA Comments at 20-22; NJ DRC Reply Comments at 26; OH PUC Comments at 14;
Alaska Commission Reply Comments at 12-13.
172 See, e.g., COMPTEL Comments at 18-19; Conexions Comments at 8; AARP Comments at 6.
173 CenturyLink Comments at 16 (“Standard minimum criteria should enable easier program administration across
multiple states.”); Cricket Comments at 11 (“Cricket fully supports this proposal, which would create greater
consistency in eligibility and verification requirements nationally. It also would help to eliminate ambiguities in
certain state regulatory frameworks and streamline the administration of Low-Income support programs by ETCs.”);
CTIA Comments at 18.
174 FL PSC Comments at 19; MI PSC Comments at 7; MS PSC Comments at 13; OR PUC Comments at 2.
175 The Oregon Commission states that “changes in income qualification levels (such as the suggested increase from
135 percent to 150 percent of federal poverty guidelines) will require changes in Oregon law.” OR PUC Comments
at 2; see also MI PSC Comments at 7 (arguing that some states, including Michigan, have laws regarding eligibility
and compliance with uniformity would necessitate burdensome legislative changes).
176 OR PUC Comments at 2.
177 47 C.F.R. § 54.403(a)(3).
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Lifeline fund and adoption of uniform eligibility criteria increases enrollment in that state.178 For
example, if a state does not currently include the Low-Income Home Energy Assistance Program
(LIHEAP) as a program conferring Lifeline eligibility, our adoption of a uniform floor of
eligibility would immediately render that state’s LIHEAP customers eligible for Lifeline,
provided those subscribers were not already enrolled in another qualifying program. If a state
were to find that uniformity increases demand on its own state fund, it could adjust its state
Lifeline support per household without increasing its overall fund size, among other options.
The potential for increased costs to states from our adopting uniform eligibility criteria are
further diminished by the fact that many Lifeline-only ETCs, including TracFone and Virgin
Mobile, do not take from state funds.179 Therefore, we conclude that the benefits of uniformity
of eligibility criteria outweigh any potential costs to states.180
68.
We decline at this time to adopt a uniform national rule mandating that
households with 150 percent of the FPG be eligible for Lifeline/Link Up. The record was mixed
on this proposal.181 We conclude that we should evaluate the impact of the other changes we
adopt today before taking steps that could increase program demand.
B.
One-Per-Household
69.We take several steps to more effectively target low-income support by codifying
a one-per-household requirement, while creating a framework that will more clearly delineate the
obligations and expectations for both qualifying households and ETCs. First, we codify a rule
limiting Lifeline support to a single subscription per household and define “household.” Second,
recognizing that there are instances where multiple households (i.e., families) reside at the same
address we implement procedures to enable applicants in such circumstances to demonstrate at
enrollment that other Lifeline recipients residing at the same address are a separate household.
Third, we adopt a requirement that, prior to providing service to a consumer, an ETC must obtain
that consumer’s permanent residential address, unless they only have a temporary address.
Fourth, we codify additional protections to be implemented by those ETCs that serve consumers
without a permanent residential address, in order to assist ETCs in more easily verifying such
consumers’ continued eligibility for the program. Fifth, we clarify that Lifeline is available to
otherwise eligible low-income consumers residing in areas zoned as “commercial” if the
178 We note that most states and territories, with the exceptions of Colorado, Montana, Idaho, and Virginia, maintain
eligibility criteria very similar to or more permissive than the federal default criteria.
179 Some states do not have or do not assert jurisdiction over wireless carriers, and some states do not have state
funds; therefore some ETCs receive Tier Three support by providing additional service to the subscriber provided
that “the carrier certifies to the Administrator that it will pass through the full amount of Tier Three support [up to
$3.50] to its qualifying low-income consumers.” 47 C.F.R. § 54.403(a)(3). Additionally, some ETCs choose not to
accept state funds due to attached conditions and ease of administration.
180 In furtherance of our goal of uniformity, we clarify that participants in Medicaid, a qualifying means-tested
assistance program, are eligible for Lifeline even if their Medicaid participation consists solely of assistance in
payment of Medicare Part B premiums.
181 AARP Comments at 6; Benton/PK/UCC Comments at 5; Budget/GreatCall/PR Comments at 6; Conexions
Comments at 8; Consumer Groups Reply Comments at 7; Cox Comments at 9; Keep USF Fair Comments at 2;
MAG-Net Comments at 13-14; OH PUC Comments at 15; Open Access Comments at 2-3. But see One Economy
Comments at 16-17; OR PUC Comments at 2; USTelecom Comments at 8.
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consumer certifies at enrollment that the address of record provided by the consumer is his or her
residential address.
1.
Background
70.The Commission previously has stated that eligible low-income consumers may
receive low-income support for “a single line in their principal residence.”182 This requirement
historically was intended to target support where it was needed most and to maximize the
number of Americans with access to the telephone network. Commonly known as the “one-per-
household” limitation, in practice this requirement has been implemented by providing one
Lifeline discount per residential address.183
71.
Beginning in 2005, the Commission has on a case-by-case basis permitted non-
facilities-based providers, including prepaid wireless carriers, to obtain low-income support from
the Universal Service Fund.184 When designating certain non-facilities-based wireless carriers as
Lifeline-only ETCs, the Commission has directed those carriers to establish safeguards to
comply with the one-per-household rule, including requiring Lifeline consumers to self-certify
under penalty of perjury upon service activation and then annually thereafter that they are the
head of household and only receive Lifeline supported service from that carrier.185 The greater
availability of Lifeline services from a variety of providers has increased the likelihood that a
residence may receive more than one Lifeline-supported telephone service.186 Thus,
notwithstanding existing program protections, including certification and verification
requirements,187 low-income consumers may be obtaining more than one Lifeline service per
household, either knowingly or unwittingly.
182 Lifeline and Link Up, WC Dkt. No. 03-109, Report and Order and Further Notice of Proposed Rulemaking, 19
FCC Rcd 8302, 8306, para. 4 (2004) (2004 Lifeline and Link Up Order and FNPRM); Universal Service First
Report and Order, 12 FCC Rcd 8776 at 8957, para. 341.
183 Some parties dispute that the Commission has ever adopted a one-per-household requirement. See, e.g., CTIA
Comments at 13-16; GCI Comments at 37; AT&T PN Comments at 3. We disagree. As discussed in greater detail
below, the aforementioned orders, see infra para. 76, established such a principle.
184 See i-Wireless Forbearance Order, 25 FCC Rcd at 8784; Virgin Mobile 2010 ETC Order, 25 FCC Rcd at 17797;
Virgin Mobile Forbearance Order, 24 FCC Rcd at 3381; TracFone Forbearance Order, 20 FCC Rcd at 15095.
185 See, e.g., Telecommunications Carriers Eligible for Universal Service Support, Federal-State Joint Board on
Universal Service, Conexions Petition for Forbearance, WC Dkt. No. 09-197, CC Dkt. No. 96-45, Order, 25 FCC
Rcd. 13866, 13871, para. 17 (2010) (Conexions ETC Order); Telecommunications Carriers Eligible for Universal
Service Support, Virgin Mobile USA, L.P. Petition for Designation as an Eligible Telecommunications Carrier, WC
Dkt. No. 09-197, Order, 25 FCC Rcd. 17797, 17804, para. 20 (2010) (Virgin Mobile ETC Order).
186 Beginning in May 2011, the Commission asked USAC to begin conducting state-specific in-depth data
validations (IDVs) after USAC audits undertaken in the course of ongoing oversight over the Low Income Program
revealed that multiple ETCs were seeking reimbursement for Lifeline service provided to the same individual, and in
some instances, to more than one individual living in the same residence. See 2011 Duplicative Program Payments
Order, 26 FCC Rcd at 9022. Adoption of a rule clarifying the one-per-household policy will similarly advance our
efforts to eliminate duplicative Lifeline payments and guard against waste, fraud, and abuse.
187 See 47 C.F.R. §§ 54.409, 54.410. For example, currently, certification rules applicable in federal default states
require consumers that receive income-based support to self-certify under penalty of perjury as to their qualification
to receive support and as to the number of individuals in their household. See 47 C.F.R. § 54.410(b). Prior to
designating a wireless carrier as a Lifeline-only ETC, the Commission has required each carrier to take specific
(continued….)
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72.
In the Lifeline and Link Up NPRM, the Commission proposed to adopt a one-per-
residential address requirement that would limit program support to a single subscription per
residence, with “residence” defined as a U.S. Postal Service address.188 The Commission also
sought comment in the NPRM on how best to apply its proposed one-per-residence rule in non-
traditional living situations, such as group living facilities and Tribal communities, in order to
ensure that Lifeline is available to such consumers but also to prevent instances of duplicative
support.189
73.
In June 2011, the Commission codified a prohibition on qualifying individual
consumers receiving more than one Lifeline subsidy at a given time.190 In August 2011, the
Bureau sought additional comment on limiting Lifeline support to one discount per residential
address.191
2.
Discussion
74.As an initial matter, we reiterate that under no circumstances may a single
consumer receive more than one Lifeline-supported service.192 We also now codify a rule
limiting Lifeline support to a single subscription per household.193 We define “household” in a
manner consistent with the definition used in the Low-Income Home Energy Assistance
Program, as “any individual or group of individuals who are living together at the same address
as one economic unit.”194 For the purposes of this rule, an economic unit consists of all adult
individuals contributing to and sharing in the income and expenses of a household.195 In light of
(Continued from previous page)
steps to further comply with the single supported service per household rule and establish safeguards to prevent
consumers from receiving Lifeline-supported service from multiple ETCs. See i-Wireless Forbearance Order, 25
FCC Rcd at 8784, 8790, para. 16; Virgin Mobile 2010 ETC Order, 25 FCC Rcd at 17797, 17804, para. 21; Virgin
Mobile Forbearance Order, 24 FCC Rcd at 3381, 3387, 3392, paras. 12, 25; TracFone Forbearance Order, 20 FCC
Rcd at 15095, 15103-04, para. 18. These requirements are only applicable to Lifeline-only ETCs designated as such
by the Commission, and not state-designated Lifeline ETCs.
188 Lifeline and Link Up NPRM, 26 FCC Rcd at 2805-08, paras. 106-16.
189 See id. at 2707-10, paras. 113-14, 116-25.
190 2011 Duplicative Program Payments Order, 26 FCC Rcd at 9026, para. 7.
191 See Lifeline and Link Up Public Notice.
192 2011 Duplicative Program Payments Order. In this Order, we move the codified restriction from section
54.401(a) to revised section 54.409(c).
193 For commenters supporting a one-per-household rule, see, e.g., Cricket Comments at 8-9; Benton/PK/UCC
Comments at 4; Consumer Groups Reply Comments at 4-5; CA PUC Reply Comments at 3, 5; LCCHR Comments
at 8; NHMC Reply Comments at 1, 3.; Sprint Reply Comments at 1, 8; Letter from John T. Nakahata, Counsel, GCI,
to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al. (filed Jan. 13,
2012) (GCI Jan. 13 ex parte Letter).
194 The U.S. Department of Health and Human Services establishes eligibility for the Low-Income Home Energy
Assistance Program. See 42 U.S.C. § 8622(5). See, e.g., Benton/PK/UCC Comments at 4; Consumer Group
Comments at 18-19; LCCHR Comments at 8; USTelecom Comments at 20.
195 For the purposes of the rule we adopt today, “adults” are persons eighteen years of age or older, and children
living with their parents or legal guardians are considered to be part of their parent or guardian’s household. A
household may include related and unrelated persons. If a low-income consumer has no/minimal income, but lives
with someone else who provides financial support to him/her, the low-income consumer should be considered to be
(continued….)
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extensive comment received in response to the Lifeline and Link Up NPRM and the Lifeline and
Link Up Public Notice, we believe that a one-per-household rule defined as an economic unit is a
reasonable way to ensure that voice and broadband service are available to low-income
consumers while minimizing the contribution burden on consumers and businesses.196
75.
A one-per-household limitation is also consistent with our prior determination that
eligible consumers may receive universal service low-income support for “a single line in their
principal residence,”197 as well as other existing Lifeline program rules. For example, today, in
those states where eligibility is permitted based on a percentage of income above the FPG,
consumers may qualify for Lifeline based on income level by demonstrating that their household
income is at or below 135 percent of the FPG.198 Similarly, as several commenters observe,199
most of the underlying public assistance programs on which consumers rely to meet the Lifeline
(Continued from previous page)
part of that person’s household. An economic unit consists of adults contributing to and sharing in the income and
expenses of a household. Examples of persons living together at an address that may constitute separate economic
units are multi-generational families living together (e.g., parents living with their adult children) or unrelated adult
roommates. See, e.g., Letter from John T. Nakahata, Counsel, GCI, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at Attach. (filed Jan. 23, 2012) (GCI Jan. 23 ex parte
Letter); U.S. Department of Agriculture, Food & Nutrition Service (FNS), Women, Infants and Children (WIC)
Prescreening Tool, Household Size, available at https://stars.fns.usda.gov/wps/pages/household.jsf (stating that a
“household” is everyone who lives in a home (including children) and shares income and household expenses (bills,
food, etc.). They may be related or unrelated) (last visited Feb. 2, 2012); see also Committee on National Statistics,
Division of Behavioral and Social Sciences and Education, National Research Council of the National Academies,
Estimating Eligibility and Participation for the WIC Program: Final Report at 51-52 (Michele Ver Ploeg and David
M. Betson, eds., 2003), available at http://www.nap.edu/openbook.php?record_id=10804&page=52; Nebraska
Health & Human Services, Nebraska WIC Program, Family Size/Economic Unit Determination, WIC Procedure
Manual, Volume 1 (Clinic Services & Management), Section D, (1999), available at
http://dhhs.ne.gov/publichealth/Documents/section%20D%20page%204%20Family%20Size%20Determination.pdf;
California WIC Program Manual, Certification, Eligibility Requirement, Determination of Income Eligibility, WIC
210-03 (2009), available at http://www.cdph.ca.gov/programs/wicworks/Documents/WPM/WIC-WPM-210-03.pdf.
196 There is a wide variety of practices among Lifeline providers today. See, e.g., Letter from John T. Nakahata,
Counsel, GCI, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at
2 (filed Nov. 23, 2011) (GCI Nov. 23 ex parte Letter) (stating that GCI currently employs a nuclear family approach
to a one-per-household limitation under which a consumer is not eligible for service if either anyone else residing
at the consumer's physical address has Lifeline-supported wireline service, or anyone in the consumer's nuclear
family (defined as spouse and minor children) has Lifeline-supported wireless service); Letter from Mitchell F.
Brecher, Counsel, TracFone Wireless, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC
Dkt. No. 11-42 et al., enclosure at 6 (filed Nov. 10, 2011) (TracFone Nov. 10 ex parte Letter) (stating that TracFone
currently limits its Lifeline enrollment to “one-per-residence”). A codified one-per-household rule as described
above will make the Fund size more predictable because all ETCs will be adhering to the same rule.
197 2004 Lifeline and Link Up Order and FNPRM, 19 FCC Rcd at 8306, para. 4; Universal Service First Report and
Order, 12 FCC Rcd at 8957, para. 341.
198 Section 54.400(f) of the Commission’s rules defines “income” for the purposes of establishing income-based
eligibility for Lifeline as “all income actually received by all members of the household.” 47 C.F.R. § 54.400(f).
See also Annual Update of the 2011 U.S. Department of Health & Human Services Poverty Guidelines, 76 Fed.
Reg. 3,367, 3,637-38 (Jan. 20, 2011) (Federal Poverty Guidelines).
199 See, e.g., AT&T PN Comments at 2; CTIA Reply Comments at 10; Consumer Groups Comments at 19-20;
Benton Foundation Comments at 4; LCCHR Comments at 8.
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eligibility criteria also are based on a “household unit.”200 Because use of the household unit is
already well-established, we believe that a one-per-household rule is a reasonable extension of
our current program rules, and is unlikely to cause confusion among consumers and ETCs.
76.
We disagree with those parties who dispute that the Commission has ever adopted
a one-per-household requirement.201 We believe that the Commission, in prior orders, has
established such a requirement for the Lifeline program.202 We acknowledge, however, that this
rule has not been a model of clarity in the past and may have caused unnecessary confusion
among consumers and ETCs. We thereby remedy this issue today by codifying the one-per-
household requirement in our Lifeline program rules.
77.
We also take steps to anticipate and resolve instances where multiple households
reside at the same address. In cases where multiple households reside at an address, including in
Tribal communities and group living facilities, program applicants must affirmatively certify that
other Lifeline recipients residing at that address are part of a separate household, i.e., a separate
economic unit that does not share income and expenses.203 The Lifeline and Link Up Public
Notice noted that at least one ETC already has procedures in place to comply with a one-per-
household limitation in situations where multiple consumers claim the same U.S. Postal Service
address, and sought comment on whether to require ETCs to implement similar processes to
ensure compliance with a one-per-household rule.204 Generally, this process allows the ETC to
provide Lifeline service to multiple qualified residents at an address and also comply with the
one-per-household limitation. However, some commenters responding to the Public Notice
raised concerns about such an “escalation” process, arguing that the low-income consumers’
applications will typically be rejected and the consumer must initiate a dispute resolution process
with the ETC to reverse that decision.205 Thus, we find that it is preferable to implement
procedures to enable applicants to demonstrate at the outset that any other Lifeline recipients
residing at their residential address are part of a separate household. This will minimize burdens
in resolving disputes, making it easier for consumers to enroll in the program.
200 Some examples of federal benefit programs that define “household” or “family” for the purpose of establishing
eligibility include the Low-Income Home Energy Assistance Program (LIHEAP), Supplemental Nutrition
Assistance Program (SNAP), National School Lunch Program (NLSP), Food Distribution Program on Indian
Reservations (FDPIR), and Section 8 Public Housing Assistance.
201 See, e.g., CTIA Comments at 13-16; GCI Comments at 37.
202 See 2004 Lifeline and Link Up Order and FNPRM, 19 FCC Rcd 8302 at 8306, para. 4; Universal Service First
Report and Order, 12 FCC Rcd at 8957, para. 341.
203 See Letter from Mitchell F. Brecher, Greenberg Traurig, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 2 (filed June 1, 2011) (TracFone June 1 ex
parte Letter); see also, e.g., CA PUC Reply Comments at 2 (noting that California permits Lifeline support in
situations where multiple, qualified households reside at the same address); Cox PN Comments at 14-15; Letter
from Sindy Y. Yun, Staff Counsel, California Public Utilities Commission, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. Nos. 11-42 et al., Attach. A, at 5 (filed June 28, 2011) (California PUC
Resolution T-17321, discussing California’s Lifeline “roommate rule”) (CA PUC June 28 ex parte Presentation).
204 Lifeline and Link Up Public Notice, 26 FCC Rcd at 11102, para. 2(a)(ii).
205 See, e.g., Consumer Groups PN Comments at 5; Benton PN Comments at 16; cf. Consumer Advocates PN
Comments at 8-9.
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78.
As explained below in the database section, upon receiving an application for
Lifeline support, all ETCs must check the duplicates database to determine whether an individual
at the applicant’s residential address is currently receiving Lifeline-supported service.206 The
ETC must also search its own internal records to ensure that it does not already provide Lifeline-
supported service to someone at that residential address. If nobody at the residential address is
currently receiving Lifeline-supported service, the ETC may initiate Lifeline service after
determining that the household is otherwise eligible to receive Lifeline and obtaining all required
certifications from the household. If the ETC determines that an individual at the applicant’s
residential address is currently receiving Lifeline-supported service, the ETC must take an
additional step to ensure that the applicant and the current subscriber are part of different
households. To enable applicants to make this demonstration, the ETC must require applicants
to complete and submit to the ETC a written document, to be developed by USAC as discussed
below, containing the following: (1) an explanation of the Commission’s one-per-household rule;
(2) a check box that an applicant can mark to indicate that he or she lives at an address occupied
by multiple households; (3) a space for the applicant to certify that he or she shares an address
with other adults who do not contribute income to the applicant’s household and share in the
household’s expenses or benefit from the applicant’s income, pursuant to the definition we adopt
here today; and (4) the penalty for a consumer’s failure to make the required one-per-household
certification (i.e., de-enrollment).207 All ETCs must collect the completed document upon initial
program enrollment from those consumers who apply for Lifeline using a residential address that
the ETC determines is already receiving Lifeline-supported service.208
79.
We direct USAC, within 30 days of the Order’s publication in the Federal
Register, to develop and submit to the Bureau a form consistent with the above requirements to
assist ETCs in providing Lifeline to low-income households sharing an address. Additionally,
within 30 days of this Order’s publication in the Federal Register, USAC should develop print
and web materials to be posted on USAC’s website that both USAC and ETCs can use to
206 The one-per-household rule we adopt today applies to all ETCs, whether designated as such by a state or by the
Commission.
207 For ease of administration, the ETC may also choose to provide pre-populated options for applicants to initial to
provide further explanation about their address being occupied by multiple households (e.g., share a home with
relatives that do not share income or expenses, live with an adult roommate who does not share in the applicant’s
income or expenses, applicant resides in a group housing facility). We expect that it will be advantageous for ETCs
to begin gathering such information, as it will assist them in more easily populating the duplicates database, once it
is implemented.
208 Thus, the first low-income consumer applying for Lifeline at a given address will not need to provide a one-per-
household worksheet to the ETC. As described in the Certification section, below, ETCs must also obtain a
certification from each consumer that he or she complies with the one-per-household requirement. See supra section
VI.C (Certification of Consumer Eligibility for Lifeine). This certification must be provided by each Lifeline
subscriber at initial enrollment and annually thereafter. See supra para. 120. In the event that a Lifeline subscriber
joins a household that also obtains Lifeline (i.e., becomes part of that economic unit), that subscriber will no longer
be entitled to the Lifeline benefit. For example, if an adult Lifeline subscriber moves in with his or her parents, who
also obtain Lifeline, and becomes a part of the parents’ economic unit, only the subscriber’s parents would be
entitled to continue receiving Lifeline benefits.
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educate consumers about the one-per-household rule.209 By requiring applicants to provide this
information as part of the initial program sign-up process, we will alleviate delays in the
enrollment process, as it is less likely that an application will be rejected due to multiple
households sharing an address and will reduce the burden on the part of both the consumer and
the ETC. Additionally, this process will assist persons living at an address shared by multiple
households to select the telephone service of their choice, wireless or wireline, without
encountering unreasonable barriers due to not being the “first resident” at an address to apply for
Lifeline.210
80.
We decline to adopt the one-per-residential address rule proposed in the NPRM in
part because it would be inappropriate to exclude otherwise eligible consumers solely because
they lack a unique residential address.211 Consumers may live in residences for which there is no
unique U.S. Postal Service address or where multiple persons or families share a residential
address, and this may be particularly common for low-income consumers.212 Based on the
record before us, we decline to adopt a rule that would potentially have the unintended
consequence of excluding low-income consumers from participation in Lifeline.213 In contrast,
by codifying the one-per-household requirement, we will enable eligible low-income consumers,
including consumers in non-traditional living situations, to receive Lifeline support.
81.
Several commenters recommend that the Commission adopt a rule allowing for
one Lifeline-supported service per consumer, which they assert is the best means to ensure the
availability of telephone service for low-income consumers.214 Other commenters advocate for
209 For example, USAC should develop a tool similar to WIC’s that helps consumers to determine if they are eligible
for Lifeline. See, e.g., U.S. Department of Agriculture, Food and Nutrition Service (FNS), Women, Infants and
Children (WIC) Prescreening Tool, Household Size, https://stars.fns.usda.gov/wps/pages/household.jsf# (last visited
Jan. 30, 2012); U.S. Department of Agriculture, Food and Nutrition Service, Supplemental Nutrition Assistance
Program Prescreening Eligibility Tool, http://www.snap-step1.usda.gov/fns/ (last visited Jan. 30, 2012).
210 Commenters state that ETCs have interpreted the Commission’s existing “one-per-household” rule by providing
one Lifeline discount per residential address; thus, in some cases, only one resident at an address shared by multiple
households has been able to obtain Lifeline service. See, e.g., Fletcher School Reply Comments at 6. MFY Legal
Services Reply Comments at 2.
211 See Amvensys Comments at 6; GCI Reply Comments 2 at 2; MAG-Net Reply Comments at 6-8; NATOA
Comments at 3; NHMC Reply Comments at 3; AT&T Comments at 17; Consumer Groups Comments at 18-19;
YourTel Comments at 3.
212 See, e.g., GCI Comments at 38; NHMC Reply Comments at 3; Consumer Groups Comments at 19-20; State of
Alaska Reply Comments at 2; Letter from James E. Dunstan, Brian Tagaban & W. Greg Kelly, Navajo Nation
Telecommunications Regulatory Authority (NNTRC), to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Dkt. No. 11-42 et al., at 5 (filed Jan. 20, 2012) (NNTRC Jan. 20 ex parte Letter).
213 Commenters provided numerous examples of these living situations, including: unrelated adults living together;
multiple families living together; and multi-generational families living together; residents of Tribal lands; as well as
group living facilities, such as nursing homes, domestic abuse shelters, and persons occupying commercially zoned
facilities. See, e.g., GCI Reply Comments at 10; LCCHR Comments at 8; COMPTEL Comments at 16; Sprint
Comments at 11-12; MAG-Net Reply Comments at 9; Verizon Reply Comments at 5; MA DTC Comments at 7;
YourTel Comments at 2; Cricket Reply Comments at 10; MI PSC Comments at 6; MFY Legal Services Reply
Comments at 2.
214 See, e.g., GCI Comments at 39-40; COMPTEL Comments at 15; NALA/PCA Comments at 2; NHMC Reply
Comments at 1, 3; Budget/GreatCall/PR Comments at 9-10. In response to the Lifeline and Link Up Public Notice,
(continued….)
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adoption of a more limited “one-per-person rule,” for example recommending that we adopt such
a rule only for residents of Tribal lands or group living facilities.215 In support of a one-per-
person rule, such commenters point to the increasing wireless penetration rate, as well as the
varied living situations of low-income consumers.216 They state that although the increasing
availability of wireless Lifeline services has increased consumer choice, it has also made it more
difficult to enforce a one-per-household or one-per-residence requirement.217 Such commenters
also point out that the challenges in applying the Commission’s existing one-per-household
policy have been exacerbated by the fact that some residences, such as those on Tribal lands,
lack a unique U.S. Postal Service address.218 Other commenters point to the potential public
safety impact of a rule permitting only one Lifeline-supported service per household or
residential address.219
(Continued from previous page)
a few commenters mistakenly stated that the Commission already adopted a one-per-qualifying consumer rule in the
2011 Duplicative Program Payments Order. See, e.g., AT&T Public Notice Comments at 1-2; CTIA Public Notice
Reply Comments at 3-4. To the contrary, in that order, the Commission explicitly prohibited a qualified low-income
individual from receiving more than one Lifeline-supported service at the same time; it did not hold that each such
person was entitled to Lifeline benefits. 2011 Duplicative Program Payments Order, 26 FCC Rcd. 9022 at 9026-28,
paras. 8-14.
215 See, e.g., SBI Comments at 9-10 (recommending that the Commission provide one Lifeline discount per eligible
adult to eligible residents of Tribal lands whose annual household income is at or below the federal poverty level,
which SBI estimates would cost approximately $25 million with a 32 percent program take rate); Letter from John
T. Nakahata, Counsel, GCI, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No.
11-42 et al., at 2-3 (filed Dec. 6, 2011) (stating that Lifeline-supported wireless services should be available to each
eligible adult on Tribal lands and estimating that this would expand service to an additional 22,000 adults in Alaska)
(GCI Dec. 6 ex parte Letter); Letter from Steven M. Chernoff, Counsel, PR Wireless d/b/a Open Mobile, to Marlene
H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 5 (filed Jan. 25, 2012)
(stating that if a one-per-qualifying-adult rule is adopted for Tribal lands, it would be essential to extend such a rule
to Puerto Rico, which has economic and infrastructure conditions similar to many Tribal areas) (PR Wireless Jan. 25
ex parte Letter). But see Letter from Michael R. Romano, Senior Vice President – Policy, NTCA, to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 1 (filed Dec. 22, 2011)
(stating that there is no reason to base a rule of general applicability on unique circumstances that may be faced in
specific areas) (NTCA Dec. 22 ex parte Letter).
216 See, e.g., NHMC Reply Comments at 1, 3; Sprint Reply Comments at 8; GCI Comments at 39-40; COMPTEL
Comments at 15; Budget/GreatCall/PR Comments at 9-10.
217 Commenters point out that multiple members of a family, for example, or adult roommates may each sign up for
a separate plan from different companies so that each person has his or her own subscription. Additionally, low-
income consumers, such as residents of nursing homes or shelters, may share a residence with other similarly
situated consumers, each of whom may wish to obtain a Lifeline service.
218 SBI Comments at 10-12; GCI Reply Comments at 10; Consumer Groups Comments at 19-20; State of Alaska
Reply Comments at 2.
219 Commenters state, for example, that one member of a household could take a mobile phone with them outside of
their residence, leaving the rest of the household members without a phone. Letter from David A. LaFuria, Counsel,
SBI, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 1 (filed
Nov. 25, 2011) (SBI Nov. 25 ex parte Letter); GCI PN Comments at 13; Letter from John T. Nakahata, Counsel,
GCI, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 3 (filed
Dec. 6, 2011) (GCI Dec. 6 ex parte Letter); Letter from Tom W. Davidson, Counsel, GRTI, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 1 (filed Jan. 24, 2012) (GRTI Jan. 24
ex parte Letter).
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82.
Although we acknowledge these concerns and issues, the program’s ability to
subsidize service for each eligible low-income individual is tempered by the need to minimize
the contribution burden the program places on all consumers. A one-per-person rule could
potentially increase the size of the low-income program by a significant percentage above the
projected Fund size with the one-per-economic unit rule we adopt in this Order. By codifying a
one-per-economic unit rule rather than a one-per-person rule, the Commission can strike an
appropriate balance between ensuring that support is available for eligible low-income families
and that universal service funds are spent in a fiscally prudent way.220 Moreover, the expected
savings from strict enforcement of a one-per-economic unit rule may be utilized to implement
other measures to modernize the Lifeline program, such as the broadband pilot program we
adopt below,221 that will assist in meeting the challenges of broadband adoption for low-income
consumers.
83.
Contrary to assertions in the record that a one-per-household rule overlooks the
importance of mobility for low-income consumers, the rule we adopt today will allow eligible
low-income households to select the Lifeline service, whether landline or mobile, that best meets
their needs.222 We recognize the public safety concerns raised by some commenters with respect
to a one-per-household rule. However, as noted above, the potential benefits of a one-per-person
rule must be balanced against the corresponding increase in the burden on the consumers and
businesses that contribute to USF.223 The Lifeline program can play an important safety role for
low-income consumers, particularly those in isolated rural areas; however, in some limited
instances consumers may need to seek out other alternatives to ensure phone coverage in
emergency situations (e.g., non-Lifeline prepaid wireless services or postpaid wireline services).
Additionally, as we clarify below, eligible consumers may choose to apply their Lifeline
discount to the purchase of family shared calling plans, which may mitigate commenters’ public
safety concerns by making voice service available to more than one person in a household at any
given time.224
84.
We acknowledge those comments that urge the Commission to use caution to
ensure that the rules we adopt do not impose additional or excessive administrative costs on
ETCs, including small carriers.225 The rules we adopt here will not unreasonably burden ETCs,
including those with a small number of Lifeline subscribers, as the rules will require ETCs to
obtain information from only a limited number of consumers about their household
arrangements, specifically those who are residing in group living facilities or at addresses shared
220 See, e.g., Cricket PN Comments at 2-3; Consumer Groups Comments at 17-18; CA PUC Reply Comments at 3,
5; Cricket Reply Comments at 10. See also supra Section III.C (Performance Goals & Measures).
221 See infra section IX.B (Broadband Pilot).
222 See, e.g., Amvensys Comments at 7; GCI Reply Comments at 6; PR Wireless Jan. 25 ex parte Letter at 1-2;
NHMC Reply Comments at 3.
223 See supra section III.C (Performance Goals & Measures).
224 See infra section IX.A (Bundled Services).
225 See, e.g., NTCA Comments at 3-4; MITS Reply Comments at 7-8.
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by multiple households.226 This information is necessary to assist qualifying consumers in such
living situations to obtain Lifeline service and to document their compliance with the one-per-
household rule. As noted above, USAC will develop materials print and web materials that
ETCs can use to educate consumers about the one-per-household rule. We stress that we are
requiring consumers to furnish only as much information as is needed for the ETC to verify the
consumer’s compliance with the one-per-household rule, which allows more than one Lifeline-
supported service at a given address in specific circumstances.227 We are not expecting a
consumer, for example, to list the names of other residents of their household or explain personal
or familial relationships on the Lifeline application form. Rather, as stated above, it would be
sufficient for a consumer to state that he or she shares an address with other adults who do not
contribute income to their household or share in the household expenses. We are not imposing
an obligation on ETCs to investigate or inquire further about the specifics of those household
arrangements.
85.
Lifeline Address Requirement. We adopt a requirement that, prior to providing
service to a consumer, ETCs must obtain that consumer’s residential address, which the
consumer must indicate is his or her permanent address, and a billing address for the service (if
the consumer’s billing address differs from his or her residential address).228 We also adopt a
requirement that Lifeline participants provide their new address to the ETC within 30 days of
moving. As described in the Database section below, ETCs will be required to enter this address
in the duplicates database within 10 business days of receipt to determine if a subscriber is
receiving Lifeline support from another ETC.229 It is important that ETCs obtain accurate
address information for all subscribers so that such information can be used to detect potential
cases of duplicative support, and for eligible consumers to promptly notify the ETC of any
changes in their address.
86.
In the record of the NPRM, we observed that some ETCs have not permitted
consumers to obtain Lifeline support when using a P.O. Box as their mailing address.230 Instead,
ETCs have required applicants seeking Lifeline support to provide a residential address on their
application to ensure that the subscriber is eligible for supported service and is not receiving
226 A few commenters contend that the Commission should not require ETCs to collect potentially sensitive
information about low-income consumers’ household living arrangements. See, e.g., AT&T Comments at 18; CTIA
Reply Comments at 11; COMPTEL PN Comments at 6-7.
227 We acknowledge the challenges associated with the lack of addresses on Tribal lands and discuss this issue
further below. See infra para. 166. The record indicates that residential addresses are frequently non-existent on
Tribal lands and, where present, often differ significantly from residential addresses off Tribal lands. See, e.g., SBI
Comments at 14-16.
228 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2807-08, para. 115 and Appendix A, 47 C.F.R. § 54.408(a)(2)
(proposed rule). The rule is supported by CenturyLink and the Missouri Public Service Commission. See
CenturyLink Comments at 8; MO PSC Comments at 11–12.
229 See infra section VII.A (National Lifeline Accountability Database).
230 Lifeline and Link Up NPRM, 26 FCC Rcd at 2792, para. 63. See, e.g., City of Cambridge TracFone One-Per-
Household Clarification Comments at 2; NNEDV TracFone One-Per-Household Clarification Reply Comments at
2; SBI TracFone One-Per-Household Clarification Comments at 4-5; POTS TracFone One-Per-Household
Clarification Comments at 2.
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more than one subsidized service.231 We sought comment on whether to codify a rule requiring
ETCs to collect the residential addresses of their Lifeline applicants before they provide
discounted service, meaning that if a consumer receives mail at a P.O. Box, the consumer would
have to provide a residential address to which his or her service would be tied.232
87.
Lifeline applicants will not be permitted to use a P.O. Box address as their
Lifeline address. We are concerned that some subscribers could list a P.O. Box as their address
in an effort to avoid complying with our one-per-household requirement. Moreover, requiring a
residential address to serve as the Lifeline address will facilitate the discovery of duplicative
support for a particular household or subscriber.233 Thus, requiring a residential address is an
important tool in reducing the potential for waste, fraud, and abuse in the program. We
recognize that there are also circumstances where an applicant may not have a permanent
residential address due to a temporary living situation or because the address is not recognized
by the post office.234 In the case of temporary living situations, the applicant must provide a
temporary residential address or other qualifying address, such as the address of a temporary
shelter, or a friend or family member, which could be used to perform a check for duplicative
support and trigger the requirement that the consumer complete the one-per-household document
referenced above.235 In the case of addresses not recognized by the post office, including
residences on Tribal lands, the applicant must provide a descriptive address which could be used
to perform a check for duplicative support and trigger the requirement to complete the one-per-
household document. For the consumer’s billing address, an ETC may accept a P.O. Box or
General Delivery address in lieu of a residential address.236
88.
Persons with temporary addresses. As stated above, the one-per-household rule
will be applicable to individuals residing in group living facilities, including, but not limited to,
nursing homes, shelters, halfway houses, boarding houses, and apartment buildings without
individual unit numbers. This rule and its associated procedures will provide an administratively
feasible means for ETCs to provide Lifeline-supported service to residents of these facilities,
231 Lifeline and Link Up NPRM, 26 FCC Rcd at 2792, para. 63.
232 Id.
233 See, e.g., MO PSC Comments at 5; IN URC Comments at 4. As discussed above, while our rules will allow
ETCs to provide service to multiple households at an address, this will require the consumer to take affirmative steps
to confirm that his or her housing arrangement involves multiple households at the same address and to certify that
no more than one Lifeline subsidy is received by his or her household.
234 See, e.g., GCI Jan. 13 ex parte Letter; Letter from David A. LaFuria, Counsel, SBI, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al. (filed Dec. 6, 2011) (SBI Dec. 6 ex
parte Letter); Letter from Erica M. Olsen, MSW, Technology Safety Specialist, National Network to End Domestic
Violence (NNEDV), WC Dkt. No. 11-42 et al. (filed July 27, 2011) (NNEDV July 27 ex parte Letter).
235 See supra paras. 77-79. See, e.g., Family Services Manual, Oregon Department of Human Services,
Supplemental Nutrition Assistance Program (SNAP), Section D (Non-Financial Eligibility), Residency,
http://apps.state.or.us/cf1/EligManual/EMnlFrame.htm?Page+ID=06-toc (noting that persons without fixed
residential addresses can provide the address of a shelter or the address of a friend to receive SNAP benefits) (last
visited Feb. 2, 2012).
236 See USPS.com, Research Delivery Options, General Delivery, https://www.usps.com/manage/research-delivery-
options.htm.
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while also reducing the risk of waste, fraud, and abuse. Some group living facilities, however,
may serve consumers who lack a permanent address. In the 2010 Joint Board Recommended
Decision, the Joint Board recommended that the Commission consider how to best serve such
populations while also maintaining a commitment to preventing waste, fraud, and abuse in the
program.237
89.
We agree with those commenters who state that consumers without permanent
addresses should not be precluded from participation in Lifeline. However, we also share the
Joint Board’s concern with respect to the “inherent difficulties of serving and verifying such
highly mobile populations.”238 Accordingly, we adopt additional protections to be implemented
by those ETCs that serve consumers without a permanent address, in order to assist ETCs in
more easily confirming such consumers’ continued eligibility for the program. Specifically, we
adopt a rule requiring ETCs to inquire on their Lifeline application forms whether the applicant’s
address is a temporary one. If it is, the ETC must verify with the subscriber every 90 days that
he/she continues to rely on that address.239 As noted above, if the subscriber has moved, the
ETC must update the database with the information within 10 business days of receipt of that
information.240 Similar to the non-usage requirement for prepaid Lifeline service, if the
subscriber fails to respond within 30 days of the ETC’s attempts to verify the temporary address,
the subscriber must be de-enrolled from Lifeline pursuant to the program’s de-enrollment rules.
This requirement will enable consumers with temporary addresses to reap the benefit of the
Lifeline program, but will also alleviate the concerns about waste, fraud, and abuse raised by the
Joint Board in the 2010 Joint Board Recommended Decision.241
90.
Application of the One-Per-Household Rule to Commercially Zoned Buildings.
As noted in the NPRM, there are instances where otherwise eligible applicants have been denied
Lifeline service because they live in facilities that are zoned for commercial, rather than
residential use.242 Such commercial residences typically tend to be group living facilities, such
as single-room occupancy buildings, lodging houses, rooming houses, and shelters, rather than
individual residences.243 Several commenters responding to the NPRM state that otherwise
eligible consumers should not be denied Lifeline service due to their residence in these
237 See 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15602-03, paras. 12-14.
238 Id. at 15603, para. 14.
239 We do not impose a requirement as to what method ETCs must use to verify the address of such subscribers. For
example, a free-of-charge text message confirming the subscriber’s address or a confirmation from a group living
facility that the subscriber resides there could be sufficient to satisfy this requirement.
240 See supra para. 85.
241 See 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15602-03, paras. 12-14. We do not expect this
requirement to impose unreasonable burdens on ETCs. As stated above, we do not prescribe the method that ETCs
must use to verify the address of those subscribers utilizing temporary addresses. See supra n.240. Moreover, in
most cases this rule is likely to be applicable to only a small portion of an ETC’s Lifeline subscriber base. Thus, the
rule we adopt today properly balances our obligation to provide access to telecommunications services for eligible
low-income consumers with our responsibility to ensure that funds are spent in a fiscally responsible way.
242 Lifeline and Link Up NPRM, 26 FCC Rcd at 2808, para. 117.
243 Id. at 2808, paras. 117-18.
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commercially zoned facilities.244 We agree. Accordingly, we clarify that if the consumer is
otherwise eligible for Lifeline and the consumer certifies at enrollment that the address of record
provided by the consumer is his or her residential address, the consumer should not be denied
Lifeline because of residence in an area that is commercially zoned.
C.
Certification of Consumer Eligibility for Lifeline
91.In this section, we adopt uniform and consistent measures to check low-income
consumers’ initial and ongoing eligibility for Lifeline. The measures we adopt today will
increase consistency in certification practices and reduce the number of ineligible consumers in
the Lifeline program.245 First, we take several steps in this Order to move expeditiously toward
the goal of having an automated means to determine Lifeline eligibility for all consumers.
Second, we amend section 54.410 of the Commission’s rules to require that ETCs (or the state
Lifeline program administrator, where applicable) check the eligibility of low-income consumers
seeking to enroll in Lifeline either by accessing electronic eligibility databases, where available,
or by reviewing documentation from the consumer demonstrating his/her eligibility for Lifeline
service.246 Third, we amend section 54.410 of the Commission’s rules to require Lifeline
subscribers to make initial and annual certifications under penalty of perjury concerning their
eligibility for Lifeline. Fourth, we amend sections 54.410 and 54.407 of the Commission’s rules
to require that all Lifeline subscribers certify upon enrollment in Lifeline and annually thereafter
that the subscriber’s household is receiving no more than one Lifeline-supported service. Fifth,
we amend section 54.416 of the Commission’s rules to require ETCs to certify to their
compliance with our rules on an annual Lifeline eligible telecommunications carrier certification
form and when submitting FCC Forms 497 to USAC for reimbursement.
92.
We also take several actions to improve the current methodology employed by
ETCs to verify ongoing consumer eligibility for Lifeline. First, we amend section 54.410 of the
Commission’s rules to replace the existing verification procedures and methodology with a
uniform annual re-certification requirement to be performed through the end of 2012 by ETCs in
all states (or the state Lifeline program administrator, where applicable), while also allowing
ETCs to leverage existing databases to more easily confirm the continued eligibility of their
subscribers. Second, we establish a process to transition, beginning in 2013, the responsibility
for annual subscriber re-certification to USAC, at the ETC’s election. Third, we amend section
54.405 of the Commission’s rules to adopt a procedure for de-enrolling those subscribers who do
244 See, e.g., CenturyLink Comments at 13; FL PSC Comments at 17; MA DTC Comments at 5; Media Action
Grassroots Network Comments at 19; MI PSC Comments at 6; MFY Legal Reply Comments at 2.
245 To date, “certification” has referred to the initial determination of eligibility for enrollment in the program, and
“verification” has referred to the subsequent determinations of ongoing eligibility after a subscriber has already been
enrolled in and is receiving support from the program. See, e.g., 2010 Joint Board Recommended Decision, 25 FCC
Rcd at 15606-15611, paras. 23-34. As detailed below, we replace this approach today with a process requiring
ETCs to make and obtain certain initial and annual attestations relating to consumer eligibility for Lifeline.
Accordingly, in the Discussion section below we use the term “certification” to collectively refer to the procedures
that ETCs (or states, where applicable) must employ to check both the initial and ongoing eligibility of their Lifeline
subscribers.
246 Throughout this section, we use the term “state Lifeline program administrator”, “states” and “state agencies”
interchangeably to include any governmental agency within a state, or its agents, hat may perform functions relating
to consumer eligibility.
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not respond to an ETC’s or state’s annual re-certification efforts, which will encourage consumer
accountability and ensure that universal service support is not directed toward consumers who
may not be eligible for Lifeline. Fourth, to provide the Commission and the states with a more
complete set of consumer eligibility data, we codify a rule requiring ETCs in all states to share
their annual re-certification results with USAC, the Commission, and their respective state
commissions, where the carrier is subject to state jurisdiction.
1.
Background
93.The Commission’s current rules regarding the certification and verification of
consumer eligibility for Lifeline differ based on whether a state maintains its own universal
service low-income program. States with their own low-income programs may establish rules to
govern the initial certification and ongoing verification of consumers’ eligibility for Lifeline
support.247 Such states are referred to as “non-federal default states.” In states without their own
low-income programs, referred to as “federal default states,” ETCs must follow the federal
certification and verification requirements set forth in sections 54.409, 54.410, and 54.416 of the
Commission's rules.248 Thus, ETCs providing Lifeline service in multiple states may be required
to comply with various state and/or federal certification and verification procedures. Moreover,
certification and verification requirements may even vary from ETC to ETC within a given state
because some states do not assert jurisdiction over certain carriers within the state (e.g., wireless
ETCs).249 In such circumstances, the federally-designated ETCs may be subject to different
standards from the state-designated ETCs in the same state.
94.
Initial Certification of Consumer Eligibility. Certification is the process by which
eligible consumers establish their qualification for Lifeline. Certification occurs at the time a
consumer is applying to enroll in Lifeline.250 To qualify for universal service low-income
support, a consumer must first demonstrate that he or she meets the eligibility criteria set forth in
federal or state rules, as applicable. Sections 54.409 and 54.410 of the Commission’s rules
provide two options for consumers in federal default states to choose between to establish
eligibility for Lifeline: (1) consumers may self-certify that they are eligible for Lifeline support
based on participation in certain federal programs;251 or (2) consumers may provide
documentation showing that they meet the income threshold requirements set forth in the
Commission’s rules.252 Non-federal default states, however, exhibit variation in permitted
certification practices, particularly with respect to the proof required by low-income consumers
247 See 47 C.F.R. §§ 54.410(a)(1), (c)(1).
248 See 47 C.F.R. §§ 54.409(d); 54.410(a)(2), (c)(2); 54.416.
249 Under the current rules, when a state commission mandates Lifeline support but does not impose certification and
verification requirements on certain carriers or customers within the state, the affected carriers must follow federal
default criteria for certification and verification purposes. See Lifeline and Link Up, WC Dkt. No. 03-109, Order
and Declaratory Ruling, 25 FCC Rcd 1641, 1641-42, 1645, paras. 1, 9 (2010) (Lifeline Declaratory Ruling).
250 2004 Lifeline and Link Up Order and FNPRM, 19 FCC Rcd at 8317, para. 23.
251 47 C.F.R. § 54.409(b), (c), (d)(1).
252 47 C.F.R. §§ 54.409(b), (d)(2), 54.410(a)(2). Currently, consumers in federal default states who wish to qualify
for Link Up support based on income levels must present documentation showing they meet the income threshold
requirements in the Commission’s rules. 47 C.F.R. § 54.416.
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seeking to enroll in Lifeline based on participation in a qualifying state or federal program.253
According to the 2010 GAO study of the Lifeline program, 25 states currently require consumers
to provide documentation of enrollment in a qualifying program.254
95.
Annual Verification of Continued Eligibility. Currently, section 54.410 of the
Commission’s rules sets out a bifurcated structure for ETCs to follow when verifying
consumers’ ongoing eligibility for Lifeline. Pursuant to section 54.410(c)(1) of the
Commission’s rules, ETCs in non-federal-default states must comply with the verification
procedures established by the states, each of which may adopt its own method for verifying
continued consumer eligibility.255 GAO’s 2010 report noted wide variation in methods
employed by non-federal-default states to verify consumers’ ongoing eligibility for Lifeline.256
Section 54.410(c)(2) of the Commission’s rules requires ETCs in federal default states to
annually verify the continued eligibility of a statistically valid random sample of their
consumers.257 The size of annual samples are based on a number of factors, including the
number of Lifeline subscribers served by the ETC and the previously estimated proportion of
Lifeline subscribers served that are “inappropriately taking” Lifeline service.258 However, the
current methodology assumes that no more than six percent of consumers would be found
ineligible in any given year.259
96.
In the Lifeline and Link Up NPRM, the Commission suggested several changes to
the Lifeline certification and verification rules aimed at improving the integrity of the program
by strengthening federal requirements and introducing greater consistency nationwide.260 The
Commission developed such proposals drawing, in large part, on recommendations of the Joint
253 According to GAO, 16 states permit self-certification under penalty of perjury, 25 states require documentation
of enrollment in a qualifying program, and 9 states have in place automatic enrollment of eligible consumers. 2010
GAO REPORT at 51.
254 Id.
255 47 C.F.R. § 54.410(c)(1).
256 See 2010 GAO REPORT at 51. According to GAO, 14 states conduct random audits of Lifeline recipients, 20
states require periodic submission of supporting documents, 13 states require an annual self-certification, 13 states
use an online verification system using databases of public assistance participants or income reports, and 17 states
conduct verification by confirming the continued eligibility of a statistically valid sample of Lifeline recipients. Id.
257 47 C.F.R. § 54.410(c)(2); see also Lifeline and Link Up NPRM, 26 FCC Rcd at 2879-81, Appendix B (overview
of the current sampling methodology used by ETCs in federal default states). Subscribers who are sampled in
federal default states and who qualify for Lifeline under program-based eligibility criteria must present proof of their
continued eligibility and self-certify under penalty of perjury that they continue to participate in a qualifying public
assistance program. See 47 C.F.R. § 54.410(c)(2). Subscribers who are sampled in federal default states and who
qualify for Lifeline based on income must present current documentation of income and self-certify under penalty of
perjury as to the number of individuals in the subscriber’s household and that the documentation presented
accurately represents their household income. Id. ETCs are required to retain copies of the self-certifications but
not the underlying documentation of income. See 47 C.F.R. § 54.417.
258 See Lifeline and Link Up NPRM, at 26 FCC Rcd at 2879-81, Appendix B (Sample Size Table); see also 2004
Lifeline and Link Up Order and FNPRM, 19 FCC Rcd at 8365, Appendix J-1.
259 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2879-81, Appendix B (“In all instances, the estimated
proportion P should never be less than .01 or more than .06.”).
260 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2824-31, paras. 167-98.
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Board and the findings of the GAO in its 2010 review of the low-income program.261 GAO, for
example, found that the Lifeline program lacks an adequate front-end mechanism to prevent
ineligible consumers from receiving program support, and that there are risks associated with
self-certification of subscriber eligibility.262 Additionally, the Joint Board recommended that, to
promote nationwide uniformity in the verification of consumer eligibility for Lifeline, the
Commission adopt uniform, minimum verification procedures and sampling criteria that would
apply to ETCs in all states.263 The changes we adopt today directly address the GAO’s critiques
and the Joint Board’s recommendations.
2.
Discussion
a.Initial and Annual Certification Requirements
97.Eligibility Databases. We find that establishing a fully automated means for
verifying consumers’ initial and ongoing Lifeline eligibility from governmental data sources
would both improve the accuracy of eligibility determinations, ensuring that only eligible
consumers receive Lifeline benefits, and reduce burdens on consumers as well as ETCs. We
therefore direct the Bureau and USAC to take all necessary actions so that, as soon as possible
and no later than the end of 2013, there will be an automated means to determine Lifeline
eligibility for, at a minimum, the three most common programs through which consumers qualify
for Lifeline.264 Several states have already developed qualifying databases through which a
Lifeline subscriber’s initial and continued eligibility can be verified, and in some cases eligibility
determinations are performed by a third-party administrator rather than ETCs. In other states,
ETCs can directly access an eligibility database.265 We take several steps in this Order to move
261 See generally 2010 Joint Board Recommended Decision; 2010 GAO REPORT.
262 See 2010 GAO REPORT at 37.
263 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15607, para. 26. However, the Joint Board
recommended that states be permitted to utilize different and/or additional verification procedures, as long as those
procedures are at least as effective in detecting waste, fraud, and abuse as the minimum federal procedures. Id. at
15608, para. 28. For additional discussion of the Joint Board’s recommendations with respect to verification, see
infra discussion at section VI.C.2.b (Annual Re-Certification of Consumer Eligibility).
264 Based on the information in the record, most consumers qualify for Lifeline through Medicaid, SNAP, and SSI.
See infra paras. 104 and n.1063. We recognize that meeting this goal will require coordinated action among
numerous parties outside of the Commission.
265 As the record indicates, there are at least nine states with an automated means for ETCs or state administrators to
determine consumer participation in at least some programs which qualify consumers for Lifeline support. See
Letter from Mitchell F. Brecher, Counsel, TracFone Wireless, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 5 (filed Jan. 24, 2012) (noting that TracFone has access
to eligibility information in Florida, Wisconsin, Maryland, Texas and Washington state) (TracFone Jan. 24 ex parte
Letter); Letter from Shana Knutson, Staff Attorney, Nebraska Public Service Commission, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Dkt. Nos. 11-42 et al., at 2 (filed Aug. 8, 2011) (NE PSC
Aug. 8 ex parte Letter); Letter from Jon Cray, Residential Service Protection Fund Program Manager, Public
Utilities Commission of Oregon, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt.
11-42 et al., at 2 (filed Aug. 24, 2011) (OR PUC Aug. 24 ex parte Presentation); NY PSC Comments at 10; Letter
from Robert W. Wilhelm, Jr., Regulatory Pricing Manager, Cincinnati Bell, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Dkt. No. 11-42 et al., at 2 (filed Aug. 30, 2011) (discussing data access
to Ohio energy assistance program) (Cincinnati Bell Aug. 30 ex parte Letter).
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expeditiously toward the goal of having an automated means to determine Lifeline eligibility for
all consumers. First, we direct the Wireline Competition Bureau to reach out to the other federal
government agencies responsible for the qualifying programs to help facilitate access to the data
necessary to determine subscriber eligibility. Second, we direct the Bureau to host a series of
workshops including non-governmental entities such as ETCs, technical experts, and database
vendors to identify pragmatic solutions to issues regarding the establishment of one or more
databases. Finally, we seek additional targeted comment on implementation issues in the
attached further notice.266
98.
Determination of Initial Program Eligibility. We first amend section 54.410 of
the Commission’s rules to require all ETCs, prior to enrolling a new subscriber in Lifeline, to
access state or federal social services eligibility databases, where available, to determine a
consumer’s program-based eligibility.267 By accessing state or federal social service eligibility
data, ETCs will more efficiently and accurately determine whether a consumer is eligible for
low-income support.268 As discussed below, we conclude that a rule requiring ETCs to access
databases where available at enrollment to confirm program-based eligibility is necessary in light
of evidence demonstrating that consumer self-certification of program-based eligibility does not
effectively prevent ineligible consumers from enrolling in Lifeline.269 Where ETCs access state
or federal databases to make determinations about consumer eligibility for Lifeline, we do not
require ETCs to obtain from a new subscriber documentation of his or her participation in a
qualifying federal program. The ETC or its representative must note in its records what specific
data was relied upon to confirm the consumer’s initial eligibility for Lifeline (e.g., name of a
state database.) This rule will reduce administrative burdens on ETCs by allowing them to
leverage existing systems and processes. In states where the ETC is not responsible for the
initial determination of consumer eligibility, a state agency or third-party administrator, as
applicable, may query the database in lieu of the ETC doing so.
99.
We recognize that some ETCs will not have access to centralized consumer
eligibility data in the near-term, or may only have access to eligibility data for a subset of the
social services programs in a given state. In states where ETCs are responsible for establishing
eligibility (i.e., there is no state administrator, and the state commission or other state agency is
not making eligibility determinations) and there is no automated means for ETCs to check
electronic databases for eligibility, an ETC must review documentation to determine eligibility
266 See infra FNPRM, section XIII.A (Establishing an Eligibility Database).
267 This discussion focuses on certification requirements for consumers seeking Lifeline support. ETCs must also
follow the certification procedures set forth in section 54.410, as modified, to determine an eligible resident of
Tribal lands’ initial eligibility for Link Up.
268 See, e.g., Letter from Mitchell F. Brecher, Counsel, TracFone Wireless, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al. (filed Nov. 22, 2011) (TracFone Nov. 22 ex parte Letter);
Letter from Danielle Frappier, Counsel, Nexus Wireless, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Dkt. No. 11-42 et al. (filed Nov. 18, 2011) (proposing that ETCs participating in the Lifeline
program engage in a cooperative effort to establish a database to screen for duplicative Lifeline subscriptions and
confirm consumer eligibility) (Nexus Nov. 18 ex parte Letter).
269 See infra paras. 102-05.
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for new subscribers until such time as a qualifying eligibility database is available.270 In states
where the ETC is not responsible for the initial determination of consumer eligibility, a state
agency or third-party administrator, as applicable, may obtain consumer documentation in lieu of
the ETC doing so.271
100.
No later than June 1, 2012, ETCs in states where carriers are responsible for
checking consumer eligibility must implement certification procedures to document the
eligibility of those consumers seeking to qualify for Lifeline under program-based criteria.272
Consistent with our current Lifeline rules, ETCs in states where carriers are responsible for
checking consumer eligibility must have already implemented procedures to document the
eligibility of consumers seeking to qualify for Lifeline under income-based criteria.273 ETCs will
be required to comply with these documentation requirements unless access to an electronic
eligibility or income database is available.
101.
Acceptable documentation of program eligibility would include: (1) the current or
prior year’s statement of benefits from a qualifying state, federal or Tribal program; (2) a notice
letter of participation in a qualifying state, federal or Tribal program; (3) program participation
documents (e.g., the consumer’s Supplemental Nutrition Assistance Program (SNAP) electronic
benefit transfer card or Medicaid participation card (or copy thereof); or (4) another official
document evidencing the consumer’s participation in a qualifying state, federal or Tribal
program. Acceptable documentation of income eligibility includes the prior year's state, federal,
or Tribal tax return, current income statement from an employer or paycheck stub, a Social
270 For comments in support of a rule requiring consumers to provide documentation of program-based eligibility,
see, e.g., Letter from Sen. Claire McCaskill, United States Senate, to Hon. Julius Genachowski, Chairman, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 1 (filed Dec. 9, 2011) (Sen. McCaskill Letter);
CenturyLink Comments at 16-17; NY PSC Comments at 7; MI PSC Comments at 8; OH PUC Comments at 18;
Cricket Reply Comments at 13; DC PSC Comments at 5; MO PSC Comments at 13; NE PSC Comments at 12;
Letter from Commissioner Anne Boyle, Nebraska Public Service Commission, to Hon. Julius Genachowski,
Chairman, Federal Communications Commission, WC Dkt. No. 11-42 et al. (filed July 21, 2011) (stating that self-
certification exacerbates the potential for waste, fraud, and abuse in the Lifeline program) (Comm’r Boyle Letter);
Letter from Norina T. Moy, Director, Government Affairs, Sprint Nextel, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 1 (filed Jan. 18, 2012) (Sprint Jan. 18 ex parte Letter).
271 We note that while we require upfront documentation of program eligibility where a carrier cannot access state or
federal eligibility data evidencing the consumer’s participation in a qualifying federal program, the amended re-
certification process we adopt today reduces burdens on consumers and carriers by eliminating the requirement that
Lifeline subscribers in federal default states provide annual documentation of their continued eligibility. See infra
section VI.C.2.b.
272 We recognize that ETCs may choose to enroll consumers online or by phone. We do not discourage ETCs from
employing these types of enrollment methods, but stress that ETCs choosing to utilize them must have a means for
verifying eligibility pursuant to the rules set forth in this order.
273 The rule we adopt today does not modify the current rule requiring consumers qualifying for Lifeline under
income-based criterion to present documentation of household income to the ETC prior to enrolling in the program.
See 47 C.F.R. § 54.410(a). Where ETCs access state or federal databases to make determinations about consumer
income-based eligibility for Lifeline, we do not require ETCs to obtain from a new subscriber documentation of his
or her household income. The ETC or its representative must note in its records what specific data was relied upon
to confirm the consumer’s initial eligibility for Lifeline (e.g, name of a state income database).
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Security statement of benefits, a Veterans Administration statement of benefits, a
retirement/pension statement of benefits, an Unemployment/Workmen's Compensation statement
of benefits, federal or Tribal notice letter of participation in General Assistance, or a divorce
decree, child support award, or other official document containing income information.274 While
ETCs will be required to examine such documentation as appropriate to verify a consumer’s
program or income-based eligibility for initiating Lifeline service, ETCs are not required to and
should not retain copies of the documentation.275 Rather, pursuant to section 54.417 of our rules,
the ETC or its representative should establish policies and procedures to review such
documentation and must keep accurate records detailing how the consumer demonstrated his or
her eligibility. Within 45 days of the effective date of this Order, USAC should develop training
materials to educate ETCs on the types of documentation, consistent with the list of
documentation described above, that may be presented by low-income consumers to demonstrate
program and income-based eligibility for Lifeline.276
102.
We view the documentation requirement as necessary to protect the integrity of
the program. Recent verification data provides troubling evidence that suggests additional
measures are needed to prevent ineligible consumers from signing up for Lifeline. Up to an
estimated 15 percent of existing Lifeline subscribers could be ineligible for Lifeline benefits,
potentially representing hundreds of millions of dollars in support that could have been used to
serve eligible subscribers.277 As an example, Appendix D, Tables 1 and 2 summarize the
percentage of subscribers deemed ineligible for Lifeline based on the results of verification
surveys conducted by ETCs in 2011 and 2007.278 The verification survey data for 2011 and 2007
separately reports ineligibility and non-response rates. Based on USAC’s preliminary results for
2011, 9 percent of subscribers surveyed responded that they were no longer eligible for Lifeline,
in comparison to the 27 percent of subscribers who failed to respond to the carriers’ verification
274 We clarify that the consumer must provide either documentation of income that covers a full year (e.g., pay
stubs) or three consecutive months’ worth of the same types of document within the previous twelve months. As
noted by GCI, the current language of 47 C.F.R. § 54.410 could be construed to preclude some consumers from
obtaining Lifeline support within the first three months of the calendar year, because three months’ worth of
documentation is unavailable. See Letter from John T. Nakahata, Counsel, General Communications Inc., to
Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al. (filed Dec. 19,
2011) (GCI Dec. 19 ex parte Letter).
275 See also, e.g., YourTel Comments at 12-13 (stating that carriers should not be required to retain documents
containing potentially sensitive information).
276 These materials should be developed in conjunction with the print and web materials that USAC creates to assist
ETCs in educating consumers about the one-per-household rule. See supra para. 79.
277 Staff conservatively assumes that ineligible subscribers could constitute up to 15 percent of the total Lifeline
subscribers in 2011 – 2014.
278 See Appendix D, Tables 1 and 2; see also Letter from Karen Majcher, Vice President High Cost and Low Income
Division, to Sharon Gillett, Chief, Wireline Competition Bureau, Federal Communications Commission, WC Dkt.
Nos. 11-42, 03-109, CC Dkt. No. 96-45 (Jan. 10, 2012) (USAC Certification & Verification Letter and Data); Letter
from Karen Majcher, Vice President High Cost and Low Income Division, Universal Service Administrative
Company, to Sharon Gillett, Chief, Wireline Competition Bureau, Federal Communications Commission, WC Dkt.
Nos. 11-42, 03-109, CC Dkt. No. 96-45 (Jan. 24, 2012) (USAC 2011 Verification Results Letter).
53
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surveys.279 Similarly, in 2007, 12 percent of subscribers surveyed responded that they were no
longer eligible for Lifeline, in comparison to the 10 percent of consumers who failed to respond
to the carriers’ verification surveys.280 Moreover, in some cases, a substantial percentage of
subscribers surveyed were found to be ineligible for the program.281 This data suggests that
existing certification practices may be insufficient to prevent ineligible consumers from enrolling
in Lifeline.282
103.
Lifeline subscribership data also reflects troubling evidence suggesting that
ineligible consumers may be enrolling in the program at a particularly rapid rate in states that do
not require documentation of program-based eligibility at sign-up. For example, subscribership
data demonstrates that the number of Lifeline subscribers in Louisiana, which does not require
documentation of program participation at enrollment, increased by 1,565 percent from 2008 to
2011.283 In comparison, the number of Lifeline subscribers in Kansas, which requires program
279 Appendix D, Table 1; USAC 2011 Verification Results Letter at 1, 3. In the 2011 verification survey results
compiled by USAC, 4,694 subscribers were found to be ineligible for Lifeline, out of a total of 52,865 subscribers
surveyed by ETCs (or the state Lifeline administrator, where applicable). In addition, 14,219 or 27 percent of
subscribers surveyed could be deemed ineligible for Lifeline due to failure to respond to the carrier or state
administrator’s verification efforts. That is, at least 9 percent of subscribers surveyed in 2011 were found to be
ineligible for Lifeline. In the 2007 Lifeline verification survey, 23,360 subscribers were found to be ineligible for
Lifeline, out of a total of 203,057 subscribers surveyed.
280 See Appendix D, Table 2; see also USAC Certification & Verification Letter and Data at 2-3. In the 2007
Lifeline verification survey, 23,360 subscribers were found to be ineligible for Lifeline, out of a total of 203,057
subscribers surveyed. Therefore, at least 12 percent of subscribers surveyed in 2007 were found to be ineligible. In
addition, 19,572 subscribers, i.e., 10 percent of the sample, could be deemed to be ineligible for Lifeline due to
failure to respond to the carrier or state administrator’s verification efforts. One commenter asserts that the results
of its verification surveys do not reflect a significantly higher percentage of ineligible consumers in those states that
currently require documentation of program eligibility as compared to states that do not. Letter from Mitchell F.
Brecher, Counsel, TracFone Wireless, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC
Dkt. No. 11-42 et al., at 2 (filed Aug. 3, 2011) (TracFone Aug. 3 ex parte Letter) (noting that 34.9 percent of
Safelink consumers in Louisiana could not verify continued eligibility for Lifeline, as opposed to 30.5 percent of
Safelink consumers in Missouri). See also Nexus Reply Comments at 11-13; cf. AARP Comments at 9 (stating that
there is no basis to believe that large numbers of consumers will fraudulently assert eligibility for Lifeline,
particularly if verification surveys are conducted on a yearly basis).
281 See Appendix D, Table 1 (in Alabama, for example, which permits consumers to self-certify their participation in
a qualifying federal or state program, see, e.g., TracFone Jan. 24 ex parte Letter, nearly twenty percent of
subscribers surveyed in 2011 were found to be ineligible for Lifeline).
282 We do recognize that it is not unusual for consumers to fail to respond to surveys. At the time same, a
subscriber’s failure to confirm his or her continuing eligibility for Lifeline is potentially suggestive that the
consumer may not be eligible for the program. See Comm’r Boyle Letter at 2 (noting that if an application to
participate in Nebraska’s Lifeline program is not supported by documentation, the state returns it and asks the
consumer to provide documentation to demonstrate program eligibility; however, a significant number of persons do
not respond when asked to produce such documentation, despite verbally asserting that they are eligible to
participate in the program).
283 The number of Lifeline subscribers in Louisiana grew from approximately 38,000 in 2008 to 626,000 in 2011
(annualized based on 11 months subscriber data), which is an increase of 1565 percent. See Letter from Karen
Majcher, Vice President High Cost and Low Income Division, Universal Service Administrative Company, to
Sharon Gillett, Chief, Wireline Competition Bureau, Federal Communications Commission, WC Dkt. No. 11-42 et
al., at 2 (filed Jan. 23, 2012) (USAC Low Income Support and Subscriber Claims Letter).
54
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participants to provide documentation of participation in a qualifying federal program, increased
by 105 percent from 2008 to 2011.284 Lifeline participation rates in other states reflect a similar
trend. It is critical that the Commission put in place measures immediately to address this
situation.
104.
Requiring consumers to present documentation demonstrating their participation
in a qualifying program prior to enrollment in Lifeline will go a long way towards ensuring that
only qualified consumers benefit from the program, thereby reducing waste, and possibly fraud
and abuse in the program.285 As we noted in the NPRM, self-certification does little to guard
against those persons who wish to intentionally defraud the Lifeline program by enrolling in the
program despite their ineligibility.286 Similarly, self-certification does not exclude consumers
who are ineligible to participate in the program but mistakenly enroll due to misunderstanding
the eligibility requirements. Recent data from two of the ETCs with the largest number of
Lifeline subscribers indicates that an overwhelming majority of consumers today sign up for
Lifeline on the basis of program eligibility.287 Additionally, state data indicates that most low-
income consumers qualify for Lifeline based on participation in Medicaid, SSI, and SNAP.288
284 The number of Lifeline subscribers in Kansas grew from 26,737 in 2008 to 54,680 in 2011 (annualized based on
11 months subscriber data), which is an increase of 105 percent. It should be noted that the difference in poverty
rates between Kansas and Louisiana remained same in 2008 and 2010 and is expected to remain same in 2011. See
U.S. Department of Agriculture, Economic Research Service, 2010 County-Level Poverty Rates,
http://www.ers.usda.gov/data/povertyrates/ (last visited Jan. 30, 2012); United States Census Bureau, State
Rankings, Statistical Abstract of the United States, Persons Below Poverty Level, 2008,
http://www.census.gov/compendia/statab/2011/ranks/rank34.html (last visited Jan. 30, 2012). Thus, it does not
appear that the disparity in poverty rates contributed to the higher growth in Lifeline subscribership in Louisiana.
See USAC Low Income Support and Subscriber Claims Letter at 2. This growth rate could be explained by new
entrants providing low-income consumers telephone service, including mobile service, for the first time.
285 See, e.g., Sen. McCaskill Letter; Comm’r Boyle Letter; Cricket Reply Comments at 13; NE PSC Comments at 12.
286 One commenter states that a requirement that consumers provide documentation of both program- and income-
based eligibility will not prevent outright fraud, as consumers may fabricate eligibility documentation in order to
obtain benefits. See Letter from Joan M. Griffin, Counsel, Emerios, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 5 (filed Nov. 3, 2011) (Emerios Nov. 3 ex parte Letter).
To protect against such scenarios, we expect that ETCs will enact appropriate safeguards to prevent fraudulent
enrollments. Further, as detailed below, any individual who willfully and knowingly violates any rule or regulation
of the Commission may be subject to penalties and permanent program de-enrollment. See infra para. 115.
287 See, e.g., TracFone Aug. 3 ex parte Letter (stating that, since 2008, TracFone has enrolled nearly 5 million
households in its Lifeline program, of which 99 percent qualified based on program-based criteria); Letter from
Jamie M. Tan, Director, Federal Regulatory, AT&T, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Dkt. No. 11-42 et al. (filed Aug. 15, 2011) (noting that, in AT&T’s experience, the vast majority
of Lifeline customers qualify via participation in public assistance programs, rather than on the basis of documenting
household income); see also Solix Aug. 31 ex parte (stating that in Texas and California, approximately 70 percent
of consumers qualify for Lifeline based on program eligibility, while 30 percent qualify based on income level)
(AT&T Aug. 15 ex parte Letter); see also CA PUC June 28 ex parte Presentation, Attachment B, at 18.
288 See, e.g., WASHINGTON STATE DEPARTMENT OF HEALTH & SOCIAL SERVICES, REPORT TO THE LEGISLATURE,
WASHINGTON TELEPHONE ASSISTANCE PROGRAM, YEAR 21 OF PROGRAM OPERATION: JULY 1, 2007 THROUGH JUNE
30, 200811 (2008), available at http://www.dshs.wa.gov/pdf/main/legrep/Leg1208/WTAP2008LegReport.pdf; CA
PUC June 28 ex parte Presentation, Attachment B, at 18.
55
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Requiring that consumers present documentation of eligibility before receiving subsidized phone
service will help to reinforce that they are signing up for a federal benefit.
105.
A new rule requiring consumers to provide documentation of program-based
eligibility as part of the initial enrollment process is consistent with the existing rule applicable
in federal default states requiring documentation for income-based eligibility. It is also
consistent with enrollment requirements in nearly all federal benefits programs. Several of the
federal benefits programs that constitute qualifying programs for Lifeline, including SNAP,
Supplemental Security Income (SSI), the Federal Housing Assistance Program, and the Low-
Income Home Energy Assistance Program (LIHEAP), require consumers to present several
forms of documentation to enroll in the benefit program.289 Moreover, as noted above, GAO
found that a number of states already require that consumers initiating Lifeline service provide
documentation of enrollment in a qualifying program.290 For example, Missouri, Texas, and
Nebraska currently require proof of participation in a qualifying program to establish program-
based eligibility for Lifeline.291 Thus, given that many consumers are already subject to such
requirements, it is not unreasonable to extend the applicability of those requirements to cover
ETCs in all states.
106.
Some commenters expressed concern that a rule requiring consumers to show
documentation of eligibility upon enrollment will discourage program enrollment because not all
consumers have documentation to prove eligibility, and many low-income consumers lack access
to technology (such as fax machines, copiers, and scanners) that would assist them in submitting
documentation to ETCs.292 For example, one commenter asserts that Nebraska, which requires
289 See 7 U.S.C. § 2020(e)(3); 7 C.F.R. § 273.2(f)(1)(i), (4), (5) (verification of eligibility for SNAP); Social Security
Online, Nutrition Assistance Programs, http://www.ssa.gov/pubs/10100.html#apply (last visited Feb. 2, 2012);
Social Security Online, Supplemental Security Income, http://www.ssa.gov/pubs/11000.html#part4 (last visited Feb.
2, 2012); HUD’s Public Housing Program,
http://portal.hud.gov/hudportal/HUD?src=/topics/rental_assistance/phprog (last visited Feb. 2, 2012); U.S.
Department of Health & Human Services, Office of Community Services, Low-Income Home Energy Assistance
Program (LIHEAP), http://www.acf.hhs.gov/programs/ocs/liheap/brochure/brochure.html (last visited Feb. 2, 2012);
Letter from Cheryl A. Leanza, Policy Advisor, United Church of Christ, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 1-2 (stating that most anti-poverty programs that are
qualifying programs for Lifeline require consumers to provide documentation of income, either a pay stub or by
getting their employer to complete a verification form) (LCCHR Nov. 21 ex parte Letter); see also USDA, Food &
Nutrition Service, WIC Prescreening Tool, https://stars.fns.usda.gov/wps/pages/start.jsf (last visited Feb. 2, 2012).
290 See supra para 94.
291 See, e.g., MO PSC Comments at 3-4; Solix Comments at 3; NE PSC Comments at 12-13. Other examples of
states that require documentation of enrollment in a qualifying program include Pennsylvania and South Carolina.
See South Carolina Lifeline and Link-Up Telephone Assistance Application, available at
http://www.regulatorystaff.sc.gov/imagesUpload/LifelineApplication.pdf; Letter from Joseph K. Witmer, Esq.,
Assistant Counsel, Pennsylvania PUC, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC
Dkt. No. 11-42 et al., (filed July 7, 2011) (Pennsylvania PUC July 7 ex parte Letter).
292 See, e.g., COMPTEL Comments at 19-20; Consumer Groups Comments at 24-25; GCI Comments at 48; Keep
USF Fair Comments at 2; MAG-Net Comments at 20; NASUCA Reply Comments at 13-14; Nexus Reply
Comments at 11; USTelecom Comments at 6; Rainbow PUSH Comments at 1; OpenAccess Comments at 4;
TracFone Comments at 28-29; YourTel Comments at 12-13; State of Alaska Reply Comments at 3; see also Letter
from Commissioner Deborah Taylor-Tate, Federal Communications Commission, to Julius Genachowski,
Chairman, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 2 (filed Aug. 1, 2011) (Comm’r Tate
(continued….)
56
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consumers to provide documentation of participation in a qualifying federal program to establish
eligibility for Lifeline, has a program enrollment rate below the national average.293 We are not
persuaded that requiring documentation of program eligibility will unduly reduce enrollment in
Lifeline or otherwise significantly hinder low-income consumers from obtaining needed
telephone services. Generally, consumers who qualify for Lifeline under program-based criteria
receive documentation evidencing their participation in a qualifying program.294 Further, as
Chart 2, below, demonstrates, Lifeline subscriber data also demonstrates that program enrollment
continues to increase significantly in states that currently require consumers to provide
documentation of program-based eligibility, such as Kansas.295 Nonetheless, to the extent that
the balance we strike here is more burdensome for consumers in those states that currently allow
self-certification, we anticipate that the documentation requirement will be temporary until
eligibility can be better addressed through a database solution.
Chart 2
Comparison of Lifeline Growth Rate in States Requiring Documentation of Program Eligibility
Versus States Permitting Self-Certification of Program Eligibility296
(Continued from previous page)
Aug. 1 ex parte Letter); Letter from Mitchell F. Brecher, Counsel, TracFone Wireless, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 2 (July 28, 2011) (TracFone July 28
ex parte Letter); TracFone Aug. 3 ex parte Letter; Emerios Nov. 3 ex parte Letter at 4; Letter from George Korn,
Advisor to Rev. Jesse L. Jackson, Sr., Rainbow PUSH, to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Dkt. No. 11-42 et al., at 1 (filed Dec. 9, 2011) (Rainbow PUSH Dec. 9 ex parte Letter).
293 TracFone July 28 ex parte Letter at 2; see also Emerios Nov. 3 ex parte Letter at 4 (stating that consumers who
are required to provide documentation of program-based eligibility may opt not to complete the Lifeline sign-up
process).
294 For example, program participants may receive an identification card or number (Medicaid, SNAP), an electronic
benefit transfer card (SNAP), a voucher (Federal Public Housing Assistance (Section 8)), a notice of eligibility or
other written decision letter (SSI, LIHEAP, Federal National School Lunch, TANF, Food Distribution Program on
Indian Reservations, BIA General Assistance). See, e.g., 24 C.F.R. § 982.302(a) (Section 8 Issuance of Voucher); 7
C.F.R. § 245.6(C)(6) (National School Lunch Program Notice of Approval); 47 C.F.R. §§ 274.1, 274.2 (setting out
how state agencies may issue SNAP benefits to households using an Electronic Benefit Transfer system); LCCHR
Nov. 21 ex parte Letter (stating that “most federal benefits programs provide an award letter or notice of eligibility
when an individual or household is deemed eligible and also a card to help maneuver in the system”); USDA,
Supplemental Nutrition Assistance, Electronic Benefit Transfer, http://www.fns.usda.gov/snap/ebt/ (last visited Feb.
2, 2012); Social Security Online, Glossary, Appeal (Appeal Rights), http://www.ssa.gov/glossary.htm (last visited
Feb. 2, 2012); USDA, FNS HANDBOOK 501 FOR FDPIR 5-3, http://www.fns.usda.gov/fdd/hdbks-
instruct/FNS501/Chap05-
Certification.pdf#xml=http://65.216.150.153/texis/search/pdfhi.txt?query=handbook+501&pr=FNS&prox=page&ro
rder=500&rprox=500&rdfreq=500&rwfreq=500&rlead=500&rdepth=0&sufs=0&order=r&cq=&id=4ea87d7c39;
U.S. Department of the Interior, Bureau of Indian Affairs, Application for Financial Assistance and Social Services
Instructions, at 17, http://www.bia.gov/idc/groups/mywcsp/documents/collection/idc014233.pdf.
295 For instance, the number of Lifeline subscribers in Kansas grew from approximately 26,737 in 2008 to 54,680
(annualized based on 11 months subscribers data) in 2011. That is, the number of Lifeline subscribers in Kansas
increased at a 28 percent Compound Annual Growth Rate (CAGR) between 2008 and 2011. See USAC Low Income
Support and Subscriber Claims Letter at 2.
296 See USAC Low Income Support and Subscriber Claims Letter at 2.
57
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Compound
Eligible
Annual
HH (in
Take
Growth
State
Requirement
thousandsRate*
Rate
)(2011)
(2008 -
(2010)
2011)
KS Documentation
28%
229
25%
OR Database 4%
278
19%
MD Self-certification
250% 325 75%
LA Self-certification
155%
518
121%
107.
As the record demonstrates, state agencies and non-profit organizations often play
an important role in facilitating access to benefits for low-income individuals.297 State agencies
and non-profit organizations may be able to assist low-income consumers if low-income
consumers do not have the ability to transmit documentation to their chosen ETC. Additionally,
some ETCs enroll consumers using a variety of methods, including at retail stores (i.e., in
person). We encourage ETCs to provide consumers with multiple options for presenting
documentation of eligibility, including in-person and by mail.
108.
Some commenters responding to the Lifeline and Link Up NPRM voice concerns
about the costs ETCs will incur in implementing a system to collect and verify consumer
documentation of program-based eligibility.298 We acknowledge that compliance with the rule
we adopt here will involve some administrative costs for ETCs; however, we conclude that those
costs are outweighed by the significant benefits gained by protecting the Fund from waste, fraud,
and abuse.299 As noted above, we estimate that up to 15 percent of current Lifeline subscribers
may be ineligible for the program, potentially representing as much as 360 million dollars of
support per year.300 We expect that a rule requiring ETCs to obtain documentation of program
participation from new Lifeline applicants, in conjunction with our efforts to implement a
297 See, e.g., MFY Legal Services Reply Comments at 1; Open Access Comments at 2, 7-8; Consumer Groups
Comments at 2-5; Letter from Martha Deaver, Executive Director, Arkansas Advocates for Nursing Home
Residents, to Julius Genachowski, Chairman, Federal Communications Commission, WC Dkt. No. 11-42 et al.
(filed Apr. 13, 2011).
298 See, e.g., AT&T Reply Comments at 15-16; USTelecom Comments at 6; MITS Reply Comments at 7; Sprint
Reply Comments at 11; Consumer Cellular Comments at 20; Cox Comments at 4; Emerios Nov. 3 ex parte Letter at
4-5.
299 Immediate adoption of a rule requiring documentation of program-based eligibility will enable the Commission
to realize cost savings in the near term, which can in turn be used to, among other things, fund efforts to modernize
the Lifeline program. See infra section IX.B (Support for Broadband).
300 See supra para. 102. Assuming that the Low-Income program provides an estimated $2.4 billion in support in
2012, see infra section X (Managing the Size of the Low-Income Fund), 360 million represents fifteen percent of
that amount.
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Lifeline database,301 will enable the Commission to recapture those funds and prevent unbridled
future growth in the Fund. The resulting cost savings will in turn benefit those consumers who
contribute to the Universal Service Fund, new qualifying low-income consumers, and our goal to
modernize the program for a broadband future. Further, while we will require consumers to
provide documentation of program- and income-eligibility to ETCs at enrollment, consumers
will no longer be required to provide such documentation as part of the annual verification
process in federal default states.302 Moreover, consumers will not need to demonstrate eligibility
at enrollment (or annually) once that function is addressed through a database. We expect that
these changes will reduce the burdens on both consumers and ETCs.
109.
Other commenters state that a rule requiring ETCs to verify documentation of
consumers’ program eligibility would raise privacy concerns.303 As noted above, without
accessing a state or federal eligibility database or collecting documentation of consumer
eligibility for Lifeline, ETCs cannot reliably confirm that a consumer is eligible for Lifeline. We
believe that the privacy concerns raised in the record are minimal in light of the fact that ETCs in
several states currently collect documentation of program-based eligibility and the Commission
is unaware of abuses resulting from that system. Thus, when balancing the benefits with the
potential burdens of such a rule, we conclude such concerns do not outweigh the significant
benefits of adopting such a rule.
110.
One commenter recommends that the Commission require carriers themselves,
rather than their agents or representatives, to review all documentation of eligibility.304 The
commenter notes that, for example, the Indiana Utility Regulatory Commission has procedures in
place requiring carriers to deal directly with consumers to reduce incentives for illicit third party
behavior.305 We do not find it necessary to adopt such a rule at this time. The Commission has
consistently found that “[l]icensees and other Commission regulatees are responsible for the acts
and omissions of their employees and independent contractors,” and has held the regulated party
responsible for violations of the Commission’s rules committed by agents.306 Thus, ETCs may
301 See infra Sections VII.A (National Lifeline Accountability Database) and XIII.A (Establishing an Eligibility
Database).
302 See infra section VI.C.2.b (Annual Re-certification of Consumer Eligibility).
303 See, e.g., AT&T Reply Comments at 15-16; Rainbow PUSH Comments at 1; CTIA Comments at 21-22;
USTelecom Comments at 6.
304 Letter from Kathleen O’Brien Ham, Vice President, Federal Regulatory Affairs, T-Mobile, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 3 (filed Dec. 16, 2011) (T-Mobile
Dec. 16 ex parte Letter).
305 Id.; see Federal-State Joint Board on Universal Service; Petition of TracFone Wireless for Forbearance from 47
U.S.C. § 214(e)(1)(A) and 47 C.F.R. § 54.201(i); Compliance Plan, CC Dkt. No. 96-45, at 15 (filed Oct. 11, 2005)
(agreeing that TracFone will have direct contact with all Lifeline applicants, including processing of the applicants’
applications); Federal-State Joint Board on Universal Service; Virgin Mobile USA, L.P. Petition for Forbearance
from 47 U.S.C. § 214(e)(1)(A); Petition for Designation as an Eligible Telecommunications Carrier in the State of
New York et. al, Compliance Plan, CC Dkt. No. 96-45, at 7-8 (same) (filed Apr. 3, 2009).
306 See, e.g., Bethune-Cookman College, Inc., File Number EB-08-TP-0406, Forfeiture Order, 24 FCC Rcd. 4513,
4515, para. 8 (Enf. Bur. 2009) (citing Eure Family Limited Partnership, Memorandum Opinion and Order, 17 FCC
Rcd 21861, 21863,-64, para. 7 (2002)); MTD, Inc., Memorandum Opinion and Order, 6 FCC Rcd 34 (1991)
(holding that a company's reliance on an independent contractor to construct a tower in compliance of FCC rules
(continued….)
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permit agents or representatives to review documentation of consumer program eligibility for
Lifeline. However, the ETC remains liable for ensuring the agent or representative’s compliance
with the Lifeline program rules.
111.
Content of Consumer Eligibility Certifications. We next amend the
Commission’s rules to require consumers to make certifications concerning their eligibility for
Lifeline when initially enrolling in the Lifeline program. All ETCs must also obtain a signed
certification from the consumer that complies with section 54.410 of our rules.307 No later than
June 1, 2012, ETCs in all states (or the state Lifeline program administrator, where applicable)
must update their Lifeline certification processes to enable consumers to comply with the
requirements listed below.308 ETCs will also be required to verify each subscriber’s compliance
with the Lifeline eligibility rules annually by requiring each subscriber to submit an annual re-
certification complying with the requirements described below.309 As discussed below, we will
permit interactive voice response systems to be used for both enrollment and annual
recertifications, as well as text messages for annual recertifications.310
112.
We do not anticipate that these requirements will impose unreasonable burdens on
low-income consumers, many of whom already provide certifications as part of the Lifeline
enrollment process.311 Further, the requirements we adopt today will help to educate low-income
consumers about the Lifeline program rules and remind them of the actions that are necessary to
ensure their compliance. In this way, we will prevent consumers from being de-enrolled from
Lifeline due to lack of awareness of program rules.
113.
First, where a subscriber’s eligibility cannot be determined through a database,
consistent with the rule we adopt above requiring documentation of program-based eligibility for
Lifeline, we amend section 54.410 of the Commission’s rules to require ETCs (or states, where
(Continued from previous page)
does not excuse that company from a forfeiture); Wagenvoord Broadcasting Co., Memorandum Opinion and Order,
35 FCC 2d 361 (1972) (holding a licensee responsible for violations of FCC rules despite its reliance on a consulting
engineer); Petracom of Joplin, L.L.C., 19 FCC Rcd 6248 (Enf. Bur. 2004) (holding a licensee liable for its
employee's failure to conduct weekly EAS tests and to maintain the “issues/programs” list).
307 In states that determine subscriber’s eligibility for Lifeline services, the state administrator should provide
prospective subscribers with the certification forms, collect completed forms from subscribers, and provide them to
ETCs. ETCs should update their annual certification forms to conform to the list of requirements provided in
Appendix B.
308 ETCs may choose to use a single document for their Lifeline program application and certification form.
309 See discussion infra section VI.C.2.b (Annual Re-Certification of Consumer Eligibility).
310 See infra VI.E (Electronic Signature).
311 See, e.g., Telecommunications Carriers Eligible for Universal Service Support; NTCH, Inc. Petition for
Forbearance from 47 U.S.C. § 214(e)(5) and 47 C.F.R. § 54.207(b); Cricket Communications, Inc. Petition for
Forbearance, WC Dkt. No. 09-197, Order, 26 FCC Rcd 13723, 13730, para. 15 (2011) (Cricket / NTCH
Forbearance Order); Telecommunications Carriers Eligible for Universal Service Support; PlatinumTel, LLC
Petition for Forbearance; CAL Communications, Inc. Petition for Forbearance; ReCellular, Inc. (MSA Wireless)
Petition for Forbearance, WC Dkt. No. 09-197, Order, 26 FCC Rcd 13788, 13795, para. 17 (2011) (PlatinumTel
Forbearance Order). See also 47 C.F.R. §§ 54.409(c)-(d); 54.410(b)(2).
60
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applicable) to obtain each consumer’s signature on a document312 certifying under penalty of
perjury that the consumer’s household receives benefits from a qualifying state or federal
assistance program, specifying the program in which the consumer’s household is enrolled, or
has income at or below 135 percent of the FPG, and that the consumer, if required to do so,
presented documentation that accurately represents the consumer’s household income or
participation in such program. Consumers must provide this certification to the ETC (or state
agency or third-party administrator, where applicable) upon enrolling in Lifeline and annually
thereafter.
114.
Second, consistent with the proposal in the Lifeline and Link Up NPRM, we
amend section 54.410 of our rules to require that a consumer notify its ETC within 30 days if he
or she no longer qualifies for Lifeline service. Specifically, a consumer must notify its telephone
service provider within 30 days if (1) the consumer ceases to participate in a federal or state
qualifying program or programs or the consumer’s annual household income exceeds 135
percent of the FPG (if that is the criterion by which that consumer qualified for Lifeline); (2) the
consumer is receiving more than one Lifeline-supported service; or (3) the consumer, for any
other reason, no longer satisfies the criteria for receiving Lifeline support.313 ETCs (or states
where, applicable) must set forth the notification requirement on their program certification
form. The notification requirement must be explained in clear, easily understandable language.
Additionally, prior to enrolling in Lifeline, consumers must attest under penalty of perjury that
they understand the notification requirement, and that they may be subject to penalties if they fail
to follow this requirement. Any consumer found to be ineligible for Lifeline support will be de-
enrolled from the program pursuant to the procedures set forth in section 54.405(e) of the
Commission’s rules.314 Currently, consumers who are no longer eligible for Lifeline support
may lack the incentive to notify their telephone service provider of their changed eligibility
status, or they may not recognize the importance of doing so. The rule we adopt here will make
clear that subscribers must contact their telephone service provider once they are no longer
eligible for Lifeline support.
115.
Third, we amend section 54.410 of our rules to require all ETCs (or states, where
applicable) to obtain each consumer’s initials or signature on a document, under penalty of
perjury, when the consumer enrolls in Lifeline and annually thereafter, attesting that the
information contained in the consumer’s application remains true and correct to the best of his or
her knowledge and acknowledging that providing false or fraudulent information to receive
312 See infra VI.E (Electronic Signature).
313 For commenters supporting this rule, see DC PSC Comments at 8; OH PUC Comments at 19-20; MO PSC
Comments at 15.
314 Some commenters express concern about the Commission’s ability to enforce such a rule. See DC PSC
Comments at 8; OH PUC Comments at 19-20; CenturyLink Comments at 18. We emphasize that the Commission
does not seek to penalize consumers who inadvertently sign up for Lifeline due to misunderstandings about their
eligibility under program rules. However, to the extent that persons intentionally defraud the Lifeline program by
knowingly participating in the program despite their ineligibility, such behavior will not be tolerated. We note that,
pursuant to section 503 of the Act, any person who “willfully or repeatedly” and knowingly violates “any rule, or
regulation, or order issued by of the Commission” may be subject to penalties. 47 U.S.C. § 503(b)(1)(B).
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Lifeline benefits is punishable by law.315 We also require ETCs to explain that Lifeline is a
government benefit program and consumers who willfully make false statements in order to
obtain the benefit can be punished by fine or imprisonment or can be barred from the program.316
We expect that by requiring ETCs and/or states to inform consumers that Lifeline is a
government benefit and about the penalties for noncompliance with program requirements, we
will more effectively reduce both inadvertent and purposeful instances of waste, fraud, and
abuse.
116.
Fourth, we amend section 54.410 of the Commission’s rules to require that ETCs
(or states, where applicable) inform consumers about the annual re-certification requirement,
described in more detail below, on the certification form that is completed upon program
enrollment and annually thereafter. Specifically, ETCs or states should obtain the consumer’s
initials or signature acknowledging that the consumer may be required to re-certify his or her
continued eligibility for Lifeline at any time, and that failure to do so will result in the
termination of the consumer’s Lifeline benefits.317 We expect that such a reminder would lessen
non-response rates for ETCs’ annual re-certification surveys by increasing consumer awareness
of the annual re-certification requirement and of consumers’ obligation to respond to ETCs’
and/or states’ re-certification efforts.
117.
Fifth, as noted in the one-per-household section, above, we adopt a requirement
that Lifeline participants provide their new address to their ETC within 30 days of moving.318 As
described in the Database section below, ETCs will be required to enter this address in the
duplicates database within 10 business days of receipt to determine if a subscriber is receiving
Lifeline support from another ETC.319 ETCs (or states, where applicable) should notify their
Lifeline subscribers of this requirement on their initial and annual certification forms using clear,
easily understandable language.
118.
Sixth, as explained below, to eliminate incidences of duplicative support, we
require ETCs to collect subscribers’ date of birth and last four digits of the Social Security
number (or an official Tribal government identification card number (for eligible consumers
living on Tribal lands who lack a social security number) to verify the subscriber’s ID through
the National Accountability Database.320 ETCs must collect this information on their initial and
annual certification forms and the Lifeline subscriber must attest that the information is correct.
315 See Federal-State Joint Board on Universal Service et al., CC Dkt. No. 96-45 et al., i-Wireless, LLC’s Revised
Compliance Plan, at 8 (filed Sept. 9, 2011); TracFone Safelink Application Forms, available at
https://www.safelinkwireless.com/Safelink/blank-application/.
316 See 47 C.F.R. § 54.8 (permitting the Commission to suspend and debar individuals from activities associated
with or related to the low-income program).
317 See, e.g., Telecommunications Carriers Eligible for Universal Service Support; Cricket Communications, Inc.
Petition for Forbearance; Cricket Communications, Inc. Compliance Plan, WC Dkt. No. 09-197, at 5 (filed Sept.
23, 2011).
318 See infra para. 85.
319 See infra para. 197
320 See infra para. 184.
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119.
Seventh, as discussed below, we amend our rules to clarify that Lifeline service is
a non-transferable benefit.321 Prepaid ETCs (i.e., ETCs that do not assess or collect a monthly
fee from their Lifeline subscribers) or the state Lifeline program administrator, where applicable,
must inform consumers about this rule in clear, easily understandable language on their initial
and annual certification form. The certification form should inform consumers that a Lifeline
subscriber may not transfer his or her service to any other individual, including another eligible
low-income consumer.
120.
Initial and Annual One-per-Household Certification. As discussed in more detail
above, we adopt a “one-per-household” rule for Lifeline.322 We therefore adopt initial and
annual certification rules tied to that requirement. Specifically, we amend section 54.410 of the
Commission’s rules to require that all ETCs (or state Lifeline program administrators, where
applicable) obtain a certification from each subscriber, under penalty of perjury, that the
subscriber’s household is receiving no more than one Lifeline-supported service. Each eligible
Lifeline consumer served by an ETC must attest at the time of enrollment and annually thereafter
that he or she receives Lifeline-supported service only from that ETC and, to the best of his or
her knowledge, no one in the subscriber’s household is receiving a Lifeline-supported service.
By June 1, 2012, ETCs in all states (or the state program administrator, where applicable) must
update their Lifeline certification form to enable consumers to comply with the one-per-
household certification requirement.
121.
As the Commission noted in the Lifeline and Link Up NPRM, requiring such
certifications at sign-up and on an ongoing basis thereafter will inform the consumer of program
requirements and periodically remind him or her that support is available for only one Lifeline-
supported service per household.323 Each ETC’s or state’s certification form must also explain in
plain, easily comprehensible language that: (1) Lifeline is a federal benefit; (2) Lifeline service is
available for only one line per household; (3) a household is defined, for purposes of the Lifeline
program, as any individual or group of individuals who live together at the same address and
share income and expenses; and (4) a household is not permitted to receive Lifeline benefits
from multiple providers.324 The certification form must also contain language stating that
violation of the one-per-household requirement constitutes a violation of the Commission’s rules
and will result in the consumer’s de-enrollment from the program, and could result in criminal
prosecution by the United States government.325
321 See infra para. 257.
322 See supra section VI.B (One-Per-Household).
323 Lifeline and Link Up NPRM, 26 FCC Rcd at 2824, para. 167. We proposed in the NPRM to adopt a rule
requiring ETCs to obtain an initial certification and annual re-certifications documenting their subscribers’
compliance with the proposed one-per-residential-address rule. Id. at paras. 167-69. However, because we choose
to adopt a one-per-household rule today in lieu of the NPRM’s one-per-address-proposal, it is appropriate to modify
the certification required by Lifeline subscribers to ensure compliance with the one-per-household rule.
324 Enrolling a consumer in Lifeline without first explaining the one-per-household rule and asking the consumer
whether another member of his or her household is already receiving Lifeline-supported service is a violation of our
rules.
325 See also OH PUC Comments at 17 (noting that ETCs should include on their certification forms a warning that a
violation of the one per household requirement may result in immediate removal from the program). In its
(continued….)
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122.
Additionally, ETCs (or states, where applicable) will be required to verify each
subscriber’s compliance with the one-per-household rule annually by requiring each subscriber
to submit an annual re-certification complying with the requirements described above.326 Any
subscriber who indicates that he or she is receiving more than one Lifeline-supported service per
household, or neglects to make the required one-per-household certification on his or her
certification form, must be de-enrolled from Lifeline pursuant to the process for resolving
duplicative Lifeline subscriptions described in section 54.405(e)(2) of our rules.327 Any non-
responders will be de-enrolled, after notification and an appropriate waiting period, pursuant to
the process set forth in section 54.405(e)(4) of our rules.
123.
We do not expect that these certification requirements will impose unreasonable
burdens on low-income consumers. As described above, the initial and annual certification form
must explain the one-per-household requirement to the consumer in plain and simple language,
so the consumer understands what he or she is signing and what the consumer must do to comply
with the one-per-household requirement. In addition, to help consumers understand the
certifications and program rules, we expect ETCs to verbally explain the certifications to
consumers when they are enrolling in person or over the phone. With respect to those enrolling
via the Internet, we expect ETCs to highlight the certifications that are required. They may do
so, for example, by requiring consumers to acknowledge each certification before moving on to
the next field. ETCs should not bury these certifications in their contracts. If included in a
contract, theses certifications should be at the beginning of the contract and stand out to the
consumer. At this time, we do not require consumers to provide documentation (e.g., tax forms)
to ETCs in order to establish their compliance with the one-per-household rule.328 Rather, we
will permit consumers to self-certify that they comply with this requirement upon enrollment and
annually thereafter, which will simplify the certification process for low-income consumers and
(Continued from previous page)
comments, NASUCA states that “a form signed by a customer might eliminate some duplicative support but it will
not eliminate outright fraud.” NASUCA Comments at 23. We acknowledge that there may be situations where
consumers provide false certifications of their eligibility for Lifeline, despite the provided warnings. We expect that
such consumers will be discovered through the process set forth above for detecting duplicative Lifeline
subscriptions and will be de-enrolled pursuant to our rules. Additionally, such consumers, if discovered to have
provided a false certification, may be subject to harsher penalties, including possible prosecution.
326 See infra section VI.B (One-per-Household).
327 As above, this requirement will not impose unreasonable burdens on ETCs, including small ETCs. ETCs may
obtain the one-per-household certification as part of their existing verification processes, and the costs of doing so
should be minimal. Similarly, ETCs already have de-enrollment processes in place to de-enroll those consumers
who are found to be ineligible for Lifeline. See 47 C.F.R. § 54.405(c)-(d). It will not impose unreasonable costs or
administrative burdens to require ETCs to extend those processes to include any subscribers who fail to comply with
the one-per-household certification requirement we adopt today.
328 See supra paras. 77-79. Unlike the process of establishing program-based eligibility for Lifeline, it is not clear
what, if any, documentation a consumer could submit to an ETC to make such a showing. See, e.g., AT&T PN
Comments at 4-6; GCI PN Comments at 20-21 It is appropriate to require consumers to present some evidence of
their eligibility for government benefits (i.e., documentation of participation in a qualifying state or federal
program); however, we recognize the need to balance the potential burdens to consumers with the adoption of rules
to guard against waste, fraud, and abuse. As such, we conclude that the self-certification requirement listed above
will be the least burdensome alternative to accomplish our goal of ensuring consumers’ compliance with the one-
per-household rule and thereby preventing waste, fraud, and abuse in the Lifeline program.
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provide a minimally invasive means for the Commission to enforce low-income consumers’
compliance with the one-per-household rule.
124.
This requirement also will not impose unreasonable burdens on ETCs, including
ETCs considered to be small businesses. We note that some ETCs already request similar
certifications from their subscribers, and we see no reason why requiring all ETCs to do so in the
future would be unreasonably burdensome.329 Moreover, we anticipate that any burden to ETCs
or consumers would be outweighed by the potential cost savings associated with the prevention
of waste, fraud, and abuse in the program. By taking steps to eliminate support for ineligible
consumers and prevent duplicative Lifeline claims, the one-per-household certification
requirement we adopt today is consistent with our program goal of ensuring that support for low-
income voice and broadband service minimizes the contribution burden on consumers and
businesses.330
125.
Eligible Telecommunications Carrier Certifications. We also amend section
54.410 of the Commission’s rules to require ETCs to make certain certifications when the ETC
conducts its annual re-certification of its consumers’ ongoing eligibility for Lifeline, as described
below. We also amend section 54.407 of the Commission’s rules to require ETCs to make
certain certifications when submitting an FCC Form 497 to USAC for reimbursement. As with
respect to the consumer certifications set forth above, we expect the administrative burdens for
ETCs to comply with these rules to be minimal.331
126.
First, we amend section 54.416 of the Commission’s rules to require that an
officer of the eligible telecommunications carrier certify that the carrier has procedures in place
to review consumers’ documentation of income- and program-based eligibility. Eligible
telecommunications carriers must make this certification annually to the Administrator as part of
the carrier’s submission of re-certification data pursuant to section 54.416. In instances where an
eligible telecommunications carrier confirms consumer eligibility by relying on official program
eligibility data, such as a state or federal database, an officer of the carrier must attest to what
data the ETC uses to confirm consumer eligibility in each state.332 By requiring ETCs to provide
329 See Cricket / NTCH Forbearance Order, 26 FCC Rcd at 13730, para. 15; PlatinumTel Forbearance Order, 26
FCC Rcd at 13795, para. 17; i-Wireless Forbearance Order, 25 FCC Rcd at 8790, para. 16; Virgin Mobile
Forbearance Order, 24 FCC Rcd at 3387, para. 12; TracFone Forbearance Order, 20 FCC Rcd at 15103, para. 18.
See also Letter from John J. Heitmann & Josh Guyan, Counsel for Link Up for America Coalition, to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 6 (filed Oct. 3, 2011) (stating
that their members have agreed to 1) explain in clear and plain language to new customers that they may not receive
more than one Lifeline supported service; 2) require all Lifeline applicants to confirm on the application form that
he or she is not receiving Lifeline supported service from any other Lifeline provider; and 3) require all Lifeline
applicants to self-certify that they receive Lifeline services only from the ETC) (Link Up for America Coalition Oct.
3 ex parte Letter).
330 See supra section III.C (Performance Goals & Measures).
331 The Commission currently directs ETCs to make certain certifications relating to the Lifeline program. See 47
C.F.R. § 54.410(b). In this section, we do not substantially change those requirements; rather, we simply add
additional certifications that the ETC must make annually and when seeking reimbursement from the Fund.
332 See discussion supra section VI.C. (Certification of Consumer Eligibility for Lifeline).
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these certifications annually, we will help ensure ETCs’ compliance with the rules we adopt
above relating to the documentation of program-based eligibility for Lifeline.333
127.
Second, we adopt a rule requiring that an officer of each ETC must attest that the
carrier is in compliance with all federal Lifeline certification procedures. This rule will help to
protect the Fund from waste, fraud, and abuse by ensuring that ETCs are accountable for their
compliance with program rules. Eligible telecommunications carriers must make this
certification annually to the Administrator as part of the carrier’s submission of re-certification
data pursuant to section 54.416.334
128.
Third, we adopt a rule in section 54.407 requiring that each ETC certify when it
seeks reimbursement that the carrier has obtained a valid certification form for each consumer
for whom the ETC seeks Lifeline reimbursement. This rule will protect low-income consumers
by preventing an ETC from enrolling a consumer in their Lifeline program without his or her
consent and seeking reimbursement for that consumer.335 This rule will also protect against
waste, fraud, and abuse by ensuring that ETCs claim support for only those subscribers that are
eligible for the program and who have agreed to comply with the Lifeline program requirements.
b.
Annual Re-Certification of Consumer Eligibility
129.Consistent with the recommendations of the Joint Board, we amend section
54.410 of the Commission’s rules to adopt a set of uniform re-certification procedures that all
ETCs should perform annually to verify the ongoing eligibility of their Lifeline subscriber base.
These standards will serve as a minimum threshold for re-certification procedures to be
performed by all ETCs, but will allow ETCs in specific circumstances to leverage existing state
verification processes to more easily verify the ongoing eligibility of their subscriber base each
year.336
130.
Pursuant to the new rule we adopt today, all ETCs must re-certify the eligibility of
their Lifeline subscriber base as of June 1, 2012 by the end of 2012 and report the results to
USAC by January 31, 2013.337 This re-certification may be done on a rolling basis throughout
the year, at the ETC’s election.338 Where ongoing eligibility cannot be determined through
333 See id.
334 See infra section VI.C.2.b (Annual Re-Certification of Consumer Eligibility for Lifeline).
335 See infra section VI.F (Automatic and Coordinated Enrollment).
336 Adoption of a set of uniform, minimum verification procedures is supported by CenturyLink, Cincinnati Bell,
Consumer Groups, Cricket, TracFone, US Telecom, YourTel, and the NY PSC. CenturyLink Comments at 18-19;
Cincinnati Bell Comments at 9; Consumer Groups PN Comments at 14; Cricket Reply Comments at 12-13;
TracFone Reply Comments at 4-6; US Telecom Comments at 5; YourTel Comments at 12; NY PSC Comments at
9-10.
337 Consistent with the the Wireline Competition Bureau’s practice with respect to the issuing reminders via Public
Notice to the federal default states, the Bureau will publish a Public Notice after June 1, 2012 to remind ETCs that
they must re-certify all of their subscribers of record as of June 1, 2012 by December 31, 2012 and to report their
results to USAC by January 31, 2013.
338 We delegate to the Wireline Competition Bureau the authority to establish, in coordination with USAC, a
process for facilitating the collection of consumer re-certifications on a rolling basis. See, e.g., Letter from Matthew
A. Brill, Counsel, Cricket Communications, Inc., to Marlene H. Dortch, Secretary, Federal Communications
(continued….)
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access to a qualifying database either by the ETC or the state, and there is no state administrator
verifying the continued eligibility of Lifeline subscribers, by the end of 2012, an ETC must re-
certify the continued eligibility of all of its subscribers by contacting them—which can be done
in any of a number of ways, including in person, in writing, by phone, by text message, by email,
or otherwise through the Internet—to confirm their continued eligibility pursuant to the rules
established in this Order.339 Specifically, all such ETCs must obtain from each Lifeline
subscriber by the end of 2012 a re-certification form that contains each of the required
certifications described above.340
131.
In states where a state agency or a third party has implemented a database that
carriers may query to re-certify the consumer’s continued eligibility, the carrier (or state agency
or third-party, where applicable) must instead query the database by the end of 2012 and
maintain a record of what specific data was used to re-certify eligibility and the date of re-
certification.341 If a subscriber’s address cannot be verified through the state data, ETCs who do
not bill their subscribers must contact the subscriber every year to obtain a valid address which
may be accomplished during the annual certification process.
132.
In contrast to the current verification rules, which require all sampled subscribers
(but no other subscribers) to provide documentation of their continued eligibility for Lifeline, the
rule we adopt today will apply to all Lifeline subscribers enrolled in the program as of June 1,
2012, while allowing those consumers to provide self-certifications without associated
documentation. Such certifications may be obtained through a written format, an Interactive
Voice Response system, or a text message.342 Regardless of the format used to re-certify the
subscriber’s continued eligibility for Lifeline, ETCs (or the state Lifeline administrator or other
state agency, where applicable) must convey all of the required information set forth in the
amended section 54.410 and obtain from the subscriber an individual certification for each
requirement set forth in the rule.343 Any text messages must be sent to the phone number
(Continued from previous page)
Commission, WC Dkt. No. 11-42 et al., at 2 (filed Jan. 24, 2012) (Cricket Jan. 24 ex parte Letter) (recommending
that annual re-certifications be permitted on a rolling basis).
339 See infra para. 132.
340 See supra paras. 111-24; see also, e.g., TracFone Reply Comments at 5-6; Letter from Norina Moy, Director,
Government Affairs, Sprint Nextel, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC
Dkt. No. 11-42 et al., at 1 (filed Nov. 14, 2011) (Sprint Nov. 14 ex parte Letter).
341 In states where a state agency or third-party is responsible for performing annual recertification functions, the
state or its agent should provide the ETC with a copy of each Lifeline subscriber’s re-certification form.
342 See infra section VI.E (Electronic Signature).
343 Section 54.410 requires that the subscriber be provided with program information, including that Lifeline is a
federal benefit available to only one line per household. In addition, the subscriber must certify that he or she
continues to be eligible for the program and will notify the carrier within 30 days if he or she no longer satisfies the
criteria for receiving Lifeline support. A message that merely asks “Are you still eligible for Lifeline?” would not
convey the necessary information that must be provided to the subscriber, nor would a message that directs the
consumer to a url where the full certification information is listed. In order to convey to and obtain all of the
required information from the subscriber via text messages, we expect that the ETC (or state administrator or
agency) will need to send and receive multiple messages to the subscriber. Similarly, when re-certifying the
(continued….)
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associated with the supported service, and text responses must be sent from that phone number.
Carriers (or the state Lifeline program administrator, where applicable) must report the results of
this annual re-certification process, as described below, to USAC by January 31, 2013.344
Carriers must also file an annual Lifeline eligible telecommunications carrier certification form
with USAC, beginning on January 31, 2013, that complies with the certification requirements
discussed above.345
133.
Ongoing eligibility of Lifeline subscribers must continue to be verified annually
after 2012; however, we expect that ETCs will increasingly gain access to automated means of
verifying subscriber eligibility. In those instances where ongoing eligibility cannot be
determined through access to a qualifying database either by the ETC or the state, and there is no
state administrator verifying continued eligibility, ETCs retain the responsibility for annual
subscriber re-certification. However, after 2012, ETCs may elect to have USAC administer the
self-certification process on their behalf. We direct USAC to work with the ETCs and the
Bureau to develop a plan for USAC to conduct annual re-certifications in lieu of ETCs, with
such annual certifications starting in 2013. If an ETC chooses to perform the annual self-
certifications itself, it must re-certify the continued eligibility of all of its subscribers by
contacting them—which can be done in any of a number of ways, including in person, in writing,
by phone, by text message, by email, or otherwise through the Internet—to confirm their
continued eligibility pursuant to the rules established in this Order.346 Additionally, all carriers
must continue to file an annual Lifeline ETC certification form with USAC that complies with
the certification requirements discussed above.347
134.
This amendment to our rules will work in lock step with other measures we
implement today. Because consumers in states without eligibility databases will be required to
provide documentation at enrollment to establish program eligibility, we find a requirement that
ETCs or program administrators, where applicable, verify all Lifeline subscribers’
documentation on an annual basis to be unnecessary.348 The upfront documentation requirement
will serve as a sufficient initial check of consumer eligibility and alleviate the need for ETCs or
third-party administrators to obtain documentation from subscribers on a recurring basis as part
of the back-end re-certification process. Additionally, some commenters note that by eliminating
the requirement that consumers provide annual documentation of continued eligibility to their
(Continued from previous page)
subscriber by phone or IVR, the subscriber must be prompted to certify the individual requirements set forth in
section 54.410.
344 See infra paras. 147-48 (collection and submission of re-certification data). But see Cricket Jan. 24 ex parte
Letter at 2 (recommending that the Commission retain the existing August 31 filing deadline for re-certifications or
a similar mid-year deadline and require re-certification to be performed on a rolling basis).
345 See supra paras. 125-28 (ETC certifications).
346 See supra paras. 111-24 (Consumer certifications). This re-certification may be done on a rolling basis
throughout the year. We delegate to the Wireline Competition Bureau the authority to establish, in coordination
with USAC, a process for facilitating the collection of consumer re-certifications on a rolling basis.
347 See supra paras. 125-28 (ETC certifications).
348 See supra paras. 98-110 (Determination of Initial Program Eligibility).
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ETC, we could reduce the burden of annual verifications on both consumers and ETCs.349 The
collection of annual self-certifications from all consumers as part of the re-certification process will
also assist in obtaining updated address information from their subscribers, which can ultimately be used
to populate the duplicates database that we adopt today.350
135.
Further, by requiring ETCs, or program administrators, where applicable, to
annually re-certify the eligibility of their entire subscriber base, we will remedy the problems
associated with sampling noted by the Commission in the NPRM. In contrast to the current
sampling methodology, all of an ETC’s Lifeline subscribers will be subject to annual re-
certification requirements. The current sampling methodology, while statistically significant and
sufficient for some data analysis purposes, fails to assess the actual eligibility of a large number
of subscribers nationwide and, more importantly, leaves enrolled in the program subscribers that
are not eligible. In contrast, the approach we adopt today will assess the eligibility of all current
subscribers to the program. Moreover, any subscribers that fail to respond to the ETC’s or
administrator’s re-certification attempts must be de-enrolled from Lifeline pursuant to the de-
enrollment procedures set out in our rules, as described in more detail below.351 These
protections will assist the Commission to more effectively protect the Fund from waste, fraud,
and abuse.352
136.
After consideration of the record, we decline to adopt the verification
methodologies proposed in the NPRM for several reasons. We decline to rely solely on
statistical sampling because we remain concerned that it will not be sufficient to detect and
remedy instances of subscriber ineligibility.353 As the Commission noted in the NPRM, the
current methodology fails to identify the ineligible subscribers that are not part of the sample.354
The rule we adopt today remedies that problem by ensuring that the eligibility of all Lifeline
subscribers will be re-certified on an annual basis and is consistent with our obligation to protect
the Fund from waste, fraud, and abuse.355
137.
With respect to sample-and-census, the Commission received feedback from
commenters – ETCs in particular – expressing concern that the census component would be
349 See, e.g., Letter from Mitchell F. Brecher, Counsel, TracFone Wireless, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 3, 10 (filed Oct. 17, 2011) (estimating that by requiring
all ETCs to obtain a signed certification from each consumer that the consumer is eligible to receive Lifeline and
does not receive Lifeline service from any other carrier could save the fund approximately $270 million per year)
(TracFone Oct. 17 Ex Parte Presentation); Sprint Nov. 14 ex parte Letter at 1-2 (estimating that if all Lifeline
subscribers are required to annually re-certify their continued Lifeline eligibility, the fund could save approximately
$150 million per year).
350 See infra section VII.A (National Lifeline Accountability Database).
351 See infra paras. 141-46.
352 See, e.g., GRTI Comments at 16-17; MO PSC Comments at 16; Alaska Commission Reply Comments at 9-10.
353 See, e.g., DC PSC Comments at 5-6; TracFone Reply Comments at 5.
354 Lifeline and Link Up NPRM, 26 FCC Rcd at 2826-27, para. 181.
355 In the NPRM, the Commission noted that it has the means to identify ineligible subscribers that are not part of an
ETC’s statistical survey, including but not limited to the use of audits. Lifeline and Link Up NPRM, 26 FCC Rcd at
2821, para. 181 n.316.
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overly burdensome.356 These commenters state that if a full census were triggered it would be
excessively costly and burdensome for ETCs, particularly ETCs with a small number of Lifeline
subscribers, to collect and verify the eligibility documentation of their entire subscriber base.357
We adopt what is expected to be a less burdensome method of checking the eligibility of an
entire subscriber’s base as it does not require the consumer to produce documentation of
continued eligibility.
138.
We also considered alternatives that would require ETCs to verify only a portion
of their Lifeline subscriber base, including allowing small ETCs within a state to perform
sampling in the aggregate rather than on an individual basis, requiring ETCs with a minimal
number of Lifeline subscribers to sample fewer subscribers than larger ETCs, and allowing all
ETCs to sample a lesser percentage of their Lifeline subscriber base. The approach we adopt
today strikes an appropriate balance between these interests by helping to identify and de-enroll
ineligible subscribers, while imposing fewer burdens on consumers and ETCs than a full census
survey (i.e., requiring consumers to annually produce documentation to verify continued
eligibility).358 Some commenters note that the costs for an ETC to seek out and obtain annual
self-certifications from subscribers could be significantly lower than the costs of performing a
full verification with examination of the underlying documentation.359
139.
We also do not believe that the re-certification process we adopt today will be
overly burdensome to consumers.360 As noted above, the amendments to section 54.410 will
permit consumers to annually re-certify to their continued eligibility for Lifeline without
requiring associated documentation as is currently mandated by our program rules for consumers
in federal default states.361 While all consumers will be required to provide an annual self-
356 See, e.g., MITS Reply Comments at 5; GCI Comments at 4; CTIA Comments at 20.
357 See, e.g., NTCA Comments at 5-7; MITS Reply Comments at 5; TCA Comments at 3-4; TSTCI Reply
Comments at 1-2.
358 But see GCI Nov. 23 ex parte Letter at 3-4 (stating that an annual recertification requirement would be
burdensome and would be disruptive to consumers, who may lose service if they do not respond to the ETC’s
recertification requests); see also Letter from Alan Buzacott, Executive Director, Federal Regulatory Affairs,
Verizon, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 2
(filed Jan. 17, 2012) (Verizon Jan. 17 ex parte Letter).
359 See, e.g., Letter from Mitchell F. Brecher, Counsel, TracFone Wireless, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al. (filed Aug. 24, 2011) (stating that in 2010, TracFone spent
$4.75 per verified subscriber to ascertain that each subscriber remained head of household and received Lifeline
service only from TracFone; however, to verify the continued eligibility of their Lifeline subscribers by contacting a
statistically valid sample of its subscriber base, TracFone’s cost per verified subscriber was $66.69) (TracFone Aug.
24 ex parte Letter); Letter from Norina Moy, Director, Government Affairs, Sprint Nextel, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 1 (Sprint Aug. 12 ex parte Letter).
But see Letter from Mary L. Henze, Assistant Vice President, Federal Regulatory, AT&T, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., Attach. At 3 (AT&T Jan. 24 ex parte
Letter).
360 See, e.g., GCI Nov. 23 ex parte Letter at 3-4; Verizon Jan. 17 ex parte Letter at 2.
361 See 47 C.F.R. § 54.410(c)(2).
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certification of continued eligibility, we expect that elimination of the requirement that
consumers annually provide supporting eligibility documentation will enable consumers to more
easily respond to verification surveys, thereby reducing the number of Lifeline subscribers de-
enrolled for failure to respond to carrier verification efforts. Additionally, as discussed below,
we direct the Wireline Competition Bureau and the Consumer and Governmental Affairs Bureau
to coordinate with USAC, states, consumer groups, and ETCs to facilitate a consumer outreach
campaign to educate consumers about the Lifeline program rules.362 By educating consumers
about the annual self-certification requirement adopted in the Order, we expect that we will
reduce the number of subscribers that fail to respond to an ETC’s or administrator’s re-
certification attempts. Further, by ensuring that all Lifeline subscribers annually verify their
continued eligibility for the program, we expect to regain cost savings that will benefit those
consumers and companies who contribute to the Universal Service Fund.363
140.
In the NPRM, the Commission sought comment on the Joint Board’s
recommendation that “states be allowed to utilize different and/or additional verification
procedures so long as those procedures are at least as effective in detecting waste, fraud, and
abuse as the uniform minimum required procedures.”364 Pursuant to the rule we adopt today, as a
condition of receiving federal Lifeline support, ETCs in all states, or the state Lifeline program
administrator, where applicable, must perform the re-certification processes adopted in this
Order.365 We recognize that states may wish to impose additional requirements where they have
their own Lifeline programs and specific concerns that may not be applicable to ETCs in all
states.366 States may supplement the federal re-certification methodology with their own
procedures specifically tailored to state-specific program requirements.367 Those supplemental
procedures, however, must may be performed in addition to, and but not in lieu of, the uniform,
minimum standards we adopt today for those ETCs who receive support from the federal
Universal Service Fund.368
362 See infra paras. 281-82.
363 See supra section III.C (Performance Goals and Measures).
364 Lifeline and Link Up NPRM, 26 FCC Rcd at 2825, para. 176 (citing 2010 Joint Board Recommended Decision,
25 FCC Rcd at 15608, para. 28).
365 Some states, such as Arkansas, North Carolina, and New York, have adopted verification methodologies akin to
the Commission’s current sampling formula. As discussed above, the Commission’s current sampling methodology
is flawed due to its inability to detect potentially large numbers of ineligible Lifeline subscribers and we replace it
today with a uniform re-certification requirement. See supra para. 136. To ensure the benefits of this rule change
accrue nationwide, it is necessary to mandate that ETCs in all states, at minimum, annually re-certify the continued
eligibility of their Lifeline subscriber base. In those states where verification functions are performed by the state
and not ETCs, all states are expected to implement procedures to comply with the verification processes adopted
here.
366 See OR PUC Comments at 3, Alaska Commission Reply Comments 2 at 14-15, CenturyLink Comments at 19,
MA DTC Comments at 9, DC PSC Comments at 5-6.
367 For example, some states have verification procedures in place where the subscriber must provide proof of
continued eligibility. See, e.g., CA PUC PN Comments at 9-10.
368 The state of California, for example, requires all Lifeline subscribers to annually provide a re-certification
(verification) form to Solix, the third-party administrator of California’s Lifeline program. CA PUC PN Comments
at 9; Solix Comments at 6. Solix also verifies the eligibility of 3 percent of the existing Lifeline subscribers in
(continued….)
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141.
Procedures to be followed after annual re-certification. In the Lifeline and Link
Up NPRM, the Commission proposed to amend section 54.405 of the Commission’s rules to
adopt a procedure for de-enrolling those subscribers who do not respond to an ETC’s verification
surveys.369 Specifically, the Commission proposed a rule requiring ETCs to provide a written
notice of impending service termination to the subscriber, separate from the subscriber’s bill, and
then give the subscriber 30 days after the date of the letter to demonstrate that his or her Lifeline
service should not be terminated.370 In order to protect the program against waste, fraud, and
abuse, we amend our rules to codify the proposed de-enrollment procedure.371
142.
We amend section 54.405 of the Commission’s rules to require ETCs to de-enroll
within 30 days Lifeline subscribers who do not respond to the carrier’s or state’s attempts to re-
certify the subscriber within a 30-day period. When contacting their Lifeline subscribers to
perform the annual re-certification process, ETCs (or the state Lifeline program administrator,
where applicable) must notify their subscribers in writing that failure to respond to the re-
certification request could result in de-enrollment from that carrier’s Lifeline program. By
codifying a specific requirement that all ETCs de-enroll subscribers for non-responsiveness, we
will ensure that support is not distributed where subscribers fail to evidence their ongoing
eligibility for Lifeline.
143.
We similarly amend section 54.405 of our rules to provide that, where the carrier
has a reasonable basis to believe that the subscriber no longer meets the Lifeline-qualifying
criteria (including instances where a subscriber informs the ETC or the state that he or she is
ineligible for Lifeline), the ETC must send notification of impending termination in writing
separate from the subscriber's monthly bill. Carriers must allow subscribers 30 days following
the date of the impending termination letter in which to demonstrate continued eligibility.372
144.
We do not anticipate that the de-enrollment processes we adopt today will
unreasonably burden low-income consumers. As stated above, ETCs in federal default states
currently de-enroll Lifeline subscribers for failure to respond to an ETC’s verification survey.
However, no standardized de-enrollment process is presently in place to provide subscribers with
notice of impending de-enrollment and an opportunity to demonstrate their continued eligibility
for Lifeline. The processes we adopt here will ensure that Lifeline subscribers are notified of
their impending de-enrollment and are given an additional period of time during which they may
re-certify to their continued eligibility.
(Continued from previous page)
California by requesting documentation to confirm the subscribers’ ongoing eligibility. CA PUC PN Comments at
9-10; Solix Comments at 6. The re-certification procedure we adopt today would not preclude California from
implementing procedures to examine the eligibility documentation of a random sample of Lifeline subscribers.
369 Lifeline and Link Up NPRM, 26 FCC Rcd at 2829-30, para. 192.
370 Id. at 2872, Appendix A, 47 C.F.R. § 54.405(e) (proposed rule).
371 For commenters supporting adoption of a de-enrollment requirement for non-responders, see DC PSC Comments
at 6; TracFone Comments at 32; MI PSC Comments at 8.
372 See id. In such cases, section 54.405(d) of the Commission’s rules currently requires ETCs to allow subscribers
60 days following the date of impending termination to demonstrate continued program eligibility. See 47 C.F.R. §
54.405(d). We amend section 54.405 of the Commission’s rules to reduce that period of time to 30 days, in order to
more effectively reduce instances of waste, fraud, and abuse in the program.
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145.
Moreover, we adopt a requirement above that ETCs must inform consumers about
the annual re-certification requirement on the certification form that is completed upon initial
program enrollment and annually thereafter.373 On their annual re-certification materials, ETCs
or the program administrator, as applicable, must clearly and succinctly inform subscribers that
they are being contacted to re-certify their continuing eligibility for Lifeline. The subscribers
must be informed that if they fail to respond, they will be considered ineligible for Lifeline and
de-enrolled from the program.374 ETCs and states may also choose to notify subscribers about
the re-certification requirements in their Lifeline outreach materials.375 By taking these actions,
ETCs and states will ensure that consumers are aware of the importance of responding to re-
certification efforts, and that they are not inadvertently disconnected due to a lack of
understanding of program rules.376
146.
We also do not expect that these rules will impose significant burdens on ETCs
(including small ETCs), many of whom already have similar de-enrollment processes in place.377
These processes are also consistent with our current rules, which already require ETCs in all
states and territories to terminate Lifeline service if the carrier has a reasonable basis to believe
that a subscriber no longer satisfies the qualifying criteria.378
147.
Collection and submission of re-certification data. Currently, the Commission
has access to verification results only from ETCs in federal default states and in a handful of
non-federal-default states that require ETCs to submit verification results annually to USAC.379
As the Commission noted in the NPRM, USAC presently receives verification results for a total
of 17 states and territories.380 In the 2010 Recommended Decision, the Joint Board
recommended that all ETCs in all states should be required to submit the data results of their
verification sampling to USAC, the Commission, and their respective states, in order to obtain a
373 See supra para. 116.
374 See also MI PSC Comments at 8.
375 See MI PSC Comments at 8; Consumer Groups Comments at 25-26.
376 See Consumer Groups Comments at 25-26 (stating that the Commission should be cautious in requiring ETC’s to
de-enroll consumers who decline to respond to ETC’s verification attempts and recommends a phase-in of the rule,
if adopted, to allow outreach).
377 Between 2008 and 2011, under the Commission’s verification methodology for federal default states, no
distinction was made between subscribers who are ineligible for Lifeline and those who do not respond to an ETC’s
verification survey. See Lifeline and Link Up NPRM, 26 FCC Rcd at 2879-81, Appendix B; see also Deadline for
Annual Lifeline Verification Surveys and Certifications, WC Dkt. No. 03-109, Public Notice, 25 FCC Rcd 7272,
7277, para. 8 (Wireline Comp. Bur. 2010) (Verification Public Notice). Thus, subscribers are routinely de-enrolled
by ETCs in federal default states. Moreover, other ETCs may already de-enroll subscribers who fail to respond to
their verification surveys. See, e.g., TracFone Comments at 32.
378 47 C.F.R. § 54.405(c),(d).
379 Lifeline and Link Up NPRM, 26 FCC Rcd at 2830, para. 193.
380 In addition to the federal default states, the following non-federal-default states require ETCs to submit their
verification results to USAC: Alabama, Arkansas, Arizona, New York, North Carolina, Pennsylvania, and West
Virginia.
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more complete set of verification data.381 The Joint Board also recommended that ETCs’
verification results be made publicly available.382 The Commission sought comment on the Joint
Board’s recommendations in the Lifeline and Link Up NPRM.383
148.
We codify a rule requiring all ETCs in all states (or the state administrator, where
applicable) to submit their aggregated re-certification data to USAC and the Commission by
January 31, 2013.384 We delegate to the Wireline Competition Bureau the authority to
coordinate with USAC to determine an appropriate format for the submission of such data.385 All
eligible telecommunications carriers must also provide this re-certification data to the relevant
state commission, where the carrier is subject to state jurisdiction, and to the relevant Tribal
government, for subscribers residing on reservations or Tribal lands. If an ETC opts to continue
performing the annual re-certification process after 2012, the ETC must provide the results of its
attempts to obtain signed certifications from all consumers attesting to their continued eligibility
for Lifeline to USAC, the Commission, and the relevant state commission, where the carrier is
subject to state jurisdiction, by January 31 of each year, beginning on January 31, 2014. All
ETCs performing annual re-certifications after 2012 must also provide, by January 31 of each
year, their annual recertification results for subscribers residing on reservations or Tribal lands to
the relevant Tribal government.
D.
Tribal Lifeline Eligibility
149.In this Order, we take steps to advance the availability of Lifeline support for low-
income consumers living on or near Tribal lands. First, we amend section 54.409 of the
Commission’s rules to clarify that low-income residents of Tribal lands may be eligible for
program support based on either income or participation in certain federal or Tribal assistance
programs. Second, we amend section 54.409 of the Commission’s rules to expand program-
based eligibility to participants in the Food Distribution Program on Indian Reservations
(FDPIR), a federal program that provides food to low-income households living on Indian
reservations and to Native American families residing in designated areas near reservations and
in the State of Oklahoma. Third, we establish a process for Tribal governments to seek
designation of off-reservation lands as Tribal lands for the purpose of receiving enhanced
Lifeline support and remove the term and definition of “near reservation” from section 54.400(e)
of our rules. Fourth, we clarify that, pursuant to section 54.410 of the Commission’s rules, low-
income residents of Tribal lands may self-certify as to their residency on Tribal lands.
381 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15607-08, paras. 26-27.
382 Id.
383 Lifeline and Link Up NPRM, 26 FCC Rcd at 2830, paras. 193-94.
384 As stated above, the annual re-certification procedures we adopt today will serve as a uniform, minimum set of
processes to be followed by all ETCs in all states. By adopting a uniform set of re-certification standards, we will
remedy the problems that result from having a patchwork of procedures that vary on a state-by-state basis. For
example, a uniform re-certification methodology will reduce compliance costs and administrative burdens on ETCs.
See CTIA Comments at 20; Cincinnati Bell Comments at 9; Cricket Comments at 11-12; TracFone Comments at 31-
32; YourTel Comments at 12. Moreover, a uniform rule will ensure that adequate checks for ineligible consumers
are being performed by ETCs in all states, thereby reducing potential waste, fraud, and abuse in the program.
385 This format should be such that data can be easily submitted to USAC by ETCs, states, and third-parties, as
applicable, and to minimize the administrative burdens for compliance with the rules we adopt today.
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1.
Background
150.In its 2000 Tribal Lifeline Order, the Commission adopted measures to
significantly enhance Lifeline and Link Up support for low-income residents living on Tribal
lands.386 The Commission defined an eligible resident of Tribal lands as a low-income consumer
living on a reservation, with a reservation defined as “any federally recognized Indian tribe’s
reservation, pueblo, or colony, including former reservations in Oklahoma, Alaska Native
regions established pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688), and
Indian allotments.”387 The changes were a direct response to the disproportionately low
subscribership to telecommunications services among Tribal communities at the time. For
example, in 2000, only an estimated 47 percent of Tribal households had phone service
compared to 94 percent of all American households and 76.7 percent of rural households earning
less than $5,000 per year.388 The rules adopted in 2000 were designed to address this urgent
challenge.
151.
Relying on both section 254 and the unique trust relationship between the federal
government and American Indian Tribes and Alaska Native Villages,389 the Commission created
a fourth tier of Lifeline support, providing up to an additional $25 (for a maximum of $35) per
month in Lifeline support to qualifying low-income consumers living on Tribal lands.390 The
Commission also expanded Link Up to allow qualifying residents of Tribal lands to receive up to
an additional $70 (for a maximum of $100) off of the cost of commencing telephone service.391
Moreover, the Commission broadened the program-based eligibility criteria for Lifeline to
include the Bureau of Indian Affairs (BIA) general assistance program, Tribally-administered
Temporary Assistance for Needy Families, Head Start, and the National School Lunch
Program’s free lunch program.392
152.
In the Lifeline and Link Up NPRM, the Commission proposed further changes to
the rules to expand opportunities for eligible households on Tribal lands to receive Lifeline
support and to permit Tribal governments to designate additional areas as Tribal lands eligible
for support.393
386 2000 Tribal Lifeline Order, 15 FCC Rcd at 12231-32, paras. 20-85. An eligible resident of Tribal lands is
defined as a qualifying low-income consumer living on or near a reservation, with a reservation being defined as
“any federally recognized Indian tribe’s reservation, pueblo, or colony, including former reservations in Oklahoma,
Alaska Native regions established pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688), and Indian
allotments.” 47 C.F.R. § 54.400(e); see also 2000 Tribal Lifeline Order, 15 FCC Rcd 12217-19, paras. 16-19. See
infra paras. 156-63 for a discussion of “near reservation” lands.
387 47 C.F.R. § 54.400(e); see also 2000 Tribal Lifeline Order, 15 FCC Rcd 12217-12219, paras. 16-19.
388 2000 Tribal Lifeline Order, 15 FCC Rcd at 12211, 12212, para. 2.
389 Id. at 12221-22, para. 22.
390 Id. at 12230-31, para. 42. Such support is commonly referred to as Tier 4, or enhanced, Lifeline support.
391 Id. at 12238-39, para. 59. Such support is commonly referred to as enhanced Link Up support.
392 Id. at 12245, para. 68.
393 Id. at 2810-17, paras. 126-41.
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2.
Discussion
153.Income-based eligibility. We first revise sections 54.409(a) and 54.409(c) of our
rules to more clearly reflect that residents of Tribal lands are eligible for Lifeline support based
on income.394 Consumers living on Tribal lands may qualify for Tribal lands support if the
consumer’s household income is at or below 135 percent of the federal poverty guidelines;
consumers may also qualify through participation in any Tribal-specific federal income
assistance program identified in our rules or participation in any other qualifying income
assistance program identified in subsection 54.409(b) of our rules. The record suggests, and we
agree, that this revision will eliminate any perceived confusion about the availability of income-
based eligibility to residents of Tribal lands395 and reduce the uncertainty that qualifying
consumers on Tribal lands have faced in securing Lifeline support.396
154.
Program-based eligibility. We also amend section 54.409 of our rules to expand
the number of assistance programs that will qualify eligible residents of Tribal lands for program
support. We add the Food Distribution Program on Indian Reservations, a food assistance
program for Tribal communities, to the list of programs through which participating consumers
living on Tribal lands may qualify for program support. In the Lifeline and Link Up NPRM, the
Commission noted that, while residents of Tribal lands may qualify for Lifeline support based on
participation in the SNAP, they may not qualify based on participation in FDPIR.397 The
Commission observed that because both programs have income-based eligibility criteria, but
households may not participate in both programs, some residents of Tribal lands do not qualify
394 In the Lifeline and Link Up NPRM, the Commission observed that significant confusion exists among ETCs,
USAC and Tribal governments about whether residents of Tribal lands can qualify for enhanced support based on
income. Lifeline and Link Up NPRM, 26 FCC Rcd at 2811, para. 127. The Commission noted that interpretations
of section 54.409 of the Commission’s rules appear to differ despite consistent language in the 2000 Tribal Lifeline
Order and the 2003 Tribal Lifeline Order. Both of those orders stated that the new rules enhancing support
represented an expansion of the low-income program; therefore, income-based eligibility for Tribal Lifeline, which
existed prior to the amendments, remained intact. See, e.g., 2000 Tribal Lifeline Order, 15 FCC Rcd at 12245, para.
68 (“Specifically, we expand the federal default qualification criteria for eligibility for Lifeline and Link Up
assistance . . . .” (emphasis added)); Federal-State Joint Board on Universal Service; Promoting Deployment and
Subscribership in Unserved and Underserved Areas, Including Tribal and Insular Areas, Twenty-Fifth Order on
Reconsideration, Report and Order, Order, and Further Notice of Proposed Rule Making, CC Dkt. No. 96-45, 18
FCC Rcd 10958, 10970, para. 23 (2003) (2003 Tribal Lifeline Order) (“[T]he Commission broadened the federal
default qualification criteria to enable low-income individuals living on tribal lands to qualify for this enhanced
support . . . . We make this clarification to ensure that those otherwise eligible to participate in the enhanced
programs will have the full opportunity to do so.” (emphasis added)).
395 As stated in the NPRM, “The Commission’s current rules regarding Tribal eligibility for Lifeline support have
been subject to differing interpretations. Specifically, ETCs, USAC, and Tribal groups have indicated there has been
inconsistency and confusion among federal default and non-default states regarding whether residents of Tribal
lands may qualify for participation in the program based on income, even though there is language in Commission
orders so indicating.” See Lifeline and Link Up NPRM 26 FCC Rcd at 2811, para. 127.
396 Commenters who addressed this issue expressed support for amending the rule to make clear that residents of
Tribal lands qualify for Lifeline based on income. CenturyLink Comments at ii-iii, 14; GRTI Comments at 11;
YourTel Comments at 10. But see Alaska Commission Reply Comments at 4-5 (urging the Commission to proceed
with care in implementing changes to the eligibility criteria to ensure that consumers currently eligible for Tier 4
support in Alaska are not inadvertently excluded from the program).
397 Lifeline and Link Up NPRM, 26 FCC Rcd at 2812, para. 129.
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for Lifeline support simply because they choose to participate in FDPIR rather than SNAP.398
Indeed, the Commission observed that members of more than 200 Tribes currently receive
benefits under FDPIR, and that elderly Tribal residents often opt for FDPIR benefits.399 The
Commission proposed amending section 54.409 of our rules to add FDPIR to the list of
qualifying programs through which participating consumers living on Tribal lands may qualify
for Lifeline support.400
155.
Permitting SNAP beneficiaries to qualify for low-income support but not FDPIR
beneficiaries is inconsistent with our program goals when the SNAP and FDPIR programs utilize
such similar eligibility criteria.401 Moreover, the record reflects that our current approach
excludes from the low-income program the very population that the Commission has attempted
to support through its Tribal lands Lifeline program – low-income consumers living on Tribal
lands.402 We therefore agree with commenters that including FDPIR as a qualifying program
will allow more low-income residents on Tribal lands to receive Lifeline support, which will
further the Commission’s goal of increasing access to telecommunications services by low-
income residents of Tribal lands.
156.
Designation of Off-Reservation Areas for Tribal Support. We next adopt the
proposal in the Lifeline and Link Up NPRM to establish a process for Tribal governments to seek
designation of off-reservation areas as Tribal lands for purposes of determining eligibility for
Tribal lands Lifeline support. This process will apply to Tribal governments seeking
qualification for enhanced Lifeline support for Tribal communities whose land does not meet the
definition of “reservation” contained in section 54.400(e) of our rules.
157.
In the 2000 Tribal Lifeline Order, the Commission limited the availability of
enhanced low-income program support to qualified low-income consumers living on Tribal
lands, which it defined to include both reservations and near reservation areas. The Commission
defined near reservation as “those areas or communities adjacent or contiguous to reservations,”
and noted that other federal programs supporting Tribes have generally considered such areas to
398 Lifeline and Link Up NPRM, 26 FCC Rcd at 2812, para. 130. For a summary of the eligibility criteria for SNAP,
see United States Department of Agriculture, Supplemental Nutrition Assistance Program (SNAP), Eligibility
Criteria, http://www.fns.usda.gov/snap/applicant_recipients/eligibility.htm (last visited Jan. 30, 2012). For a
summary of the eligibility criteria for FDPIR, see United States Department of Agriculture, FD Programs, About
FDPIR, http://www.fns.usda.gov/fdd/programs/fdpir/about_fdpir.htm (last visited Jan. 30, 2012); see also Food
Distribution Fact Sheet, October 2010, available at http://www.fns.usda.gov/fdd/programs/fdpir/pfs-fdpir.pdf.
399 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2812, para. 130.
400 Id. at para. 131; see also id. at Appendix A, 47 C.F.R. § 54.409(b) (proposed rule).
401 See Letter from Duke Storen, Director, Office of Strategic Initiatives, Partnerships, and Outreach, United States
Department of Agriculture, Food and Nutrition Service, to Marlene Dortch, Secretary, Federal Communications
Commission, WC Dkt. No. 11-42 (filed Sept. 2, 2011) (USDA FDPIR Letter).
402 Commenters generally supported the addition of FDPIR as a qualifying program for residents of Tribal lands.
See, e.g., GRTI Comments at 11-12 (noting that consumers who could otherwise participate in SNAP but choose to
participate in FDPIR may be unnecessarily excluded from Lifeline eligibility, and that cultural and language barriers
faced by Tribal members when attempting to qualify for federal aid programs exacerbate the problem of inadvertent
disqualification); YourTel Comments at 9-10 (noting that one state, Oklahoma, already includes FDPIR in its list of
qualifying programs, and that it supported making the same change on the federal level); see also USDA FDPIR
Letter, at 1; CenturyLink Comments at 14.
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be Tribal lands.403 Shortly after the adoption of the 2000 Tribal Lifeline Order, however, the
Commission became aware that its definition of near reservation potentially encompassed wide
areas in which communities do not face the economic and geographic barriers faced by
communities on reservations.404 Thus, in the Near Reservation Stay Order, the Commission
stayed the implementation of the enhanced support rules set forth in the 2000 Tribal Lifeline
Order as applied to “qualifying low-income consumers living near reservations,” and sought
comment on alternative methods of reaching low-income Tribal consumers living off-
reservation.405
158.
We are concerned that the current definition of Tribal lands and the associated
stay have precluded many potentially eligible low-income consumers from receiving Tribal lands
Lifeline support as intended by the 2000 Tribal Lifeline Order. Although they reside in off-
reservation areas, such consumers may face the same levels of poverty, geographic isolation, and
lack of access to telecommunications services faced by communities on reservations.406 We also
recognize the Commission’s concerns, as discussed in the Near Reservation Stay Order, about
the potential over-inclusiveness of the current definition of Tribal lands. Accordingly, we adopt
a process today that will enable us to more effectively target Lifeline support to qualified
residents of Tribal lands.
159.
Under the rule we adopt today, a Tribal government may seek designation of off-
reservation lands as Tribal lands by filing a petition for designation with the Commission’s
Wireline Competition Bureau and Office of Native Affairs and Policy, to whom we jointly
delegate the authority to resolve such petitions. The Office of Native Affairs and Policy will also
be responsible for initiating consultation with each Tribal government submitting a designation
petition. In establishing this process allowing Tribal governments to designate off-reservation
areas as Tribal lands, we rely on the precedent articulated by the Commission in establishing a
similar process for radio stations seeking to serve Tribal lands.407 By making individualized
designations of off-reservation Tribal lands, the Commission will more effectively reach those
Tribal consumers and communities that are most in need while at the same time reducing over-
inclusiveness that could expand eligibility beyond what is appropriate to serve our goal of
increasing access to telecommunications services on Tribal lands.
160.
A petition for designation of off-reservation lands as Tribal lands for purposes of
qualifying for Tribal lands Lifeline support must be formally made by a duly authorized official
403 2000 Tribal Lifeline Order, 15 FCC Rcd at 12218, para. 17.
404 For example, well-served population centers such as Phoenix, Arizona and Sacramento, California were
considered near reservation areas. 2003 Tribal Lifeline Order, 18 FCC Rcd at 10965, para. 13.
405 Federal-State Joint Board on Universal Service; Promoting Deployment and Subscribership in Unserved and
Underserved Areas, Including Tribal and Insular Areas, Order and Further Notice of Proposed Rulemaking, CC
Dkt. No. 96-45, 15 FCC Rcd 17112, 17113-15, paras. 2-6 (2000) (Near Reservation Stay Order).
406 See, e.g., LCCHR Comments at 9-10 (noting the low penetration rates for American Indians for basic telephone
service and asserting that the Commission should direct support toward Tribal lands and Tribal members with low
subscribership rates).
407 See Policies to Promote Rural Radio Service and to Streamline Allotment and Assignment Procedures, MB Dkt.
No. 09-52, RM-11528, Second Report and Order, First Order on Reconsideration, and Second Further Notice of
Proposed Rulemaking, 26 FCC Rcd 2556, 2561-63, paras. 8-11 (2011) (Rural Radio Second Report and Order).
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of a federally recognized Tribe and must establish good cause for such designation. The
requirement that designation be formally requested by a duly authorized official of a federally
recognized Tribe is consistent with our requirement that only residents of Tribal lands may
qualify for enhanced low-income support, based on the government-to-government relationship
between Tribal governments and the federal government.408 A request for designation must
provide sufficient evidence of: (1) a nexus between the area or community and the Tribe; and (2)
a description of how Tribal lands Lifeline support to the designated area would aid the Tribe in
serving the needs and interests of its citizens and further the Commission’s goal of increasing
telecommunications access on Tribal lands.
161.
To satisfy the first requirement, a Tribal government seeking designation for off-
reservation Tribal lands must submit evidence probative of a connection between a defined
community or area and the Tribe itself. A designation petition should explain that the
communities or areas associated with the Tribe do not fit the definition of Tribal lands contained
in section 54.400(e) of the Commission’s rules. Geographically identifiable factors, such as
evidence that the area is one to which the Tribe delivers services to its citizens or to which the
federal government delivers services specifically intended for Tribal members, would be
probative.409 Evidence that a Tribe has a defined seat, such as a headquarters or office, in
combination with evidence that Tribal citizens live and/or are served by the Tribal government in
the immediate environs of such a government seat, would also be probative of a nexus between
that community and the Tribe. A Tribal government might also provide a showing under the
standard enunciated in section 83.7(b)(2)(i) of Part 25 of the Code of Federal Regulations,410 that
more than 50 percent of Tribal members live in a geographical area exclusively or almost
exclusively composed of members of the Tribe.411 Additionally, Tribal governments might
provide other indicia of community, such as Tribal institutions (e.g., hospitals or clinics,
museums, businesses) or activities (e.g., conferences, festivals, fairs).412 The designation petition
should also detail, pursuant to the second requirement adopted in section 54.412 of our rules,
how the provision of Tribal lands Lifeline support to the community or area would aid the Tribe
in serving the needs of its community and thus would further the goals of the enhanced Lifeline
program.
408 See generally Statement of Policy on Establishing a Government-to-Government Relationship with Indian Tribes,
Policy Statement, 16 FCC Rcd 4078 (2000) (Tribal Policy Statement). See also 2000 Tribal Lifeline Order, 15 FCC
Rcd at 12213-14, para. 5.
409 For example, areas to which the federal government provides services to Tribal members could include federal
service areas used by the Indian Health Service, Department of Energy, or Environmental Protection Agency.
Probative evidence might also include evidence of Census Bureau-defined Tribal service areas used by agencies
such as the Department of Housing and Urban Development. See Rural Radio Second Report and Order, 26 FCC
Rcd at 2561, para. 7.
410 25 C.F.R. § 83.7(b)(2)(i). Title 25 encompasses the responsibilities of the Bureau of Indian Affairs, and Part 83
is entitled “Procedures for Establishing that an American Indian Group Exists as an Indian Tribe.”
411 See Rural Radio Second Report and Order, 26 FCC Rcd at 2562, para. 9.
412 Id.
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162.
The Tribal government must also clearly describe a defined area for the off-
reservation lands for which it seeks designation as Tribal lands.413 This requirement is consistent
with the purposes of enabling Tribes to serve their citizens, to perpetuate Tribal culture, and to
promote self-government.414 In addition, the showing must demonstrate the Tribal character of
the area or community for which Tribal lands designation is sought. The need for such a
demonstration is in line with the purposes underlying Tribal lands enhanced low-income support,
namely to promote telecommunications deployment and subscribership on Tribal lands,
consistent with our obligations under the historic federal trust relationship between the federal
government and federally recognized Indian Tribes to encourage Tribal sovereignty and self-
governance.415 We note that it is the express intent of the Commission that any such designation
shall be used solely for the Lifeline program and shall not be used for other purposes – such as
eligibility for the Tribal Mobility Fund established in the USF/ICC Transformation Order and
FNPRM.
163.
In conjunction with this action, we also adopt the proposal in the Lifeline and Link
Up NPRM to remove the term and definition of “near reservation” from section 54.400(e) of our
rules. We acknowledge that leaving the language in the rules after staying its implementation
may have caused confusion. We also acknowledge that the term “near reservation” was overly
broad, designating large areas that do not possess characteristics warranting Tribal lands low-
income support. We expect that the designation process we adopt today will eliminate any
lingering confusion associated with this term and, consistent with the 2000 Tribal Lifeline Order,
will enable the Commission to target Tribal lands Lifeline support to underserved consumers
living off of reservations. We do not anticipate the removal of the near reservation language
from our rules to have any adverse impact on consumer eligibility for Tribal lands support.
Moreover, the record supports the adoption of a process for designating off-reservation areas as
Tribal lands in lieu of maintaining or modifying the term “near reservation,”416 and we therefore
make that change today.
164.
Self-certification of Tribal land residence. We also adopt the proposal in the
Lifeline and Link Up NPRM to clarify that, pursuant to section 54.410 of the Commission’s
amended rules, consumer self-certification is sufficient to meet the Tribal lands residency
requirement for enhanced Lifeline support. In 2008, Qwest Communications (Qwest) (now
known as CenturyLink) sought review of a USAC decision which found that Qwest provided
enhanced Lifeline support to subscribers who did not reside on eligible Tribal lands and failed to
413 See Rural Radio Second Report and Order, 26 FCC Rcd at 2586, para. 58 (noting that Tribal lands may be very
small or irregularly shaped).
414 Lifeline and Link Up NPRM, 26 FCC Rcd at 2814, para. 136.
415 See Tribal Policy Statement, 16 FCC Rcd at 4080-81; 2000 Tribal Lifeline Order, 15 FCC Rcd at 12213-14, para.
5.
416 Commenters generally found this proposal to be non-controversial. Specifically, CenturyLink expressed its
support for the implementation of a new designation process for off-reservation Tribal lands, adding that once the
process is in place, the Commission should maintain a list of Tribal lands designated under the process.
CenturyLink Comments at 14.
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provide enhanced Lifeline support to subscribers who were eligible residents of Tribal lands.417
Qwest argued that it had secured signed documents from consumers self-certifying their
participation in a qualifying program and residence on a reservation, and had thus fulfilled its
obligation to demonstrate the consumers’ residence on Tribal lands as required by Commission
rules.418 The Commission sought comment on the Qwest Petition in 2008,419 and commenters
generally urged the Commission to continue allowing low-income consumers to self-certify to
their residency on Tribal lands.420
165.
In the Lifeline and Link Up NPRM, the Commission proposed to eliminate the
option for consumers to self-certify to their program-based eligibility for Lifeline support, but to
maintain a rule allowing consumers to self-certify to their residence on Tribal lands.421 The
Commission noted that there is consensus among ETCs and Tribes that Tribal addresses are
often difficult, if not impossible, to determine, and that requiring ETCs to document Tribal
residency would significantly undermine the goal of increasing access to telecommunications
services on Tribal lands by discouraging carriers from serving Tribal communities.422
166.
As proposed in the NPRM, we clarify that, pursuant to section 54.410 of the
Commission’s amended rules, consumer self-certification is sufficient to meet the residency
requirement of Tribal lands Lifeline support.423 Thus, a low-income consumer applying for
Tribal lands low-income support must certify upon program enrollment that he or she is an
“eligible resident of Tribal lands,” as defined in section 54.400(e) of our rules. The record
indicates that residential addresses are frequently non-existent on Tribal lands and, where
present, often differ significantly from residential addresses off Tribal lands.424 Further, the
record strongly suggests that imposing an address verification requirement for Tribal land
417 Lifeline and Link Up NPRM, 26 FCC Rcd at 2815, para. 138; see also Request for Review by Qwest
Communications International, Inc. of the Decision of the Universal Service Administrator, WC Dkt. No. 03-109
(filed Apr. 25, 2008) (Qwest Petition).
418 Qwest Petition at 6-9.
419 Comment Sought on Qwest Request for Review of a Decision of the Universal Service Administrative Company,
WC Dkt. No. 03-109, Public Notice, 23 FCC Rcd 7845 (Wireline Comp. Bur. 2008).
420 Lifeline and Link Up NPRM, 26 FCC Rcd at 2816, para. 139 (citing AT&T Qwest Petition Comments, WC Dkt.
No. 03-109 (filed Jun. 16, 2008); USTelecom Association Qwest Petition Comments, WC Dkt. No. 03-109 (filed
Jun. 16, 2008); Alltel Communications, LLC Qwest Petition Reply Comments, WC Dkt. No. 03-109 (filed Jul. 1,
2008); Rural Cellular Corporation Qwest Reply Comments, WC Dkt. No. 03-109 (filed Jul. 1, 2008); SBI Qwest
Petition Reply Comments, WC Dkt. No. 03-109 (filed Jul. 1, 2008).
421 Lifeline and Link Up NPRM, 26 FCC Rcd at 2816-17, para. 141.
422 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2816, para. 139.
423 We also grant Qwest’s April 2008 request for review of the USAC audit finding. We find that Qwest was
compliant with the Commission’s Lifeline rules that existed at the time, as clarified herein.
424 See, e.g., SBI Comments at 14-16. SBI cited a letter to the Commission from the Navajo Nation describing the
absence of addressing systems on Tribal lands and the significant challenges that the absence has posed to the
provision of basic services like mail and emergency medical dispatch. See SBI Comments at 14-15. SBI noted that
when a consumer provides an address commonly seen in Tribal communities such as “5 MI NE OF ROCKWELL
STORE,” reliable verification of the address is all but impossible. SBI Comments at 15. See also NNTRC Jan. 20
ex parte Letter at 5.
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residence would be unduly cumbersome and counterproductive to our goal of increasing access
to telecommunications services on Tribal lands.425 We therefore agree with commenters, who
urge us to keep the rule as is.
E.
Electronic Signature and Interactive Voice Response Systems
167.Background. The Commission’s Lifeline and Link Up rules require subscribers
or potential subscribers to the program to sign documents certifying to program eligibility in
order to obtain the service. Sections 54.409(c) and (d) of our rules, for example, require ETCs to
“obtain [a] consumer's signature on a document certifying under penalty of perjury” that the
consumer meets certain Lifeline eligibility requirements.426 Similarly, section 54.410 requires
ETCs to verify their subscribers’ continued eligibility by having subscribers self-certify under
penalty of perjury to certain requirements relevant to continued eligibility.427 In the NPRM, the
Commission proposed to allow consumers to electronically sign the “penalty of perjury”
requirements of sections 54.409(c), 54.409(d), and 54.410 of the Commission’s rules and sought
comment on the rules defining and guidelines for accepting electronic signatures for Lifeline
enrollment, certification, and verification.428 The Commission also sought comment on whether
interactive voice response (IVR) systems, which record and save an applicant’s certification of
eligibility over the telephone, is an acceptable method to verify a consumer’s signature under
sections 54.409(c), 54.409(d), and 54.410 of the Commission’s rules.429
168.
Discussion. We clarify that ETCs may obtain electronic signatures from potential
or current subscribers certifying eligibility to receive support under “penalty of perjury” pursuant
to section 54.410 of the Commission’s rules. The Electronic Signatures in Global and National
Commerce Act (E-Sign Act)430 and Government Paperwork Elimination Act431 establish that an
electronic signature, defined by the E-Sign Act as an electronic sound, symbol, or process,
attached to or logically associated with a contract or other record and executed or adopted by a
person with the intent to sign the record, has the same legal effect as a written signature.432 The
E-Sign Act grants federal agencies, including the Commission, the authority to issue rules and
guidance in accordance with section 101 of the E-Sign Act, which states that “a signature,
contract, or other record relating to such transaction may not be denied legal effect, validity, or
425 See, e.g., CenturyLink Comments at 15; SBI Comments at 14-16; USTelecom Comments at 6-7. Because we
have already addressed the proposal on self-certification as to income and program participation above, we limit our
discussion in this section to the proposal on self-certification as to residence on Tribal lands. See supra section VI.C
(Certification of Consumer Eligibility).
426 See 47 C.F.R. § 54.409(c), (d).
427 See 47 C.F.R. § 54.510.
428 See NPRM, 26 FCC Rcd at 2839, para. 224.
429 See id. at 2839, para. 225. In addition, one ETC has filed a request with the Commission seeking permission to
enroll Lifeline consumers online and by telephone using an IVR. See Letter from Peter Lurie, Virgin Mobile USA,
L.P., to Sharon Gillett, Chief, Wireline Competition Bureau, Federal Communications Commission, WC Dkt. No.
09-197 (filed March 4, 2010).
430 See 15 U.S.C. §§ 7001-7004 (2006).
431 See 44 U.S.C. §§ 3501-20 (2006).
432 See 15 U.S.C. §§ 7001-7004 (2006); 44 U.S.C. §§ 3501-20 (2006).
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enforceability solely because it is in electronic form,” before specifying further requirements
regarding verifiability, accuracy, and consumer consent.433 Because our Lifeline rules make no
distinction between electronic and written signatures, the operative effect of the E-Sign Act is to
permit the use of electronic signatures for the purposes of certifying eligibility to receive support
under penalty of perjury.434 The record supports the use of electronic signatures by consumers as
a way to simplify the enrollment process.435 As such, we find that it is in the public interest to
clarify that electronic signatures may be relied upon for purposes of the Lifeline program rules,
including the certification requirements adopted herein. We also determine for purposes of
annual certifications, ETCs may rely upon text messages from Lifeline consumers when such
communications is received in response to the annual certification request from the consumer’s
Lifeline-supported phone number.
169.
Though ETCs may now rely on electronic signatures, including IVR recordings,
we note that our recordkeeping requirements remain unchanged.436 Indeed, our requirements, as
written, are not affected by the inclusion of electronic records; ETCs are still required to
maintain records to document compliance with all Commission and state requirements governing
the Lifeline program, including copies of text messages for annual certifications.437
Nevertheless, we adopt a rule to clarify that an electronic signature is an acceptable method to
verify a consumer’s signature under section 54.410 of the Commission’s rules. While we make
clear that ETCs may rely on electronic signatures to obtain a consumer's signature on a document
certifying under penalty of perjury, ETCs must keep accurate and verifiable records and must
comply with the certification requirements set forth in section VI.C, above.
F.
Automatic and Coordinated Enrollment
170.Background. In this section, we limit automatic enrollment in the program by
state agencies and, at the same time, encourage the use of coordinated enrollment. Coordinated
enrollment is a mechanism that permits but does not compel consumers to enroll in Lifeline and
Link Up at the same time they enroll in a qualifying public assistance program.438 Coordinated
enrollment is distinguishable from “automatic” or “automated” enrollment, which entails a state
or authorized agent automatically enrolling an eligible consumer in Lifeline without the
433 See 15 U.S.C. §§ 7001-7004 (2006).
434 One commenter agrees with our analysis: Comptel states that electronic signatures are already allowed under the
E-Sign Act, which includes IVRs. COMPTEL Comments at 22. Furthermore, we interpret “document” in 47 C.F.R.
§ 54.409(c) and (d) to constitute a record that may be saved pursuant to the record keeping requirements set forth in
47 C.F.R. § 54.410.
435 See, e.g., Amvensys Comments at 9; CenturyLink Comments at 21-22; COMPTEL Comments at 22; Emerios
Comments at 17; GCI Comments at 52; NALA/PCA Comments at 6; Solix Comments at 3; YourTel Comments at
14.
436 See 47 C.F.R. § 54.417.
437 See id.
438 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2831, para 199. The Commission and its staff have long
encouraged coordinated enrollment as a way to improve the efficiency of the low-income program. In 2004, for
example, the Commission encouraged states to implement coordinated enrollment. See 2004 Lifeline and Link Up
Order and FNPRM, 19 FCC Rcd at 8318, para. 25.
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consumer submitting a Lifeline application or expressly authorizing the enrollment.439 In
automatic enrollment programs, an eligible consumer is automatically enrolled in a Lifeline
program without their affirmative consent.440 The Texas PUC matches ETCs’ current
subscribers’ names to eligibility data from state social services databases.441 Eligible subscribers
are automatically enrolled in the Lifeline program of their carrier (if that carrier is an ETC). The
Lifeline discount is then provided to the subscriber unless they opt out after having received
notification of their enrollment. Other states have similar processes.442
171.
In 2010, the National Broadband Plan recommended that the Commission
encourage state agencies responsible for Lifeline and Link Up to streamline benefit enrollment
and suggested the use of unified online applications for social services.443 In the 2010
Recommended Decision, the Joint Board recommended that coordinated and automatic
enrollment should be encouraged as a best practice,444 but also recommended that the
Commission not mandate coordinated enrollment before seeking comment on the various
administrative, technological and funding issues of such a requirement.445 Thus, in the Lifeline
and Link Up NPRM, the Commission suggested that coordinated enrollment be encouraged as a
best practice by the states and sought comment on the steps that the Commission could take to
further facilitate coordinated enrollment.446 The Commission sought comment on the overall
costs and benefits of coordinated enrollment as the Joint Board recommended.447
172.
Discussion. We limit the ability of states and their agents to automatically enroll a
consumer in Lifeline without the consumer’s express authorization in order to protect the Fund
against duplicative Lifeline support, increase adherence to consumer certification rules, and
ensure that all ETCs have an opportunity to compete for subscribers. At the same time, we agree
with the Joint Board that coordinated enrollment has substantial benefits and should be
facilitated.
173.
While automatic enrollment programs increase consumer enrollment in Lifeline,
some features of these programs may have the unintended consequences of excessively
burdening the Fund, may undermine Commission objectives to reduce waste and prevent
439 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2831-32, para 200 (“Unlike automatic or automated enrollment,
coordinated enrollment requires eligible consumers to affirmatively choose to enroll in the Lifeline program.”).
440 See id.
441 See Solix Comments at 3-4.
442 See, e.g., NY PSC Comments.
443 NATIONAL BROADBAND PLAN at 173.
444 In its recommended decision, the Joint Board used the term “automatic” or “automated” enrollment to mean both
automatic enrollment and coordinated enrollment as defined in this order. See 2010 Joint Board Recommended
Decision at n.26 (citing LIFELINE ACROSS AMERICA WORKING GROUP, REPORT OF THE FCC/NARUC/NASUCA
WORKING GROUP ON LIFELINE AND LINK-UP: “LIFELINE ACROSS AMERICA” 6-9 (2007), available at
http://www.lifeline.gov/LLLUReport.pdf (WORKING GROUP REPORT).
445 See 2010 Joint Board Recommended Decision at paras 18-22.
446 See Lifeline and Link Up NPRM, FCC Rcd at 2832-33, paras. 201-04.
447 See id. at 2833, para 204.
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duplicative support, and limit ETCs’ opportunities to compete for consumers.448 For example, in
one state, Verizon must apply the Lifeline discount to any existing Verizon wireline consumer
identified as receiving benefits from the that state’s Office of Temporary Disability Assistance.449
The consumer subsequently receives a letter from the state explaining that they have been
enrolled in Verizon’s Lifeline program and must opt-out if they do not want the discount. A
substantial number of consumers will likely not exercise that option and stay with the default
selection regardless of their actual preference or whether they are receiving Lifeline from another
provider.450 Not only can competition among ETCs for low-income consumers be frustrated by
automatic enrollment processes that favor a single provider, but this process may lead to
duplicative claims. For example, a Verizon wireline subscriber that is automatically enrolled in
Verizon’s Lifeline program and given the Lifeline discount may already be receiving Lifeline
support from a wireless Lifeline provider.451 Automatic enrollment may also prevent ETCs from
complying with certification and other requirements we adopt in this Order meant to reduce
waste in the Fund. In states with automatic enrollment, automatically enrolled consumers are
unable to attest, under penalty of perjury, that they are the only person in their household
receiving Lifeline prior to enrollment.452 In light of the rule changes we adopt today, states with
automatic enrollment programs must modify those programs, as necessary, to comply with our
rules, so that consumers are not automatically enrolled without consumers’ express consent.
174.
While we place limitations on how states’ automatic enrollment processes can be
utilized, we encourage coordinated enrollment and recognize coordinated enrollment as a best
practice in light of the overwhelming support in the record and the benefits of coordinated
enrollment. We also note that coordinated enrollment processes can increase the effectiveness of
state eligibility databases which are currently in use and any national eligibility database which
the Commission may adopt in the future.453
448 See 47 U.S.C. § 254(d) (“A State may adopt regulations to provide for additional definitions and standards to
advance universal service within that State only to the extent that such regulations…do not rely on or burden
Federal universal support mechanisms.”).
449 See NY PSC Comments at 10.
450 See Telecommunications Carriers’ Use of Customer Proprietary Network Information and Other
Customer Information, et al., Report and Order and Further Notice of Proposed Rulemaking, WC Dkt. No. 04-36 et
al., para 44 (2007) (noting that customers may inadvertantly provide consent to share private information if consent
is provided unless the consumer affirmatively opts out).
451 For example, both TracFone and Virgin Mobile provide Lifeline service in New York. See Assurance Wireless,
How To Qualify for Assurance Wireless, available at
http://www.assurancewireless.com/Public/HowToQualify.aspx (last visited at Jan. 18, 2012); Safelink Wireless;
New York Questions, available at https://www.safelinkwireless.com/Safelink/program_info/faq/newyork; see also
USAC Low-Income Disbursement Tool, http://usac.org/li/tools/disbursements/default.aspx (reflecting Lifeline
disbursements to Safelink and TracFone in New York) (last visited Feb. 5, 2012).
452 Supra n.52, supra para. 120.
453 As AT&T argues, an eligibility database would enable coordinated enrollment on a wider scale. See AT&T
Reply Comments at 2 (“We support the Commission requiring states to implement coordinated enrollment, a
process that we see as logically linked to a national Lifeline consumer database.”).
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175.
A number of states currently engage in or are implementing coordinated
enrollment.454 For example, in 2007, Florida’s Department of Children and Families (DCF) and
the Florida Public Service Commission (FL PSC) established a coordinated enrollment system in
which applicants to three Lifeline eligible programs (Food Stamps, Medicaid, and Temporary
Assistance to Needy Families) can also apply for Lifeline benefits at the same time.455 When a
consumer receiving benefits from DCF enrolls in one of these three DCF programs online, the
consumer is also presented with the option to enroll in Lifeline.456 If the consumer affirmatively
enrolls in Lifeline, the consumer selects an ETC from a list.457 The list of consumers and their
ETC selections are sent to the FL PSC. The FL PSC then sends each ETC the list of consumers
who selected that ETC as their Lifeline provider.458 Nebraska has a similar coordinated
enrollment process in which at least some consumers apply for Lifeline at the Nebraska social
services office where those consumers apply for and receive other qualifying benefits.459
176.
In response to the Lifeline and Link Up NPRM, many commenters argue that the
Commission should maintain the current policy of encouraging coordinated enrollment as a best
practice.460 Commenters report that coordinated enrollment is an efficient and effective means of
increasing participation in the Lifeline and Link Up programs while protecting against waste in
the Fund. Commenters argue that coordinated enrollment helps ensure that only eligible
consumers are enrolled,461 increases awareness in the program,462 makes enrollment more
convenient for eligible subscribers,463 and by doing so, expands program participation.464 Others
suggest that the Commission should make monies available from the Fund for states to use
454 See, e.g., DC PSC Comments at 6-7 (“The DC PSC notes that, in the District of Columbia, there have been
discussions to consolidate the utility discount program certification activities with the public assistance certification
activities performed by the Income Maintenance Administration (‘IMA’), which handles public assistance
applications in the District of Columbia….The DC PSC intends to continue its efforts to promote Lifeline adoption
through coordinated or automatic enrollment.”); FL PSC Comments at 23.
455 See FL PSC Comments at 20, 23. Lifeline consumers in Florida whose eligibility is based on a program that
DCF does not administer (Supplemental Security Income, Section 8 Federal Public Housing, Low-Income Home
Energy Assistance, National School Free Lunch, or Bureau of Indian Affairs Programs) might be required to provide
additional documentation proving participation in these programs. Id. at 20.
456 See id. at 23.
457 See id.
458 See id.
459 See NE PSC Aug. 8 ex parte Letter at 1 (noting that some consumers receive lifeline applications from the
NDHHS).
460 See NASUCA Comments at 24; see also Alaska Commission Reply Comments at 14.
461 See AT&T Reply Comments at 2; see also NJ DRC Comments at 21.
462 See, e.g., CenturyLink Comments at 20; DC PSC Comments at 6; NJ DRC Reply Comments at 24.
463 See CenturyLink Comments at 20.
464 See NJ DRC Reply Comments at iii. FL PSC Comments at 23; Benton/PK/UCC Comments at 5; MAG-Net
Comments at 14.
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toward implementation of coordinated enrollment.465 While some commenters support
mandatory coordinated enrollment,466 the majority oppose such a mandate as administratively
and technologically infeasible and financially burdensome.467 We decline at this time to impose
coordinated enrollment obligations on states but instead, given the substantial benefits offered by
coordinated enrollment, continue to encourage state social service agencies to coordinate
enrollment in Lifeline with other qualifying benefit programs.
177.
We also note that coordinated enrollment is, in many cases, facilitated through
access to state social services databases which allow for real-time verification of eligibility.468
Verifying eligibility at the beginning of the application process, either through coordinated
enrollment at a state social services agency and/or by accessing an eligibility database at the time
of application increases efficiency and effectively manages consumer expectations by ensuring
that consumers know early in the process whether they are eligible for a supported service.469
178.
Some states and ETCs query eligibility databases after the consumer has
submitted their application but before the ETC initiates service.470 While these processes are not,
by definition, coordinated enrollment, they assist in improving administration of the Fund. By
enabling the carrier or state to check eligibility prior to service activation, eligibility databases
will likely eliminate a substantial amount of waste in the Fund. In the FNPRM, we seek further
comment on the feasibility of establishing and/or mandating the use of databases capable of
providing real-time eligibility verification.471
465 See, e.g., Consumer Groups Reply Comments at 8 (arguing that “without financial incentives to address the cost
of developing and implementing these systems, coordinated enrollment will languish as little more than a best
practice”).
466 See, e.g., AT&T Reply Comments at 2; LCCHR Comments at 8-9; Benton/PK/UCC Comments at 5.
467 See, e.g., Alaska Commission Reply Comments at 13; FL PSC Comments at 23; MO PSC Comments at 17; NY
PSC Comments at 10; NASUCA Comments at 24 (stating that the Commission lacks the authority to impose such a
mandate); IN FSSA Comments at 1; MITS Reply Comments at 3.
468 See supra para. 165.
469 See TracFone Aug 3 ex parte Letter at 3. (“ETCs are able to access those data bases and determine whether
applicants for the Lifeline programs are enrolled in qualifying programs, without imposing a documentation burden
on those applicants.”).
470 NE PSC Aug. 8 ex parte Letter (“Once a subscriber obtains the application from the NPSC, NDHHS, or from the
carrier, and submits it to the NPSC, the NPSC staff reviews the application for completeness. If the subscriber’s
eligibility is based on Medicaid, Food Stamps or Kids Connection, then the NPSC staff accesses NDHHS
information via a secured file and NPSC staff verifies that the subscriber is on the said program.”); OR PUC Aug.
24 Ex Parte Presentation at 2 (“When an applicant contacts the Oregon Commission or submits an Oregon-specific
Lifeline application via mail, fax or online, the Oregon Commission’s staff searches the Oregon Commission
database using the applicant’s complete Social Security number followed by the phone number and the first few
letters of their first and last name…”); Letter from Sally Brown, Senior Assistant Attorney General, Washington, to
Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 at 3 (filed Aug. 30, 2011)
(describing three-way call between the consumer, ETC and social services agency at time of customer enrollment in
Lifeline in order to verify Lifeline eligibility).
471 See infra section XIII(A).
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VII.
REFORMS TO ELIMINATE WASTE, FRAUD & ABUSE
A.
National Lifeline Accountability Database
179.In this Order, we establish a National Accountability Database (“database”) to
detect and prevent duplicative support in the Lifeline/Link Up program. We direct USAC to
establish a database to both eliminate existing duplicative support and prevent duplicative
support in the future. To accomplish these purposes the database must have a number of core
functions, including the ability to receive and process subscriber information provided by ETCs
to identify whether a subscriber is receiving a Lifeline benefit from another ETC. The database
will utilize subscriber data provided by ETCs to identify and reduce current instances of
duplicative support. The database must also be capable of accepting queries from an ETC to
enable them to determine if a prospective subscriber is already receiving Lifeline support from
another ETC. The record indicates that the cost to the Fund of establishing the database with
these functions will be substantially outweighed by the amount of duplicative support which will
be eliminated through operation of the database.
1.
Background
180.As explained below, our ongoing oversight has revealed that a substantial number
of subscribers are receiving duplicative Lifeline support, which includes individuals receiving
two or more Lifeline benefits from ETCs as well as two or more individuals in a household
receiving benefits from multiple ETCs. We conclude that without implementing additional
measures to prevent duplicative Lifeline support, such waste will continue to increase, especially
as additional ETCs begin offering Lifeline service. There is currently no mechanism for an ETC
to verify, on its own, whether a prospective subscriber is receiving Lifeline benefits from another
ETC because ETCs cannot view each other’s subscriber lists. 472 As a result, some subscribers
receive Lifeline benefits from multiple carriers.
181.
The Commission has taken steps to address waste and duplicative payments. The
National Broadband Plan recommended that the Commission should “consider whether a
centralized database for online certification and verification is a cost-effective way to minimize
waste, fraud, and abuse.”473 In the 2010 Joint Board Referral Order, the Commission asked the
Joint Board to examine ways to eliminate waste, including how a database might streamline
certification and verification and check for duplicative support “based on numerous such
proposals in the record.”474 In the 2010 Joint Board Recommended Decision, the Joint Board
observed that many stakeholders recognize that a database could eliminate duplicative claims
472 See Sprint Reply Comments at 10 (“Lifeline service providers currently have no means to prevent duplicate
discounts…and have experienced significant de-enrollment of otherwise eligible Lifeline customers because those
customers fail to provide proof of their on-going eligibility during the verification process. A national database
would effectively address both of these situations.”); Verizon and Verizon Wireless Comments at 10. We note that
ETCs participating through the duplicates resolution process have been informed by USAC which of their customers
in certain states are receiving duplicative support. However, this process is temporary and does not allow the ETC
to determine whether a prospective customer is already receiving support from another ETC.
473 NATIONAL BROADBAND PLAN at 173.
474 See 2010 Joint Board Referral Order, 25 FCC Rcd at 5079 n.88 (noting that commenters believed a national
database could prevent “double dippers who seek to obtain Lifeline-supported service from two different
providers.”) (internal quotations omitted).
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and “provide accurate and up-to-date information on customers’ eligibility,”475 but it concluded
that it did not have “the level of operational details or associated tangible cost estimates
necessary to implement a national database” at that time.476 The Joint Board recommended that
the Commission seek further comment on whether to adopt a database and how it would be
administered and implemented.477 In the Lifeline and Link Up NPRM, the Commission proposed
several measures to modernize the Lifeline and Link Up programs and sought comment on both
immediate and permanent measures to prevent waste in the Lifeline program, including the
creation of a database to check for eligibility and duplicative support.478 The vast majority of
parties filing comments support a database and provide recommendations regarding its design
and implementation.479 In the 2011 Duplicative Program Payments Order, the Commission
established an interim process to eliminate duplicative support.480 This process has been
successful in eliminating substantial amounts of duplicative support. Indeed, according to data
provided by USAC, it is estimated that over $35 million will be saved per year from the
elimination of duplicative support in twelve states,481 and we anticipate there will be additional
savings as USAC expands its examination to additional states.
2.
Discussion
182.To prevent waste in the Universal Service Fund, we now create and mandate the
use by ETCs of a National Lifeline Accountability Database with specified features and
functionalities, described more fully below, to ensure that multiple ETCs do not seek and receive
reimbursement for the same Lifeline/Link Up subscriber.482 This action represents an important
step in addressing potential waste, fraud, and abuse in the program; addressing the concerns the
Commission has identified in the last eighteen months; and responding to recommendations
made by the Government Accountability Office in its 2010 report.483
183.
The database will have certain basic functions to prevent, detect, and eliminate
duplicative Lifeline and Link Up support. This includes the ability to receive and process
475 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15612, para. 38.
476 Id. at 15611, para. 37.
477 Id. at 15610, para. 36.
478 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2788-93, paras. 52-64.
479 See, e.g., Solix Comments; Solix Reply Comments; Letter from Mitchell F. Brecher, Counsel for TracFone and
West to Marlene Dortch, Secretary, Federal Communications Commission, ex parte Presentation, WC Dkt. No. 11-
42 et al. (filed May 19, 2011) (West May 19 Presentation); Emerios Comments; Emerios Reply Comments; AT&T
Comments at 11-15.
480 2011 Duplicative Program Payments Order 26 FCC Rcd at 9030-9032, paras. 15-18.
481 See Letter from Karen Majcher, Vice President, USAC, to Sharon Gillett, Chief, Wireline Competition Bureau,
Federal Communications Commission, WC Dkt. No. 11-42 et al. (filed Jan. 10, 2012) (USAC 2011 IDV Process
Letter).
482 To the extent a state agency or administrator enrolls consumers in the Lifeline program, the agency or
administrator should perform the functions described below, in lieu of ETCs. In this section, obligations are placed
on ETCs only to the extent there is no state agency or third party administrator that can perform this function.
483 2010 GAO REPORT at 35 (noting that the Commission must adequately address the risk of duplicative claims).
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subscriber information provided by ETCs to identify whether a subscriber is receiving a Lifeline
benefit from another ETC, and the ability to allow authorized users, including ETCs and states,
to query the database to determine if a prospective consumer already is receiving Lifeline
service.484
184.
The database cannot serve its intended purpose unless ETCs (or states, where
enrollment is performed by a state agency or third party) populate the database with the
information necessary to detect duplicative support. We therefore adopt a rule requiring each
ETC to submit the name, address, and phone number of each of its Lifeline subscribers,485 the
subscribers’ service initiation and de-enrollment dates (when de-enrollment occurs), the means
through which the subscriber qualified for support (e.g., Medicaid or income), the last four digits
of the Social Security number486 and date of birth of the subscriber, the amount of Lifeline
support received by the subscriber each month (e.g., flat rate or Tribal Land support) as well as
whether the subscriber has also received Link Up support, and if so, the address, and date of
service initiation to which Tribal Link Up support applied. The database and related processes
must be able to accommodate non-traditional addresses, such as addresses on Tribal lands not
recognized by the U.S. Postal Service.487 This data will be utilized by USAC and ETCs to
eliminate duplicative claims, will assist USAC in its auditing processes and may also facilitate
the “auto-generation” of Form 497s in the future. ETCs must provide this information for
existing subscribers to the database within 60 days of the Bureau providing notice that the
database is ready to accept ETC information for new subscribers upon initiation of service
thereafter.488
185.
We set a target date to have the database operational as soon as possible and no
later than a year from release of the Order. Once the database is operational and has been
populated with the initial subscriber information necessary to check for duplicative support (i.e.,
ETCs’ existing subscriber data provided within 60 days of Bureau notice), we direct USAC to
identify those subscribers currently receiving duplicative support and resolve those claims for
duplicative support pursuant to the “scrubbing” process explained below.489 We direct USAC to
484 By “authorized users” we mean entities which are permitted to query the database to detect duplicative support.
As we explain below, we establish a process for USAC to authorize database access for those parties who will
require or would benefit from database access, such as ETCs, state administrators, state social services agencies, and
third-party administrators (e.g., Solix in California).
485 Throughout this Order, the phrase “to the database” means to USAC, the third party administering the database
and/or the database itself.
486 For those consumers living on Tribal lands who lack a Social Security number, an official Tribal identification
card number may be provided in lieu of the last four digits of a Social Security number. This is the case everywhere
noted in the Order where a consumer is required to provide the last four digits of a Social Security number.
487 See supra paras. 165-66, in which we note record support for the fact that residential addresses are frequently
non-existent on Tribal lands and, where present, often differ significantly from residential addresses off Tribal lands
(citing SBI Comments at 14-16).
488 As noted below, ETCs operating in states that check for duplicative Lifeline and Link Up support are not
obligated to provide such data to the national database.
489 We anticipate that this process will be similar to the process described in the June 21, 2011 Guidance Letter. See
generally June Guidance Letter. That process involved collecting subscriber lists from ETCs, determining those
(continued….)
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assist subscribers and ETCs in resolving disputes over duplicative support as necessary and
establish processes to manage the “exceptions” to the definition of “duplicate” adopted
elsewhere in this Order.490 Once the database is capable of being queried by authorized entities
to detect duplicative support on an ongoing basis, we direct USAC to provide notice to the
Commission, and the Bureau shall release a public notice that the database is fully operational.
ETCs’ obligation to query the database to detect duplicative support, as explained below, will be
effective 30 days following release of the Bureau notice.
186.
We direct USAC, in coordination with the Bureau and the Office of the Managing
Director (OMD), to take all necessary steps to develop and implement, as quickly as possible, a
database and associated processes capable of performing the functions outlined in this section of
the Order consistent with our rules. We direct USAC to submit an implementation plan covering
all of its responsibilities as it relates to the operation of the database and its related duties
discussed below in this section to OMD and the Bureau for review and approval no later than 10
days after the effective date of this Order.
187.
Finally, as we discuss in more detail below, we also direct the Bureau and USAC
to take all necessary steps so that as soon as possible, and no later than the end of 2013, there
will be an automated means to verify eligibility for a significant majority of Lifeline subscribers.
In the near term, we expect that our documentation and certification requirements will
substantially reduce the number of ineligible consumers while the Commission seeks targeted
comment on the issues involved in creating an eligibility database.491 We reiterate that to the
extent that states have developed a database or other electronic means to check subscriber
eligibility, ETCs must use those databases.492
a.
Functionality of Database and Obligations of ETCs
188. The database must have certain capabilities to detect and eliminate duplicativesupport. These include, among other things, the capability to: (1) receive and process subscriber
information provided by ETCs sufficient to identify whether a subscriber is receiving a Lifeline
benefit from another ETC; (2) allow ETCs and other authorized entities to query the database to
determine if a prospective subscriber seeking Lifeline service is already receiving a Lifeline
benefit; and (3) maintain the proprietary nature of the data housed in the database by protecting it
from theft, loss or disclosure to unauthorized persons.
189.
We also require ETCs to, among other things, provide to the database subscriber
name, address, phone number, the last four digits of Social Security number, date of birth,
Lifeline service initiation and de-enrollment date(when applicable), and amount of federal
(Continued from previous page)
consumers who have duplicative service, facilitating the selection of a default ETC, and allowing the consumer to
override the default ETC selection. See id., at 3-5.
490 See, e.g., supra para. 81 (discussing the fact that some consumers may not have postal addresses).
491 See sections VI (Certification of Consumer Eligibility); XIII.A (Eligibility Database).
492 See supra para. 91.
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Lifeline support being sought for that subscriber.493 To the extent that a state agency or other
authorized third party has not already done so with respect to a new subscriber, ETCs must also
query the database prior to enrolling a new subscriber to determine whether a prospective
subscriber is already receiving Lifeline from another ETC. ETCs are prohibited from receiving
support for any prospective subscriber already receiving Lifeline benefits from another ETC.
190.
ETC Duty To Provide Particular Data To the Database. The database must be
designed both to identify subscribers currently receiving duplicative support and to avoid future
instances of duplicative support by providing a means for ETCs and other authorized users to
query the database to determine if prospective subscribers are already receiving Lifeline service
from another ETC. To perform these functions, the database must be able to match subscriber
records from different ETCs. ETCs must provide the subscriber information described below for
existing subscribers to the database within 60 days of the Bureau providing notice that the
database is capable of accepting subscriber information for new subscribers thereafter.494
191.
Based on a review of the record and our experience with the process established
in the 2011 Duplicative Program Payments Order, we require ETCs (or other authorized users)
to provide to the database the name, address, and phone number of each of its Lifeline and Link
Up subscribers. We also require ETCs, to the extent that they do not already do so, to request
that their subscribers provide the last four digits of their Social Security number to the ETC and
their date of birth, and, once received, for the ETC to provide that information to the database.
We find that both date of birth and the last four digits of the Social Security number are
necessary to perform the identification verification check described below.495
192.
We are mindful that many ETCs do not currently collect subscribers’ dates of
birth and the last four digits of subscribers’ Social Security number and may not have retained
information regarding the means through which the subscriber qualified for Lifeline. However,
we expect that the burden of collecting such information from both new and existing subscribers
would be small because all ETCs must annually re-certify all of their subscribers and this
information could be collected along with other information necessary for re-certification at that
time. New subscribers can provide their date of birth and last four digits of their subscribers’
493 We include phone numbers because, among other things, they will assist with USAC auditing procedures and
will assist in the transfer of benefits between consumers.
494 As noted below, ETCs operating in states that check for duplicative Lifeline and Link Up support are not
obligated to provide such data to the national database.
495 See, e.g., Letter from Mitchell F. Brecher, Counsel, TracFone, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 at 2 (filed Dec. 5, 2011) (noting that by collecting the last four
digits of customers’ Social Security numbers and date of birth, TracFone has been able to “confirm that customers
are who they say that they are who they claim to be.”); Letter from Joan M. Griffin, Counsel, Emerios, to Marlene
H. Dortch, Secretary, FCC, WC Dkt. No. 11-42 et al., Attach A. FCC National Database Industry and Collaboration
Proposal at 5 (filed Aug. 3, 2011) (Emerios Database Proposal) (arguing that the name, address, date of birth and
last four digits of Social Security number are necessary to verify the identity of an applicant); Nexus Nov. 18 ex
parte Letter (arguing that a privately organized database to check for duplicate support “could also incorporate
additional safeguard measures, such as ‘third party ID Verification’ which consists of ETCs collecting information
such as the subscriber’s date of birth and the last four digits of his or her Social Security number.”).
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Social Security number at the time of their application for Lifeline.496 As discussed in the
FNPRM attached to this Order, we remain interested in expanding the use and functionality of
the database to improve checks for initial and continuing eligibility.497
193.
USAC has had substantial experience with standardizing (i.e., placing in a proper
format) and verifying addresses (determining whether the address is valid and deliverable) as
part of the duplicates resolution process, and commenters and USAC have found that the
standardization and verification of addresses and names makes the identification of duplicative
benefits faster and more reliable.498 However, as USAC has explained, substantial time and effort
was expended to correct information provided by ETCs. Moreover, the ETCs have the direct
relationship with the subscriber with whom the ETC may have to interact with to obtain the
necessary information to correct the subscriber’s address, we direct ETCs to standardize and
verify addresses in their records prior to submission of the address data to the database.499 We
expect that having ETCs verify and standardize the address data on the front-end will
substantially reduce the total time needed to load the database with the necessary subscriber
information and will therefore speed up the process of identifying and eliminating duplicative
support. At least three months prior to the ETCs providing subscriber information to the
database pursuant to the scrubbing process below, USAC shall provide, subject to Bureau review
and approval, detailed information to the ETCs regarding address standardization and address
verification requirements and the proper format to use in submitting such information. We direct
USAC to work with the ETCs to develop a process to ensure that all Lifeline subscribers’
496 As explained supra section VI, ETCs must also determine customers’ eligibility as well and therefore can
provide the means of qualification to the database.
497 Several commenters support AT&T’s proposal that subscribers should be identified with a unique identifier or
Personal Information Number (PIN). AT&T Comments at 11-15. However, we do not adopt AT&T’s proposal. To
the extent that AT&T’s PIN proposal could eliminate duplicative support, we conclude that the burden and
uncertainty of implementing AT&T’s system for that purpose would outweigh the benefits of such a proposal.
AT&T’s proposal assumes that a third party at the state level (e.g., state PUC) would issue and manage PIN
numbers (see AT&T Comments at 11) and there is no guarantee that states would be willing or economically able to
take-on such an administrative function in the absence of explicit federal support. We note that we are seeking
comment on the extent to which the Commission should provide support to states to implement eligibility databases
in the attached FNPRM.
498 See MS PSC Comments at 7-8 (noting that one of the requirements for a database to function properly would be
to devise input requirements that would allow defined parameters with the same fields an input parameters and the
database must be designed such that all data is submitted in a consistent manner); DC PSC Comments at 3 (arguing
that subscriber information should be provided “in compatible formats, to reduce the administrative burden of
comparing lists in different formats.”).
499 See USAC 2011 IDV Process Letter at 2 (describing the data steps necessary to correct ETC address data).
Several ETCs have indicated that their consumer data is currently not in a standardized format. Cincinnati Bell
Comments at 6; see also TSTCI Reply Comments at 2. However, we find that some carriers have already
implemented similar standardization processes without an explicit requirement, indicating that the burden of doing
so is limited. See TracFone June 1 ex parte Letter at 1. As explained, some consumers rely on non-standardized
addresses (e.g., Tribal lands, rural route numbers). See supra para. 81; infra paras. 165-66. In those cases, we
direct USAC to work with ETCs through the exception management process described below so that such customers
can receive Lifeline service and ETCs can receive reimbursement from the fund where appropriate.
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addresses can be loaded into the database, including the minority of cases where a subscriber’s
valid address cannot be verified. That is, the database must be able to accommodate those
situations, such as on Tribal lands, where a U.S. postal address is not available or recognized.500
This process is subject to Bureau review and approval. We also require the database to include
the functionality to standardize and verify addresses to speed the process of loading customer
information into the database.
194.
We also mandate that ETCs provide the dates of service initiation and termination
(when it occurs) of each subscriber and the amount of support being sought for the subscriber
(e.g., flat rate or Tribal Land support) to the database. This information, along with name,
address, and phone number will help facilitate the preparation of Form 497s and USAC’s
auditing efforts. Indeed, commenters have argued that the forgoing information can be used to
provide a basis for carrier reimbursement and “autogenerate” Form 497s.501 While we do not
adopt such an approach in this Order given limited comment on implementing such a process, we
expect that automating the reimbursement process through the autogeneration of Form 497s
would both reduce fraud and ETCs’ compliance burden. Information regarding support levels
will also provide USAC with an additional auditing tool through which USAC can compare an
ETC’s subscriber records with the records provided to the database.
195.
We also direct ETCs (or other authorized users) to provide the means of
qualification for Lifeline (e.g., Medicaid, SNAP, TANF) to the database.502 We find that the
inclusion of such information in the database would assist in the transition to any eligibility
database adopted pursuant to the attached FNPRM. Moreover, Commission analysis of such
data on an aggregated basis would provide valuable insight regarding the operation of the
Lifeline program.503 The database must retain all data related to consumers who receive Lifeline
and Link Up for ten years after the consumer receives Link-Up or de-enrolls from Lifeline. As
explained in more detail below, we also direct ETCs seeking Link Up support to provide each
subscriber’s name, residential address, and date of Link Up service to the database to assist in
USAC’s auditing efforts, and the database must retain the record of Link Up assistance for ten
years in order to facilitate USAC’s oversight over the Fund. The Commission may revisit these
obligations in the future so that the processes outlined in this Report and Order adequately
address potential vulnerabilities to the Fund that may arise.
500 See Emerios Reply Comments at 9 (noting that there was widespread support for using a consistent format for
address data and in those cases where a USPS address does not adequately characterize a location, rules can be
defined in the database to take care of most of these situations).
501 See, e.g., Emerios Comments at ii (arguing that requiring ETCs to use to the duplicates database to obtain
reimbursement would eliminate the need for ETCs to file Form 497 in its current form and create incentives for
ETCs to use the platform).
502 We recognize that ETCs may not have retained this information during subscriber sign-up. Therefore, ETCs are
required to collect such information for existing customers either before or during the first annual recertification
process established in this order. We find that this approach will minimize the burden on ETCs.
503 For example, California currently collects such information, indicating that the majority of customers qualify for
Lifeline in that state through SNAP, Medicaid and SSI. See CA PUC June 28 ex parte Presentation, Attach.
(Request for Proposal) at 18.
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196.
Timely Transmission of Data. Many commenters argue that for the database to
effectively provide a means for ETCs to determine if prospective subscribers are already
receiving Lifeline support, subscriber data must be provided as rapidly as possible from the ETC
to the database at the time the consumer signs up for service.504 Without real-time or near real-
time updates to the database, there is an increased risk that some subscribers will receive
duplicative benefits for at least some period of time, causing unnecessary confusion.505 At the
same time, many ETCs argue that it may be burdensome, particularly for smaller ETCs with
limited resources and larger ETCs with less flexible back-office systems, to provide subscriber
information to a database in real-time.506
197.
Although real-time or near real-time updates would likely reduce waste in the
Fund and reduce the likelihood of duplicative claims, we do not mandate real-time updates at this
time, but rather adopt the following rule applicable to new subscribers to promote real-time
updates. Except with respect to the scrubbing process described below, in those cases where two
or more ETCs provide information to the database for the same subscriber, the ETC whose
information was received by the database first will be entitled to reimbursement from the Fund
for that subscriber, regardless of which ETC the consumer signed up with first.507 We
acknowledge that this approach may place those ETCs that are unable or unwilling to update the
database in near real-time at a disadvantage. However, we find that this approach will reduce the
amount of duplicative support and encourage the prompt transmission of data without imposing
the burdens that a blanket requirement to provide data in near- or real-time would impose. With
respect to subscribers already in the database, ETCs must (subject to the exception for subscriber
504 See, e.g., Emerios Comments at i-ii, 2; Verizon Reply Comments at 2; CenturyLink Comments at 21; Sprint
Comments at 4; Consumer Groups Comments at 23-24.
505 For example, if the database were only updated once a week, a consumer could sign up for Lifeline service from
ETC A, and then, later that day, sign up for Lifeline service from ETC B. While the consumer might only receive
duplicative benefits from both ETCs for a short time, one of the ETCs and USAC would likely incur costs to de-
enroll the consumer from duplicate support and consumer’s expectations would be upset. See Emerios Reply
Comments at 8 (arguing for real-time database updates and asserting that daily or periodic updates would create
administrative problems and would result in duplicate claims); id. (noting that without real-time updates, a Lifeline
consumer might go without 911 or other phone services if that consumer moved into a house where another
consumer had already been receiving Lifeline support because the database might indicate that two consumers were
seeking support at a single address); Cincinnati Bell Comments at 11 (“If the database is out of date, a person could
appear to have duplicate benefits when in fact the person simply switched service providers at the same address and
the old provider had not yet updated the database.”).
506 See Cincinnati Bell Comments at 11 (“However, realtime updates also create significant expenses and
administrative burdens that must be balanced against the potential benefits.”); Letter from Matthew A. Brill,
Counsel, Cricket, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et
al., at 2 (filed June 15, 2011) (Cricket June 15 ex parte Letter) (“In addition, the Commission should not require
ETCs to upload subscriber information to any Lifeline database in real time. Any such mandate would impose
substantial development costs on ETCs. In particular, Cricket does not have any means of electronically bonding
with the databases maintained by third-party administrators in real time (such as Solix, in California), and
developing such capabilities—particularly for multiple databases/administrators—would entail considerable
investment in new IT systems.”).
507 We clarify that this rule only applies to new subscribers who sign up for Lifeline following the initial loading of
the database by ETCs. Existing subscribers receiving duplicative support identified once the initial loading of the
database occurs will be de-enrolled according to the “scrubbing” process described below.
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de-enrollments described below) update the database within 10 business days after receiving
notice of a change in subscriber data that is also housed in the database (e.g., subscriber’s
address changes, or changes in a subscriber’s means of qualification for Lifeline).
198.
Receipt of Information by the Database. We next address the ability of the
database to receive, process, and utilize the information we require ETCs to provide. In order to
identify subscribers currently receiving duplicative support and provide a means for ETCs to
determine if prospective subscribers are already receiving Lifeline service from another ETC, the
database must be capable of receiving and processing subscriber data sent by ETCs. Indeed,
commenters recognize that this capability is crucial to any database designed to identify and
eliminate duplicative support.508 We therefore require that the database must be capable of
receiving and processing data provided by ETCs both in real-time and via periodic batches.509
We direct USAC to provide ETCs with guidance, subject to Bureau review and approval,
regarding how carriers must submit data to the database subject to both real-time and batch
processes.
199.
Database Access and Output. Once the database receives the necessary
information from ETCs, it is equally important that ETCs and other authorized parties be able to
query the database to determine if prospective subscribers are already receiving support from
another ETC. The process established in the 2011 Duplicative Program Payments Order has
been effective in detecting and resolving duplicative support among certain ETCs in select
states.510 However, that process, by design, only identifies duplicates that already exist; it does
not prevent consumers from signing up for duplicative support from more than one ETC at the
time of service initiation.511 There is widespread agreement that a permanent solution to
duplicative claims requires that ETCs are able to determine if a prospective subscriber is already
receiving a Lifeline benefit at the time the prospective subscriber requests service or seeks a
Lifeline benefit from that ETC.512 Therefore, the database must be capable of providing
508 See, e.g., Emerios Comments at 10 (“The [database] should include the following processing steps, at a
minimum, to initially populate the database and determine existing duplicates: Transfer of data on program
beneficiaries from … ETCs to the administrator; data processing to identify dual-benefit households and individuals
…”).
509 See Emerios Database Proposal at 4 (arguing that the database must have “sufficient capacity, response speed,
and recognition accuracy, and be flexible enough to incorporate batch processes or be fully automated. This will
allow ETCs to readily integrate database activities with their existing workflows, giving them the flexibility and
speed to continue enrollments without new burdens.”).
510 See generally USAC 2011 IDV Process Letter.
511 See TracFone Comments at 16.
512 See GCI Comments at 27-28 (“ETCs must be able to access the database (on a ‘read only’ basis) for at least two
reasons. First, to prevent duplicate subscriptions, they must be able to access the database to ascertain whether any
particular applicant for Lifeline service already receives Lifeline service from another ETC (although the identity of
the other ETC should be masked). Second, they must be able to review their own Lifeline subscriber lists as
reflected in the database in order to assess whether it accurately reflects their own records listing Lifeline
subscribers. This would enable ETCs to inform USAC of variances between the lists and resolve discrepancies”);
AT&T Comments at 11-12; CGM Comments at 3 (“critical stakeholders including USAC, State regulators and
ETCs will all maintain access to the data for particular and managed purposes . . . this can be set up [with] security
so that privacy is safeguarded”).
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verification upon query from an eligible querying party whether a prospective subscriber is
currently receiving Lifeline support.513 The database must also provide information necessary
(e.g., error codes) to the querying party to understand the result of a database response that the
prospective subscriber is either already receiving duplicative support, or if the database was
unable, with the information provided, to make such a determination.514 The database must
permit ETCs to compare the subscriber information attributable to that ETC (and only that ETC)
housed in the database to the ETC’s own subscriber list and establish a process for doing so.515
This feature will provide an additional check on the accuracy of the database while protecting
consumers.
200.
Several parties have argued that the database must be capable of verifying the
identity of a subscriber through a third party identity verification service, prior to an ETC
submitting for support for that subscriber. TracFone estimates that such a “front-end” identity
verification check, if done by all ETCs, could save the Fund $192 million annually.516 An
identification verification process would utilize a subscriber’s name, address, date of birth and
the last four digits of the social security number, and compare that information to publicly
available databases, to determine if all of the information provided by the subscriber is valid
(e.g., Joe Smith really lives at 123 Main St., is 29 years old and the last four numbers of his
social security number are 4444). This check would reduce the possibility that applicants and/or
ETCs submit incorrect information either purposefully, in order to evade the one per household
rule or to seek reimbursement for non-existent subscribers, or inadvertently. Moreover, by
validating a subscriber’s date of birth, minors will be prevented from signing up for service. We
expect that this functionality can be added to the database at minimal cost.517 We also note that
several ETCs have already been performing routine identification checks using subscribers’ date
of birth and social security number even though they are not explicitly required to do so by our
rules, indicating that the burden of performing such verifications is low.518
513 GCI Comments at 3 (arguing that a database “would enable ETCs to ascertain whether an applicant for Low-
income Program service already subscribes with an ETC (which no ETC would currently know).”). id. at 27 (“[T]o
prevent duplicate subscriptions, [ETCs] must be able to access the database to ascertain whether any particular
applicant for Lifeline service already receives Lifeline service from another ETC (although the identity of the other
ETC should be masked) …”); CGM Comments at 4 (“ETCs will want to access this database in real time to
authenticate new users …”).
514 See Emerios Database Proposal at 7 (arguing that the database should “provide error codes and descriptions in
real-time…”).
515See Cincinnati Bell Comments at 11; GCI Comments at 28 (“First to prevent duplicate Lifeline subscriptions,
[ETCs] must be able to access the database to ascertain whether any particular applicant for Lifeline service already
receives Lifeline service from another ETC (although the identity of the ETC should be masked). Second, they must
be able to review their own Lifeline subscriber lists as reflected in the database in order to assess whether it
accurately reflects their own records listing Lifeline subscribers.”).
516See TracFone Nov. 10 ex parte Letter, Attach. at 6.
517See, e.g., Experian, Experian GSA Catalog, available at
http://www.experian.com/assets/government/brochures/gsa-catalog.pdf (noting that the cost of its Precise ID product
costs approximately 25 cents per query per the GSA schedule, depending upon volume).
518 See, e.g., TracFone Nov. 10 ex parte Letter, Attach. at 6; Letter from Mathew S. O’Brien, Century Corporation,
to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 1 (filed Jan.
(continued….)
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201.
Because of the benefits and limited costs of identification verification, we
conclude that the database must have the capability of performing an identification verification
check when an ETC or other party submits a query to the database about a potential consumer.
In response to the query, the database must indicate whether the subscriber’s identity can be
verified, and if not, provide error codes to indicate why the identity could not be verified. To
ensure that subscribers are not mistakenly denied benefits, USAC must establish a process, as
part of the resolution process described below, so that those consumers who failed the
identification verification are able to either provide additional information to verify their identity,
or correct errors in the information utilized to validate the subscriber’s identification.519 As noted
above, the database and identification verification process must be able to accommodate
consumer addresses that are not recognized by the U.S. Postal Service (e.g., residences on Tribal
lands). We direct USAC to facilitate this process by publishing its processes and rules used to
verify subscriber identification. We anticipate that these processes will involve both automated
processes and well as manual fall-out processes in those small number of cases where an
automated process cannot verify a subscriber’s identification. ETCs may not receive
reimbursement for those subscribers whose identities could not be verified through the
identification verification process.
202.
Some State PUCs and state and local social service agencies are also involved in
the process of enrolling consumers in Lifeline and must have the ability to query the database to
check for duplicative support. ETCs, state, local and Tribal governmental agencies (including
state regulatory commissions and social service agencies which may assist low-income
consumers with signing up for Lifeline service) and their authorized agents, must be able to
query the database with a prospective subscriber’s identifying information to determine if he or
she is already receiving Lifeline support from another ETC.520 We also direct USAC to establish
a process to qualify and provide individualized access to authorized users.521 USAC must submit
that process for review and approval by the Bureau.
(Continued from previous page)
23, 2012) (explaining that a number of carriers are using Century Corporation’s products to standardize and
implement the capture of DOB and the last four digits of subscriber’s Social Security numbers and that Century
Corporation is “[e]ngaging the services of LexisNexis to validate the identity of program enrollees in real-time”).
519 Low-income consumers and ETCs seeking Lifeline benefits must comply with all statutory, regulatory and
procedural requirements in order to obtain the discount. Denial of this support does not violate an ETC’s or a
consumer’s due process rights and does not deprive the ETCs or consumer of a protected property interest absent a
legitimate claim of entitlement to the Lifeline benefit. See Town of Castle Rock v. Gonzales, 545 U.S. 748, 756
(2005); see also Board of Regents v. Roth, 408 U.S. 564, 577 (1972) (“To have a property interest in a benefit, a
person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation
of it. He must, instead, have a legitimate claim of entitlement to it.”).
520 See supra para. 178. It may be more efficient, and provide consumers with a faster response, if states are able to
query the duplicates database prior to sending the application to the ETC in these situations. We direct USAC to
establish a process to qualify state and local government agencies and their authorized agents to query the database.
State and local government agencies may only query the database for the purpose of implementing and managing
the program in their states.
521 AT&T Comments at 11-12; CGM Comments at 3 (“[C]ritical stakeholders including USAC, State regulators and
ETCs will all maintain access to the data for particular and managed purposes . . . this can be set up [with] security
so that privacy is safeguarded”).
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203.
ETC Duty To Query the Database. ETCs must ensure that they do not provide a
Lifeline benefit to a consumer that is already receiving a Lifeline benefit from another ETC. We
therefore require that 30 days following Bureau notice that the database is capable of accepting
queries, all ETCs query the database to check to see if a prospective subscriber is already
receiving service from another ETC at a residential address prior to seeking reimbursement from
the Fund.522 If the ETC queries the database, and discovers that the prospective consumer is
already receiving a Lifeline benefit from another ETC at that address, the querying ETC may not
seek a Lifeline benefit for that consumer unless and until the consumer de-enrolls from the ETC
from whom they are receiving service. As explained above, if, based on the query, the ETC
determines that an individual at the prospective consumer’s residential address other than the
prospective consumer is currently receiving a Lifeline-supported service at that address, the ETC
must take an additional steps to ensure that the prospective and current subscriber are part of
different households.523 Only if the ETC takes these steps and determines that the prospective
and current subscriber at the same address are in different households can the ETC receive
reimbursement for the prospective subscriber.
204.
If a carrier does not query the database prior to signing up a consumer or has not
received notice from a state Lifeline administrator or its agent that it has performed a query on
behalf of the ETC, the ETC may not receive Lifeline benefits for that consumer, regardless of
whether the ETC has already provided a Lifeline discount to the consumer.524 To assist with
compliance with this rule, the database must have the capability of logging the time a query was
made, the party who made the query, and the information (e.g., name, address) that was
submitted in the query.
205.
Transfer of Benefits and Consumer De-enrollment. With increased competitive
choices for consumers seeking Lifeline supported services, we seek to simplify the process for
subscribers to transfer their Lifeline supported service from one ETC to another. In the Lifeline
and Link Up NPRM, the Commission sought comment on whether subscribers should be able to
take their Lifeline benefits with them when they change ETCs.525 In at least some cases, the
transfer of benefits could also be accompanied by the porting of a number. Commenters agree
that the database should facilitate, as necessary, benefit transfers from one provider to another.526
522 This rule does not apply to ETCs in those instances where it receives notice from a state Lifeline administrator or
its agent that the administrator or its agent has queried the Database about a prospective subscriber.
523 See supra para. 78.
524 As explained above, only the ETC which first populates the database with a new customer’s information will be
eligible to receive support from the fund for that consumer. See supra para. 197.
525 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2837, para. 217.
526 See Consumer Groups Reply Comments at 6 (“The Commission must provide a clear and consumer-friendly
process to switch carriers…Carriers should also be obliged to promptly coordinate ‘switch’ requests with the
database administrator so that the duplicates database does not act to prevent customers from shopping for better
Lifeline service.”); National Consumer Law Center Comments at 24; Rate Counsel Reply Comments at 8;
Consumer Groups Reply Comments at 6-7; AT&T Comments at 6 (AT&T notes that in its proposal, benefits would
be “fully portable to the service provider of a consumer’s choice.”); Letter from Jennifer Brandon, Executive
Director, Community Voice Mail, to Marlene Dortch, Secretary, Federal Communications Commission, WC Dkt.
No. 11-42 et al., at 1 (filed Jun. 23, 2011) (Community Voice Mail June 23 ex parte Letter) (“Numerous policy
issues need to be clarified as part of the design process including … portability of Lifeline status…”).
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Without the ability to handle benefit transfers, there is a risk that subscribers will lose their
Lifeline benefit when they change ETCs.527 For these reasons, the database must include
features which facilitate the process of transferring Lifeline benefits from one ETC to another in
as expeditious and transparent a manner as possible.528 We direct USAC to submit for Bureau
review and approval a process for facilitating the transfer of benefits.529
206.
We also adopt a rule that ETCs must update the database with any subscriber de-
enrollments within one business day of de-enrollment. De-enrollment may occur due to, for
example, subscriber inactivity, subscriber initiated deactivation or the porting of a number to
another carrier.530 This rule will not only assist the process of transferring benefits from one ETC
to another, but will provide an added check against the possibility that ETCs would receive
subsidies for subscribers who are no longer enrolled with that ETC.
207.
Security. In its Lifeline and Link Up NPRM, the Commission acknowledged that
the data housed in the database may include sensitive personal information subject to protection
under state and federal privacy laws.531 Indeed, as many of the commenters note, some of the
data fields that we now require ETCs to transmit to the database constitute particularly sensitive
information.532 There is widespread consensus that the information in the database must be
subject to the highest protections.533 Moreover, the mere fact that a consumer receives Lifeline
benefits (and therefore receives other government social services benefits or has a particular
income level) is also sensitive personal information.534 For these reasons, the database must have
527 For example, if a consumer switches from ETC A (through which it was receiving Lifeline support) to ETC B
and the database does not contain a benefit porting function, when ETC B queries the database to determine if the
consumer already has Lifeline support, the database may indicate that the consumer is already receiving a Lifeline
benefit from ETC A.
528 It is important to note that the rules which we adopt here are independent of and do not affect the carrier change
and slamming rules.
529 We recognize that this process may overlap with the dispute resolution and exception management processes
outlined below.
530 We note that ETCs’ failure to do so would be subject to enforcement action.
531 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2838, paras. 220-221.
532 FL PSC Comments at 24 (“Section 364.107, Florida Statutes, requires that personal identifying information of a
participant in a telecommunications carrier’s Lifeline Assistance Plan be confidential.”).
533 See, e.g., FL PSC Comments at 24 (“Whether USAC or a third party administrator is used, any national database
of Lifeline subscribers/applicants would have to be maintained by an independent administrator under strict
confidentiality provisions to protect the Lifeline subscriber’s/applicant’s personal identifying information.”); Solix
Comments at 8 (“Additionally data security must be designed into all system components and interfaces. In support
of satisfying relevant data security and privacy laws, secure transfer methods such as Secure Socket Layer (SSL)
encryption or SFTP should be required.”); NASUCA Comments at 25 (“It goes without saying that NASUCA
would emphasize the need to maintain consumer privacy as a high priority in the establishment of a national
database.”); CA PUC Reply Comments at 10 (“We share the Missouri PSC’s concerns regarding a national
database. Any such system must be established and maintained with federal dollars, and it must ensure privacy
protection and online security of customer information.”).
534 This information also may be protected as CPNI. See 47 U.S.C. § 222(h)(1)(A) (requiring telecommunications
carriers to protect “customer proprietary network information.” The statute defines CPNI as “information that
relates to the quantity, technical configuration, type, destination, location, and amount of use of a
(continued….)
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sufficient safeguards to maintain the proprietary or personal nature of the information in the
database by protecting it from theft or loss.
208.
Link Up Support on Tribal Lands. Elsewhere in this Order, we eliminate Link Up
support for ETCs serving non-Tribal subscribers and for Lifeline-only ETCs serving Tribal
lands. We also require ETCs to provide information related to Link Up support provided to
subscribers so that USAC is able to determine whether an ETC is improperly seeking
reimbursements for the same consumer at the same principal place of residence. Subscribers may
not receive Link Up support more than once at their residential address.535 Sixty days following
Bureau notice that the database is capable of receiving subscriber information, we require ETCs
offering Link Up support to provide the subscriber’s name, residential address, and date of Link
Up service to the database so that USAC is able to efficiently track Link Up support.536 ETCs
seeking to provide Link Up support to residents on Tribal lands must query the database prior to
requesting Link Up support to determine if the consumer has already received Link Up support
at that location.537 If the ETC determines from the query that the consumer has already received
Link Up support at that residential address, the ETC may not receive reimbursement for that
consumer. The database must retain submitted Link Up records for ten years.
209.
National Database. We conclude that the database should be national in scope.
In the Lifeline and Link Up NPRM, the Commission sought comment on whether to establish
state or regional databases or a national database.538 The record persuades us that the
Commission should adopt a national database to prevent duplicative support and should not
establish multiple state or regional databases.539 For example, Emerios argues that the cost of
establishing and implementing a nationwide system would be “dramatically lower, as the
incremental cost of a larger, single, pre-qualification system would be much less than the cost of
multiple smaller state systems.”540 Emerios also estimates that creation of a national database
would cost only 30 percent more than the creation of a system for a single state with a large
(Continued from previous page)
telecommunications service subscribed to by any customer of a telecommunications carrier, and that is made
available to the carrier by the customer solely by virtue of the carrier-customer relationship…”).
535 47 C.F.R. § 54.411(a)(1), (c).
536 This duty does not apply to ETCs operating in states whose opt-out certification has been approved by the
Bureau.
537 This duty does not apply to ETCs in those instances where it receives notice from a state Lifeline administrator
or its agent that the administrator or its agent has queried the Database about a prospective subscriber.
538 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2838, para 222.
539 See Emerios Comments at 7-8 (arguing for a national database instead of separate state databases because 1) a
national database would be more cost-effective, 2) a national database could be deployed more rapidly, and 3) a
national database would pose fewer security risks); Nebraska PSC Comments at 6 (arguing that having one entity in
charge of a single database would reduce the number of errors and streamline the process of duplicate resolution);
AT&T Comments at 5 (stating that, “auditing a provider’s compliance with the Commission’s Lifeline rules will
also be simpler and more effective … because the requirement to interface with the national database provides a
consistent control point that is more conducive to standard auditing methods.”); but see OR PUC Comments at 3
(noting that states are better handle verification of eligibility); CGM Comments at 2 (same).
540 Emerios Comments at 8.
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number of Lifeline/Link Up benefit recipients.541 Furthermore, a single nationwide database
would provide significant efficiencies because ETCs need only train staff to use a single
system.542 A single nationwide database could be deployed more rapidly than multiple state
systems because national or regional ETCs would only need to interface with one system, and
the physical infrastructure, connections, and all related components would be located in a single
location (or several locations to establish sufficient redundancy).543 The security risks associated
with a single nationwide system would likely be less than the risks associated with multiple state
systems.544 AT&T argues that it would be easier to audit a single nationwide database
provider.545 In light of these advantages, we conclude that the database should be national in
scope.546
b.
USAC’s Additional Duties To Eliminate Duplicative Claims
210.A database with the functions described above is a key building block of any
permanent solution to reduce duplicative Lifeline claims. However, a database by itself is only
one of the components of such a solution. As several commenters note, human intervention and
non-electronic means may be necessary in some cases to identify and eliminate duplicative
support.547 We therefore direct USAC to implement processes to complement the
implementation and functionality of the database described above. As discussed in more detail
below, we direct USAC to implement a process to mitigate the risk that consumers are
improperly denied access to Lifeline benefits, to implement a “scrubbing process” to
substantially reduce if not eliminate current duplicative support, and to establish a dispute
resolution process for managing duplicative claims.
211.
Continuation of IDVs. As noted above, the IDV process undertaken by USAC in
12 states has resulted in significant savings to the Fund.548 Until the duplicates database is
operational, we direct USAC, consistent with the 2011 Duplicative Program Payments Order to
continue with in-depth data validations targeted at uncovering duplicative Lifeline support. We
541 See id.
542 See id.
543 See Emerios Comments at 8; Letter from Thomas Cohen, Counsel, Emerios, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Dkt. No. 11-42 et al. at 2 (filed June 22, 2011) (Emerios June 22 ex
parte Letter) (“In addition, at a minimum, the system should have a redundant location ideally with a hot/hot
configuration to ensure the highest level of uptime.”).
544 See id.
545 See AT&T Comments at 5 (“[A]uditing a provider’s compliance with the Commission’s Lifeline rules will also
be simpler and more effective … because the requirement to interface with the national database provides a
consistent control point that is more conducive to standard auditing methods.”).
546 We note that the selection of a single, national database to assist in the elimination of duplicate support does not
prejudge the geographic parameters of any database which may be adopted at a later date to verify eligibility.
547 See, e.g., Letter from Eric Seguin, Solix, to Marlene H. Dortch, Federal Communications Commission, WC Dkt.
No. 11-42 et al., Attach. at 4 (filed June 15, 2010) (discussing exception management process); Emerios Database
Proposal at 6-7, 10 (discussing need for a “Customer Preference Resolution Process” and the need for a call center
to answer customer questions during the scrubbing process).
548 See USAC 2011 IDV Process Letter.
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direct the Bureau to select the states and ETCs that should be subject to the IDVs, and require
USAC to follow the consumer outreach requirements set forth in the 2011 Duplicative Program
Payments Order.549 In the course of identifying duplicative subscribers, USAC shall also
identify those subscribers receiving multiple Lifeline service offerings at the same address and
notify such subscribers about the one-per-household requirement established in this Order.
USAC shall provide notice to these subscribers that they must select a single Lifeline provider
within their economic unit and provide them with a copy of the one-per-household worksheet.
We direct the Bureau and USAC to work with ETCs to facilitate outreach to these subscribers
and to develop a process for resolving the duplicative support within a household. We direct
USAC to continue with the IDVs at the Bureau’s direction until ETCs (or state agencies, where
applicable) can determine if someone is receiving Lifeline benefits from another provider via the
National Lifeline Accountability Database.
212.
Exception Management. Any duplicates elimination process must balance the
need to reduce waste in the Fund against mistakenly denying consumers Lifeline benefits. In the
Lifeline and Link Up NPRM, the Commission recognized that it might be appropriate to establish
“exceptions” to the rules restricting the availability of Lifeline so that consumers are not
improperly denied access to Lifeline benefits. There was widespread support for the Commission
to adopt a process to permit consumers falling within these exceptions to remain eligible to
receive benefits.550 For example, as explained, some residences on Tribal lands lack U.S. Postal
Service addresses.551 Without an exception process, consumers with addresses not recognized by
the U.S. Postal Service may be inappropriately denied support.552
213.
We direct USAC to implement a process to manage these exceptions so that
consumers are not improperly denied access to Lifeline benefits. To the extent possible, the
database should be designed to recognize and manage exceptions without human intervention to
limit ongoing costs. However, as several commenters argue, it may not be feasible or desirable
to eliminate all human intervention. 553 USAC, for example, may have to consider utilizing call
center representatives to manage exceptions.554 To provide sufficient flexibility to address
exception management, we direct USAC to implement a process that will provide sufficient
549 2011 Duplicative Payments Order, 26 FCC Rcd at 9029, 9030-31, paras. 13, 16.
550 See, e.g., Cricket Comments at 8-9; Verizon Reply Comments at 5; Smith Bagley Comments at 10-12;
Benton/PK/UCC Comments at 4; NASUCA Comments at 18; NY PCS Comments at 8; TracFone Comments at 13.
551 See supra para. 193.
552 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2807, para. 113.
553 See Emerios June 22 ex parte Letter at 3 (“The cost of exception staff is significant and will rise as the
Commission increases the need for exception handling. A well designed system that encourages automation will
reduce this cost and improve the customer experience.”).
554 See Emerios Database Proposal at 12 (discussing scenarios where live intervention may be necessary to manage
exceptions).
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flexibility to address current and future exceptions, consistent with our rules.555 We further
direct USAC to propose such a process to the Bureau for approval within six months after the
effective date of this Order. USAC may only implement such a process once approval is given
by the Bureau. USAC’s proposal shall include estimates on how much their proposal will cost.
214.
Duplicates Scrubbing Process. In June 2011, the Commission directed USAC to
establish processes to notify subscribers that they are receiving duplicative support, explain that
they can select the provider from which to receive a Lifeline benefit, and facilitate the selection
of a single provider for receipt of Lifeline support.556 This process has been successfully
implemented in a number of states to take interim steps to eliminate duplicative support while
ensuring that subscribers continue to receive Lifeline benefits.557 Pursuant to the Commission’s
instructions, USAC matched subscribers of a number of ETCs in a handful of states.558 In its
Lifeline and Link Up NPRM, the Commission anticipated that a similar “scrubbing” process
would need to be undertaken to eliminate duplicative support once ETCs populate the database
with the required subscriber information.559 Many commenters agree and provide detailed
proposals for implementation.560 For example, West argues that, like the Duplicates Resolution
Process, a scrubbing process must involve, at a minimum, identification of duplicative benefits,
the selection of a default provider, notification of subscribers of their default selection, and a
means for subscribers to select the Lifeline provider of their choice.561
215.
Given the success of the Duplicate Resolution Process to date and support in the
record for the creation of a similar industry-wide process, we direct USAC to develop and
implement, subject to Bureau approval a scrubbing process modeled on the duplicates resolution
process. We direct USAC to provide a plan to the Bureau within two months after the effective
date of this order on how the scrubbing process would be implemented. This scrubbing process
should begin once the Bureau approves USAC’s plan, and ETCs have provided their existing
subscriber lists and accompanying data to either USAC or the database, as directed by the
Bureau, and USAC has developed an exception management process. The database must be
sufficiently capable of handling whatever functions, if any, are necessary to implement the
scrubbing process.
555We note that under its Memorandum of Understanding with the FCC, USAC must “procure all goods and services
in an open, neutral, lawful, and cost effective manner.” See USAC/FCC Memorandum of Understanding at 4,
available at http://transition.fcc.gov/omd/usac-mou.pdf. (emphasis added).
556 See generally June Guidance Letter.
557 See generally USAC 2011 IDV Process Letter.
558 See June Guidance Letter (“This letter provides guidance to USAC on the process it should follow in identifying
and resolving duplicative Lifeline claims found through IDVs conducted in specific states …”).
559 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2791, paras. 59-60 (discussing population of database).
560 See Presentation of West Corporation, WC Dkt. No. 11-42 et al., at 5 (filed June 13, 2012) (West June 13 ex
parte Presentation) (describing “scrubbing” process); Letter from James Bradford Ramsey, NARUC, to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 2 (filed June 17, 2011)
(NARUC June 17 ex parte Letter) (“The FCC needs to detail a process for selecting the default lifeline provider in
cases where a customer with more than one lifeline service provider either refuses or fails to make a timely selection
after being notified that only one carrier can get the support and a choice must be made.”).
561 See West June 13 ex parte Presentation at 5.
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216.
As part of the scrubbing process, USAC should identify those subscribers
receiving duplicative support, establish a process to select a default Lifeline provider for each
subscriber, provide notice to the subscriber that they will be de-enrolled from all Lifeline support
except for support from their default provider unless they override the default selection, and
provide subscribers a means to do so. Consistent with the Duplicates Resolution Process, USAC
must provide subscribers information and perform outreach regarding how subscribers with more
than one Lifeline subscription can continue receiving service under the Lifeline program from
the ETC of their choosing.562 We direct the Wireline Competition Bureau to work with USAC
as necessary so that these outreach efforts are implemented smoothly.
217.
Dispute Resolution Process. As the database and duplicates scrubbing process is
implemented, ETCs will de-enroll existing subscribers receiving duplicative support. Going
forward, ETCs will query the database to determine which prospective subscribers are already
receiving support from another ETC. Despite best efforts, in any such situation, it is possible
that some subscribers and prospective subscribers may be improperly identified as receiving or
applying for duplicative support. For example, we expect that this process will ensure that
consumers will not be denied support in those cases where the database is not updated with de-
enrollment information quickly enough. To protect these current and prospective subscribers,
several commenters suggest that the Commission put in place a process so that those persons
denied access to Lifeline benefits based on a finding of duplicative support are able to dispute
that finding and have a means of correcting inaccurate information in the database.563 We direct
USAC to establish processes to manage and resolve disputes over duplicative support consistent
with our rules.564 We further direct USAC to provide such a process to the Bureau for approval
within six months after the effective date of this Order. USAC may only implement such a
process once approval is given by the Bureau.
c.
Other Issues
218.Compliance with Laws and Regulations Regarding Privacy. In the Lifeline and
Link Up NPRM, the Commission sought comment on whether the transmission of information to
or storage of information by a database would violate any laws and regulations regarding
privacy.565 Some commenters raise concerns regarding privacy and urge the Commission to
examine the matter closely before implementing the database.566 As explained above, ETCs
must provide the consumer’s name, address, telephone number, the amount of support provided,
date of initiation and termination of Lifeline service, the last four digits of social security
number, date of birth, the means through which the consumer qualified (e.g., Medicare or
562See generally June Guidance Letter.
563 See Community Voice Mail June 23 ex parte Letter at 1 (“Numerous policy issues need to be clarified as part of
the design process including … a dispute resolution process…”).
564 See 47 C.F.R. § 54.719 et seq.
565 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2838, paras. 220-21.
566 See Cincinnati Bell Comments at 4 (arguing that a national duplicates database “may raise insurmountable
hurdles relative to the protection of customer proprietary network information”).
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income), whether the consumer has received Link Up support, the address where the support was
provided, and the date of initiation of Link Up service.567
219.
We do not believe that federal privacy laws are implicated by the transmission or
use of this information for the purposes outlined in this Order.568 This includes the Electronic
Communications Privacy Act (ECPA), which includes provisions limiting the ability of a
provider of “electronic communication service,” such as an ETC, to “divulge a record or other
information pertaining to a subscriber to or customer of such service” to the extent such
divulgence is made to a governmental entity.569 ECPA permits a divulgence that is “necessarily
incident to the rendition of the service or to the protection of the rights or property of the
provider of that service.”570 In light of the findings we make in this Order about the need to
develop a database to detect and prevent duplicative support, we conclude that divulging
information about Lifeline and Link Up subscribers as required by this Order is “necessarily
incident to the rendition of the service.” The Lifeline program must be run efficiently and in
compliance with the principles in section 254, including the public interest, convenience, and
necessity.571 As this Order explains, we must take steps now to reduce the amount of waste,
fraud, and abuse in these programs, and that necessarily includes the creation of a database to
identify and eliminate duplicate subscriptions. This would not be possible without the
cooperation of participating ETCs. In any event, we also conclude that we have sufficient
authority under the Communications Act of 1934, as amended, to require ETCs to provide the
required subscriber information notwithstanding ECPA. Sections 215, 218, and 220572 clearly
567 See supra at paras. 188-192.
568 As the Commission explained in the 2011 Duplicative Program Payments Order, the transmission of customer
data to a third party in order to eliminate duplicative support does not violate section 222 of the Act or the
Commission’s CPNI rules. See 2011 Duplicative Program Payments Order, 26 FCC Rcd at 9029, n.48. Similarly,
to the extent that the information transmitted by ETCs to the database or the information provided to authorized
parties querying the database is CPNI, these disclosures are permitted by the exceptions in section 222(d). See 47
U.S.C. § 222(h); 47 U.S.C. § 222(d)(1)-(2) (permitting disclosure “to initiate, render, bill, and collect for
telecommunications services” and “to protect the rights or property of the carrier, or to protect users of those
services and other carriers from fraudulent, abusive, or unlawful use of, or subscription to, such services”).
569 See 18 U.S.C. § 2702(c) (restricting disclosure of “a record or other information pertaining to a subscriber to or
customer of” an electronic communication service), (c)(6) (allowing divulgence “to any person other than a
governmental entity”); id. § 2703(c)(1) (providing that “[a] governmental entity may require a provider of electronic
communication service to disclose a record or other information pertaining to a subscriber to or customer of such
service” only under certain circumstances). We also observe that it is not at all clear whether transmitting
information to this database constitutes divulgence to “a governmental entity” within the meaning of ECPA. See id.
§§ 2702(c)(6), 2703(c)(3); id. § 2711(4) (defining “governmental entity” for this purpose as “a department or agency
of the United States or any State or political subdivision thereof”). The information will be transmitted to a database
that will be developed by USAC, in coordination with the Bureau and Office of Managing Director, and will not be
operated by this Commission. See supra para. 186. Although the Commission generally has access to all
information in USAC’s possession, see 47 C.F.R. § 54.702(j), the Commission does not intend routinely to access
the specific “information pertaining to a subscriber” that is protected by ECPA.
570 18 U.S.C. § 2702(c)(3).
571 See 47 U.S.C. § 254(b), (c), (e)(2).
572 47 U.S.C. §§ 215, 218 (“The Commission may obtain from such carriers and from persons directly or indirectly
controlling or controlled by, or under direct or indirect common control with, such carriers full and complete
information necessary to enable the Commission to perform the duties and carry out the objects for which it was
(continued….)
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demonstrate Congress’s intent that the Commission must have access to relevant information in
the possession of carriers in order to conduct necessary oversight. In particular, section 220(c)
provides that “[a]ny provision of law prohibiting the disclosure of the contents of messages or
communications shall not be deemed to prohibit the disclosure of any matter in accordance with
the provisions of this section.” Although we do not require access to the contents of any
communications for present purposes, this provision demonstrates Congress’s intent that other
provisions of law should not be held to override our specific authority to access information
needed to perform oversight, including non-content information, which generally is less sensitive
than the contents of communications.573 Thus, even to the extent that ECPA might otherwise
restrict the transmission of subscriber information to the database, we interpret sections 215, 218,
and 220 to give the Commission authority to direct ETCs to provide this information to USAC
notwithstanding ECPA.574
220.
Many parties argue that the Commission should establish safeguards so that the
data in the database is only used to check for duplicative support and related functions and for no
other purpose.575 For example, some commenters raise concerns that ETCs might “troll” the
database to determine which prospective subscribers are or are not currently receiving Lifeline
service and tailor marketing to those prospective subscribers accordingly.576 We conclude that
the database must have sufficient protections so that all the data housed in the database may only
be used to perform the functions and processes described in this Order and may not be used for
any other purpose, including marketing or subscriber retention. This includes a function that
logs, by time, every query and datafield upload or datafield change by an ETC. The database
must have a feature such that each time the database is accessed, the accessing party must sign
(electronically or otherwise) an acknowledgement that the database and the information in the
database may only be used to perform the functions and processes described in this Order, and
for no other purpose. Moreover, ETCs may only query the database to check to see if a
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created.”); 47 U.S.C. § 220(c) (“The Commission shall at all times have access to and the right of inspection and
examination of all accounts, records, and memoranda, including all documents, papers, and correspondence now or
hereafter existing, and kept or required to be kept by such carriers . . . .”).
573 When these provisions of the Communications Act were enacted, there was no specific statutory provision
prohibiting the disclosure of non-content information, so Congress would have had no need to refer to such
prohibitions in section 220(c). See generally House Comm. on the Judiciary, Electronic Communications Privacy
Act of 1986, H.R. Rep. No. 647, 99th Cong., 2d Sess. 25-26.
574 Cf. Qwest Communications International Inc. v. FCC, 229 F.3d 1172, 1176-80 (D.C. Cir. 2000) (deferring to the
Commission’s reasonable interpretation of section 220 in reading it together with the Trade Secrets Act).
575 See, e.g., Letter from Mary L. Henze, Assistant Vice President, AT&T, to Marlene Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 1 (filed Jun. 16, 2011) (“A Lifeline database should not
be designed for, and in fact should not be allowed to be used for, any marketing or promotional activities by
carriers.”) (AT&T June 16 ex parte Letter).
576 See Cincinnati Bell Comments at 10 (“[P]rocedures must ensure that providers cannot collect information from
the database for marketing purposes…”); Emerios Database Proposal at 11 (“The FCC should clearly limit data
queries by ETCs to that data for which the ETC has a valid use, such as an actual enrollment request, change of
address request, or de-enrollment request by the consumer. The FCC should prohibit any party from submitting data
queries to determine whether an address is available for any other purpose, including marketing, unless such
requirement conflicts with state rules.”).
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prospective subscriber already has support from another ETC and to audit the ETC’s own data in
the database and for no other purpose.577 ETCs violating this rule will be subject to the
Commission’s full enforcement authority.578 Furthermore, prior to providing subscriber
information to the database, the ETC must obtain consent from the subscriber. In doing so, the
ETC must describe to the subscriber in writing using clear and easily understandable language
the specific information being provided, that the information is being provided to the
Administrator to ensure the proper administration of the low-income program, and that failure to
provide consent will deny the consumer the Lifeline or Link Up benefit.
221.
State Opt-Out. A number of states have or are about to move forward with their
own systems to check for duplicative Lifeline support.579 States have expressed concern that any
national duplicates database not inhibit the operation of these state efforts.580 We applaud the
actions of these states to move proactively against waste and do not intend to inhibit their
progress. At the same time, states that do not implement their own processes for checking for
duplicative support must be covered by the national solution we implement in this Report and
Order.581 We allow states to opt-out of the duplicates database requirements outlined in this
Order if they certify one time to the Commission that they have a comprehensive system in place
to check for duplicative federal Lifeline support that is as at least as robust as the processes
adopted by the Commission and that covers all ETCs operating in the state and their subscribers.
Such certification must itemize with particularity each functionality of the state system that
corresponds to the federal rule we adopt today and must be approved by the Bureau.582 States
wishing to take advantage of this process must submit their one time certification within six
months of the effective date of this Order. If the Bureau does not act to deny the certification
within 90 days of being filed, it will be granted automatically. We do not require ETCs
operating in the states which have exercised their opt-out rights and whose certification has been
approved by the Bureau to comply with the obligations placed on ETCs herein with respect to
the duplicates database.583
577 A consumer is considered a prospective subscriber if the customer initiates the process of enrolling in the Lifeline
program.
578 See, e.g., 47 U.S.C. § 503. Moreover, to the extent that information housed or disclosed by querying the database
is CPNI, ETCs may also be subject to forfeitures for the unlawful disclosure or use of such information. See 47
U.S.C. § 222(c).
579 See, e.g., NARUC June 17 ex parte Letter at 2 (noting that states, including Texas, Oregon, and California have
existing programs that target duplicative lifeline support); Letter from Liz Kayser, Public Utility Commission of
Texas to Marlene Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 1 (filed
Aug. 15, 2011) (discussing Texas’ duplicates resolution process).
580 See NARUC June 17 ex parte Letter at 2 (“Several [state PUCs urged] that all States with complementary and
independent lifeline programs be allowed to opt out of any federal database if appropriate and/or be given real-time
password access to the federal database.”).
581 See id. at 3 (noting that some states support rapid implementation of a federal database to eliminate duplicate
support.”)
582 We direct the Bureau to release a public notice providing additional guidance to the states regarding the opt-out
process.
583 See Appendix A.
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222.
Duplicates Database and Related Processes Must Be Sufficiently Flexible. Our
administration of the Lifeline program will continue to evolve over time, particularly as the
Commission addresses additional issues raised in the Lifeline and Link Up NPRM. As several
commenters note, the database should be designed to be sufficiently flexible to adapt to
reasonably foreseeable changes in the Lifeline rules so that additional functionality can be added
at minimal cost.584 For example, we continue to consider whether we will provide ongoing
Lifeline support for broadband services and adopt a Lifeline broadband pilot program in this
Order.585 As a result, any database should be flexible so that additional functionalities may be
added in the future. For example, it should be capable of accepting and processing the data
necessary to check for duplicative broadband support.
223.
Eligibility Database. In the Lifeline and Link Up NPRM, we sought comment on
the potential functions of a database designed to eliminate duplicative claims as well as a
database to facilitate initial and ongoing certification of consumer eligibility.586 As explained
above, we adopt a number of requirements for ETCs, state agencies and USAC regarding the
initial and ongoing certification of Lifeline subscribers in order to ensure that only subscribers
receive a Lifeline benefit. To reduce burdens on consumers and ETCs going forward, we direct
the Bureau and USAC to take all necessary actions so that, as soon as possible and no later than
the end of 2013, there will be an automated means to determine Lifeline eligibility for, at a
minimum, the three most common programs through which consumers qualify for Lifeline.
Many parties support the adoption of a permanent eligibility verification solution,587 and find that
such a solution may have significant benefits for consumers, state agencies that today enroll
consumers in the Lifeline program, and ETCs. However, we find that we must gather additional
information, including how to facilitate the access of eligibility data from state social service
agencies and existing federal databases and how to manage consumer privacy risks.588 We
therefore seek comment in the attached Further Notice regarding discrete issues related to such a
process.589
224.
Because access to program and income information from federal or state agencies
may require coordination among government agencies, following the release of this FNPRM, we
direct the Wireline Competition Bureau to reach out to other government agencies to explore
cooperation regarding the exchange of eligibility data, and to the extent necessary and feasible,
coordinate the establishment of an interagency working group to include members of the
584 See, e.g., Emerios Comments at 2 (discussing need to capture both telephone and broadband information).
585 See section IX.B (Support for Broadband).
586 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2835-36, paras. 211-213.
587 See, e.g., AT&T Comments at 3; CenturyLink Comments at iii; CTIA Comments at 5; MMTC Comments at 6;
Sprint Comments at 1; Verizon Reply Comments at 1.
588 See, e.g., Cincinnati Bell Comments at 9-10; MO PSC Comments at 18.
589 Based on the information in the record, most consumers qualify for Lifeline through Medicaid, Food Stamps and
SSI. See supra n. 288. We recognize that meeting this goal will require coordinated action among numerous parties
outside of the Commission.
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Department of Agriculture, HHS, other appropriate federal agencies, and state PUCs.590 We
expect that shortly after release of the Order, the Bureau will host a series of workshops with
non-governmental entities, including ETCs, technical experts and database vendors, to accelerate
the establishment of a wide-spread, automated means for initial and ongoing verification of
subscriber eligibility. There are a number of benefits to proceeding in stages. As explained
below, setting up the infrastructure for a permanent duplicates process may reduce the cost of
subsequently implementing database solutions to address eligibility.591 Moreover, the
Commission’s and USAC’s experience with the process adopted in the 2011 Duplicative
Program Payments Order and the implementation of the duplicates database may assist in the
design and creation of an automated process for confirming eligibility from governmental
agencies.
d.
Cost
225.The ultimate objective of the database is to reduce waste in the Fund. Therefore,
it is important that the initial and ongoing costs of the database are outweighed by the waste that
will be eliminated by operation of the database. Based on the evidence in the record, even the
highest estimates of the cost of development and ongoing administration of a database appear to
bear a much smaller cost than the substantial ongoing annual savings to the Fund that will result
from limiting duplicate benefit payments.592 For example, Emerios estimates the cost of
development of a duplicates database and related functions at $7.5-10 million.593 While other
available cost estimates vary depending on the vendor and specific functionality of each
proposal,594 estimates for a duplicates database do not appear to vary by orders of magnitude and
590 Any such working group would be established consistent with the requirements of the Unfunded Mandates
Reform Act of 1995 (2 U.S.C. § 1501 et seq.) (UMRA), which creates an exception to the Federal
Advisory Committee Act (see 5 U.S.C. Appendix 2), to allow intergovernmental meetings solely for the purposes of
exchanging views, information, or advice relating to the management or implementation of Federal programs
established pursuant to public law that explicitly or inherently share intergovernmental responsibilities or
administration.
591 See Emerios Database Proposal at 2 (“Phase II [the eligibility database] would be built on the structure and
systems in Phase I [the duplicates database], thus dramatically reducing the cost and effort required to expand
functionality of the [eligibility database].”).
592 See CenturyLink Comments at 21 (“Ultimately, a database likely would prove cost effective by generating
savings for the low-income program fund greater than the cost of developing and maintaining the database.”).
593 See Emerios Comments at 15-16 (“Emerios estimates the market budget and planning costs for Phase I [i.e., a
duplicates database] at approximately $7.5-10 million. This estimate excludes the costs to communicate with
program beneficiaries and any ongoing fee to administer the database.”). West breaks down the estimated cost of a
database into various components, including the “initial infrastructure configuration,” the initial database scrub, and
the cost of ongoing “dips” to the database by participating ETCs. See West May 19 Presentation at 19-23. West
estimates that if the initial infrastructure is a “shared platform,” the cost will be approximately $25,000, but if it is a
“dedicated platform,” it will cost approximately $300,000. See id. The initial scrub would cost approximately
$532,500 plus the costs of “one-time letter creation” and “letter mailing,” which West lists as currently unknown
costs. See id. Finally, West estimates that each database “dip” will cost $0.19 for the first 500,000 dips; $0.15 for
dips 500,001-750,000; $0.11 for dips 750,001-1,000,000; $0.09 for dips 1,000,001-2,000,000; and $0.08 for dips
2,000,001 and beyond. See id.
594 See Solix Comments at 7 (noting that based on its experience in centralized Lifeline certification and verification,
the cost of database administration will be determined by many factors, including the specific design requirements;
(continued….)
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all appear to be substantially less than the amount of money wasted through duplicative
payments each year. Indeed, based on results from the first 12 states in which we implemented
the duplicate resolution process, we have identified $2.9 million in duplicative payments per
month which represents $35 million in annualized payments for those states alone.595 There is
little doubt that on a national scale, a database could potentially identify millions more in wasted
support. A duplicates database may also produce other operational efficiencies that would
improve administration of the program and may reduce costs for both ETCs as well as USAC,
thereby reducing the burden on all contributors to the Fund. For instance, the consumer data in
the duplicates database could potentially be utilized to save carriers the trouble of assembling
and filing FCC Form 497s, reduce the need for USAC to perform audits so that ETCs are only
being reimbursed for Lifeline consumers that they are actually serving, and make the audits that
are undertaken more efficient and less costly.596 Moreover, implementing a duplicates database
now may reduce the future cost of development and/or administration of an eligibility database
and associated processes.597 While we recognize that carriers will incur some costs in interacting
with the database (e.g., submitting queries, uploading data), the database is designed to minimize
these costs.598 For example, we recognize that carriers will incur some costs from interacting
with the database, because we do not mandate that carriers must update the database in real-time,
we believe that the compliance costs will be minimal. Moreover, ETCs will not be charged for
“dipping” the database and the costs of development and ongoing maintenance of the database
will be supported by the Fund.599 For all of these reasons, we conclude that it would be cost
effective to implement a database to check for and eliminate duplicative support.
B.
Toll Limitation Service Support
226.Background. Toll limitation service (TLS) historically has included both toll
blocking, which prevents the placement of all long distance and international calls for which the
subscriber would be charged, and toll control, which limits to a preset amount the long-distance
(Continued from previous page)
degree of automation; interface standards between the administrator, state agencies and participating service
providers, consumer application options and processes, eligibility review procedures and the level of communication
and correspondence between applicants); West May 19 Presentation at 19-23; Emerios June 23 ex parte Letter
(describing variables which may effect the cost of a database to check for duplicates or eligibility).
595 See USAC 2011 IDV Process Letter.
596 See Cox Comments at 5 (“Matching carrier records to the database will be much more straightforward than the
current process, and may involve nothing more than validating the carrier’s procedure for using the
database…While audits are necessary in the current program to control waste, fraud and abuse, the manual
comparisons of records to filed claims can be quite labor-intensive and intrusive.”); Sprint Reply Comments at 10, n.
16 (“Today, carriers to [sic] file Form 497 lifeline count reports, which are processed and audited by USAC. A
Lifeline customer database would obviate the need for these reports and thus should generate some administrative
cost savings for USAC.”). While we do not in this order begin a transition from the filing of Form 497s to an
“autofilling” process by the database, we believe that the construction of a duplicates database will make such a
transition easier and less costly.
597 See Emerios Reply Comments at 15-16.
598 Moreover, no party has fully quantified these costs in the record.
599 By contrast, a significant portion of the process established pursuant to the Duplicates Order was paid for by the
ETCs participating.
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charges a subscriber can incur during a billing period.600 In the Universal Service First Report
and Order, the Commission required ETCs to offer TLS at no charge to low-income
subscribers.601 At the time, only incumbent local exchange carriers were receiving support for
serving low-income consumers.602 Consumers typically purchased long distance service
separately from local service, and rates for long distance were considerably higher than they are
today.603 The Commission required ETCs to offer TLS based on studies demonstrating that the
primary reason for service termination for low-income subscribers was failure to pay long
distance bills.604
227.
Commission rules provide additional support to ETCs to be compensated for the
“incremental” costs of providing toll limitation service to eligible low-income consumers.605
The Commission’s TLS rule has not been comprehensively reexamined since it was established
in 1997.
228.
In the NPRM, the Commission proposed amending its rules to eliminate Lifeline
support for the costs of providing TLS to Lifeline subscribers.606 The Commission explained
that the TLS rule, which was adopted more than a decade ago, may have outlived its usefulness
given reductions in long-distance calling rates.607
229.
Discussion. We conclude that the original policy rationale for requiring all ETCs
to offer toll limitation service to low-income consumers no longer remains valid in light of
significant changes in the communications marketplace over more than a decade. Many carriers
no longer distinguish between toll and non-toll calls in how they price voice telephony. The
notion of higher priced long distance or “toll” calling is increasingly irrelevant in today’s
marketplace. Low-income consumers often have options for service that provide the ability to
make calls for a flat price, regardless of the location of the called party. With such service plans,
the need to block or limit toll calls to protect against unexpected, higher charges is necessarily
600 See 47 C.F.R. § 54.400(d); see also Universal Service First Report and Order, 12 FCC Rcd at 8980, para. 383.
601 Universal Service First Report and Order, 12 FCC Rcd at 8980, para. 385.
602 Universal Service First Report and Order, 12 FCC Rcd at 8969-8970, para. 365.
603 Section 271 of the Telecommunications Act of 1996 prohibited the regional Bell operating companies (RBOCs)
from offering most long-distance services until the Commission found that they had opened their local market to
competition. See 47 U.S.C. § 271. Between 1999 and 2003, the Commission found that each of the RBOCs had
satisfied the statutory criteria and accordingly was eligible to compete in the long-distance market. See TRENDS IN
TELEPHONE SERVICE, FEDERAL COMMUNICATIONS COMMISSION, WIRELINE COMPETITION BUREAU, INDUSTRY
ANALYSIS AND TECHNOLOGY DIVISION at 9-3 (Sept. 2010). Since then, “the distinctions between the two markets
have become blurred as customers acquired the ability to select among competing carriers” for all markets. See id.
at 9-2.
604 See Universal Service First Report and Order, 12 FCC Rcd at 8980, 8982-83, paras. 385, 389.
605 47 C.F.R. § 54.403(c).
606 See NPRM, 26 FCC Rcd at 2794, para. 70.
607 See id.
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moot.608 Indeed, we note that today, only 5 percent of Lifeline subscribers also subscribe to
TLS.609
230.
We acknowledge the concern that eligible telecommunications carriers should be
required to provide low-income consumers the ability to manage the cost of their monthly
service plans, and to avoid higher expenditures that could prove to be devastating to a household
of limited means.610 Such concerns are less prevalent, however, for consumers who subscribe to
service plans that offer a set amount of domestic minutes (local or toll calls) each month, which
by definition provide a mechanism for the low-income household to manage monthly
expenditures. We therefore clarify that we do not consider a subscriber who has a Lifeline
calling plan that includes a set number of calling minutes available for either local or domestic
long distance calls to have voluntarily elected to receive TLS. Therefore TLS support will not be
provided to ETCs providing such plans effective with April 2012 disbursements. We maintain
the requirement to offer TLS at no charge to the low-income consumer only for service plans for
which the ETC charges a fee for toll calls, either domestic or international, that is in addition to
the per month or per billing cycle price of the consumer’s Lifeline service.611 A plan that does
not provide the ability to make international calls, however, would not be considered a toll
limitation service.
231.
Moreover, given the low subscription rate to TLS, we no longer believe that
providing additional support for the provision of TLS remains necessary to protect low-income
consumers from potential service disconnection for non-payment of toll charges. The funds
currently provided for the incremental costs of TLS could be used in other ways to more
effectively meet our universal service goals. Program participants have increasingly moved to
wireless services, which do no claim TLS support.612
232.
We observe that there is great variance in TLS costs claimed by ETCs seeking
reimbursement, ranging from $0 to $36 per Lifeline subscriber per month.613 Such variance
608 By definition, in the absence of toll calls, there is no need to limit toll calling.
609 Of the current 13 million Lifeline subscribers, ETCs seek reimbursement for TLS for only 500,000 subscribers,
almost all of whom are wireline subscribers.
610 Some commenters argue that TLS is of great value to Lifeline subscribers. See COMPTEL Reply Comments at
2, n. 1 (summarizing commenters that support a continued need for TLS for subscribers).
611 Providing the consumer with the ability to purchase additional minutes when a set amount of minutes are
exhausted does not constitute toll limitation service. In the event a Lifeline-only ETC provides to subscribers a set
amount of “all distance” minutes whereby the subscriber can make local or toll calls without incurring additional
charges, that Lifeline-only ETC does not meet the “facilities” requirement of section 214(e)(1)(a) if its only facilities
are call management functionalities that track the consumer’s usage and that limit the ability to make additional calls
when the minutes associated with the Lifeline offering are exhausted. If the ETC transfers a subscriber to a call
center to purchase additional minutes when the set amount of all distance minutes are exhausted, that is not toll
limitation service. Likewise, if the subscriber must purchase additional minutes to make international calls, any
facilities used by the ETC to permit the subscriber to purchase additional international minutes cannot be relied upon
to meet the facilities requirement of section 214.
612 See generally USAC 2011 Support Amounts Letter. USAC’s filing indicates that only two competitive ETCs
claiming TLS are wireless providers, and they each have only two subscribers. See id.
613 See id.
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strongly suggests that ETCs are taking different interpretations of our current requirement for
reimbursement for “incremental costs.” Moreover, we note that a number of ETCs do not seek
any reimbursement for TLS costs, despite providing TLS to their subscribers,614 which calls into
question whether there is any significant incremental cost to providing the service.
233.
In 2010, USAC disbursed $22.5 million in TLS support – an increase from $8.9
million in 2009.615 USAC reported $7.8 million in TLS disbursements in 2011.616 Given the
growth and variance in TLS support, we are concerned that there may be significant waste or
abuse in claims for TLS support.
234.
We conclude that we should eliminate support for TLS as an amount separate
from Lifeline support, but will do so over a period of time to mitigate the potential impact of
doing so. We will phase out TLS support over a period of time by capping the maximum
amount of TLS support that may be claimed by an ETC, subject to our existing requirement that
claimed TLS costs “shall equal the eligible telecommunications carrier’s incremental cost of
providing either toll blocking or toll control, whichever is selected by the particular
consumer.”617 We establish a limit on TLS support of $3.00 per month per TLS subscriber that
will be implemented April 1, 2012 through the remainder of 2012. TLS support will be reduced
to $2.00 in 2013, and will be eliminated and unavailable at the beginning of 2014.
235.
The initial limit of $3.00 per month per TLS subscriber is based on the current
disbursement distribution of TLS support for the relatively few ETCs that claim such support.
According to USAC data, competitive ETCs, which serve roughly two-thirds of TLS subscribers,
do so at an average cost to the Fund of $3.67 per subscriber per month.618 In contrast, incumbent
LECs provide TLS at a much lower cost, at an average cost to the Fund of $0.51 per subscriber
per month.619 We implement this rule to address our immediate concerns with the unprecedented
growth in TLS support claims at a time when technological innovation and industry practices
suggest there is less need for this service. This decision is also consistent with the Commission’s
focus on improving fiscal responsibility and reducing waste, fraud, and abuse.
236.
We considered an immediate elimination of separate support for TLS
provisioning, but take a more gradual approach to avoid a flash cut that could potentially have a
negative impact on low-income consumers. Some commenters, including state regulators,
614 See Letter from Karen Majcher, Vice President, Universal Service Administrative Company to Trent Harkrader,
Chief, Telecommunications Access Policy Division, Wireline Competition Bureau, Federal Communications
Commission, CC Dkt. No. 96-45 (filed Feb. 25, 2011).
615 2011 MONITORING REPORT at Table 2-4.
616 Because a number of TLS recipients have not yet submitted claims for 4th quarter 2011 support, TLS claims for
2011 are likely to be higher. See Letter from Karen Majcher, Vice President, Universal Service Administrative
Company, to Sharon Gillett, Chief, Wireline Competition Bureau, Federal Communications Commission, CC Dkt.
No. 11-42 (filed Jan. 30, 2012) (USAC Jan. 30 Support Letter). USAC notes that carriers have up to January 31,
2012 to submit claims for fourth quarter 2011 support.
617 47 C.F.R. § 54.403(c).
618 See USAC 2011 Support Amounts Letter.
619 See id.
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support the elimination of reimbursement for TLS.620 Other commenters, however, recommend
that the Commission cap TLS support instead of eliminating it altogether.621 One commenter
argued for a limit of $1 per month per subscriber. 622 Given that we still require provision of
TLS by ETCs offering Lifeline services that would result in higher charges for consumers who
elect to make a toll call, immediate imposition of a $1 cap or immediate elimination of TLS
support could have an impact on certain ETCs in the near term.623 Incumbent LECs’ wholesale
cost of TLS varies – Verizon reports that its TLS costs range from $0.58 to $3.50 per month,624
while AT&T reports that its TLS costs range from $0 to $5.38 per month.625 Wireline
competitive ETCs purchase resold TLS with periodic agreements sometimes purchased months
in advance. An immediate elimination of TLS support could leave some wireline competitive
ETCs with little time to readjust their business arrangements to be able to provide TLS at a lower
cost.626 Therefore, we conclude that this glide path is necessary to provide sufficient opportunity
to ETCs and other interested parties to modify their practices in anticipation of the elimination of
support for TLS.
237.
We are also not persuaded by commenters who suggest a significantly higher cap
for TLS. Reunion suggests a non-recurring charge of $5.50 followed by $3.50 in monthly-
recurring charges per subscriber.627 Two parties filed comments in support of Reunion's
proposal.628 The actual support claimed by the vast majority of ETCs for providing TLS,
however, is significantly lower than Reunion's proposed caps. According to what ETCs
submitted this year in TLS support claims, the average incremental cost per month per subscriber
is $2.65.629 Because ETCs have not been required to substantiate their TLS costs, however, we
620 See, e.g., MI PSC Comments at 4; MO Commission Comments at 6.
621 See, e.g., Amvensys Comments at 6; AT&T Comments at 31; COMPTEL Reply Comments at 3; Image Access
Reply Comments at 1-2; NALA/PCA Reply Comments at 5; NJ DRC Comments at 14.
622 See AT&T Comments at 31.
623 See NALA/PCA Reply Comments at 2; see also Reunion Reply Comments at 11.
624 See Letter from Alan Buzacott, Executive Director, Verizon, to Marlene H. Dortch, Secretary, Federal
Communications Commission, (filed Nov. 21, 2011) (Verizon Nov. 21 ex parte Letter).
625 See, e.g., AT&T Jan. 24 ex parte Letter; Letter from John J. Heitmann, Counsel,Reunion, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Dkt. 11-42 et al., (filed Jan. 20, 2012) (Reunion Jan. 20 ex
parte Letter).
626 In an ex parte filing, Reunion asserted that ILECs fees are up to $8.52 in non-recurring charges and $5.12 in
monthly-recurring charges. Letter from John J. Heitman, Counsel, Reunion, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Dkt. 11-42 et al.,at 2 (filed April 8, 2011) (Reunion April 8 ex parte
Letter). AT&T’s average TLS rate is $3.50. See Reunion Jan. 20 ex parte Letter as amended by AT&T Jan. 24 ex
parte Letter. AT&T’s average TLS rate was calculated by averaging the wholesale residential TLS rates of AT&T
across all states except Wisconsin, for which wholesale TLS rates were unavailable.
627 See Reunion April 8 ex parte Letter.
628 See Letter of Jim Dry et al., Image Access et al., to Marlene H. Dortch, Secretary, Federal Communications
Commission, WC Dkt. No. 11-42 et al., at 1-2 (filed May 10, 2011) (Image Access May 10 ex parte Letter);
NALA/PCA Reply Comments at 5.
629 See USAC 2011 Support Amounts Letter.
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have no way to determine what the actual costs may be, and the wide variance in submitted costs
suggests that these figures may be higher than actual average costs.
238.
Finally, we find that phasing out TLS support does not create an unfunded
mandate for ETCs to supply TLS without reimbursement, despite what two commenters
argued.630 In this Order, we relieve ETCs of the obligation to offer TLS in the first instance if
their Lifeline offering does not distinguish in the pricing of toll and non-toll calls, which may
relieve many ETCs of the obligation to offer TLS.631 For those ETCs that will still be required to
offer TLS, we reject arguments that it is inappropriate or unlawful to require the offering of TLS
but to deny separate reimbursement.632 Commenters seem to suggest that they are entitled to
continued separate support for TLS as a matter of right. Precedent makes clear, however, that
carriers have no vested property interest in specific levels of support for the provision of
supported services. To recognize a property interest, carriers must “have a legitimate claim of
entitlement to” USF support.633 Such entitlement would not be established by the Constitution,
but by independent sources of law.634 Section 254 does not expressly or implicitly provide that
particular companies are entitled to a specified level of ongoing USF support, but rather that
support mechanisms be specific and predictable.635 The glide path established by this Order
clearly satisfies those statutory requirements. Indeed, there is no statutory provision or
Commission rule that provides companies with a vested right to continued receipt of support at
current levels, and we are not aware of any other, independent source of law that gives particular
companies an entitlement to ongoing USF support. Carriers, therefore, have no property interest
in or right to continued USF support to cover the incremental costs of providing TLS.636
630 See Amvensys Comments at 5-6; see also AT&T Comments at 31.
631 As noted above, in today’s marketplace many ETCs offer calling plans that do not distinguish between toll and
non-toll calls.
632 See, e.g., AT&T Reply Comments at 28; USTelecom Comments at v, 16.
633 Board of Regents, 408 U.S. at 577.
634 See id.; see also Members of the Peanut Quota Holders Assoc. v. U.S., 421 F.3d 1323, 1334 (Fed. Cir. 2005),
cert. denied, 548 U.S. 904 (2006) (finding that congressional action amending peanut quota program to exclude
prior beneficiaries from that program did not effect a taking because “the property interest represented by the peanut
quota is entirely the product of a government program unilaterally extending benefits to the quota holders, and
nothing in the terms of the statute indicated that the benefits could not be altered or extinguished at the government’s
election”).
635 See 47 U.S.C. § 254(b)(5).
636 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 293. Moreover, we note that, even if we
were to recognize a property interest in USF support, our action today would not result in a taking in circumstances
such as these, where the “interference arises from some public program adjusting the benefits and burdens of
economic life to promote the common good.” Penn Central, 438 U.S. at 124; see also Connolly, 475 U.S. at 225.
The “purpose of universal service is to benefit the customer, not the carrier.” Rural Cellular Association v. FCC,
588 F.3d 1095, 1103 (D.C. Cir. 2009) (quoting Alenco Communications, Inc. v. FCC, 201 F.3d 608, 621 (5th Cir.
2000)). The Commission has discretion to balance competing section 254(b) principles. Qwest Communications
Intern., Inc. v. FCC, 298 F.3d 1222, 1234 (10th Cir. 2005) (“The FCC may exercise its discretion to balance the
principles against one another when they conflict, but may not depart from them altogether to achieve some other
goal.”). Thus, the Commission may balance the principles posited in section 254(b)(3) (“Access to advanced
telecommunications and information services should be provided in all regions of the Nation”) and (b)(4)
(continued….)
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239.
Our rule balances the needs of the relatively few subscribers who subscribe to
TLS with our goal of minimizing the USF contribution burden and providing support that is
sufficient but not excessive. Our rule is specifically tailored to reduce burdens on the Fund; spur
innovation in the TLS provisioning market; and minimize, through the gradual reduction in TLS
support, the potential impact on ETCs caused by the elimination of TLS support. Further, we
give ample transition for affected ETCs of the phase-out of TLS support so as to ease the burden
of incorporating the costs of providing TLS with the costs of other aspects of Lifeline service.
C.
Link Up
1.Background
240.Link Up was originally adopted to provide up to $30 to offset half of the
customary charges assessed by incumbent local exchange carriers for commencing telephone
service.637 When the Commission adopted its current Link Up rules in 1997, Link Up support
was provided to ETCs, and passed through to low-income subscribers, to reduce a single service
connection charge at a consumer’s principal place of residence.638
241.
In 2000, in an effort to create incentives for ETCs to construct
telecommunications facilities on Tribal lands, the Commission amended its Link Up rules to
provide up to $70 in additional support for ETCs serving residents of Tribal lands.639 The
Commission stated that enhanced Link Up was to be used to cover part of the costs of extending
telecommunications infrastructure to eligible low-income consumers on Tribal lands.640 In 2003,
(Continued from previous page)
(“Consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost
areas, should have access to telecommunications and information services” at rates that are reasonably comparable
to urban rates) with the principle in section 254(b)(5) (“There should be specific, predictable and sufficient Federal
an State mechanisms to preserve and advance universal service”). Nothing in the Takings Clause or section 254
precludes the Commission from such reasoned decision making, even if it means reducing support of some current
support recipients. The requirement that support should be “specific, predictable and sufficient” does not mean that
support levels may never change, nor does it mean that required service offerings may not be combined.
637 See Universal Service First Report and Order, 12 FCC Rcd at 8977, para. 380 (adopting Joint Board
recommendation to permit carriers to offset half of customary charges, up to $30); see MTS and WATS Market
Structure Recommended Decision and Order, 2 FCC Rcd at 2332, para. 68 (the Joint Board noted that “we believe
that more can be done to directly address the problem of high non-recurring charges for low income households that
are not presently on the network, thereby not only preserving, but also increasing, universal telephone service.
Toward this end…we are recommending an additional lifeline assistance program to offset the charges assessed for
commencing telephone service.”).
638 See Universal Service First Report and Order, at 8977, para. 380 (determining “support shall only be available
for the primary residential connection”); see also 47 C.F.R. § 54.411 (a) (defining Link Up).
639 See 2000 Tribal Lifeline Order, 15 FCC Rcd 12208 at 12239-40, para. 60.
640 2000 Tribal Lifeline Order, 15 FCC Rcd at 122240-41, paras. 61-62 (discussing line extension charges). At the
time, the Commission stated: “we do not anticipate that expanded Link Up support will encourage inefficient
investment in telecommunications infrastructure because (1) support for line extension or other construction costs is
capped at $100 per qualifying low-income individual on Tribal lands; and (2) the line extension or other
construction costs in many tribal areas will exceed the maximum amount covered under the expanded Link Up
support; and (3) carriers therefore may have to absorb certain costs in excess of the maximum expanded Link Up
support amount in order to induce low-income individuals to initiate service.” Id.at 122241, para. 62.
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the Commission clarified that wireless carriers are eligible for Link Up support for their
customary charges for commencing telecommunications service, but that Link Up does not
support any costs of a wireless handset.641
242.
The Commission’s rules currently specify that such support reimburses ETCs for
the revenue they forgo in reducing their customary charge for commencing telecommunications
service and for providing a deferred schedule for interest-free payment of charges assessed for
commencing service.642 Link Up provides qualifying consumers with discounts of up to $30 off
the initial costs of installing a single telecommunications connection and up to $100 for
qualifying residents of Tribal lands.643 Commission rules for Tribal Link Up specify that the
charges that the carrier customarily assesses to connect subscribers to the network include
facilities-based charges associated with the extension of lines or construction of facilities needed
to initiate service.644
243.
Link Up support has increased over 230 percent in the last three years.645 USAC
projects that it will disburse more than $180 million in Link Up support to ETCs in 2012,
compared to $122.9 million in 2011, and up from $37.2 million disbursed in 2008.646 The
increase in support is largely the result of certain Lifeline-only wireless ETCs entering the
market in recent years and seeking reimbursement for Link Up, including enhanced Link Up on
Tribal lands.647 In September 2011, incumbent LECs accounted for 27 percent of Link Up
claims, while competitive ETCs accounted for 73 percent.648
244.
In the Lifeline and Link Up NPRM, the Commission proposed amendments to the
Link Up rules to eliminate waste, fraud, and abuse.649 In response to a subsequent proposal to
641 2003 Tribal Lifeline Order, 18 FCC Rcd at 10967-68, para. 18.
642 47 C.F.R. §§ 54.411, 54.413.
643 47 C.F.R. § 54.411.
644 47 C.F.R. § 54.411(a)(3).
645 See 2011 MONITORING REPORT at Table 2.2 (providing actual Link Up disbursements from 2007 to end of 2010);
see also USAC 2011 Support Amounts Letter at 3; USAC Jan. 30 Support Letter.
646 See USAC Federal Universal Service Support Mechanisms Fund Size Projects for First Quarter 2012, dated Nov.
2, 2011, at 19, available at http://www.usac.org/about/governance/fcc-
filings/2012/Q1/1Q2012%20Quarterly%20Demand%20Filing.pdf (detailing how USAC projects total annual 2012
Link Up support to be approximately $183.48 million); see also USAC 2011 Support Amounts Letter; 2011
MONITORING REPORT at Table 2.2.
647 ETCs typically are designated and eligible to receive both high-cost and low-income universal service support.
Lifeline-only ETCs, however, are carriers authorized to receive support only for the provision of the Lifeline
supported services to eligible low-income consumers. These carriers are not eligible to receive high-cost universal
service support.
648 See USAC 2011 Support Amounts Letter at 3 (listing support amounts for incumbent LECs and competitive
ETCs from January 2011 through September 2011).
649 Lifeline and Link Up NPRM, 26 FCC Rcd at 2795-96, paras. 72-76; see also TracFone Wireless, Inc. Petition for
Declaratory Ruling, WC Dkt. No. 96-45 et al., filed December 1, 2010 (TracFone Petition) (proposing reforms to
Link Up to eliminate waste and abuse based on business practices of some Lifeline-only ETCs).
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eliminate Link Up support,650 the August Public Notice sought further comment on whether such
support should be eliminated or limited to reimbursement for service initiations that involve
physical installation of facilities by the provider at the consumer’s residence.651
2.
Discussion
245.We amend our rules to eliminate Link Up support on non-Tribal lands for all
ETCs.652 Marketplace trends indicate that Lifeline consumers increasingly have service options
from ETCs that neither draw on Link Up support nor charge the consumer a service initiation
fee,653 raising concerns that Link Up support is not the most efficient means to reach our
programmatic goals. As part of our responsibility to balance a number of universal service goals
with finite resources, we conclude that dollars currently spent for Link Up in its current form can
be more effectively spent to improve and modernize the Lifeline program.654 Given the
significant telecommunications deployment and access challenges on Tribal lands, however, at
the present time we will maintain enhanced Link Up support for those ETCs that also receive
high-cost support on Tribal lands.655
246.
Link Up on Non-Tribal Lands. Today, unlike in 1997, many low-income
consumers have competitive choices among carriers that do not charge an activation fee and do
not draw on Link Up support. 656 At a time when we seek to modernize the program and
650 See Sprint Comments at 9-10.
651 Lifeline and Link Up Public Notice, 26 FCC Rcd at 11103-04, para. 3.b.
652 March is the last month for which ETCs serving customers on non-Tribal lands can claim Link Up support on
their FCC Form 497. For example, if an ETC serving non-Tribal lands currently receives Link Up support and
enrolls a new subscriber on March 15, 2012, that ETC may claim Link Up support for that subscriber. If, however,
that ETC enrolls a new subscriber on April 1, 2012, that ETC may not claim Link Up support for that subscriber.
653 See Letter from Mitchell F. Brecher, Counsel, TracFone, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 1-3 (filed Nov. 21, 2011) (TracFone Nov. 21 ex parte
Letter) (explaining that both TracFone and Virgin Mobile do not impose activation charges on Lifeline subscribers
and operate in the same markets as other ETCs that obtain Link Up support); see also USAC Low Income
disbursement tool, http://www.usac.org/li/tools/disbursements/default.aspx (showing the increase in subscribership
of i-wireless, an ETC that does not receive Link Up support) (support amounts can be determined by typing “i-
wireless” in “Study Area Name” option) (last visited Feb. 5, 2012).
654 See, e.g., Cricket PN Comments at 4 (arguing that Link Up support is not necessary to enable consumers to
access the public switched telephone network); AT&T PN Comments at 8-10 (supports elimination of Link Up for
all ETCs and explains problems of limiting Link Up to physical installations); T-Mobile Dec. 16 ex parte Letter, at 6
(urging the Commission to eliminate Link Up support, which would free up approximately $136 million per year in
funding that could be allocated toward other uses); Sprint PN Comments at 1 (supporting elimination of Link Up
support and re-purposing of funds to support the broadband pilot).
655 See USF/ICC Transformation Order, FCC 11-161 at para. 482 (recognizing that Tribal lands have significant
telecommunications deployment and access challenges). When the Commission first established the expanded Link
Up program for Tribal lands, it observed that doing so would create incentives for carriers to construct facilities
where none existed. See 2000 Tribal Lifeline Order, 15 FCC Rcd at 12239-40, para. 60.
656 The two largest wireless Lifeline providers, TracFone and Virgin Mobile (Sprint), along with Cricket and i-
wireless, enroll millions of low-income consumers in Lifeline without reliance on Link Up support. See Letter from
Mitchell Brecher, Counsel, TracFone, to Marlene H. Dortch, Secretary of the Federal Communications Commission,
(continued….)
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constrain the growth of the Fund and there are many competing demands for program support,
we question whether it makes sense to provide Link Up support to ETCs with high activation
fees for voice service when low-income consumers can get Lifeline service from another
provider without paying an activation fee.657 Declining costs and competitive pressures have led
many ETCs to stop assessing connection charges on low-income consumers.658 The Lifeline-
only ETCs that do not assess a connection fee or collect Link Up support are operating in the
same geographic markets as ETCs obtaining Link Up support.659 In a competitive environment,
carriers will only assess a fee that the market will bear. Indeed, the lack of activation fees
assessed by many competitive ETCs raises the question of whether the existence of rules
allowing ETCs to collect Link Up support creates an incentive for some ETCs to charge such
fees, when they otherwise would not.660
247.
We also have concerns that Link Up, in its current form, is vulnerable to waste
and abuse.661 Providing support for half of a “customary” charge up to a flat $30 amount creates
incentives for carriers to set their customary charge at $60 in order to maximize their draw from
the program, with incentives to focus on obtaining new subscribers, thus triggering application of
the activation fee, rather than focus on maintaining existing subscribers.662 Indeed, a number of
(Continued from previous page)
WC Dkt. No. 11-42 et al., at 4 (filed Oct. 13, 2011), (TracFone Oct. 13 ex parte Letter) (providing examples of
competitive choices of ETCs that do not receive Link Up support). The Link Up Coalition has also acknowledged
that members of the coalition serve the same geographic areas. See Letter from John Heitmann, Counsel, Link Up
Coalition, to Marlene Dortch, Secretary, Federal Communications Commission, at 2 (filed Dec. 7, 2011) (Link Up
Coalition Dec. 7 ex parte Letter).
657 See supra n.653 (providing examples of ETCs that do not charge activation fees and do not receive Link Up
support).
658 See Cricket PN Comments at 4 (noting that over the years many carriers have reduced and then eliminated their
activation fees); see also Sprint Comments at 9-10 (stating that “the ever increasing level of automation has reduced
the cost of initiating service”).
659 See TracFone Nov. 21 ex parte Letter at 1-4 (explaining that both TracFone and Sprint do not impose activation
charges on Lifeline customers and operate in the same markets as other wireless ETCs that obtain Link Up support).
Indeed, some facilities-based wireless ETCs that provide Lifeline service using their own network argue that
technological advances and business efficiencies have rendered activation fees unnecessary for wireless providers.
See Sprint Comments at 9-10; see also Cricket PN Comments at 4 (recognizing changes in marketplace such that
Link Up is unnecessary).
660 See TracFone Nov. 21 ex parte Letter at 3-4 (noting that many Lifeline-only ETCs receiving Link Up support
charge the maximum amount allowable under current Link Up rules).
661 See AT&T PN Comments at 8-10 (providing examples of how Link Up support can create wasteful spending);
see also Sprint Comments at 9-10 (arguing that elimination of Link Up, which it claims is a service of questionable
utility, will promote the public interest by helping to keep the Fund at a manageable and sustainable size, and will
discourage ETCs from manipulating program rules to get unneeded subsidies).
662 See Letter from John J. Heitmann, Counsel, Link Up Coalition, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42, Redacted – Public Version, at 2-5 (filed Nov. 14, 2011) (Link
Up Coalition Nov. 14 ex parte Letter) (arguing that activation fees are general industry practice and that several of
its members charge $60 due to their costs of operation, which gives them the maximum amount of allowable funds
under Link Up rules); but see TracFone Nov. 21 ex parte Letter at 3-4 (rebutting Link Up Coalition Nov. 14 ex parte
Letter by noting that the examples provided by the Link Up Coalition are of facilities-based wireless carriers with
activation fees almost half the amount that the Link Up Coalition imposes).
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Lifeline-only ETCs collecting Link Up support have $60 activation fees for which they take $30
from the Fund and waive the remaining balance.663 In such circumstances, the ETC has no
incentive to lower its activation fee.
248.
There is significant disagreement in the record as to the purpose of Link Up and
what costs are properly reimbursable through Link Up. The record indicates that Link Up
support is being used to offset an array of costs, including customer billing, basic labor,
equipment and facilities, outreach and marketing, as well as compliance with Lifeline rules, all
of which are costs that every carrier assumes in doing business in today’s market.664 In fact, it
appears that a number of Link Up recipients rely upon Link Up so that they can charge lower
monthly charges to low-income consumers.665
249.
As noted above, Link Up was adopted as a discount off “customary” connection
charges, at a time when such connection charges were rate-regulated by state public utility
commissions.666 Now, the majority of Link Up is going to pre-paid wireless resellers who are not
rate-regulated.667 If we specified that only certain costs are properly recoverable through Link
Up, compliance with such a rule would be difficult for USAC and this Commission to monitor,
audit, and enforce for companies whose rates are not regulated today under cost of service
principles.668 Record evidence indicates that most wireless resellers are not charged a separate
connection fee by their underlying wholesale providers.669 Because their rates are not regulated,
663 See 47 C.F.R. § 54.413(b); see also Link Up Coalition Nov. 14 ex parte Letter at 2-5 (acknowledging they charge
the maximum amount allowable in activation fees when receiving Link Up support); see TracFone Petition at 3-9
(explaining how at least one Lifeline-only ETC either waives the remaining balance of an activation not covered by
Link Up or “defers” payment over a period of 12 months giving the customer the option of reducing any activation
fee by purchasing more airtime minutes).
664 See, e.g., COMPTEL PN Comments at 9-11 (providing examples of the broad array of costs associated with
connection charges); CenturyLink PN Comments at 3-4 (noting that Link Up support covers the cost of making the
access line available to the customer, provisioning services, and processing the customer’s service order and opening
the account); GRTI PN Comments at 15 (noting that it charges its customers a one-time fee of $75 in order to recoup
its basic labor, equipment and facilities costs); Nexus PN Comments at 7-8 (providing examples of how the ETC
uses Link Up to cover the costs of community outreach and marketing).
665 The Link Up Coalition, comprised of at least six wireless competitive ETCs, acknowledges that its members rely
on Link Up subsidies to provide low cost (and most often free) wireless service and “free” phones to Lifeline
consumers. See Link Up Coalition PN Comments at 2.
666 See Universal Service First Report and Order, 12 FCC Rcd at 8969-70, paras. 365, 380 (originally intended for
incumbent LECs’ cost of connecting service in the residence).
667 See 47 U.S.C. § 332(c)(3)(a) (preventing states from regulating commercial mobile radio service providers’
rates).
668 Dollars are fungible, and there is no administratively practical way to determine whether $30 is recovering the
costs of “acceptable” activities but not being used for other things, including defraying the costs of handsets. See
Link Up Coalition PN Comments at 21 (stating that if Link Up was eliminated Coalition members would have to
evaluate whether they could continue to provide “no-charge handsets;”); see also supra para. 241 (explaining how
the Commission has previously held that Link Up does not support costs of wireless handsets).
669 See TracFone Nov. 21 ex parte Letter at 3 (noting that TracFone’s underlying carriers include three of the four
largest CMRS network operators in the nation -- AT&T Mobility, Verizon Wireless and T-Mobile -- none of which
impose activation fees on TracFone as the wholesale customers). We note that the incremental cost to connect a
new subscriber to the network may be built into the wholesale rate structure. The Link Up Coalition claims that
(continued….)
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however, wireless carriers can set their “activation” fees at any level the marketplace will bear.670
The Link Up subsidy, coupled with the ability to waive the fee borne by the consumer, insulates
those charges from the effects of competition when serving Link Up subscribers.671 Indeed, as
noted above, we are concerned that Link Up support may act as an incentive for ETCs that focus
primarily or exclusively on the low-income market to charge higher activation fees to Lifeline
consumers than typically are charged by other ETCs to non-Lifeline customers.672
250.
We acknowledge that some incumbent LECs continue to assess a customary
charge on their subscribers to commence service. The record indicates that such charges vary
significantly among the incumbent carriers, ranging from $13.50 to $66.00.673 Given the many
competing demands for program support and our desire to maintain a technology-neutral
approach, we decline to adopt a policy that would provide Link Up support only to wireline
carriers.674 We are not convinced from the record before us that elimination of Link Up support
for incumbent LECs will discourage or prevent consumers from subscribing to telephone
service.675 Indeed, some incumbent LECs support eliminating Link Up support.676 Others argue
(Continued from previous page)
several of its members are subject to network activation charges from the underlying provider, but nothing in the
record indicates that such charges are based on individual customer activations as opposed to a general charge built
into the wholesale rates. See Link Up Coalition Reply Comments at 4.
670 There is information in the record that the average activation charge for facilities-based wireless carriers is $35,
whereas some wireless ETCs do not charge any fees on Lifeline customers and others impose as much as $72 for
activation, but waive such fees for Lifeline customers. See Nexus Nov. 15 ex parte Letter,at 4, Attach. (providing
examples of activation fees from competitors); see also Link Up Coalition Nov. 14 ex parte Letter at 2-4 (providing
examples of activation fees in industry which are approximately $35). In contrast, all or most of the members of the
Link Up Coalition charge an activation fee of $60, the level that maximizes draw from the Fund. See id.; see also
supra n.662 (providing examples of how most Lifeline-only ETCs that are recipients of Link Up charge at least the
maximum amount permitted under current regulations).
671 See TracFone Petition at 3-9 (providing example of how at least one ETC either waives the remaining balance of
an activation not covered by Link Up or “defers” payment over a period of 12 months giving the customer the
option of reducing any activation fee by purchasing more airtime minutes).
672 Many facilities-based wireless carriers charge fees at or about $35-$36, which is almost half the amount charged
by Lifeline-only ETCs receiving Link Up. See Nexus Nov. 15 Ex Parte (noting that Verizon, AT&T and T-Mobile
charge activation fees in the range of $35-$36); see also Letter from Matthew A. Brill, Counsel, Cricket, to Marlene
H. Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., at 2 (filed Nov. 22, 2011)
(Cricket Nov. 22 Ex Parte) (claiming that Link Up provides little benefit due to competitive pressures and invites
waste and abuse in the program).
673 Most incumbent LEC connection fees are based on the terms contained in state tariffs. See Letter from Jamie M.
Tan, Director, Federal Regulatory, AT&T, to Marlene H. Dortch, Secretary, Federal Communications Commission,
WC Dkt. No. 11-42 et al. (filed Nov. 22, 2011) (listing line connection charges in its 22-state region) (AT&T Nov.
22 ex parte Letter); see also Verizon Nov. 21 ex parte Letter (listing activation charges for the 12-state region).
674 Cox suggests that the Commission should consider eliminating Link Up support altogether unless it is available
on a competitively neutral basis. See Letter from Charles Keller, Counsel, Cox, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Dkt. No. 11-42 et al., at 1-2 (filed Oct. 24, 2011) (Cox Oct. 24 ex parte
Letter). CenturyLink argues that Link Up support should be limited to wireline ETCs as opposed to wireless ETCs.
See CenturyLink PN Reply Comments at 4.
675 A number of commenters point out that for low-income consumers that face the challenges of securing
employment, mobile service is preferred over landline service. See, e.g, Letter from Mitchell Brecher, Counsel,
(continued….)
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that Link Up should be limited to physical installation of facilities.677 If the Commission limited
support to physical installation of facilities, it is unlikely that many providers would be eligible
for Link Up, as initiation of phone service in today’s marketplace typically is an automated
process.678 With declining costs of initiating service and competitive pressures, we are not
convinced that we should maintain Link Up for only wireline providers, even if we were to limit
it only to the physical installation of facilities. Based on the record before us, we decline to
maintain Link Up support for wireline ETCs only.679
251.
We acknowledge that certain Link Up recipients contend that Link Up enables
them to market Lifeline service in innovative ways to underserved markets that do not presently
have phone service.680 The record merely suggests, however, that community sign-up campaigns
can be effective at signing up consumers, not that Link Up in its current form is the only way to
(Continued from previous page)
TracFone, to Marlene H. Dortch, WC Dkt. No. 11-42, Attach., “Subsidized Cell Phones Provide Significant
Economic Gains for Poor and Near-Poor Americans” (filed Dec. 5, 2011). USAC data indicate that while
incumbent LECs are receiving less Link Up support each month, likely due to subscribers choosing competitive
alternatives, Lifeline disbursements for Virgin Mobile, TracFone, i-wireless and Cricket, as non-recipients of Link
Up, are steadily increasing . See USAC Low Income disbursement tool,
http://www.usac.org/li/tools/disbursements/default.aspx (last visited Feb. 5, 2012). Disbursements for particular
companies can be accessed on the USAC tool by typing company name in “Study Area Name” option.
676 AT&T PN Comments at 8-10; Verizon Nov. 21 ex parte Letter.
677 IN URC Comments at 4-5 (contending that ETCs must not be allowed to collect Link Up funds except when they
are installing physical equipment on the subscriber’s premises).
678 See Centurylink PN Comments at 3 (noting that for most customers, initiating service does not require
installation at the residence); Nexus PN Comments at 4 (acknowledging that physical installations are rare for both
wireline and wireless providers in today’s market); supra n. 658 (providing examples of how the ever increasing
level of automation has reduced the cost of initiating service).
679 Several LECs support elimination of Link Up support and believe that the funds could be redirected to more
tangible benefits to consumers. See AT&T PN Comments at 8-10 (supporting elimination of Link Up support);
Verizon Nov. 21 ex parte Letter (noting that it is not opposed to elimination of Link Up support to all ETCs
provided carriers obligation to provide discounts are eliminated); Cox ex parte Oct. 24 Letter (advocating for Link
Up support to be reallocated to more productive uses).
680 See Link Up Coalition PN Comments at 14, Figs. 1, 2 (contending that community outreach efforts should be
reimbursed by Link Up because, without the subsidy, certain low-income consumers would not otherwise be
served); Letter from Christopher Savage, Counsel, Nexus, to Marlene H. Dortch, WC Dkt. No. 11-42, Attach. at 11,
(filed Jan. 20, 2012) (Nexus Jan. 12 ex parte Letter) (stating that 62 percent of Nexus subscribers have no phone
service at time of enrollment); Nexus’ claim that 62 percent of their subscribers have no phone service at time of
enrollment appears high given that approximately 91.5 percent of low-income households subscribe to telephone
service. See 2011 MONITORING REPORT at Table 3.2. Nexus provides no back up support for its data. Indeed, one
explanation for why its statistic could be so high is because a low-income consumer may disconnect service for
periods of time and resume service with the same or competing carrier during the course of the year. There is no
indication in Nexus’ Jan. 12 ex parte Letter of whether the service provider properly verified whether the 62 percent
of subscribers had previously had phone service in the last few months or benefited from Link Up support in the past
by dropping service and reconnecting multiple times. The Commission’s rules, however, make clear that a
consumer can only receive the benefit from the Link Up support once unless the individual moves from their
principal place of residence. See 47 C.F.R. § 54.411(c) (limiting a consumer to receive benefit of Link Up support
only once unless the individual changes principal place of residence).
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ensure that such consumers subscribe to phone service.681 We also note that ultimately the
program is funded by other consumers and allowing the use of these funds for corporate
marketing has moved the uses of the funds far from the original purpose of the Lifeline program.
We note that through USAC’s in-depth data validation process targeted at uncovering duplicative
claims for Lifeline support, USAC has identified thousands of consumers subscribing to Lifeline
service from both an ETC receiving Link Up and an ETC that does not receive Link Up.682 For
example, in the state of Maryland, there were 10,201 subscribers – accounting for 51 percent of
total duplicates found in the state – who were found to be receiving Lifeline service from both an
ETC that receives Link Up and an ETC that does not receive Link Up support.683 This example
suggests that at least for some low-income consumers, Link Up is not increasing phone
subscribership. We seek further comment in the attached FNPRM whether there should be
support for one-time service charges as opposed to monthly charges in a modernized Lifeline
program.
252.
Certain carriers suggest that a decrease in support to $20-24 would be an
appropriate amount of Link Up support.684 We decline to adopt this proposal for the same
reasons we are eliminating the $30 amount allowable under our rules for receiving Link Up
support. Many low-income consumers have competitive choices from ETCs that do not charge
an activation fee and do not receive Link Up support. In balancing a number of universal service
goals with finite resources, and given the circumstances described above, we decline to adopt
this proposal. Because we find that the Link Up program is potentially susceptible to abuse,685 is
creating unhelpful incentives, and is providing little public-interest benefit, we conclude that it
should be eliminated as soon as possible. We are unpersuaded by the factual arguments that
some supporters of Link Up have made686 and conclude there is no persuasive evidence in the
record of any public-interest benefit to continuing to provide this support on non-Tribal lands687
for any amount of time.
253.
We therefore revise our rules, on a technologically-neutral basis, to eliminate
Link Up support for all ETCs on non-Tribal lands. We also conclude there is no federal
obligation for ETCs to offset or discount their activation fees for qualifying low-income
consumers. While we considered various proposals to define more narrowly appropriate and
inappropriate uses of Link Up, on balance, we conclude that the dollars spent on Link Up in its
681 See USAC 2011 IDV Process Letter at 5-6, 9, nn. 19, 21, 30 (providing details on duplicates with Link Up ).
682 See id. (providing details on duplicates from customers in Maryland, Michigan and Louisiana in which
subscribers were found to subscribe to ETCs receiving Link Up and ETCs that did not receive Link Up support).
683 See id. at 5-6, n. 19. Similarly, in the state of Michigan, there were 25,055 subscribers who were found to be
receiving Lifeline service from both an ETC who receives Link Up and an ETC that does not receive Link Up
support, which accounted for 47 percent of total duplicates found in the state. Id. at 6, n. 21.
684 See Nexus Jan. 20 Ex Parte at 3-4 (suggesting a decrease in Link Up per customer based on changes in market).
685 See supra para. 247.
686 See supra para. 251.
687 Despite this finding, we will continue to provide Link Up support on Tribal lands for ETCs receiving high-cost
support because those ETCs are building telecommunications infrastructure on Tribal lands, which have significant
telecommunications deployment and connectivity challenges.
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current form can be better spent on other uses, such as modernizing the program and constraining
the overall size of the fund.688 In eliminating Link Up today, we do not prejudge whether it
would be appropriate in the future to adopt a new rule to provide subsidies for non-recurring
charges imposed at service initiation.
254.
Link Up on Tribal Lands. At present, we maintain the enhanced Link Up program
on Tribal lands, but limit its availability to those ETCs receiving high-cost support.689 Consistent
with the intent of the enhanced Link Up program, those ETCs are building telecommunications
infrastructure on Tribal lands, which have significant telecommunications deployment and
connectivity challenges.690 This rule change will be effective beginning with April 2012 support
claims.691 Given changes in how high-cost support will be directed to Tribal lands as a result of
the USF/ICC Transformation Order and FNPRM, however, we seek further comment in the
attached FNPRM on whether the Commission should maintain the enhanced Link Up program
for Tribal lands in the future, or whether such funding should be re-purposed for other uses, such
as efforts to modernize Lifeline on Tribal lands.692
D.
Subscriber Usage of Lifeline-Supported Service
1.Background
255.ETCs receive a specific amount of Lifeline support per month for each qualifying
low-income consumer they serve. Some ETCs reduce the subscriber’s monthly bill by the
support amount and require the subscriber to pay the balance. Other ETCs, however, particularly
those offering pre-paid services, do not charge for service on a monthly basis and do not have a
regular billing relationship with the subscriber, or other similar relationship to track activity by
the subscriber. Our current rules do not require ETCs to ensure the qualifying low-income
consumer is actually using the Lifeline-supported service. As a result, some ETCs may seek and
receive Lifeline support for a consumer who has abandoned the service, transferred the service to
someone else, or failed to use the service at all.693 This wastes Lifeline support, because the
688 See Sprint PN Comments at 1 (“Sprint supports elimination of Link Up support for the Lifeline voice telephony
program and the redeployment of those funds to support the broadband pilot.”); Cox Oct. 24 ex parte Letter
(advocating for Link Up support to be reallocated to more productive uses).
689 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at paras. 479-482 (recognizing the unique
challenges in bringing communications services to Tribal Lands). Today, several Lifeline-only ETCs are receiving a
large amount of enhanced Link Up support on Tribal Lands. See, e.g., USAC Low Income disbursement tool,
http://www.usac.org/li/tools/disbursements/default.aspx (providing an example of how at least one Lifeline-only
ETC has received approximately a million in Link Up support for two months in 2011 on Tribal lands in OK
without building infrastructure) (support amounts can be determined for a company such as True Wireless by typing
the company name in “Study Area Name” option) (last visited Feb. 5, 2012).
690 See 2000 Tribal Lifeline Order, 15 FCC Rcd at 12239, para. 60 (concluding that expanded Link Up should apply
to costs associated with the construction of facilities needed to initiate service to qualifying individuals on Tribal
lands).
691 March 2012 is the last month that Lifeline-only ETCs operating on Tribal lands (i.e, those ETCs who do not
receive high-cost support) may seek reimbursement for enhanced Link Up support on Tribal lands.
692 See section XIII.E (Tribal Lands Lifeline and Link Up Support).
693 There are many reasons why a consumer may not use his or her Lifeline-supported service. For example, some
subscribers may have lost or abandoned their wireless devices, may lack a readily accessible source of electricity to
(continued….)
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program is not actually benefiting the consumer for which it is intended. To address this
situation, the Commission and some states have imposed “non-usage” procedures on some pre-
paid wireless ETCs in order to eliminate payments from the Fund for enrolled Lifeline
subscribers who are no longer using the service. 694
256.
In the NPRM, the Commission proposed to prohibit ETCs from seeking
reimbursement from the Fund for any Lifeline subscriber who has failed to use his or her service
for 60 consecutive days. The NPRM sought comment on whether a subscriber’s failure to use
the service for a specific period of time may reasonably demonstrate, or serve as a proxy for,
intended service discontinuation. The Commission also sought comment on whether a 60-day
period of inactivity, or something shorter or longer, would be reasonable and whether a usage
requirement should be limited to particular types of service or should apply to all types of
service. 695
2.
Discussion
257.We find that imposing a reasonable consumer usage requirement is appropriate in
certain circumstances in order to ensure that Lifeline support benefits only eligible low-income
subscribers actually using the supported service.696 We also amend our rules to clarify that
Lifeline service is a non-transferable benefit; an eligible Lifeline subscriber may not transfer his
or her phone service to anyone, not even someone who is also eligible. We further amend our
rules to prevent ETCs who do not assess and collect from end users a monthly charge (pre-paid
ETCs) from obtaining Lifeline support for an inactive subscriber who has failed to use his or her
(Continued from previous page)
charge the device, or may lack consistent access to a signal. In other cases, the consumer may have given or sold the
phone to another person, in violation of the ETC’s terms of service.
694 See, e.g., PlatinumTel Forbearance Order, 26 FCC Rcd at 13788; Petition of TracFone Wireless, Inc. for
Designation as an Eligible Telecommunications Carrier in the State of Wisconsin, 9385-TI-100, Wisconsin Public
Service Commission Final Decision, May 21, 2009, available at
http://psc.wi.gov/apps35/erf_view/viewdoc.aspx?docid=118017 (Wisconsin Non-Usage Order); Application of
Nexus Communications, Inc. for Designation as an Eligible Telecommunications Carrier in the State of Georgia for
the Limited Purpose of Offering Wireless Lifeline and Link Up Service to Qualified Households (Dkt. No. 19664),
available at ftp://www.psc.state.ga.us/dockets/18664/121955.PDF; Application of TracFone Wireless, Inc. for
Designation as an Eligible Telecommunications Carrier in Georgia for the Limited Purpose of Offering Lifeline
Service to Qualified Households (Dkt. No. 26282), available at
http://www.psc.state.ga.us/factsv2/Docket.aspx?docketNumber=26282; Georgia Public Service Commission Order
Amending ETC Designations, October 20, 2010, available at ftp://www.psc.state.ga.us/dockets/26282/131742.pdf
(Georgia Non-Usage Order); Application of TracFone Wireless, Inc. for Designation as an Eligible
Telecommunications Carrier in the State of Kansas for the Limited Purpose of Offering Lifeline Service to Qualified
Households, Dkt. No. 09-TFWZ-945-ETC, available at http://estar.kcc.ks.gov/estar/portal/kcc/page/docket-
docs/PSC/DocketDetails.aspx?DocketId=d40c343e-be19-4913-88ec-c567d1215bb3; Kansas State Corporation
Commission Order Granting in Part and Denying in Part Amended Application of TracFone for Designation as ETC
for Limited Purpose of Offering Lifeline Service to Qualified Households, December 14, 2010, available at
http://estar.kcc.ks.gov/estar/portal/kcc/page/docket-docs/PSC/DocketDetails.aspx?DocketId=d40c343e-be19-4913-
88ec-c567d1215bb3 (Kansas Non-Usage Order).
695 See NPRM, 26 FCC Rcd at 2798, para. 82.
696 See Wisconsin Non-Usage Order at 8; see also Georgia Non-Usage Order at 2; Kansas Non-Usage Order at 6.
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service in the first instance.697 If a pre-paid wireless service is not initiated, the consumer will
not be considered enrolled, and the pre-paid wireless ETC will not be eligible for Lifeline
support until a new subscriber personally activates the service. Furthermore, prepaid ETCs will
not receive Lifeline support for inactive subscribers who have not used the service for a
consecutive 60-day period. These new requirements for qualifying for Lifeline support respond
directly to recommendations made by the GAO in 2010, and represent an important step in
addressing potential waste, fraud, and abuse in the program.698 Moreover, in order to make sure
consumers are fully informed about the consequences of non-usage, we require pre-paid ETCs to
notify their subscribers at service initiation about the non-transferability of the phone service, its
usage requirements, and the de-enrollment and deactivation that will result following non-usage
in any 60-day period of time.699 We also require pre-paid ETCs to update the database within
one business day of de-enrolling a consumer for non-use. Furthermore, we require pre-paid
ETCs to annually report USAC the number of subscribers de-enrolled for non-usage. The de-
enrollment reports must be submitted with the ETC’s annual recertification results, and must
report the number of de-enrolled subscribers on a month-by-month basis.
258.
Adopting usage requirements should reduce waste and inefficiencies in the
Lifeline program by eliminating support for subscribers who are not using the service and
reducing any incentives ETCs may have to continue to report line counts for subscribers that
have discontinued their service. The vast majority of commenters support a 60-day subscriber
usage requirement for pre-paid ETCs.700 One commenter argues for a significantly longer non-
usage interval of 120 days to account for seasonal migrations in rural and Tribal areas and job
opportunities that may require that Lifeline service be interrupted for months at a time.701 While
we understand that there may be unique circumstances that may disrupt some subscribers’
connectivity for periods of time, the 60-day period we adopt is fiscally responsible and balances
the interests of subscribers with the risks associated with potential waste in the program.702 As
noted above, we expect ETCs to educate their subscribers about usage requirements and the de-
enrollment that will result from non-usage.
259.
Existing consumer usage policies have already resulted in substantial savings for
the program. TracFone, Virgin Mobile, and others have already implemented a 60-day “non-
usage” policy in a number of states.703 TracFone, for example, has de-enrolled 700,000
697 These restrictions do not apply to prepaid providers that do not collect some monthly amount from the customer.
698 GAO recognized this general approach as one step toward improving the integrity of the Lifeline program. See
2010 GAO REPORT at 36.
699 See id.; see also NASUCA Reply Comments at 8 (supporting sufficient notice of termination for non-usage).
700 See, e.g.,Cricket Comments at 5; FL PSC Comments at 12-13; COMPTEL Comments at 13-14; MI PSC
Comments at 5; MO PSC Comments at 7-8; NASUCA Reply Comments at 8; NY PSC Comments at 8-9; TracFone
Reply Comments at 2-3; USTelecom Comments at v, 17-18; IN URC Comments at 5; Sprint Reply Comments at 7.
701 See GCI Comments at 32-33.
702 See GAO Report at 35.
703 See TracFone Aug. 24 ex parte Letter (noting that TracFone posts its non-usage policy on its Lifeline website
www.safelink.com, which states: “Regardless of the Service End Date displayed on your handset, if you exceed 2
months without any Usage, you will be de-enrolled from the SAFELINK Program”).
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subscribers for non-usage in the last two years alone.704 The Florida PSC has also instituted a
60-day non-usage requirement that has resulted in $8.5 million in savings over six months from a
single provider.705 Some ETCs encourage the Commission to follow this policy and assert that
by doing so savings to the program would approach $230 million annually.706 We are building
on the proven success of practices developed and implemented at the state level, including in
Florida, and believe that adopting a rule that will apply uniformly across the country should
result in additional savings to the Fund.
260.
An ETC offering pre-paid service may not seek or receive universal service
support for a qualifying low-income consumer until that individual subscriber uses the supported
service to either activate the service or complete an outgoing call.707 We amend section 54.407
of our rules to make clear that all new Lifeline subscribers of pre-paid wireless service must
personally activate the service prior to the ETC seeking reimbursement from the Fund. After
service has been initiated in this manner (by initiation and/or actual use of the service by a
subscriber), pre-paid ETCs will continue to receive universal service support reimbursement for
each qualifying low-income subscriber who continues to use the supported service, as described
below.
261.
To provide clear guidance to ETCs on what is necessary to comply with this new
rule, we specify the activities that establish continued usage by a consumer. An account will be
considered active if during any 60-day period the authorized subscriber does at least one of the
following: makes a monthly payment; purchases minutes from the ETC to add to an existing
pre-paid Lifeline account; completes an outbound call; answers an incoming call from anyone
other than the ETC, its representative, or agent; or affirmatively responds to a direct contact from
the ETC confirming that he or she wants to continue receiving the Lifeline supported service.708
We find these actions impose an appropriately small burden on the subscriber to maintain use of
the supported service and clearly establish for the ETCs the few actions they must monitor.709
We decline to specify any other qualifying actions to establish usage at this time, and will
evaluate whether any future modifications are necessary based on experience with the new rule.
704 See Nexus Comments at 27; see also TracFone Comments at 17-18.
705 See FL PSC Comments at 12-13. Other state commissions concur. See IRUC Comments at 5; see also MI PSC
Comments at 5; MO PSC Comments at 7-8; OH PUC Comments at 9.
706 See TracFone Oct. 17 ex parte Letter at page; see also Letter from Danielle Frappier, Counsel, Nexus
Communications, Inc., WC Dkt. No. 11-42 et al., at 1 (filed Oct. 25, 2011) (citing TracFone Oct. 17 ex parte Letter)
(Nexus Oct. 25 ex parte Letter).
707 The subscriber must activate the service, or the service must be activated in the presence of the subscriber. A
third party, such as an ETC, cannot activate the service for the subscriber unless expressly authorized to do so by the
subscriber. Unless and until the subscriber personally activates the Lifeline service, the pre-paid ETC may not seek
or receive reimbursement from the Fund.
708 See Sprint Comments at 10-11; see also NASUCA Reply Comments at 8 (concurring with Sprint’s list of
activities for determination of active use).
709 We also decline to adopt CompTel’s suggestion to include sending or receiving a text message in the enumerated
list as text messaging is not a supported service. See COMPTEL Comments at 13-14; see also 47 C.F.R. §
54.101(a)(1)-(9).
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262.
We further clarify that ETCs must continue to comply with existing public safety
obligations, and nothing in this Order modifies those obligations. For example, the
Commission’s rules require commercial mobile radio service (CMRS) providers subject to the
Commission’s 911 rules to transmit all wireless 911 calls, including those from non-service
initialized phones, to Public Safety Answering Points (PSAPs).710 We do not modify this rule,
and we make clear that our 60-day usage rule applicable to pre-paid ETCs does not modify in
any way the requirement that ETCs transmit a Lifeline subscriber’s wireless 911 calls, regardless
of subscriber inactivity. Hence, an ETC must transmit 911 calls even if the ETC is no longer
providing Lifeline service to that consumer.711
263.
We extend the consumer usage condition only to pre-paid services, which are
those services for which subscribers do not receive monthly bills and do not have any regular
billing relationship with the ETC, and decline at this time to impose this condition on other types
of Lifeline supported services. A number of commenters raised concern with a usage rule being
applied to post-paid ETCs,712 with several pointing out that post-paid service does not present the
same risk of phantom accounts that can be detected only by inactivity.713 Similarly, others argue
that even a minimum payment on post-paid accounts is a clear indication of the subscriber’s
intent to maintain the Lifeline service.714 Another commenter points out that a paying subscriber
who is away from their phone does not signal that the consumer does not want the service.715
We conclude that subscribers of post-paid ETCs do not present the same risk of inactivity as
subscribers of pre-paid services. The possibility that a wireless phone has been lost, is no longer
working, or the subscriber has abandoned or improperly transferred the account is much greater
for pre-paid services.716 We are sensitive to the administrative burden that a 60-day usage
requirement may have on post-paid services, and at this time do not extend the usage
requirements to post-paid services, whether wireline or wireless.717 For pre-paid service with no
monthly charge, by contrast, there may be no other means beside usage patterns to track whether
a consumer is still receiving the benefit of the supported service.718 Thus, the 60-day usage
requirement we adopt is applicable only to subscribers of pre-paid ETCs who, because of the
710 See 47 C.F.R. § 20.18(b).
711 See id.; see also NPRM, 26 FCC Rcd at 2798, para 83.
712 See Alaska PUC Reply Comments at 2, 9-10; see also AT&T Reply Comments at 21-22; GCI Comments at 30;
NASUCA Comments at 15; NASUCA Reply Comments at 8; NY PSC Comments at 8-9; TracFone Reply
Comments at 2-3; Verizon Reply Comments at 8; YourTel Reply Comments at 2.
713 See AT&T Reply Comments at 21; see also GCI Comments at 30; NASUCA Comments at 15; NASUCA Reply
Comments at 8.
714 See CenturyLink Comments at 9; see also GCI Comments at 3.
715 See Verizon Reply Comments at 8.
716 See Consumer Cellular Comments at 12 (explaining that subscribers may not be aware of the social cost of
abandoning service).
717 See AT&T Reply Comments at 21-22; see also GCI Comments at 30-31; NASUCA Comments at 15.
718 See GCI Comments at 30 (noting that for free pre-paid Lifeline wireless services in which there is no activation
fee, no monthly fee, no surcharges or taxes, there is no objective means of ascertaining whether the subscriber
should still be viewed as active apart from their usage patterns).
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pre-paid contract arrangement, do not have regular contact with the ETC that would provide a
reasonable opportunity to ascertain a continued desire to continue to receive Lifeline benefits.
E.
Minimum Consumer Charges
1.Background
264.In the 2010 Recommended Decision, the Joint Board expressed concern about
Lifeline service offerings provided at no cost to the subscriber.719 In particular, the Joint Board
raised concerns about the connection between prepaid wireless ETCs, which do not provide a
monthly bill and, in some cases, provide handsets and service at no charge to consumers, and the
significant growth in the Fund.720 The Joint Board recommended that the Commission consider
whether all Lifeline subscribers should pay a minimum monthly rate, including eligible
subscribers on Tribal lands.721
265.
In the NPRM, the Commission sought comment on how best to prevent waste of
universal service funds without creating unnecessary obstacles for low-income households to
obtaining vital communications services.722 The Commission noted alternatives, including a rule
requiring all ETCs in all states to collect some minimum monthly amount from participating
households, and sought comment on the administrative burdens for ETCs of a requirement to
collect a minimum amount, such as $1 per month, from participating consumers,723
acknowledging that it may not be cost-effective to send a bill to collect such a small amount.724
2.
Discussion
266.At this time, we decline to adopt a rule requiring ETCs to impose a minimum
consumer charge on subscribers for Lifeline services. We are concerned that requiring a
minimum consumer charge could be burdensome for those low-income consumers who lack the
ability to make such payments electronically or in person,725 potentially undermining the
program’s goal of serving low-income consumers in need. We conclude that imposing a
minimum charge could impose a significant burden on some classes of Lifeline consumers.726
For example, making regular payments to an ETC, even when those payments are minimal, may
be difficult for low-income consumers who do not have bank accounts and might fail credit
719 See 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15626-27, para. 79.
720 See id.; see also Lifeline and Link Up NPRM, 26 FCC Rcd at 2782, para. 27. See, e.g., Assurance Wireless
Lifeline Program, Program Description, http://www.assurancewireless.com/Public/MorePrograms.aspx (last visited
Feb. 5, 2012); SafeLink Wireless, Lifeline/SafeLink Fact Sheet,
https://www.safelinkwireless.com/Safelink/program_info/benefits (last visited Feb. 5, 2012).
721 See 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15626-27, para. 79.
722 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2799, para. 86.
723 See id.
724 See id. at para. 89.
725 See Keep USF Fair Reply Comments 2 at 1; see also NAACP Reno Sparks Branch Comments at 1; TracFone
Reply Comments at 6.
726 See Amvensys Comments at 4; see also APRIL Comments at 1; Las Vegas Urban League Comments at 1.
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checks.727 TracFone reports that 60 percent of its Lifeline subscribers do not have checking
accounts, credit cards, or debit cards, and would have no alternative other than to use money
transfer services or purchase money orders to make minimum payments.728 Further, the cost of a
money transfer is likely to exceed the nominal $1-$5 monthly fee that some parties advocate,
significantly raising the effective cost of Lifeline services for low-income consumers.729 For
example, one commenter notes that a Western Union money transfer for $1 would cost
consumers $12.99 in fees.730 We have serious concerns about the unintended costs of imposing a
minimum charge.731
267.
We also find that a minimum charge could potentially discourage consumers from
enrolling in the program and could result in current Lifeline subscribers leaving the program.732
Commenters argue that a minimum charge will drive down participation, and cite to a TracFone
survey in which almost 65 percent of its responding consumers stated that they would de-enroll
from the Lifeline program instead of paying a mandatory charge.733 While we recognize that
requiring low-income consumers to pay some minimum monthly charge would help ensure that
the subscriber places some value on the service,734 the possibility that the subscriber will not or
cannot pay that minimal charge does not necessarily mean that the low-income consumer does
not value Lifeline service.735 The Lifeline program is serving the truly neediest of the population
in the most dire economic circumstances and for whom even a routine charge is an excessive
financial burden.736
268.
While some state commissions and providers advocate for a minimum charge,737
and argue that such a charge will protect against abuse because the nominal charge ensures that
727 See Letter from Cheryl Leanza, Policy Advisor, United Church of Christ, OC Inc., to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al. (filed May 18, 2011) (LCCHR May 18.
ex parte Letter).
728 See TracFone Comments at 23-24; see also TracFone Reply Comments at 7, n.7.
729 See Open Access Connections Comments at 5; see also TracFone Reply Comments at 7.
730 See Open Access Connections Comments at 5.
731 See USTelecom Comments at 18 (discussing the cost of billing a minimum consumer charge).
732 See Keep USF Fair Reply Comments 2 at 1; see also NAACP Reno Sparks Branch at 1; TracFone Reply
Comments at 6.
733 See AT&T Reply Comments at 24; see also TracFone Comments at 21.
734 See State of Alaska Reply Comments at 9.
735 See NASUCA Reply Comments at 9; see also NJ DRC Reply Comments at 17.
736 See AT&T Reply Comments at 24; see also TracFone Comments at 23; TracFone Aug. 10 ex parte Letter at
Attach. (“When you’re on a limited income you’ve gotta watch your money. . . . If I didn’t have [SafeLink] I would
be more of a recluse than anything else. I just thank God and SafeLink for the freedom I have”).
737 For instance, the California PUC requires a minimum monthly payment and believes it serves as a deterrent for
consumers to receive more than one Lifeline benefit. See CA PUC Reply Comments at 4; see also Cricket
Comments at 4-5; Cricket Reply Comments at 7; INURC Comments at 6; NE PSC at 8-9.
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subscribers place some value on the service, 738 there is insufficient data to establish that such a
federal requirement would effectively protect the program from waste, fraud, and abuse without
thwarting our goal of making vital communications services available to low-income consumers.
It also is unnecessary to impose a federal minimum charge requirement in light of the other
significant steps we take here to reform the Lifeline program. We therefore choose not to
implement such a requirement at this time.739 A minimal charge, such as $1 per month, might be
insufficient to serve as a deterrent to those seeking to exploit the program, while a greater
amount, such as $5 per month, would potentially pose a significant barrier to participation for
those in severe economic need.740 While a minimum charge might reduce the number of
duplicate claims,741 duplicative claims can better be reduced by additional certification
requirements, improved consumer education about Lifeline program rules, and the
implementation of a duplicates database, in conjunction with the measures the Commission has
already taken to reduce duplicative claims.742 Finally, we are not persuaded at this time that
charging low-income consumers a one-time fee upon service activation, rather than a minimal
monthly amount, would be an appropriate measure to address waste, fraud, and abuse.743 A
number of commenters oppose a one-time fee as creating an unreasonable hurdle for low-income
consumers for the same reasons applicable to a monthly fee.744 Even a minimal one-time fee
could be a significant barrier for many of the intended recipients of the program. As noted
above, the concerns about waste, fraud, and abuse are sufficiently addressed by other rules
adopted in this Order.745 For example, identification verification and enrollment requirements,
along with the subscriber usage policy adopted in this Order will help ensure that there will be a
valid and qualifying subscriber behind each account and that the ETC is accountable for that
subscriber’s continued use of the supported service.746
269.
Application of Minimum Charge to Tribal Consumers. The Commission’s rules
currently require that the basic local residential rate for Tier 4 subscribers (i.e., eligible low-
income households residing on Tribal lands) may not fall below $1 per month.747 We
738 For instance, GCI argues that a minimum charge establishes a billing relationship between the ETC and the
subscriber and thus ensures that the ETC knows there is an actual bona fide customer behind an account. See GCI
Comments at 15.
739 Notwithstanding the foregoing, nothing in this Order precludes states from requiring state-designated ETCs to
assess and collect a minimum charge from Lifeline subscribers.
740 See, e.g., CA PUC Reply Comments at 4; GCI Comments at 15.
741 See Cincinnati Bell Comments at 5.
742 See supra section VII.A. (National Lifeline Accountability Database)
743 For instance, the Michigan PSC suggests that a one-time $10 charge for Lifeline consumers who receive service
without a monthly fee would help deter situations in which a Lifeline-supported service has been activated on a
phone that is unused or improperly transferred to third parties. See MI PSC Comments at 5.
744 See Consumer Groups Comments at 12-13; see also TracFone Reply Comments at 6.
745 See supra section VII (Reforms to eliminate waste, fraud & abuse.)
746 See section VII.D (Subscriber Usage of Lifeline-Supported Service).
747 See 47 C.F.R. § 54.403(a)(4)(i).
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understand, however, that some carriers do not collect the $1 from their Tribal subscribers.748
While the Commission’s current rules specify the minimum rate, they do not require the ETC to
bill or collect such amounts.749 As a result, we sought comment in the NPRM on whether to
amend section 54.403(a)(4)(i) of the Commission’s rules to require a $1 monthly payment from
each participating subscriber on Tribal Lands to their ETC, and whether this proposal would
adequately balance our objective of ensuring affordable service for eligible Tribal consumers
while also guarding against waste, fraud, and abuse in the Lifeline program.750
270.
At this time, we decline to impose a payment requirement on Tribal Lifeline
recipients, but we will monitor Lifeline subscribership on Tribal lands and revisit this issue in the
future if necessary. In an effort to eliminate any confusion as to what our rules require ETCs to
collect from Lifeline subscribers on Tribal lands, we eliminate section 54.403(a)(4)(i) of the
Commission’s rules. We note that the additional federal Lifeline support of up to $25 per month
Tribal support will be available to an ETC providing service to an eligible resident of Tribal
lands regardless of whether that amount brings the rate for service below $1 per month per
qualifying low-income subscriber. However, we maintain the current requirements of section
54.403(a)(4)(ii) to require an ETC to certify to the Administrator that it will pass through the full
Tribal support amount to qualifying residents of Tribal lands.751 We also clarify that, under no
circumstances can an ETC collect from the Fund more than the rate charged to Tribal
subscribers, up to a maximum of $34.25 for monthly Lifeline support.
F.
Marketing & Outreach
1.Background
271.Section 214(e)(1)(B) of the Act requires ETCs to advertise the availability of
services supported by universal service funds “using media of general distribution.”752 Over the
years, the Commission has highlighted the importance of outreach to low-income consumers,753
and in 2004 adopted outreach guidelines for ETCs and states to ensure that those in need of
Lifeline service would be made aware of the program.754 While we continue to believe in the
benefits of outreach, which entails increasing public awareness of the program, we are also
concerned about messages ETCs use when marketing Lifeline supported services that may
748 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2800, para. 990.
749 See 47 C.F.R. § 54.403(a)(4).
750 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2799-80, paras. 90-92.
751 47 C.F.R. § 54.403(a)(4)(ii).
752 47 U.S.C. § 214(e)(1)(B).
753 2000 Tribal Lifeline Order, 15 FCC Rcd at 12250, para 78.
754 These outreach guidelines are: (1) States and carriers should utilize outreach materials and methods designed to
reach households that do not currently have telephone service; (2) states and carriers should develop outreach
advertising that can be read or accessed by any sizable non-English speaking populations within a carrier’s service
area; and (3) states and carriers should coordinate their outreach efforts with governmental agencies/Tribal
governments that administer any of the relevant government assistance programs. 2004 Lifeline and Link Up Order
and FNPRM, 19 FCC Rcd. at 8326-28, paras. 45-48.
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mislead consumers and increase waste, fraud, and abuse. We therefore take significant steps to
ensure that potential consumers receive accurate and quality information from ETCs.
272.
In its 2010 Recommended Decision, the Joint Board looked at both outreach and
marketing and urged the Commission to adopt mandatory outreach requirements for all ETCs
that receive low-income support from the Universal Service Fund.755 In support, the Joint Board
cited USAC data showing that, in 2009, only 36 percent of eligible consumers participated in
Lifeline.756 Based on this statistic, the Joint Board expressed concern that current outreach is
ineffective or that some ETCs are neglecting low-income outreach altogether.757 The Joint
Board also recommended that the Commission review carrier best practices on community-based
outreach;758 clarify the role of the states in performing low-income outreach,759 including
working with ETCs to formulate methods to reach households that do not currently have
telephone and/or broadband service;760 and monitor ETCs’ outreach efforts.761 With respect to
marketing, the Joint Board encouraged the Commission to provide ETCs with the flexibility to
market their service offerings to eligible consumers in accordance with their respective business
models, and recommended that the Commission seek comment on whether ETCs should be
required to submit a marketing plan to the state or Commission describing outreach efforts.762 In
accordance with the Joint Board’s recommendation, the Commission sought comment on
effective outreach methods to low-income subscribers and inquired whether additional outreach
requirements were necessary.763 The Commission also sought comment on whether to impose
marketing guidelines on ETCs to ensure that consumers fully understand the benefit being
offered.764
273.
Some ETCs market their Lifeline-supported service offerings under trade names.
For example, TracFone offers Lifeline-supported service under the name SafeLink Wireless,
while Virgin Mobile’s competing offering is called Assurance Wireless. A number of ETCs also
spend significant amounts of money marketing their Lifeline-supported services to low-income
consumers. For example, TracFone states it spent $41 million in advertising during 2010 to
promote SafeLink Wireless.765 Virgin Mobile, now owned by Sprint, notes that it has spent tens
of millions of dollars promoting its Assurance Wireless prepaid Lifeline offering through
television, radio, and newspaper advertising; direct mail campaigns; and partnerships with
755 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15619, para. 60.
756 See id. at 15618-19, para. 59 n.152.
757 See id. at 15618-19, paras. 59-60.
758 See id. at 15621, para. 64.
759 See id. at 15622, para. 67.
760 See id. at 15622, para. 68.
761 See 2010 Joint Board Recommended Decision, 25 FCC Rcd at 15623, para. 70.
762 See id. at 15620-21, paras. 62-63.
763 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2841, para. 230.
764 Id.
765 See TracFone Comments at 41.
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organizations and agencies that serve Lifeline-eligible consumers.766 The Commission sought
comment in the NPRM on whether to require all ETCs to include standard language in their
marketing materials.767
2.
Discussion
274.While we continue to support increased public awareness of the program, we are
concerned about the messages ETCs use when marketing Lifeline-supported services to potential
subscribers. Consumers may not understand that these products are Lifeline-supported offerings
entailing a government benefit, that they must be eligible in order to receive the benefit, or that
they may receive no more than one benefit at a time from the program.768 We therefore take
significant steps to increase the quality of information ETCs must provide to potential
consumers.
275.
Marketing and Uniform Language To Describe Lifeline. To increase
accountability within the program and to target support where it is needed most, we require that
ETCs providing Lifeline-supported services make specific disclosures in all marketing materials
related to the supported service. We adopt rules requiring ETCs to explain in clear, easily
understood language in all such marketing materials that the offering is a Lifeline-supported
service; that only eligible consumers may enroll in the program; what documentation is
necessary for enrollment; and that the program is limited to one benefit per household, consisting
of either wireline or wireless service. We also require ETCs to explain that Lifeline is a
government benefit program, and consumers who willfully make false statements in order to
obtain the benefit can be punished by fine or imprisonment or can be barred from the program.769
For purposes of this rule, the term “marketing materials” includes materials in all media,
including but not limited to print, audio, video, Internet (including email, web, and social
networking media), and outdoor signage, that describe the Lifeline-supported service offering,
including application and certification forms. These disclosures will help ensure that only
eligible consumers enroll in the program and that those consumers are fully informed of the
limitations of the program, so as to prevent duplicative or otherwise ineligible service as well as
other forms of waste, fraud, and abuse.770 Additionally, we require every ETC to disclose the
company name under which it does business and the details of its Lifeline service offerings in
any Lifeline-related marketing and advertising.771
766 See Sprint Comments at 16.
767 See NPRM, 26 FCC Rcd at 2842-43, para. 237.
768 See 2011 Duplicative Program Payments Order.
769 See 47 C.F.R. § 54.8, permitting the Commission to suspend and debar individuals from activities associated
with or related to the low-income program.
770 See, e.g., CenturyLink Comments at iv, 23; CinciBell Comments at 4; Consumer Group Comments at 41; MI
PSC Comments at 10; Missouri Commission Comments at 19; OH PUC Comments at 21; OR PUC Comments at 2;
Sprint Comments at 14-15; YourTel Reply Comments at 2.
771 Consumer Groups Reply Comments 2 at 9; MO PSC Comments at 19; YourTel Reply Comments at 2.
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276.
Some ETCs have already revised their marketing materials to make some of these
disclosures and others have committed to doing so.772 We require all ETCs to implement these
disclosures six months from the effective date of this Order. We direct USAC to undertake
ongoing reviews of ETCs’ marketing materials sufficient to ensure compliance with program
rules. We leave the scope and frequency of those reviews to USAC’s discretion, but direct the
Wireline Competition Bureau to oversee USAC’s efforts to review the ETCs’ materials.
277.
ETCs should have the flexibility to market their Lifeline-supported services in
creative and innovative ways. Therefore, we do not mandate a uniform Lifeline application or
provide model language for ETCs to include in marketing materials.773 The rules summarized
above provide sufficient information that ETCs must convey to potential subscribers about the
Lifeline service. Additionally, we do not believe it is necessary to adopt a rule, as some suggest,
that prepaid wireless providers explain how their Lifeline service differs from other forms of
Lifeline service. There is no benefit to imposing this burden on only one segment of the Lifeline
service provider community particularly considering the disclosures we require above. 774
278.
Outreach Guidelines. Since 2004, the Commission has urged states and carriers
to coordinate their outreach efforts with governmental agencies that administer the relevant
government assistance programs.775 The Commission’s 2004 outreach guidelines make clear
that states play an important role in working with ETCs to advertise the availability of Lifeline-
supported services.776 Although the Joint Board recommended that the Commission adopt
mandatory outreach requirements for all ETCs that receive low-income support from the
Fund,777 the current outreach guidelines, as established in the 2004 Lifeline and Link Up Order,
provide a broadly applicable set of goals without prescribing any specific outreach methods.778
Many states already perform a variety of outreach activities designed to inform consumers about
the Lifeline program, consistent with our broad guidelines. For example, the Regulatory
Commission of Alaska and the Massachusetts Department of Telecommunications and Cable
provide information on Lifeline availability to other state agencies involved with assistance to
low-income consumers.779
279.
We encourage states to provide comparative information to low-income
consumers requiring Lifeline service plans available in their states, such as the rates charged,
number of minutes included in the Lifeline plan, and what additional charges, if any, are assessed
for toll calls or additional minutes of use.
772 See, e.g., i-Wireless Forbearance Order, 26 FCC Rcd 14508 at 14510.
773 See CenturyLink Comments at 23.
774 See OH PUC Comments at 21.
775 See 2004 Lifeline and Link Up Order and FNPRM, 19 FCC Rcd. at 8328, para 48.
776 See id. at 8326-8327, para. 45-46.
777 2010 Joint Board Recommended Decision at 15619, para. 60.
778 2004 Lifeline and Link Up Order and FNPRM, 19 FCC Rcd. at 8326-28, paras. 45-48.
779 See Alaska Commission Reply Comments at 15; MA DTC Comments at 10.
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280.
Given the wide variety of outreach engaged in by ETCs and states, we do not, at
this time, amend our outreach guidelines. However, the Commission received many insightful
comments regarding how to improve outreach.780 Two commenters suggested the development
of best practices for the purposes of outreach, including increased public-private partnerships.781
Another commenter recommended methods for state public service commissions to work with
other state agencies for purposes of coordinated enrollment; this commenter also suggested a
variety of possible outreach requirements of state public service commissions and ETCs.782
Many of these recommendations dovetail with outreach guidelines suggested in 2006 by the
Lifeline Across America Working Group (LAAWG).783 Given that the LAAWG has already
provided a compendium of outreach guidelines that remain as relevant today as when they were
published five years ago, we do not find further Commission action with regards to outreach to
be necessary at this time, except as noted below with respect to consumer education.
780 See, e.g., AARP Comments at 8-10; Consumer Groups Comments at 36, 39-41; DC PSC Comments at 7; FL
PSC Comments at 27-28; MA DTC Comments at 10.
781 See Consumer Groups Comments at 35; FL PSC Comments at 26. Consumer Groups also provided a series of
specific outreach recommendations, including: include a reference about discounted telephone programs on the
home page of the website of each ETC (or state agency), with comprehensive information about the program only
one click away either on the carrier’s website or a third party website; provide state-specific and program-specific
material about Lifeline, translated into languages other than English and in formats accessible to those with
disabilities; inform new customers about the discounted telephone program either verbally or through a separate
mailing at the time they sign up for telephone service, or at the latest within 14 days from the customer’s service
initiation; provide additional annual notice to all subscribers of the availability of the program, its basic eligibility
requirements, and a reference to the website or to a phone number to call for more information; and provide
additional notice to customers who are at risk of service termination due to non-payment. See Consumer Groups
Comments at 36. FL PSC recommended the Commission expand its Lifeline Across America Working Group to
include wireline and wireless representatives to determine which methods of outreach work best with each of the
underserved populations making up the body of Lifeline subscribers. See FL PSC Comments at 26-28. FL PSC
also recommended public-private partnerships, one-on-one outreach, train-the-trainer programs, and interagency
cooperation at the state level as useful at expanding outreach. See id.
782 See AARP Comments 8-10. AARP recommended the Commission require state public service commissions to
conduct statewide outreach and education programs designed to raise awareness about the Lifeline and Link Up
program, with a goal of 100 percent enrollment of eligible subscribers. AARP further recommended that any
statewide education program should be developed and implemented with the advice and assistance of local
community-based organizations with firsthand experience with the means to effectively communicate with their
respective members and communities. Additionally, AARP recommended that:
Outreach efforts should be undertaken by or on behalf of an ETC or a consortium of ETCs.
Accordingly, any such ETC, or ETC-sponsored program, should be subject to the approval of the
state commission and should be coordinated with the statewide education and outreach program.
At a minimum as part of an ETC’s outreach efforts, the ETC should be required to solicit
eligibility for Lifeline and Link Up from each residential customer at the time that the customer
requests installation of service, at a contact with the customer prior to a pending termination of
service for nonpayment, and at a contact with a customer who seeks to negotiate a deferred
payment plan. In addition, the ETC should be required to notify all residential customers about
the Lifeline and Link Up program and how to participate in the program at least once per year.
The incremental costs of the statewide consumer education and outreach program should be
eligible for recovery in rates in the same manner as state-funded Lifeline and Link Up benefits.
AARP Comments at 10.
783 See WORKING GROUP REPORT; Consumer Groups Comments at 35; FL PSC Comments at 26-28.
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281.
Consumer Education. After the Commission adopted the 2011 Duplicative
Program Payments Order, the Commission’s Bureau and Consumer and Governmental Affairs
Bureau (Consumer Bureau), in concert with USAC, ETCs, states, and consumer groups, engaged
in an outreach campaign designed to educate consumers about the changes to the Lifeline
program rules. USAC sent a letter to subscribers explaining that they are not permitted to
receive more than one Lifeline subsidy and had to select a single provider, which was followed
by a postcard and telephone call to those subscribers who did not respond. The Commission also
coordinated with consumer groups and states to run Public Service Announcements (PSAs) in
states participating in the duplicate resolution process, to create posters for distribution to social
service offices in such states, and to create consumer tip sheets to be circulated by the
Commission, states, and consumer service groups. USAC received a high response rate from
low-income consumers who were contacted as part of this outreach process.
282.
In light of the success of these recent outreach efforts, we direct the
Commission’s Wireline Competition Bureau and Consumer and Governmental Affairs Bureau to
conduct an outreach campaign to educate low-income consumers about the Lifeline program
rules adopted in this Order.784 The Bureaus shall coordinate, as appropriate, with USAC,
consumer groups, and states to ensure that consumers are sufficiently apprised of the new
Lifeline program rules and any actions they may be required to take in the future to obtain
Lifeline service.
G.
Audits and Enforcement
1.Background
283.The Commission is committed to ensuring that there is a focused and effective
system for identifying and deterring program abuse. Our existing rules authorize USAC to
conduct audits of Lifeline recipients.785 As directed by the Commission’s Office of Managing
Director,786 USAC currently has two programs in place to safeguard the Universal Service Fund
784 See NCLC Jan. 24 ex parte Letter, at Attach.
785 See 47 C.F.R. § 54.707. The 2008 FCC-USAC Memorandum of Understanding requires USAC to conduct
audits, including audits of Fund beneficiaries, in accordance with generally accepted government auditing standards
(GAGAS), as required by section 54.702(n) of our rules. See Memorandum of Understanding Between the Federal
Communications Commission and the Universal Service Administrative Company at 7 (Sept. 9, 2008) (2008 FCC-
USAC MOU), available at http://www.fcc.gov/omd/usac-mou.pdf; see also Letter from Dana R. Shaffer, Deputy
Managing Director, Federal Communications Commission to Scott Barash, Acting CEO, Universal Service
Administrative Company, October 13, 2010, available at http://www.fcc.gov/omd/usac-letters/2010/101310CPA-
USAC.pdf; 47 C.F.R. § 54.702(n).
786 See Letter from Steven Van Roekel, Managing Director, Federal Communications Commission to Scott Barash,
Acting CEO, Universal Service Administrative Company, February 12, 2010, available at
http://www.fcc.gov/omd/usac-letters/2010/021210-ipia.pdf. (FCC IPIA Letter); see also OMB Circular A-123,
available at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a123/a123_rev.pdf. In 2010,
the Commission provided additional direction to USAC regarding independent CPA firms and follow-up on audit
findings. See Letter from Steven Van Roekel, Managing Director, Federal Communications Commission to Scott
Barash, Acting CEO, Universal Service Administrative Company, January 25, 2011, available at
http://www.fcc.gov/Daily_Releases/Daily_Business/2011/db0210/DA-11-128A1.pdf; see also Letter from Steven
Van Roekel, Managing Director, Federal Communications Commission to Scott Barash, Acting CEO, Universal
Service Administrative Company (filed Oct. 13, 2010), available at http://www.fcc.gov/omd/usac-
letters/2010/101310CPA-USAC.pdf.
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– the Beneficiary/Contributor Compliance Audit Program (BCAP) 787 and the Payment Quality
Assurance (PQA) program.788 USAC has completed its first round of PQA assessments and
initiated a number of Lifeline and Link Up BCAP compliance audits in 2011.
284.
In the NPRM, the Commission sought comment on ways to improve the current
low-income audit program in light of growing concerns with waste, fraud, and abuse in the
program, including duplicative claims and ineligible consumers.789 The Commission proposed
that all new ETCs be audited after the first year of providing Lifeline-supported service.790 The
Commission also proposed that negative audit findings above a specified dollar threshold, or
affecting at least a specific percentage of an ETC’s Lifeline consumers, trigger shorter intervals
between audits, an expanded audit for the company at issue, and/or an additional audit the
following year in the relevant study area.791 The NPRM also sought comment on appropriate
Commission responses to multiple audit findings of non-compliance, such as precluding an ETC
with significant non-compliance from receiving some or all Lifeline support.792 Lastly, the
Commission sought comment on whether to require some or all ETCs in the program to engage
an independent third-party firm to assess the ETCs’ compliance with some or all Commission
low-income requirements.793
787 The Compliance Audit program, BCAP, was developed with the following objectives: (1) cover all four
programs and contributors; (2) tailor audit type and scope to program risk elements, size of disbursement, audit
timing and other specific factors; (3) keep costs reasonable in relation to overall program disbursements, amount
disbursed to beneficiary being audited, and USF administrative costs; (4) spread audits throughout the year; and (5)
retain capacity and capability for targeted and risk-based audits. See FCC IPIA Letter at 2, 4. To assist program
participants, USAC has information about BCAP available on its website. See USAC, Understanding Audits,
http://www.usac.org/li/about/understanding-audits.aspx (last visited Feb. 5, 2012).
788 The Improper Payments Information Act (IPIA) assessment program (PQA) was developed with the following
objectives: (1) separately cover all four USF programs; (2) measure the accuracy of the Administrator’s payments
to program applicants; (3) evaluate the eligibility of program applicants who have received payments; (4) include
high-level testing of information obtained from program participants; and (5) tailor scope of procedures to ensure
reasonable cost while meeting IPIA requirements for sample size and precision. Unlike BCAP, the PQA program
does not involve audits. See USAC, Payment Quality Assurance (PQA) Program FAQs, available at
http://www.usac.org/fund-administration/about/program-integrity/pqa-faqs.aspx. Rather, it provides for reviews
specifically designed to assess estimated rates of improper payments, thereby supporting IPIA requirements. The
PQA reviews measure the accuracy of USAC payments to applicants, evaluate the eligibility of program applicants,
and involve high level testing of information obtained from program participants. USAC tailors the scope of
procedures to ensure reasonable costs while still meeting IPIA requirements. To assist program participants, USAC
has information about the PQA program available on its website. See USAC, Payment Quality Assurance (PQA)
Program, http://www.usac.org/fund-administration/about/program-integrity/pqa-program.aspx (last visited Feb. 5,
2012).
789 The 2010 GAO REPORT also expressed concern about the increased risk of waste, fraud, and abuse due to
consumers simultaneously receiving Lifeline discounts for both a wireline and wireless phone. See 2010 GAO
REPORT at 35.
790 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2802, para. 98.
791 See id. at 2802, para. 99.
792 See id. at 2082, paras. 100-01.
793 See id. at 2803, para. 102.
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2.
Discussion
285.The Commission will continue to use the audit process to ensure there is a
focused and effective system for identifying and deterring program abuse.794 The development
of a uniform audit program, USAC audits of ETCs in their first year of providing Lifeline
service, the requirement for biennial independent audits for larger ETCs, and stepped-up
enforcement will strengthen our existing low-income oversight process to reduce improper
payments and mitigate the potential for program violations.
286.
Uniform Audit Program. USAC must assess compliance with the program’s
requirements, including the new requirements established in this Order for recipients of low-
income support. We therefore direct USAC to review and revise the BCAP and PQA programs
to take into account the changes adopted in this Order. We further direct USAC to submit a
report to the Wireline Competition Bureau (Bureau) and Office of Managing Director (OMD)
within 60 days of the effective date of this Order proposing changes to the BCAP and PQA
programs consistent with this Order. Program audits should be conducted against a uniform set
of auditing guidelines. The Bureau and OMD will work with USAC as necessary to ensure that
there is consistency in these compliance standards.795
287.
USAC’s oversight program to assess compliance should be designed to test the
effectiveness of Lifeline ETCs’ internal controls and ensure that management is reporting
accurately to USAC, the Commission, and state regulators, as appropriate. The oversight
program should also be designed to test some of the underlying data that forms the basis for
management’s certification of compliance with various requirements including, but not limited
to, verifying eligibility at enrollment and thereafter, verifying that only one discount per
household is provided, verifying that subscribers are not receiving duplicate discounts, and
verifying that subscribers are de-enrolled for non-use of the service. This list is not intended to
be exhaustive, but rather illustrative of the requirements that USAC must take into account in
determining what modifications to make to its existing oversight activities. We also direct
USAC to test the accuracy of carrier certifications made pursuant to our new reporting
requirements, the accuracy of the data included in the carriers’ Form 497, and the data input into
the database by carriers.
794 USAC’s audit program historically has consisted of audits by USAC’s internal audit division staff as well as
audits by independent auditors under contract with USAC. In addition, in the past, the Commission’s OIG has
conducted audits of USF program beneficiaries. See FEDERAL COMMUNICATIONS COMMISSION OFFICE OF
INSPECTOR GENERAL, SEMIANNUAL REPORT TO CONGRESS, OCTOBER 1, 2009 THROUGH MARCH 31, 2010 AT 17-20,
available at http://transition.fcc.gov/oig/SAR_March_2010_050710.pdf. In a February 12, 2010, letter to USAC,
OMD directed USAC to separate its two audit objectives into distinct programs – one focused on Improper
Payments Information Act (“IPIA”) assessment and the second on auditing compliance with all four USF programs.
See Improper Payments Information Act of 2002, Pub.L.No. 107-300, 116 Stat. 2350 (2002). In addition to
providing guidance on the implementation of the IPIA assessment program and compliance audit program, the letter
informed USAC that OMD would assume responsibility for oversight of USAC’s implementation of both programs.
See Letter from Steven Van Roekel, Managing Director, Federal Communications Commission to Scott Barash,
Acting CEO, Universal Service Administrative Company (filed Feb. 12, 2010), available at
http://www.fcc.gov/omd/usac-letters/2010/021210-ipia.pdf.
795 Several commenters noted that the current audit process could be improved by increased clarity of the standards
against which the auditors are auditing carrier behavior and increased consistency of these compliance standards.
See Conexions Comments at 7-8; see also YourTel Comments at 8.
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288.
First Year Audit Requirement. We conclude there is a need for heightened
oversight of newly designated ETCs that have not previously provided Lifeline services
anywhere in the country to ensure they establish effective internal controls regarding compliance
with Commission requirements.796 DC PSC notes that this is especially important in situations
where the state commission may not have oversight authority over the ETC.797 An initial audit
will aid efficient administration of the program by confirming early on that new ETCs are
providing Lifeline service in accord with program requirements.798 ETCs will be made aware of
any violations of the low-income requirements and prevent them from occurring on an ongoing
basis.799
289.
We direct USAC to audit new carriers (those carriers activating a new Study Area
Code to provide Lifeline service for the first time) within the first year they begin receiving
federal low-income USF support. This audit requirement shall include ETCs that received their
first Study Area Code for the designated service from USAC in 2011.800 The audit should occur
in the first study area in which the ETC is designated, after it completes its first annual re-
certification of its subscriber base. In instances where an ETC is designated in multiple study
areas, USAC may, at its discretion, choose which study area in which to perform the audit. This
audit will be conducted on an ETC within its first year of seeking Lifeline support within any
single state.801
290.
We are not persuaded by the argument that a first-year audit requirement will
unreasonably divert resources at companies that have demonstrated a good compliance pattern in
their first year.802 One commenter proposed that a threshold dollar amount of annual benefits in
any state trigger audits rather than an audit subsequent to a carrier’s first year of receiving
benefits.803 USAC has the discretion, however, to conduct a desk audit, rather than a full-blown
audit, of newly established ETCs, including those whose revenues are minimal. Exercising this
discretion will minimize potential disruption for smaller ETCs.
796 A number of commenters support such a requirement. See CenturyLink Comments at 12; see also DC PSC
Comments at 3-4; FL PSC Comments at 14-15; MI PSC Comments at 5; MO PSC Comments at 9-10; YourTel
Comments at 8. We note that USAC retains the right to conduct targeted audits of any ETC in response to
suspicious data, whistleblower activity, inquiries from state commissions, and for other reasons as permitted by law.
797 See DC PSC Comments at 3-4.
798 See CenturyLink Comments at 12; see also NASUCA Reply Comments at 11.
799 See FL PSC Comments at 14.
800 If an ETC was providing wireline Lifeline service prior to 2011 but received its first study area code for wireless
service in 2011, it is subject to this requirement.
801 Annually, ETCs providing low-income service must submit the FCC Form 497 and Eligibility Verification
Survey. See USAC, Step 6: Submit Lifeline and Link Up Worksheet (Form 497),
http://www.usac.org/li/telecom/step06/form497.aspx (last visited Feb. 2, 2012); USAC, Step 8: Annual Verification
of Consumer Eligibility, http://www.usac.org/li/telecom/step08/verification-of-eligibility.aspx (last visited Feb. 2,
2012).
802 See Consumer Cellular Comments at 16; see also NALA/PCA Comments at 5.
803 See Consumer Cellular Comments at 16.
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291.
Independent Audit Requirements. We also adopt a requirement that every ETC
providing Lifeline services and drawing $5 million or more in the aggregate on an annual basis,
as determined on a holding company basis taking into account all operating companies and
affiliates, from the low-income program hire an independent audit firm to assess the ETC’s
overall compliance with the program’s requirements.804 Such audits will be performed once
every two years unless otherwise directed by the Commission, as discussed below.805 The
independent audit firms conducting the audits must be licensed certified public accounting firms.
These audits shall be conducted consistent with the GAGAS standards and follow the audit
guidelines described below.806
292.
The Commission directs USAC to prepare proposed audit guidelines outlining the
scope of the engagement and the extent of compliance testing to be performed in the independent
audits and submit them to the Bureau and OMD within 60 days of the release of this Order. The
Bureau, in conjunction with OMD, will review the proposal and finalize a uniform and standard
audit plan and publish it in a Public Notice, which also will establish a deadline for completing
the first biennial audit. Rather than performing an audit at the individual study area level, we
expect these audits to focus on the company’s overall compliance program and internal controls
regarding Commission requirements as implemented on a nationwide basis. For instance, when
an ETC has an automated system to verify initial and ongoing eligibility, the biennial
independent audit should focus on whether the methods and procedures of such automated
systems are appropriately structured to ensure compliance with program rules. Independent
audits shall be an agreed upon procedures attestation.
293.
We expect that the uniform audit plan established by the Bureau and OMD,
working in conjunction with USAC, will provide clarity for both auditors and the companies
subject to this requirement. As discussed above, the Bureau and OMD will work with USAC to
identify the key risk areas and specific audit program requirements that independent auditors
must audit for compliance. In other words, independent audit firms will not need to guess at the
areas of greatest concern to the Commission, but rather will be given structured aspects of ETC
program compliance to verify. The Bureau and OMD will set out standards for ETCs that are
engaging auditors to perform an agreed upon procedures attestations. If an auditor subsequently
identifies an area of ambiguity regarding Commission requirements, one that will likely affect
multiple ETCs, the issue should be reported to USAC, and the audit firm shall submit to the
Commission any requests for rule interpretations necessary to complete the audit. For areas
where it appears Commission requirements may be unclear, USAC will notify all outside
804 Under our risk-based approach, we selected $5 million as our threshold so as to subject those carriers that
collectively draw the vast majority (over 90 percent) of Lifeline funding to the new requirement, while not imposing
additional compliance costs on carriers who collectively draw less than 10 percent of annual funding, many of
whom are smaller providers.
805 An affiliate shall be determined in accordance with section 3(2) of the Communications Act, as amended.
806 See U.S. GOVERNMENT ACCOUNTABILITY OFFICE, GOVERNMENT AUDITING STANDARDS (Aug. 2011), available
at http://www.gao.gov/govaud/iv2011gagas.pdf. In particular, these audit program standards shall reflect the
GAGAS standards for auditor independence, auditor professional judgment, auditor competence, auditor quality
control and assurance, standards for attestation engagements, reporting audit field work standards, and reporting
standards.
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auditors so that it will not be held as a negative finding until guidance has been provided by the
OMD or the Bureau.
294.
Within 60 days after completion of the audit work, but prior to finalization of the
report, the third party auditor shall submit a draft of the audit report to the Commission and
USAC. In order to maximize the administrative efficiency and benefit of these audits, we
mandate that covered ETCs provide audit reports to the Commission, USAC, and relevant state
and Tribal governments within 30 days of issuance of the final report, and that the Commission
and USAC be deemed authorized users of such reports, as proposed in the NPRM.807 These audit
reports will not be considered confidential and requests to render them so will be denied.
295.
We determine that due to the significant growth of the program; the known
instances of waste, fraud, and abuse; and the critical importance of ensuring this program
effectively serves those most in need, these remedial steps are warranted and necessary at this
time.808 We do not agree with commenters that contend an annual audit requirement is
unnecessary absent evidence of abuse.809 The Commission has long recognized that regular
audits of a company’s compliance when the company receives federal funds or is a federally
regulated entity are part of the cost of doing business.810 We conclude it is appropriate to focus
the mandatory audit requirement on the largest recipients, who pose the biggest risk to the
program if they lack effective internal controls to ensure compliance with Commission
requirements.811 These larger ETCs have greater resources to devote to compliance-related
activities and should be prepared to devote such resources as part of the necessary cost of
obtaining significant federal benefits. Performing a baseline audit of the carriers drawing $5
million from the fund annually, which collectively draw more than 90 percent of Lifeline
support, is warranted to develop an understanding of the areas of biggest risk once the new rules
have been implemented. If there are no material findings in a carrier’s first independent audit
report, the Wireline Competition Bureau may, in its discretion, relieve the carrier of its
807 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2803, para. 102.
808 Id. at 2900, Separate Statement of Chairman Genachowski.
809 See NTCA Comments at 5; see also TSTCI Reply Comments at 4.
810 See, e.g., Separation of Costs of Regulated Telephone Service from Costs of Nonregulated Activities; Amendment
of Part 31, the Uniform System of Accounts for Class A and Class B Telephone Companies to Provide for
Nonregulated Activities and to Provide for Transactions Between Telephone Companies and their Affiliates, CC
Dkt. No. 86-111, Report and Order, 2 FCC Rcd 1298, 1329-31, paras. 243-59 (1987) (Joint Cost Order), petition for
review denied, Southwestern Bell Corp. v. FCC, 896 F.2d 1378 (D.C. Cir. 1990); Application of GTE Corporation,
Transferor, and Bell Atlantic Corporation, Transferee, For Consent to Transfer Control of Domestic and
International Sections 214 and 310 Authorizations and Application to Transfer Control of a Submarine Cable
Landing License, Memorandum Opinion and Order, 15 FCC Rcd 14032, 14190-92, paras. 336-38, 341 (2000) (Bell
Atlantic/GTE Merger Order), vacated in part sub nom., Ass'n of Communications Entrs. v. FCC, 235 F.3d 662 (D.C.
Cir. 2001); Bell Atlantic/GTE Merger Order, 15 FCC Rcd at 14190, para. 336.
811 Commenters raised various concerns about a mandatory audit requirement, such as the potential cost to
companies, and the potential for burden on small businesses. See, e.g., CenturyLink Comments at 12; Consumer
Cellular Comments at 16; MITS Reply Comments at 5; MI PSC Comments at 5; NTCA Comments at 5; TSTCI
Reply Comments at 4. MITS and NTCA note, for instance, that requiring ETCs to engage independent firms for
routine compliance audits would have the effect of imposing greater economic and fiscal impacts on small
companies than on larger providers with increased numbers of staff and greater resources.
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obligation to perform an independent audit in the next biennial audit cycle. Nor do we agree with
commenters who contend that any new audit requirement should replace existing USAC
oversight activities.812 The new biennial audit requirement that we adopt today is focused on the
corporate-wide compliance program, rather than carrier activity in a particular study area.
296.
In order to implement this new biennial audit rule, we will need to determine at
the holding company level which carriers meet the $5 million threshold. We therefore adopt a
rule requiring all Lifeline ETCs to report annually the names of the company’s holding company,
operating companies and affiliates, and any branding (a “dba,” or “doing-business-as company”
or brand designation).813 Additionally, filers will be required to report relevant universal service
identifiers for each such entity by Study Area Code. This reporting will help the Commission
increase accountability in our universal service programs by simplifying the process of
determining the total amount of public support received by each recipient, regardless of
corporate structure. Overall, we conclude that this annual reporting requirement should not
impose an undue burden on ETCs, and the benefits of USAC and the Commission being able to
determine who is subject to this new audit requirement outweigh any burdens. Such information
is necessary in order for the Commission to ensure compliance with the requirements adopted
today that take into account holding company structure. We delegate authority to the Wireline
Competition Bureau to announce the initial deadline for this annual reporting requirement after
Federal Register publication of OMB approval under the Paperwork Reduction Act. The Bureau
also will issue a Public Notice identifying the carriers that meet the $5 million threshold.
297.
We acknowledge that compliance with the rules we adopt here will involve some
administrative costs for ETCs; however, we conclude that those costs are outweighed by the
significant benefits gained by protecting the Fund from waste, fraud, and abuse.814 We estimate
that up to 15 percent of current Lifeline subscribers may be ineligible for the program,
potentially representing hundreds of millions of dollars in wasted support per year. We expect
that a rule requiring regular and mandatory audits of ETCs will ensure that the companies have
put in place adequate procedures to prevent such waste and prevent unbridled future growth in
the Fund.815 The resulting cost savings will in turn benefit through cost savings those consumers
and companies who contribute to the Universal Service Fund.
298.
Consequences of Non-Compliance. The Commission’s rules already direct USAC
to “suspend or delay discounts, offsets, and support amounts provided to a carrier if the carrier
fails to provide adequate verification of discounts, offsets, or support amounts… upon reasonable
request, or if directed by the Commission to do so.”816 We now address the specific procedural
812 See AT&T Jan. 24 ex parte Letter Attach., at 4.
813 Section 153 of the Act defines “affiliate” as “a person that (directly or indirectly) owns or controls, is owned or
controlled by, or is under common ownership or control with, another person.” 47 U.S.C. § 153(2); see also 47
C.F.R. § 76.1200.
814 Immediate adoption of a rule requiring documentation of program-based eligibility will enable the Commission
to realize cost savings in the near term, which can in turn be used to, among other things, fund efforts to modernize
the Lifeline program.
815 See supra para. 102 (noting that up to an estimated 15 percent of Lifeline subscribers could be ineligible).
816 47 C.F.R. § 54.707.
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steps that will be taken when USAC determines an ETC has failed to comply with our low
income rules. Going forward, when USAC finds that an ETC has failed to provide adequate
documentation or has otherwise been operating in violation of the Commission’s low income
rules and requirements, it shall notify the ETC of that failure and give the ETC 30 days to
provide the necessary documentation and come into compliance. The ETC must provide USAC
with proof of that compliance as well as a description of the specific measures the ETC will take
to avoid repetition of the violation. USAC has the discretion to suspend further payments to the
carrier pending USAC’s receipt and evaluation of the carrier’s response to this notification.
USAC, however, shall suspend only payments related to the Study Area Codes where the ETC is
operating in violation of the Commission’s low income rules and requirements.
299.
Carrier compliance with the Commission’s low-income USF rules and
requirements is critical to maintaining the integrity of the fund. Protecting the fund against
waste, fraud and abuse helps further Congress’s objectives in section 254(b) of the Act, including
providing low income consumers with access to affordable telecommunications and information
services.817 We intend to pursue recapture of any funds that ETCs obtain in violation of our rules
pursuant to applicable statutes and regulations including, but not limited to, the Improper
Payments Elimination and Recovery Act (IPERA) and related Office of Management and Budget
implementation guidelines.818 A carrier that violates the Commission’s low-income rules also
faces stiff penalties, including monetary forfeitures of up to $150,000 for each violation or each
day of a continuing violation, up to a maximum of $1,500,000 per continuing violation.819 In
particularly egregious cases, a carrier also could face revocation of its section 214 authorization
to operate as a carrier.820 Finally, ETCs are subject to revocation of their ETC designation, by
either the relevant state commission or this Commission, for failure to comply with program
requirements.
VIII. PAYMENT OF LOW-INCOME SUPPORT
300.The Commission’s Office of the Managing Director directed USAC on May 13,
2011 to propose an administrative process for disbursing low-income support to eligible
817 See 47 U.S.C. § 254(b); see also FCC Enforcement Advisory: Eligible Telecommunications Carriers Offering
Lifeline Service Are Reminded of Their Obligation to Confirm Consumers' Eligibility and to Avoid Providing
Duplicative Service, Enforcement Advisory, DA 11-1971 (Enforc. Bur. Dec. 5, 2011) (Lifeline Enforcement
Advisory).
818 See Improper Payments Elimination and Recovery Act of 2010, Pub. L. No. 111-204, 124 Stat. 2224; see also
Memorandum For the Heads of Executive Departments and Agencies (March 22, 2010), available at
http://www.whitehouse.gov/sites/default/files/omb/assets/a123/a123_appx-c.pdf; Memorandum For the Heads of
Executive Departments and Agencies (April 14, 2011), available at
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-16.pdf.
819 47 U.S.C. § 503(b)(2)(B); 47 C.F.R. § 1.80(b)(2). We note that these penalties are periodically adjusted for
inflation.
820 See 47 U.S.C. § 214; 47 C.F.R. § 63.01(a) (granting domestic section 214 authority generally); Implementation of
Section 402(b)(2)(A) of the Telecommunications Act of 1996, Report and Order, 14 FCC Rcd 11364, 11373-74,
paras. 15-16 (1999) (stating that a carrier’s blanket section 214 authority can be revoked “when warranted in the
relatively rare instances in which carriers may abuse their market power or their common carrier obligations”).
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telecommunications carriers based on actual claims, as opposed to projected claims.821 On
August 9, 2011, USAC submitted its plan to transition universal service low-income support
from payments based on projections of subscriber counts to payments based on actual subscriber
counts.822 The Bureau sought comment on USAC’s plan, including the filing deadline for
carriers to submit their FCC Form 497, whether carriers should be allowed to continue to file the
FCC Form 497 on a quarterly basis, the deadline for revisions on the FCC Form 497, and on
various questions related to the transition to the new disbursement process. 823
301.
USAC’s plan proposes to establish a monthly due date by which an ETC must
submit its FCC Form 497 in order to receive a payment at the end of the following month.824 In
order to transition to paying on actual support claims, USAC proposes to true-up the amount of
support already paid to each ETC based on projected support against the ETC’s support claim for
a specific month when the transition takes place.825 In the case of a carrier that would owe
money back to the Fund as a result of the true-up process that takes place during the transition
month, USAC suggests subtracting the overpayment from the carrier’s next low-income
disbursement, and in the event the negative amount exceeds the carrier’s next monthly payment,
USAC plans to invoice the carrier for the full amount of the negative balance beginning the
second month after the transition month.826 USAC further proposes to adopt a rolling six-month
window, calculated from the current disbursement month, during which ETCs can file an
original or a revised FCC Form 497.827 Carriers would have until the yearly December filing
deadline to file original or upward revisions for the preceding June, but downward revisions
would be accepted at any time.828 USAC’s plan for transition to payment on actual support
claimed would still allow carriers to file on a monthly or quarterly basis, but carriers filing
quarterly would receive a three-month lump payment, not a monthly payment. The majority of
821 See Letter to Scott Barash, Acting Chief Executive Officer, Universal Service Administrative Company, from
Dana Shaffer, Deputy Managing Director, Federal Communications Commission (dated May 13, 2011), 26 FCC
Rcd 6810 (FCC May 2011 Letter).
822 The Bureau sought comment in a Public Notice on USAC’s plan to replace the current process of USAC
projecting low-income support with a process whereby ETCs are reimbursed based on actual claims. See Lifeline
Disbursement Public Notice.
823 See id.at 13132–33.
824 See id. at 13132. USAC’s plan proposes that carriers that do not file an FCC Form 497 by the monthly deadline
would not receive a payment in the following month, but would receive a disbursement based on that support claim
in the subsequent month. See id. at 13132.
825 See id. at 13139, Appendix A. The effect of this process would be that carriers currently paid based on
projections would likely receive little or no support for one month as a result of the true-up. USAC’s plan allows an
alternative for carriers to begin the transition to payment on actual claims earlier than the transition month by
notifying USAC to begin transitioning specific study area codes sooner so that the carrier mitigates the risk of
experiencing a month with little or no payment. See id. at 13141, Appendix A
826 See Lifeline Disbursement Public Notice 26 FCC Rcd at 13140, Appendix A.
827 See id. at 13141, Appendix A.
828 See id.
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commenters support USAC’s plan to transition payment to actual support, noting the plan would
curb waste, fraud and abuse in the low-income program.829
302.
Discussion. With a few modifications noted below, we adopt USAC’s plan to
shift the low-income disbursement process from payments based on projected subscriber counts
to payments based on actual subscriber counts. We direct USAC to implement the transition
beginning on July 1, 2012 with completion by October 2012. We also implement administrative
measures to accelerate the reporting and disbursement process and establish a new disbursement
system to promote efficiency in the methods and timeliness of low-income support payments and
decrease the burden on carriers who are transitioning from projected payments to actual
payments.830
303.
We first adopt USAC’s proposal to establish a monthly deadline for carriers to
file the FCC Form 497.831 Beginning July 1, 2012, ETCs seeking support for low-income service
provided in the preceding month shall submit to USAC no later than the eighth day of each
month an electronic FCC Form 497 reporting their support claims, as well as certifications of
accurate reporting, in order to receive a low-income disbursement at the end of that same
month.832 ETCs that do not file their FCC Form 497 electronically by the eighth day of the
month may still file the FCC Form 497, electronically or manually, within the time period we
establish below, however those carriers may not receive their low-income support disbursement
at the end of the same month.833 ETCs are currently required to file an FCC Form 497 by the
fifteenth day of each month reporting low-income service provided in the preceding month. We
find that requiring ETCs to electronically file an FCC Form 497 within eight days of the end of
829 CenturyLink Disbursement Comments at 1; COMPTEL Disbursement Comments at 1-2; MI PSC Disbursement
Comments at 3; PR Wireless Disbursement Comments at 2; Smith Bagley Disbursement Comments at 2; South
Carolina Office of Regulatory Staff Disbursement Comments at 3; USTelecom Disbursement Comments at 2;
Verizon and Verizon Wireless Disbursement Reply Comments at 2; MA DTC Disbursement Reply Comments.
830 See, e.g., COMPTEL Disbursement Comments at 2; MI PSC Disbursement Comments at 3; South Carolina
Office of Regulatory Staff Disbursement Comments at 2; USTelecom Disbursement Comments at 1; MA DTC
Disbursement Reply Comments at 3.
831 Most commenters support USAC’s proposal to establish a filing deadline for the FCC Form 497, and state that a
filing deadline should enable USAC to make disbursements in a timely and predictable manner. See, e.g.,
CenturyLink Disbursement Comments at 1; Verizon and Verizon Wireless Disbursement Comments at 2; Smith
Bagley Disbursement Comments at 6; PR Wireless Disbursement Comments at 6; COMPTEL Disbursement
Comments at 3-4; USTelecom Disbursement Comments at 3; NTTA Disbursement Comments at 2.
832 In months on which the 8th falls on a weekend or holiday, carriers must submit the FCC Form 497 by the next
business day after the 8th day.
833 For example, an ETC that files its September support claims in an FCC Form 497 manually on October 8th may
not receive its low-income support disbursement until November 30th, whereas an ETC that files its September
support claims in an electronically filed FCC Form 497 on October 8th would receive its low-income support
disbursement on October 31st. An ETC that files an electronic FCC Form 497 for September support claims on
October 10th may not receive its low-income support disbursement until November 30th, whereas an ETC that
electronically files its September support claims in an FCC Form 497 on October 8th would receive its low-income
support disbursement on October 31st.
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the preceding month, rather than fifteen days, is a necessary modification to the current
administration of this program given one of our goals to expedite support payments to ETCs.834
304.
Beginning October 2012, we direct USAC to process each electronically filed
FCC Form 497 and disburse support to ETCs that file electronically by the last business day of
the same month in which the FCC Form 497 is due, provided it is timely filed. As we require
ETCs to submit FCC Forms 497 earlier in the month, we also decrease substantially the amount
of time between the filing of an FCC Form 497 and USAC’s disbursement so that carriers will
receive actual support within one month of providing service to eligible low-income consumers
so long as they timely file an electronic FCC Form 497.835 This new timetable will provide
USAC sufficient time to process the claims. Finally, some ETCs submit claims for
reimbursement on a quarterly, rather than a monthly basis. We find no reason to disallow
carriers from filing their FCC Form 497 on a quarterly basis; however carriers choosing to file
quarterly will no longer receive monthly support payments, but rather will receive one quarterly
payment for all three months.836
305.
We next modify the amount of time ETCs have to file FCC Forms 497 and any
revisions thereto. Currently, USAC maintains an administrative window of fifteen months for
filing original or revised support claims.837 After the end of each calendar year, carriers have
fifteen months to file original claims or to revise support claims for any request due during the
closed calendar year.838 After the fifteen month window, ETCs may not file revised or original
support claims for any portion of the closed calendar year.839 USAC proposes that new support
claims and upward revisions would only be permitted to be filed within six months of the current
disbursement month, while downward revisions may be filed at any time.840 We adopt USAC’s
proposal of a rolling window, but decline to adopt the six-month window proposed by USAC
because it does not allow sufficient time for carriers to process revisions and may promote
inaccuracies in payments. We find instead that a rolling one-year deadline is sufficient time for
ETCs to reconcile their records and submit original or revised FCC Form 497s to USAC.841
834 Commenters expressed concern at the amount of time it takes for USAC to disburse low-income funds. See. e.g.,
COMPTEL Disbursement Comments at 2-7; Smith Bagley Disbursement Comments at 5-6; PR Wireless
Disbursement Comments at 5-6; Nexus Disbursement Reply Comments at 2. This modification will substantially
reduce the time it takes for USAC to disburse low-income funds to the ETCs that file electronically.
835 Carriers that do not file their FCC Form 497 electronically may experience a delay in payment and receive their
disbursement by the end of the following month.
836 See Lifeline Disbursement Public Notice, 26 FCC Rcd at 13132-33.
837 See id. at 13133.
838 See id.
839 See id.
840 See id.
841 Many commenters oppose USAC’s proposal to have an asymmetrical revision window, and suggest that a six
month window for upward revisions is too short a period for carriers to reconcile their records and submit revisions.
See, e.g., Alexicon Disbursement Comments at 5; CenturyLink Disbursement Comments at 1-2; COMPTEL
Disbursement Comments at 8; PR Wireless Disbursement Comments at 6-8; Smith Bagley Disbursement Comments
(continued….)
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ETCs therefore must file within one year from the due date of the relevant FCC Form 497 an
original FCC Form 497 or any revisions to the FCC Form 497 due on that date. ETCs that file
an FCC Form 497 after the relevant due date, but within the one-year rolling deadline, shall
receive reimbursement in the following month. USAC, however, shall not accept any requests
for reimbursement submitted more than one year from the due date of the relevant FCC Form
497. This twelve-month period to file an original FCC Form 497 or any revision should be
sufficient time for carriers to ensure their request for support contains accurate and complete
subscriber data and all other information supporting their claim.842
306.
Finally, USAC’s plan for the transition to actual claims would reduce an ETC’s
actual support claim during the transition month by the already paid projected amount from prior
months. USAC also proposes not to pay a new projected amount during this transition month.843
In many cases, this method would provide ETCs with little or no support for the transition
month. We acknowledge that this transition could inflict a financial hardship on many carriers
for the transition month.844 USAC’s plan for the transition allows carriers to notify USAC to
begin transitioning specific study area codes before the transition month so that the carriers may
reduce the potential financial hardship of having all study area codes transition in one month.845
We therefore adopt a modified version of USAC’s alternative approach whereby the transition to
payments based on actual claims for ETCs receiving support based on projections as of the date
of this Order will take place over a three-month period.846 During this transition period, carriers
may notify USAC which study area codes to transition from projected to actual claims during
each month. This method allows carriers to offset the financial impact of the transition by
permitting the carrier to designate the study area codes USAC will transition in a given month.
For example, a carrier with twenty study area codes may chose to transition five study area codes
in the first month, while receiving support consistent with the current system based on
projections for the remaining fifteen study area codes in that same month. In subsequent months,
the carrier could choose to transition other study area codes and would receive disbursement
based on actual claims for those study area codes, while receiving payment on projections for the
remaining undesignated study area codes. Carriers could continue to designate the study area
codes to transition until the third month when USAC would complete the transition and disburse
payment for all study area codes based on actual claims.
(Continued from previous page)
at 6-8; USTelecom Disbursement Comments at 2-3; NTTA Disbursement Comments at 3-4; Nexus Disbursement
Reply Comments at 4.
842 We decline to establish a different limitation period for downward adjustments, but note that the Commission or
USAC may conduct an audit of a carriers’ subscriber data and recoup any excess funds disbursed to the carrier at
any time.
843 See Lifeline Disbursement Public Notice, 26 FCC Rcd at 13139, Appendix A.
844 See, e.g., Alexicon Disbursement Comments at 3-4; COMPTEL Disbursement Comments at 2; Smith Bagley
Disbursement Comments at 2-6; PR Wireless Disbursement Comments at 2-6; Sprint Disbursement Comments at 1-
2; NTTA Disbursement Comments at 2-3; PR Wireless Disbursement Comments at 2-6.
845 See Lifeline Disbursement Public Notice, 26 FCC Rcd at 13141, Appendix A.
846 See NTTA Disbursement Comments at 3 (explaining that a transition to actual costs over multiple months would
ease the transition for USAC as well as for ETCs).
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307.
The approach we adopt not only reduces the financial impact on the carriers by
extending the transition period to three months, but it also minimizes the likelihood of the carrier
owing money to the Fund at the end of the transition by completing the transition in the same
month as USAC begins its accelerated payment. Because we set the new FCC Form 497 due
date to the eighth day of the month and direct USAC to pay disbursements based on the actual
claims in the electronically filed FCC Form 497 by the last business day of the same month the
FCC Form 497 is due, a carrier will receive payments based on actual claims submitted in the
same month that the FCC Form 497 is due. Therefore, in the first month of the accelerated
payment schedule, which is also the last month in which we complete the transition to payment
on actual claims, a carrier that has filed an FCC Form 497 by the last business day of the
previous month, as well as an electronic FCC Form 497 by the eighth day of the current month,
would receive a low-income disbursement for the previous month’s FCC Form 497 as well as the
current month’s electronic FCC Form 497 at the end of the current month, thus receiving
payment for two months’ of support at the end of that month. For example, if a carrier files an
FCC Form 497 in September, under the current system it would be paid in October. When the
transition month occurs in October, the carrier would file its electronic FCC Form 497 on the
eighth day of October, and receive its September disbursement as well as its October
disbursement on the last business day of October. Any true-up of disbursements would take
place in this “double payment” month and will minimize carriers experiencing a negative
disbursement as a result of this transition period.
308.
Carriers may choose to begin their transition to payment on actual claims at any
time after the effective date of these rules. Carriers must notify USAC, however, of which study
area codes to transition during each month no later than June 1, 2012, and the transition to
payments based on actual claims must be completed by October 2012. In the event a carrier fails
to notify USAC of which study area codes to transition each month, we direct USAC to select
which study area codes to transition for such carrier.847 USAC will use its best efforts to choose
study area codes proportionately to that carrier’s monthly disbursements so that the risk of the
carrier experiencing the entire transition for all its study area codes in a one-month period is
minimized. Carriers that service only one study area code will have until October 2012 to plan
and prepare for their transition to actual claims. This transition method should minimize the
burden on carriers and avoid the hardship of carriers missing a month of payments under the
USAC proposal. Any study area codes that are submitted to USAC for low-income support for
the first time on or after the date of this Order will be paid based on actual claims.848
309.
In the event a carrier owes money to the Fund as a result of the transition process,
USAC proposes to offset any negative balance in the next month and, if the carrier continues to
owe the Fund money in subsequent months, to invoice the carrier for any remaining balance
thereafter.849 We adopt USAC’s plan to net any negative balance a carrier may incur as a result
of this process against the carrier’s next monthly payment and invoice the carrier for the
847 Carriers that fail to notify USAC of which study area codes to transition each month by June 1, 2012 may
experience a delay in payment for the first transition month.
848 Any ETCs that USAC currently pays based on actual claims must continue to be paid based on actual claims.
849 Lifeline Disbursement Public Notice, 26 FCC Rcd at 13133.
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remaining balance thereafter. While many carriers suggest that USAC net any remaining
balance against future monthly payments until the negative balance is paid off, we find that the
transition method we adopt today allowing carriers to stagger the transition by study area code
will minimize the financial burden on the carrier and reduce the likelihood of any carrier having
substantial negative balance.
IX.
MODERNIZING THE PROGRAM
A.
Bundled Services
310.Background. Today, consumers are increasingly purchasing services in bundles
that include both voice and broadband services.850 Bundled plans allow consumers to customize
packages of services to meet their communications needs,851 and also offer potential cost-savings
as compared to standalone products.852 Eligible low-income consumers also can benefit from the
opportunity to obtain packages that contain both mobile voice and broadband services at a
reduced cost.
311.
The Commission’s rules currently provide for Lifeline discounts on basic voice
service, but do not address whether such discounts may be applied to bundled offerings that
include both basic voice service and other services, such as broadband. Specifically, section
54.401 of the Commission’s rules provide that Lifeline supported services consist of a “retail
local service offering” with specified functionalities.853 The rule is silent, however, on whether
the consumer may apply his or her Lifeline discount to reduce the cost of calling plans that
include additional service components in addition to basic, local calling.
312.
Section 54.403(b) of the Commission’s current rules sets out how Lifeline support
must be passed through to the consumer.854 As noted above,855 pursuant to that rule, ETCs that
charge federal subscriber line charges or equivalent federal charges to the subscriber apply Tier 1
850 See, e.g., NATIONAL BROADBAND PLAN at 38, n.20 (noting that “no definitive data source tracks whether
consumers purchase broadband as a standalone product or as a bundle, but estimates of the share of subscribers with
some type of bundle range from 65 percent . . . to 90 percent”); OECD, Broadband Bundling: Trends and Policy
Implications, OECD Digital Economy Papers No. 175, at 3, http://www.oecd-ilibrary.org/science-and-
technology/broadband-bundling_5kghtc8znnbx-en (stating that its “data collection of over 2,000 offers of stand-
alone and bundled services from 90 firms across 30 OECD countries reveals that broadband services in the OECD
are overwhelmingly sold as mixed bundles, allowing users to choose among stand-alone offers or bundled
services”) (OECD Bundling Study).
851 See OECD Bundling Study at 5 (“Typical bundles offer fixed-voice, data, and video services and are commonly
referred to as ’multiple-play’ or ‘triple-play’ packages. A number of operators are expanding their bundles to include
mobile voice as a fourth component of ‘quadruple-play’ offers.”).
852 As the Commission noted in the NPRM, as compared to carriers’ basic plans, bundled packages of services may
offer better value for Lifeline consumers. See Broadband Adoption and Use in America (finding that consumers
who receive broadband bundled with other services pay an average of $8.55 less per month than those customers
who purchase stand-alone broadband service), available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-
296442A1.pdf; see also OECD Bundling Study at 3 (noting that the average bundled discount compared with buying
the services separately is $15 per month or a 26 percent discount).
853 47 C.F.R. § 54.401(a).
854 See 47 C.F.R. § 54.403(b).
855 See supra section V (Support Amounts for Voice Service).
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federal Lifeline support to waive the federal SLC for Lifeline subscribers.856 Any additional
support received (i.e., from Tiers 2 through 4) is then applied to reduce the consumer’s intrastate
rate.857 ETCs that do not charge federal SLCs or equivalent federal charges must “apply the Tier
[1] federal Lifeline support amount, plus any additional support amount, to reduce their lowest
tariffed (or otherwise generally available) residential rate” for the services they provide.858 Our
rules, however, do not define the parameters of a lowest-cost plan or specify the types of service
plans that are eligible for Lifeline support.
313.
Some states have enacted their own policies regarding use of Lifeline support to
reduce the cost of expanded voice offerings that include optional features or bundled
combinations of other services.859 Among these states, however, there is no uniform
approach.860 In an October 2010 report, the GAO found that ETCs in 14 states do not currently
permit consumers to apply the Lifeline discount to a bundled service offering or package that
includes telephone service.861 The National Broadband Plan recommended that the Commission
and states permit Lifeline consumers to apply their Lifeline discounts on all calling plans with a
local voice component, including bundled service packages, as it would help make bundled
offerings, including those that include broadband, more affordable for low-income
households.862
314.
In the Lifeline and Link Up NPRM, the Commission first sought comment on
amending the Commission’s rules to adopt a uniform federal requirement that Lifeline discounts
may be used on any Lifeline calling plan offered by an ETC with a voice component, including
bundled service packaging combining voice and broadband, or packages containing optional
calling features.863 Pursuant to this proposed rule, states would not be permitted to adopt rules
prohibiting ETCs from offering bundled service packages or packages with optional calling
features to Lifeline consumers.864 Second, the Commission also sought comment on whether to
856 47 C.F.R. § 54.403(b).
857 Id.
858 Id.
859 See, e.g., Letter from James Bradford Ramsay, General Counsel, National Association of Regulatory Utility
Commissioners, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Dkt. Nos. 11-42 et al.,
(filed Aug. 17, 2011) (noting that 24 states permit ETCs to offer bundled service packages or voice plans with
additional services to Lifeline consumers, 5 require that ETCs offer bundled service packages or voice plans with
additional services to Lifeline consumers, and one state is currently looking into the issue) (NARUC Aug. 17 ex
parte Letter).
860 See id.
861 2010 GAO REPORT at 13; see also NATIONAL REGULATORY RESEARCH INSTITUTE (NRRI), STATE UNIVERSAL
SERVICE FUNDING MECHANISMS: RESULTS OF NRRI’S 2005-2006 SURVEY 49, Table 30 (2006) (listing the services
supported by various state universal service low-income programs), available at
http://nrri.org/pubs/telecommunications/06-09.pdf.
862 See NATIONAL BROADBAND PLAN at 172 (Recommendation 9.1).
863 See Lifeline and Link Up NPRM, 26 FCC Rcd at 2850, para. 258.
864 Id. (citing 47 U.S.C. § 254(f) (barring states from adopting regulations that are inconsistent with the rules
established by the Commission to preserve and advance universal service)).
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adopt a national rule that would require all ETCs to offer Lifeline discounts on all of their service
plans with a voice component.865 Third, the Commission sought comment on whether to cap the
Lifeline discount for each eligible subscriber receiving a bundled service package or package
with optional calling features at the amount the subscriber would have received if he or she had
selected a basic voice plan.866
315.
Discussion. We amend sections 54.401 and 54.403 of the Commission’s rules to
adopt a rule permitting ETCs in all states to allow qualifying low-income consumers to apply
Lifeline discounts to all residential service plans that provide voice telephony service, including
bundled service packages combining voice and broadband, or packages containing optional
calling features.867 We adopt a flexible federal policy that allows all ETCs (whether designated
by a state or this Commission) to choose to make bundled service packages or packages
containing optional calling features available to Lifeline consumers.868 We clarify that, pursuant
to the rule we adopt today, ETCs may permit consumers to apply their Lifeline discount to
family shared calling plans. The plan must be in the name of an eligible low-income consumer,
and a household may receive only one Lifeline-supported service. Moreover, pursuant to this
rule, each subscriber’s Lifeline discount can be no larger than if he or she chose a basic voice
plan.869 Finally, as described below, we adopt an additional rule to protect the interests of
Lifeline subscribers who purchase bundled service packages.
316.
We also eliminate language in section 54.401 of our rules that currently describes
Lifeline as a retail service offering “that is available only to low-income consumers.”870 We
eliminate such language to clarify that ETCs are free to apply the Lifeline discount to any retail
service offering, not just to an offering specifically offered to low-income consumers.
317.
Adoption of these requirements is consistent with the statutory principle that
consumers have access to quality services at “just, reasonable, and affordable rates.”871 As the
865 Id. at 2850, para. 259.
866 Id.
867 Several commenters support this proposal. See, e.g., AT&T Comments at 7; AT&T PN Reply Comments at 12;
Box Top Comments at 3; CT DPUC Comments at 4; GCI Comments at 52; LCCHR Reply Comments at 3; MA
DTC Comments at 11; MI PSC Comments at 11; NASUCA Comments at 29-30; NCTA Comments at 4; NJ DRC
Comments at 24; New America Foundation Comments at 5-6; NAF PN Reply Comments at 4-5; NJ DRC
Comments at 24; NY PSC Comments at 6; TCA Comments at 4.
868 Thus, if an ETC chooses to make expanded calling plans available to Lifeline consumers, states may not adopt
policies that prohibit consumers from applying their Lifeline discounts to the voice calling plan of their choice. See
47 U.S.C. § 254(f). We clarify that, pursuant to the rule we adopt today, ETCs may permit consumers to apply their
Lifeline discount to family shared calling plans. The plan must be in the name of an eligible low-income consumer
and a household may receive only one Lifeline-supported service. See Appendix A, 47 C.F.R. §§ 54.408, 54.409
(adopted rules). Consumers who are eligible to receive Tribal Link Up support, see supra section VI.D (Tribal
Lifeline Eligibility), may also apply those discounts to the cost of bundled service packages or packages containing
optional calling features.
869 For example, if a Lifeline subscriber would have received $9.25 per month in support to purchase a voice-only
service, he or she would continue to receive no more than $9.25 per month, or $111 per year, in Lifeline support to
apply toward the purchase of a bundled service package or a voice package containing optional calling features.
870 47 C.F.R. § 54.401(a); see also supra section IV (Voice Services Eligible for Discounts).
871 47 U.S.C. § 254(b)(1).
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Commission noted in the Lifeline and Link Up NPRM, many carriers limit Lifeline offerings to
basic voice service, even in states where ETCs are not precluded by state requirements from
allowing consumers to apply their Lifeline discounts to the purchase of bundled packages or
optional voice services.872 A nationwide rule giving ETCs the flexibility to offer expanded
service packages to Lifeline consumers will enhance consumer choice by making broadband and
mobile voice services more accessible and affordable for all eligible low-income consumers.873
Indeed, competition in the Lifeline services market may provide additional incentives for ETCs
to offer an expanded range of service plans with additional calling features to eligible low-
income consumers, including bundled service packages.
318.
Our findings today are compatible with the determinations made by the
Commission in the April 2004 Lifeline and Link Up Order and Further Notice of Proposed
Rulemaking, which expressly declined to adopt a rule prohibiting Lifeline consumers from
purchasing optional calling features, such as caller ID or call waiting.874 In that case, the
Commission stated that such a restriction might discourage qualified low-income consumers
from enrolling in the Lifeline programs.875 Such a rationale is analogous here, and we encourage
ETCs to make expanded service packages available to eligible low-income consumers.
319.
We do not have sufficient information in the record before us to evaluate the
impact of a rule mandating that ETCs allow Lifeline discounts to be applied to any package
containing a voice component, and we seek further comment in the attached FNPRM on
requiring ETCs to allow consumers to apply their discount to any service offering.
320.
Finally, we adopt an additional rule to better protect the interests of Lifeline
subscribers who choose to purchase bundled service packages or packages containing optional
calling features. Specifically, we agree with commenters that ETCs should explicitly notify
Lifeline subscribers that partial payments will first be applied to pay down the allocated price of
the Lifeline voice services, and require ETCs to provide clear language to this effect on the bills
of those Lifeline subscribers who are receiving bundled service packages from the ETC.876 We
adopt this rule to protect against Lifeline subscribers losing access to voice service if they can no
872 Lifeline and Link Up NPRM, 26 FCC Rcd at 2850, para. 259; see USAC, Low Income, Telephone Assistance
Program for Low Income Households, LifelineSupport.org, www.lifelinesupport.org (last visited Jan. 30, 2012)
(searchable database listing Lifeline services available by each ETC in a state).
873 See, e.g., AT&T Reply Comments 2 at 12 n.43; MA DTC Comments at 11; New America Foundation Reply
Comments 2 at 3-5; NY PSC Comments at 6; Regulatory Commission of Alaska Reply Comments at 10; NATOA
Comments at 2-3.
874 2004 Lifeline and Link Up Order and FNPRM, 19 FCC Rcd. at 8330, para. 53.
875 Id.
876 See Consumer Groups Comments at 44. This rule will ensure that Lifeline subscribers do not lose access to voice
service if they can no longer afford to pay for the non-Lifeline components of a bundled package. Otherwise
applicable disconnection rules (state and/or federal) will apply. The rule we adopt today will not unreasonably
burden ETCs, including small carriers, some of whom may already have processes in place to apply partial
payments to maintain the voice portion of a Lifeline calling plan. Moreover, this rule will help to prevent Lifeline
subscribers from being disconnected from voice service for non-payment, thereby reducing potential burdens that
may result to ETCs from having to re-enroll disconnected subscribers.
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longer afford to pay for the non-Lifeline components of a bundled package, thereby also
reducing potential burdens that ETCs may face if they have to re-enroll disconnected subscribers.
B.
Support for Broadband1.
Background
321.The National Broadband Plan recognized that although increasing numbers of
Americans have broadband at home, some segments of the population – particularly low-income
households, racial and ethnic minorities, seniors, rural residents, residents of Tribal lands and
people with disabilities – disproportionately do not.877 The National Broadband Plan
recommended using Lifeline to help close the broadband adoption gap and specifically
recommended that the Commission implement a low-income pilot program to produce
actionable information about how best to design efficient and effective long-term broadband
support mechanisms for low-income consumers.878 The Lifeline and Link Up NPRM likewise
recognized the importance to low-income consumers and society as a whole of reducing the gap
in broadband adoption, and that the program may be able to play an important role in helping to
close the broadband adoption gap.879 The Commission sought comment on whether to amend
the definition of Lifeline to cover broadband services, and proposed to set aside a discrete
amount of funds reclaimed from eliminating inefficiencies in the program to create a low-income
broadband pilot program to gather data about how Lifeline can be used to support broadband
adoption.880
322.
Based on the record, we are taking the first step in working towards achieving one
of the three express goals of the program --- recognizing the importance of the availability of
broadband services for low-income Americans by creating a low-income broadband pilot
program.881 Recognizing the complexities of modernizing the low-income support mechanisms
for broadband, and the need to ensure that universal service funds are used efficiently, we are
877 NATIONAL BROADBAND PLAN at 167 (providing data about how some communities are significantly less likely to
have broadband at home); see also id. at 152, Box 8-4 (noting that available data suggests that less than 10 percent
of residents on Tribal lands have broadband available).
878 Id. at 172-173. In 2010, the Commission hosted a roundtable discussion to solicit input on how to design a pilot
program to test the effectiveness of supporting broadband services directed to low-income households. See Wireline
Competition Bureau Announces June 23, 2010 Roundtable Discussion to Explore Broadband Pilot Programs for
Low-Income Consumers, WC Dkt. No. 03-109, Public Notice, 25 FCC Rcd 7272 (2010) (2010 Roundtable Public
Notice). Webcast of the event is available at http://www.fcc.gov/events/roundtable-discussion-explore-broadband-
pilot-programs. At the roundtable discussion participants explored goals for supporting broadband through the low-
income program; barriers to adoption, including the cost of service; the availability of data and information on
broadband service and adoption by low-income individuals; and pilot program mechanics and operation. Id.
Webcast of the event is available at http://www.fcc.gov/events/roundtable-discussion-explore-broadband-pilot-
programs.
879 Lifeline and Link Up NPRM, 26 FCC Rcd at 2852-53, para 267. Many commenters echoed the Commission’s
concern about the gap in broadband adoption. See, e.g., The City of New York Comments at 1; AT&T Comments
at 19-20; Gila River Telecommunications, Inc. PN Comments at 1-9.
880 Lifeline and Link Up NPRM, 26 FCC Rcd at 2855-56, paras. 275-276 and 26 FCC Rcd at 2856-62, paras. 279-
302.
881 See supra section III.B (setting forth goals of Lifeline program, which includes availability of broadband service
to low-income consumers).
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launching a pilot program to test the design of any future universal service programs involving
support for broadband adoption.
2.
Creation of a Pilot Program
323.There is broad agreement that a pilot program could allow the Commission to
gather data on whether and how the Lifeline program can be structured to promote the adoption
and retention of broadband services by low-income households.882 We therefore adopt a Low-
Income Broadband Pilot Program (Pilot Program) that will focus on testing the necessary amount
of subsidies for broadband and the length of support. Given our implementation of the Pilot
Program, we decline to amend the definition of Lifeline at this time to include broadband for the
existing low-income program. Rather, we conclude it is preferable to develop data that will
allow the Commission and participating ETCs to evaluate how best to structure the program in
the future, with the added benefit of helping to close the adoption gap for consumers that
participate in the pilot.883 We direct the Bureau to initiate the Pilot Program by the release of a
Public Notice specifying the Pilot Program application procedures, including dates, deadlines,
and other details of the application process, no later than 15 days after receiving approval under
the Paperwork Reduction Act.
324.
As discussed more fully above, the Fund has realized substantial savings from the
June 2011 Duplicative Program Payments Order,884 and we anticipate that the other efforts to
reduce waste in the low-income program will lead to additional significant savings. Consistent
with our overarching objective of fiscal responsibility in using universal service funds, we are
able to start a pilot program using low-income program funds without increasing the current size
of the low-income program. We delegate authority to the Bureau to implement the Pilot Program
consistent with the framework established in this Order, and direct USAC to disburse no more
than $25 million to fund the Pilot Program, as directed by the Bureau.885
325.
As discussed in more detail below, we direct the Bureau to solicit applications
from ETCs to participate in the Pilot Program and to select a relatively small number of projects
to test the impact on broadband adoption with variations in the monthly discount for broadband
services, including variations on the discount amount, the duration of the discount (phased down
over time or constant) over a 12-month period.886 As discussed more fully below, we will
882 We note that some commenters urged us to expand the Lifeline program immediately to cover broadband
services. See, e.g., Consumer Groups PN Comments at 6; NASUCA PN Comments at 3-4; MAG-Net Comments at
21-22. Further, the record indicates that the Commission would be better served by gathering data on how best to
modify the Lifeline program to support broadband. See Joint Center for Political And Economic Studies Ex Parte
(Nov. 18, 2011) (providing recommendations of how best to structure a pilot program).
883 See infra para. 334 (explaining why funding is limited to ETCs pursuant to section 254(e)).
884 See generally 2011 Duplicative Program Payments Order; see also USAC 2011 IDV Process Letter at 1 (noting
that USAC has discovered approximately 269,000 duplicates in 12 states).
885 The $25 million for the pilot is exclusive of administrative expenses.
886 We find that the Pilot Program, and the data collection involved, is exempt from the requirements to create an
Institutional Review Board (IRB). See 45 C.F.R. 46.101(b); see also Letter from Sarah Morris, New America
Foundation, to Marlene H. Dortch, Federal Communications Commission, WC Dkt. No. 11-42 et al., (filed Jan. 23,
2012) (citing 45 C.F.R. § 46) (raising the question of whether the data collection component within the Pilot
Program would require creation of an IRB).
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implement an 18-month Pilot Program, which includes 3 months for ETCs to implement
necessary back-office functions, up to 12 months of subsidized broadband service either through
bundles of voice and broadband or standalone broadband, and 3 months to finalize data
collection and analysis.
326.
The Bureau shall select a diversity of projects, with different amounts and
duration of subsidies, different types of geographic areas (e.g., rural, urban) and different types
of broadband networks (e.g., fixed and mobile) and technologies.887 To the extent possible, the
pilot program will seek to collect data on a number of variables, such as the impact of income,
age, ethnicity, gender, and family size and make up on adoption rates. The Bureau will give
preference in choosing projects that offer speeds at least at 4 Mbps for downloads and 1 Mbps
for uploads. The Bureau will also give preference to ETCs that partner with third parties (e.g.,
grantees of other programs such as the Broadband Technology Opportunities Program (BTOP),
the Broadband Initiatives Program (BIP), existing library programs) that have already developed
holistic approaches to overcoming broadband adoption barriers, including digital literacy,
equipment costs, and relevance. The Bureau will consider whether the projects proposed will
promote entrepreneurs and other small businesses in the provision and ownership of
telecommunications services and information services, consistent with section 257 of the
Communications Act, including those that may be socially and economically disadvantaged
businesses. We recognize, however, that it is difficult to partner with third party entities in more
rural areas, and will not exclude from consideration applications that include remote online
training.888 We also encourage ETCs to utilize control groups when developing proposals in
order to better assess the impact on adoption of the project. Project funding, which will be
disbursed directly to ETCs participating in the program, will be passed on to subscribers in the
form of subsidies to defray the cost of service. ETCs selected to participate in the Pilot Program
will be required to participate in the collection, analysis, and sharing of anonymized quantitative
and qualitative data with standardized data elements, formatting, and submission requirements.
At the end of the Pilot Program, the Commission will publicly recognize the ETCs and their
partners that best succeeded in meeting the Pilot Program goals.
327.
The Commission will draw on the experiences of other broadband adoption
programs such as BTOP/BIP and “Connect to Compete” without duplicating their efforts and
results, and plans to implement best practices (e.g., type of data collected and tools used,
evaluation metrics/criteria, use of control groups) that were learned through implementation of
such programs.889 While the Commission plans to take best practices learned through other
887 See, e.g., AT&T PN Comments at 15 (recommending that the pilot test a variety of variety of approaches to
determine which approach most efficiently increases broadband adoption by low-income consumers).
888 See Letter from Jennie B. Chandra, Senior Counsel, Windstream, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. et al. at 9-10 (filed Dec. 21, 2011) (Windstream Dec. 21 ex parte
Letter) (urging the Commission to take into account the particular challenges presented by rural areas including the
difficulty of partnering with third party entities with existing adoption programs).
889 Letter from Sarah Morris, New America Foundation, to Marlene Dortch, Federal Communications Commission,
WC Dkt. No. 11-42 et al., at 2 (filed Dec. 12, 2011) (New America Foundation Dec. 12 ex parte Letter) (providing
examples of data tools that BTOP grantees developed that could be implemented for the purposes of the Pilot
Program study such as the definition of what is meant by adoption). Based on their work on BTOP evaluations, the
New America Foundation recommends that the Commission use evaluation tools and metrics that measure
(continued….)
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broadband adoption programs to help in creating metrics/criteria for selecting and evaluating
pilots and data collection, the Pilot Program is unique in that it is a subsidy-focused program
intended to study the length and amount of subsidy that is necessary for low-income consumers
to adopt broadband.890 Additionally, as discussed in more detail below, the Pilot Program is
unique in that it will require participation by broadband providers that are also ETCs, which
means low-income consumers that qualify for Lifeline will also qualify for the subsidized
broadband service through this Pilot.891
3. Legal
Authority
328.In the USF/ICC Transformation Order and FNPRM, the Commission concluded
that we have authority under section 254 and section 706 of the Act to provide support for
modern networks capable of providing both voice and broadband and to condition receipt of
support for the provision of voice telephony on the offering of broadband services over those
networks.892 Consistent with that decision, we conclude that sections 254 and 706 authorize us
to fund bundled voice and broadband services as well as standalone broadband services as part of
a discrete, time-limited Pilot Program structured to determine how best to bring advanced
services to low-income consumers. These conclusions are consistent with the overwhelming
bulk of the comments we received on this issue.893
(Continued from previous page)
broadband adoption in broad terms, including customers’ access to community resources. See id. Commenters have
also recommended that the Commission utilize existing data from other adoption programs to help in selecting pilot
communities, program evaluation and control groups. See id. (recommending that the Commission utilize data from
other adoption programs); see also Letter from Nicol Turner-Lee, The Joint Center for Political And Economic
Studies to Marlene H. Dortch, Secretary, Federal Communications Commision, WC Dkt. No. 11-42 at 1-3 (filed
Nov. 18, 2011).
890 New America Foundation Dec. 12 ex parte Letter (recognizing how the Pilot Program differs from BTOP/BIP,
but Commission can implement practices learned through other grant programs).
891 Other broadband adoption programs are distinguishable from the Pilot Program. For example, the BTOP
program focuses on digital literacy training centers with some grantees entering partnerships with broadband
providers to offer discounted broadband service after completing digital literacy training programs. See Broadband
Technology Opportunities Program (BTOP) Quarterly Program Status Report Submitted to the Committee on
Appropriations United States Senate and House of Representatives, the Committee on Commerce, Science and
Transportation United States Senate and the Committee on Energy and Commerce United States House of
Representatives, December 2011, available at http://www.ntia.doc.gov/files/ntia/publications/btop-quarterly-
congressional-report-dec-2011.pdf. In the “Connect to Compete” initiative, cable broadband providers will provide
discounted broadband service at minimum speed tier of 1 Mbps to eligible families when at least one student is
enrolled in the Free School Lunch Program, the family has not subscribed to broadband service for the past 90 days
and does not have an overdue bill or unreturned equipment owed to the participating cable company. See FCC &
“Connect to Compete” Tackle Barriers to Broadband Adoption, available at http://www.fcc.gov/document/fcc-and-
connect-compete-broadband-fact-sheet (providing details of the discounted broadband service and which consumers
are eligible).
892 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at paras. 60-73.
893 See, e.g., MMTC PN Comments at 1-2 (recognizing Commission authority to create broadband pilot project);
GRTI PN Comments at 4-5 (citing sections 254(b)(2) and (b)(3) of the Communications Act and sections 151 and
154(i) as legal authority for the Commission to fund broadband pilot program); Cox PN Comments at 5-6 (arguing
that the Commission has broad legal authority to fund broadband pilot program under sections 254(c) and 706).
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329.
In enacting section 254, as part of the Telecommunications Act of 1996, Congress
expressly recognized the importance of ensuring that low-income consumers “have access to
telecommunications and information services, including . . . advanced telecommunications and
information services.” Section 254 sets forth additional principles upon which we must “base
policies for the preservation and advancement of universal service.”894 Among these principles
are that “[q]uality services should be available at just, reasonable, and affordable rates,” and that
“[a]ccess to advanced telecommunications and information services should be provided in all
regions of the Nation.” Recently, in the USF/ICC Transformation Order and FNPRM,
consistent with the recommendations of the Joint Board, we adopted an additional principle that
“[u]niversal service support shall be directed where possible to networks that provide advanced
services as well as voice services.”895
330.
As we explained in the USF/ICC Transformation Order and FNPRM, section 254
provides express statutory authority to support telecommunications services that we have
designated as eligible for universal service support.896 To the extent carriers offer traditional
voice telephony services over traditional circuit-switched networks, our authority to provide
support for such services is well-established. Section 254 also allows us to impose conditions on
the support provided to entities designated as ETCs. Indeed, we have a “mandatory duty” to
adopt universal service policies that advance the principles outlined in section 254(b), and we
have the authority to “create some inducement” to ensure that those principles are achieved.897
Congress made clear in section 254 that the deployment of, and access to, information services –
including “advanced” information services – are important components of a robust and
successful federal universal service program.898 Also, the statute is clear that universal service
support should include addressing low-income needs.899 Using a discrete, time-limited
broadband pilot program to determine whether the low-income program can successfully be used
to increase broadband adoption among low-income consumers is therefore consistent with the
purposes of section 254. Accordingly, we find authority under section 254, as supported by
section 4(i),900 to provide limited USF support through a Low-Income Broadband Pilot Program
and to require ETCs receiving support through the Pilot Program to offer either a bundle of voice
and broadband services or standalone broadband service.
331.
We also have authority under section 706 of the 1996 Act to provide USF support
to ETCs through a low-income broadband Pilot Program to subsidize low-income consumers’
purchase of broadband services. In section 706, Congress recognized the importance of
ubiquitous broadband deployment to Americans’ civic, cultural, and economic lives and, thus,
894 47 U.S.C. § 254(b).
895 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 65.
896 47 U.S.C. § 254(c); See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 62.
897 Qwest Corp. v. FCC, 258 F.3d 1191, 1200, 1204 (10th Cir. 2001).
898 47 U.S.C. § 254(b)(2), (b)(3).
899 See 47 U.S.C. §§ 254(b)(1), (b)(3) (implementing Congress’s universal service directives in sections 254(b)(1)
and 254(b)(3) that quality services should be available at affordable rates and to consumers throughout the nation).
900 47 U.S.C. § 4(i) (providing Commission authority to “perform any and all acts . . . as not inconsistent with [the
Communications Act] as may be necessary in the execution of its functions”).
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established a federal policy of “encourag[ing] the deployment on a reasonable and timely basis
of advanced telecommunications capability to all Americans.”901 Of particular importance,
Congress adopted a definition of “advanced telecommunications capability” that is not confined
to a particular technology or regulatory classification. Rather, “‘advanced telecommunications
capability’ is defined, without regard to any transmission media or technology, as high-speed,
switched, broadband telecommunications capability that enables users to originate and receive
high-quality voice, data, graphics, and video communications using any technology.”902 Section
706(a) directs the Commission to “encourage the deployment on a reasonable and timely basis of
advanced telecommunications capability to all Americans.”903 Section 706(b) requires the
Commission to “determine whether advanced telecommunications capability is being deployed
to all Americans in a reasonable and timely fashion” and, if the Commission concludes that it is
not, to “take immediate action to accelerate deployment of such capability by removing barriers
to infrastructure investment and by promoting competition in the telecommunications market.”904
The Commission has found that broadband deployment to all Americans has not been reasonable
and timely905 and observed in its most recent broadband progress report that “too many
Americans remain unable to fully participate in our economy and society because they lack
broadband.”906 This finding triggers our duty under section 706(b) to “remov[e] barriers to
infrastructure investment” and “promot[e] competition in the telecommunications market” in
order to accelerate broadband deployment throughout the Nation.
332.
Providing support to carriers to subsidize low-income consumers’ purchase of
broadband services helps achieve section 706’s objectives. The Commission has recognized that
a key barrier to infrastructure investment is “lack of affordability of broadband Internet access
services.”907 Providing federal support for low-income consumers’ purchase of broadband
901 47 U.S.C. § 1302(a); Section 706(a) is more than just a statement of policy, as Commissioner McDowell
contends. It directs the Commission to “utiliz[e], in a manner consistent with the public interest, convenience, and
necessity, … regulating methods that remove barriers to infrastructure investment.” Id. As discussed in para. 332,
infra, providing federal support for low-income consumers’ purchase of broadband services does remove barriers to
infrastructure investment.
902 47 U.S.C. § 1302(d)(1); see also National Broadband Plan for our Future, GN Dkt. 09-51, Notice of Inquiry, 24
FCC Rcd 4342, 4309, App., para. 13 (2009) (“advanced telecommunications capability” includes broadband Internet
access); Inquiry Concerning the Deployment of Advanced Telecomms. Capability to All Americans in a Reasonable
and Timely Fashion, CC Dkt. No. 98-146, Report, 14 FCC Rcd 2398, 2400, para. 1 (section 706 addresses “the
deployment of broadband capability”), 2406, para. 20 (same). The Commission has observed that the phrase
“advanced telecommunications capability” in section 706 is similar to the term “advanced telecommunications and
information services” in section 254. See Rural Health Care Support Mechanism, WC Dkt. No. 02-60, Order, 21
FCC Rcd 11111, 11113, n.9 (2006).
903 47 U.S.C. § 1302(a).
904 47 U.S.C. § 1302(b) (emphasis added).
905 Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a
Reasoanble and Timely Fashion, GN Dkt. No. 09-147 et al., Report, 25 FCC Rcd 9556, 9558, paras. 2-3 (2010)
(Sixth Broadband Progress Report); Inquiry Concerning the Deployment of Advanced Telecommunications
Capability to All Americans in a Reasonable and Timely Fashion, Seventh Broadband Progress Report and Order on
Reconsideration, GN Dkt. 10-59, 26 FCC Rcd 8008, 8009, para. 1 (2011) (Seventh Broadband Progress Report)
906 Seventh Broadband Progress Report, 26 FCC Rcd at 8011, para. 4.
907 Id., at 8040, para. 65.
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services will expand the base of consumers able to purchase broadband services. The additional
revenue generated by these new consumers in areas where broadband is already available will
provide additional resources for deployment projects where broadband networks are not yet
available. Effective support for broadband services to low-income consumers thus “removes
barriers to infrastructure investment” as section 706(b) directs us to do, and the pilot program we
establish here is an important first step to designing such support.908
4.
Structure of the Pilot Program
333.The Pilot Program is to be a joint effort of the Commission, ETCs, broadband
providers, and other interested parties, including non-profit institutions, independent researchers
with experience in program design and evaluation, consumer device manufacturers, and state,
local and Tribal government agencies. Over the last several years, there has been a groundswell
of initiatives focused on broadband adoption.909 Our aim is not to retread the ground already
covered by public and private broadband adoption projects but to benefit from the work already
done on broadband adoption in order to determine how we can best use Lifeline funds to increase
broadband adoption and retention by low-income consumers. Consistent with this aim and our
legal authority, we direct the Bureau to incorporate the following general guidelines in
implementing the Pilot Program.
a.
Service Provider Qualifications
334.In the Lifeline and Link Up NPRM, the Commission sought comment on whether
funding for the Pilot Program should be limited to ETCs, or whether non-ETCs could be eligible
for funding.910 Section 254(e) of the Communications Act provides that only ETCs designated
pursuant to section 214(e) are eligible for universal service support.911 Given that the Fund will
908 47 U.S.C. § 1302(b).
909 Federal, state, and local entities, along with their non-governmental partners, have provided significant funding to
support hundreds of innovative broadband adoption programs. Most recently, we have announced several
broadband adoption initiatives. For example, Connect to Compete is aimed at boosting basic computer skills and
promoting the adoption of high-speed Internet. See http://connect2compete.org (last visited Feb. 5, 2012); see also
Press Release, Federal Communications Commission, FCC “Connect to Compete” Tackle Barriers to Broadband
Adoption (Nov. 9, 2011), available at http://www.fcc.gov/document/fcc-and-connect-compete-broadband-fact-sheet
(detailing private/non-profit partnership providing qualifying families with $9.95 monthly broadband service and
reduced price equipment). The Connect to Compete program is intended to complement the Broadband
Telecommunications Opportunities Program (BTOP) and the Broadband Initiatives Program (BIP) which together
have committed more than $7 billion to fund numerous exciting broadband initiatives, many of which have already
increased adoption in the communities in which they are working and provided other tangible results for the
program participants. Also recently, Comcast and CenturyLink have announced low-cost broadband adoption
programs. The Comcast Internet Essentials program is aimed at families that have one or more children who qualify
for free school lunches, and is advertised as providing $9.95/month broadband services, at speeds of up to 1.5 Mbps
down and 384 Kbps up, and the opportunity to purchase a $150 netbook computer. The CenturyLink program is
aimed at consumers who would qualify for Lifeline service, and is advertised as providing $9.95/month broadband
services for the first 12 months at speeds of up to 1.5Mbps down and the opportunity to purchase a $150 netbook
computer.
910 Lifeline and Link Up NPRM, 26 FCC Rcd. 2860, para. 293.
911 47 U.S.C. § 254(e). Some commenters argued that only ETCs can and should receive USF funds. See, e.g. GCI
PN Comments at 2; Staff of the Public Utilities Commission of Ohio Comments at 30-31 (citing 214(e)(1)(A) as
limiting funding to ETCs); Sprint PN Comments at 5 (supporting participation only to designated ETCs to ensure
(continued….)
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be used for the Pilot Program, only ETCs will be eligible to receive Pilot Program funds.
Carriers that seek to participate in the Pilot Program must be ETCs in the areas for which they
propose to offer service at the time they submit their proposed projects to the Commission for
review. If a carrier is contemplating becoming an ETC to participate in the Lifeline program,
including participation in the Pilot Program, it should act promptly to begin the process. The
Commission will make every effort to process such ETC applications in a timely fashion, and we
urge the states to do likewise. We anticipate the Bureau will give ETCs at least 45 days after
release of the Public Notice to submit applications for the Pilot Project.
335.
To afford Tribes an increased opportunity to participate in the Pilot Program, in
recognition of their interest in self-government and self-provisioning on their own lands, we will
permit a Tribally-owned or controlled entity to submit a Pilot Program proposal for the
geographic area defined by the boundaries of the Tribal land associated with the Tribe that owns
or controls the entity as long as the Tribally-owned or controlled entity has an application for
ETC designation pending at the time it submits its proposal.912 We note that allowing such
entities to submit applications for the Pilot Program in no way prejudges the ultimate decision on
a Tribally-owned or controlled entity’s ETC designation or whether it will be chosen as a project
for the Pilot Program. Support would be disbursed only after the carrier receives its ETC
designation.913
b.
Data Gathering and Sharing
336.Numerous commenters noted the importance of using the Pilot Program to collect
and share robust data.914 Therefore, to be eligible for funding, ETCs seeking to participate in
pilot projects must commit to robust data gathering as well as analysis and sharing of the data.
Applicants will be expected to explain what types of data they intend to gather and how they
intend to gather that data. There will be standardized data elements, formatting and submission
requirements for all of the participating ETCs outlined in the Public Notice that will detail the
application procedures. Service providers need not commit to conducting all data gathering and
analysis functions “in house,” however. As discussed in section IX.B.3.f below, we authorize
administrative expenses from the Fund to perform data gathering and analysis functions. Funded
projects must seek participating subscribers’ consent to share information about their experiences
with the Commission, public utility commissions in states that host pilot projects, Tribal
(Continued from previous page)
adequate oversight and eliminate issues associated with inexperience in serving Lifeline subscribers). Other
commenters felt that the Commission should not limit funding for the Pilot Program to ETCs. See, e.g., Box Top
Comments at 4; EDNet Reply Comments at 2; LCCHR Comments at 4; NCTA Comments at 4-5; USTelecom
Comments at 23; MSB Reply Comments at 5; AT&T Comments at 8-9 (claiming Commission has authority to
distribute funds to non-ETCs under 254(j)).
912 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 491(affording Tribes a similar
opportunity in the Mobility Fund auction).
913 A Tribally-owned or controlled entity that does not obtain and provide the required ETC designation will not be
entitled to any support payments and may ultimately be in default in accordance with the rules. See 47 C.F.R. §
54.1005(b)(3)(v); 47 C.F.R. § 1.21004.
914 See, e.g., EDNet Comments at 10-12 (emphasizing importance of requiring carriers to collect data); Benton/NAF
PN Comments at 9-11 (proposing an open process that ultimately makes available anonymized raw data).
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governments hosting pilot projects and other stakeholders, and must provide such subscriber
information in anonymized form. The Commission plans to make this data public for the benefit
of all interested parties, including third parties that may use such information for their own
studies and observations.
c.
Duration of Pilot Program
337.In order to garner useful data without delay, we direct the Bureau to fund the pilot
projects for up to 18 months from the time the Bureau announces the selection of the pilot
projects, and expect the projects to be substantially completed at the end of that time, with
interim reporting as discussed in IX.B.3.b.915 We expect each project to offer 12 months of
reduced-price voice and broadband services or standalone broadband to the consumers served in
the pilot, unless the pilot is specifically designed to test a shorter duration, and that design
element is clear in the proposal made to the Commission. We recognize, however, that some
projects may require additional time to implement, as well as several months to finalize the
collection and analysis of the data the projects generate. We therefore authorize the Bureau to
grant up to six additional months for projects to startup and wind down provided that no project
may offer more than 12 months of reduced-price services.
338.
At the Commission’s broadband pilot roundtable, several parties suggested that it
might be appropriate to provide subsidies only for a limited period of time to address the initial
adoption hurdle of realizing the benefits of broadband.916 Proposals to provide reduced voice and
broadband services for less than 12 months should include a commitment to track and report data
on adoption and retention for a minimum of 12 months so that the Commission can evaluate
whether consumers drop service when the subsidy is eliminated or reduced.
d.
Services to Be Supported
339.In order to encourage consumer participation in this Pilot Project, all projects
must support services meeting the criteria set forth in this section.
340.
Bundled and Standalone Services. As discussed in section IX.B.3, we conclude
that sections 254 and 706 authorize us to fund bundled voice and broadband services as well as
standalone broadband services as part of a discrete, time-limited Pilot Program structured to
determine how best to bring the low-income program into the digital age.917 We therefore direct
the Bureau to select Pilot Program applicants that agree to offer voice services bundled with
broadband or standalone broadband service. We expect that pilot participants will seek a
monthly Lifeline subsidy equal to whatever subsidy the ETC would be entitled to for a voice-
only subscriber, plus whatever additional amount that the ETC proposes to offer consumers as
915 Although the Pilot Program will officially end after 18 months, we encourage ETCs to set up their projects so
that they can follow the low-income subscribers beyond the end of the funding for the project, and we direct the
Wireline Competition Bureau when deciding which projects to fund to give preference to well designed projects that
commit to collecting and sharing longer term data about the subscribers that participated in the projects.
916 See June 2010 Roundtable Public Notice.
917 See, e.g., Consumer Groups PN Comments at 5; Budget/Great Call/UCC PN comments at 1-2; CA PUC PN
Comments at 6-7; Cox PN Comments at 8-12; GCI PN Comments at 2; MMTC PN Comments at 3; NASUCA/NJ
PN Comments at 6; SBI PN Comments at 10.
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part of the pilot program. In its application, the ETC will propose how much support it should
receive for each broadband service subscriber.
341.
Broadband Speed. Consumers should have access to broadband that is capable of
enabling the kinds of key applications that drive our efforts to achieve universal broadband,
including education (e.g., distance/online learning),918 healthcare (e.g., remote health
monitoring),919 and person-to-person communications (e.g., VoIP or online video chat with loved
ones serving overseas).920 In the USF/ICC Transformation Order and FNPRM, we established 4
Mbps downstream and 1 Mbps upstream as a broadband speed benchmark at fixed locations for
CAF recipients.921 We further established speeds for recipients of Mobility Fund Phase I support
deploying current generation, also known as third generation or 3G, or next generation, also
known as fourth generation or 4G, mobile networks.922 In particular, the minimum standard for
3G networks requires supported mobile service providers to offer mobile transmissions to and
from the network meeting or exceeding the following minimum standards: outdoor minimum of
200 kbps downstream and 50 kbps upstream to handheld mobile devices. For 4G networks, we
required the following minimum standards: outdoor minimum of 768 kbps downstream and
200 kbps upstream to handheld mobile devices. These minimum data rates should be achievable
in both fixed and mobile conditions, at vehicle speeds consistent with typical speeds on the roads
covered and must be achieved throughout the cell area, including at the cell edge. We adopt
these benchmarks for purposes of the Pilot Program as well, meeting the CAF benchmarks for
fixed service, 3G benchmarks on 3G networks, and 4G benchmarks on 4G networks.923
However, we recognize there are many areas of the country where low-income consumers do not
yet have access to networks that can provide such speeds, either for fixed or mobile services.924
We also recognize that there is typically a trade-off between the performance of broadband
service and its cost to consumers, and note that some commenters support enabling low-income
consumers to use a Lifeline subsidy for slower broadband speeds.925 An offering that includes a
broadband service below the speed benchmarks to the extent that it is less expensive, potentially
918 See NATIONAL BROADBAND PLAN at 223-44.
919 See, e.g., Omnibus Broadband Initiative, Health Care Broadband in America, Early Analysis and a Path
Forward, at 5 (Aug. 2010); Center for Technology and Aging, Technologies for Remote Patient Monitoring for
Older Adults, Position Paper, at 13 (Apr. 2010), available at http://www.techandaging.org/RPMPositionPaper.pdf
(discussing data transmission methods used for various continuous cardiac remote patient monitoring technologies).
920 See NATIONAL BROADBAND PLAN at 223-244.
921 See USF/ICC Transformation Order and FNRPM, FCC 11-161 at paras. 92-5; see NATIONAL BROADBAND PLAN
at 135-36 (recommending the Commission to establish minimum broadband speed goal of 4 Mbps for downloads
and 1 Mbps for uploads).
922 See USF/ICC Transformation Order and FNRPM, FCC 11-161 at paras. 359-364.
923 As noted in the USF/ICC Transformation Order and FNRPM, examples of 3G networks are EV-DO, EV-DO
Rev A, UMTS/HSPA, while examples of 4G networks are HSPA+ or LTE. Id.at para. 334.
924 See id. at paras. 93-95; Sixth Broadband Progress Report, 25 FCC Rcd 8011-12, para. 5; Seventh Broadband
Progress Report, 26 FCC Rcd 8008, 8019, para. 15; see also Budget PN Comments at 2-3 (explaining that speeds of
4 Mbps/1Mbps are unrealistic in some Tribal lands, areas of mountainous terrain, and Puerto Rico); GCI PN
Comments at 4-5 (noting that 4 Mbps/1Mbps speeds are not affordable in many areas, including Alaska).
925 See, e.g., GCI PN Comments at 5.
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could draw more Lifeline-eligible consumers.926 In light of the challenges of offering higher
speeds in some areas and on some networks, and the benefits of more fully understanding
consumer choices in the Pilot Program, we provide the Bureau discretion to select some projects
that offer broadband at speeds below the benchmark, but only upon careful consideration of the
justification for providing lower speeds. Such a justification should at a minimum show that the
project would contribute data that would be comparably useful in our efforts to understand how
Lifeline can best help overcome barriers to broadband adoption.
342.
Latency and Capacity. The USF/ICC Transformation Order and FNPRM
required ETCs to offer sufficiently low latency to enable use of real-time applications, such as
VoIP, and concluded that any usage limitations imposed by an ETC on its USF-supported
broadband offerings must be reasonably comparable to usage limits for comparable broadband
offerings in urban areas.927 We expect Pilot Project participants to offer services with similar
characteristics to low-income consumers. In particular, we require participants to offer usage
limits that are reasonably comparable to usage limits for comparable broadband offerings in
urban areas. We direct the Bureau to require applicants that propose to limit data usage on their
offerings to specify the size of usage limits, and explain how subscribers will be notified when
they reach their limits and the consequences to a subscriber of exceeding such usage limits.
e.
Consumer Qualifications
343.Consumer Eligibility To Participate in Pilot Projects. The Lifeline and Link Up
NPRM and Public Notice both sought comments on whether to allow broadband pilot projects to
deviate from the federal default rules with regard to consumer eligibility for the Lifeline/Link Up
programs.928 We recognize that the need to increase broadband adoption does not start and stop
with consumers who are eligible for the Lifeline program. However, by definition, Lifeline must
focus its resources on qualifying low-income consumers. Moreover, consistent and uniform
eligibility rules applicable to both the Pilot Program and the program will control administrative
costs associated with the pilots and help the Commission to more easily compare results from
different pilot projects.929 Therefore, we require that all pilot projects use the federal criteria for
low-income consumer eligibility as modified in this Order.
344.
New Adopters. One important variable to test during the Pilot Program is the
extent to which discounts on the cost of broadband services may induce broadband adoption
among those who do not currently subscribe to broadband. For that reason, we direct the Bureau
926 Participants in “Connect to Compete” will offer consumers a minimum of download speeds up to 1 Mbps, while
some may receive faster speeds.
927 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at paras. 96-100 (fixed); 363-64 (mobile).
928 Lifeline and Link Up NPRM , 26 FCC Rcd at 2832-33, para. 202; Lifeline and Link Up Public Notice , 26 FCC
Rcd 11099-11100, para. 1. A significant number of commenters urged the Commission to set the income-eligibility
threshold for consumers participating in the Pilot Program at 150 percent of FPG. See, e.g., Benton/PK/UCC
Comments at 10; Consumer Groups PN Comments at 4, 6; CA PUC PN Comments at 4; GRTI PN Comments at 9-
10; MMTC PN Comments at 2; NASUCA/NJ PN Comments at 5-6; SBI PN Comments at 10; Joint Center, PN
Reply Comments at 4. Still other commenters argued that the Commission should apply the existing voice
eligibility criteria of 135 percent of FPG to broadband. See, e.g., Cox PN Comments at 9.
929 Letter from Steven F. Morris, National Cable & Telecommunications Association, GN Dkt. No. 09-51 et al.,
(filed Dec. 4, 2009).
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to ensure that all of the projects selected provide services that focus on qualifying households
that do not currently subscribe to broadband services.930 We do this to focus on the goal of
increasing broadband adoption by low-income consumers. We conclude that using the Pilot
Program to subsidize broadband services purchased by consumers who have already adopted
such services will not provide us with sufficient and useful data about whether such subsidies
increase adoption.
f.
Use of Pilot Program Funds
345.Consistent with the Lifeline program, we expect that the primary use of Pilot
Project funds will be to provide discounts to qualifying consumers for recurring and non-
recurring fees. Additionally, we authorize a portion of funds to be used to execute necessary
program administrative functions.
346.
Recurring/Nonrecurring Fees for Broadband. To test various subsidy levels, we
will not require that ETCs impose minimum or maximum monthly fees for each project.
However, to ensure there is a commitment by consumers to utilize the service, we direct the
Bureau to give preference to those projects that impose at least a minimal charge, either one-time
or on an ongoing basis, for the low-income consumer to participate in the project.931 We
acknowledge that many ETCs charge a non-recurring activation fee for broadband services and
will consider proposals that include reimbursement for such fees.932 As with the current
program, the full amount of the subsidies must be passed on to the participating subscribers.
347.
Administrative Costs. To allow for uniform collection of data from consumer and
carrier surveys and other related program administrative costs, the Fund may be used to
administer such functions as are necessary, including costs associated with conducting surveys of
pilot participants and analyzing data.
348.
Equipment. As the Commission recognized in the Lifeline and Link Up NPRM,
the expense of consumer equipment necessary to access the Internet (including computers or
other devices) has been shown to be a major barrier to broadband adoption, particularly for low-
income households.933 At the same time, as the Commission acknowledged in the Lifeline and
Link Up NPRM, historically the Fund has been used for services not equipment.934 The
930 We recognize that some participants might currently subscribe to a 3G wireless service but do not subscribe to
fixed residential broadband, which would not preclude them from participating in the Pilot Program; see supra
section VI.B (codifying a one-per-household requirement).
931 The subsidy amount within each project will apply to the lowest publicly available promotional rate that the ETC
offers for broadband, with the same speeds, to consumers in the same geographic market at the time the ETCs
submit their applications for the Pilot Project.
932 See, e.g., Windstream Internet service, available at http://www.windstream.com/Free (last visited on Jan. 3,
2011); Centurylink Internet service, available at
http://embarq.centurylink.com/embarq/assets/disclaimers/resDisclaimers.html (last visited on Jan. 3, 2011). Any
reimbursements for non-recurring fees in the Pilot Program are separate and apart from the Link Up program that
the Commission is eliminating as described in section VII.C.
933 Lifeline and Link Up NPRM, 26 FCC Rcd. at 2853, para. 268.
934 Id. at 2857, para. 282.
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Commission therefore sought comment on how the Pilot Program could test the impact of a
variety of equipment discount programs in encouraging broadband adoption.935
349.
There is evidence in the record that lack of access to affordable equipment,
including computers, smart phones, air cards, and modems is a significant barrier to broadband
adoption among low-income consumers,936 and we therefore conclude that projects should
incorporate this consideration into their plans. We encourage Pilot Program applicants – directly
or in partnership with other entities – to provide no-cost or low-cost devices to participants in
their pilot project, and direct the Bureau to consider the extent to which pilot projects provide
access to equipment when deciding which projects to fund.937 However, in keeping with the
Commission’s historic approach to using the Fund, we will not subsidize equipment purchases as
part of the pilot program.938
g.
Other Factors To Be Considered
350.Diversity of Data. The Lifeline and Link Up NPRM sought comment on how best
to design the Pilot Program in order to gather as much useful data as possible.939 We recognize
that there is a tension between the need to limit the number of variables examined in order to
ensure that the data gathered is comparable and useful and the desire to examine as many facets
of the issue as possible. Given the potential variety of proposed projects and the goal of finding
the best way to use program funds to encourage low-income consumers to adopt and use
broadband services, we direct the Bureau to select projects that will maximize the useful
information available regarding the impact of variations in the subsidy level, the amount of time
the subsidy is made available, and whether different approaches are warranted based on
consumer demographics or geography.940 Proposals are not, however, limited to examining
these factors, and may seek funding for one or more models of providing broadband service to
low-income consumers, including variations on technology used and program design (e.g.,
935 Id. at 2857-58, paras. 282-283.
936 Commenters agreed that lack of access to affordable equipment is a major barrier to broadband adoption among
low-income consumers, and offered data supporting that proposition. See, e.g., Cox Comments at 4 (providing data
demonstrating that one of the most significant barriers to broadband adoption is the lack of necessary equipment).
Cox’s internal research shows that approximately 70 percent of the low-income consumers in Cox’s market do not
have computers. See id.
937 The Public Notice asked about whether we should seek to test the impact of consumers using leased versus
purchased equipment. Lifeline and Link Up Public Notice, 26 FCC Rcd at 11099-11100, at para. 1.c. A number of
consumer groups expressed concerns the Commission would encourage consumers to lease computers. See
Consumer Groups PN Comments at 7-8. The groups pointed out that computer leasing has often proved to be
financially detrimental to consumers and could lead to abusive equipment lending schemes. Id.
938 Compare GRTI PN Reply Comments at 2 (arguing that sections 254(b)(2) and (b)(3) of the Communications Act
give the Commission authority to take necessary action to increase “access to services” and subsidizing equipment
costs will increase access to broadband services); with Cox PN Comments at 6-7 (urging the Commission to use its
ancillary authority to support computer equipment and training).
939 Lifeline and Link Up NPRM, at 2856-65, paras. 279-312.
940 One Economy recommended three possible pilot designs: one involving a 4G public-private partnership focused
on a selected metropolitan area; one involving a reverse auction pilot; and one providing shared wireless service in
multi-dwelling units identified by HUD as being affordable housing. See One Economy Comments at 22-25. We
welcome projects aimed at studying adoption among varied groups of low-income consumers.
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utilizing different techniques to combine discounts on service with efforts to address other
barriers to broadband adoption such as digital literacy).941 In addition, in light of the extremely
low broadband penetration rate on Tribal lands, we direct the Bureau, in coordination with the
Office of Native Affairs and Policy, to select at least one pilot project directed at providing
support on Tribal lands.942 If the Bureau determines that a single or small number of proposals
provide the best opportunity to gather data consistent with the guidelines set forth in this Order,
the Bureau should select only that set of proposals for funding.
351.
Digital Literacy. The National Broadband Plan and subsequent research have
identified the lack of digital literacy among low-income Americans as a major barrier to
broadband adoption.943 Being able to use a computer or other Internet-enabled device to retrieve
and interpret information or to communicate and collaborate with other users, and even such
fundamental steps as navigating a website and creating a username and password, may pose
significant difficulties for many consumers. Therefore the Lifeline and Link Up NPRM proposed
that pilot projects be prepared to experiment with different approaches to overcoming digital
literacy barriers to broadband adoption.944 In the FNPRM accompanying this Order, we propose
to provide support for digital literacy training and seek comment on dedicating a certain amount
of annual funding for training at libraries and schools that do not currently offer this service in
order to help these institutions develop ways to reduce the digital literacy skills gap and to assist
Americans who have not yet adopted broadband technology gain the necessary digital skills.945
352.
Partnerships. The Commission sought comment on whether to require funded
ETCs to partner with entities approved by the NTIA’s State Broadband Data & Development
(SBDD) Program.946 We direct the Bureau to give preference in the selection process to ETCs
941 One commenter suggested that Pilot Program funds be directed at low-income consumers in Puerto Rico. See
Letter of Colleen Newman, Strategic Policy Advisor, Puerto Rico Federal Affairs Administration, to Marlene H.
Dortch, Secretary, Federal Communications Commission, (filed Nov. 17, 2011). Still another commenter suggested
that Pilot Program funds be directed at low-income consumers who are blind or visually impaired. See Cintex PN
Reply Comments at 1-2. There was general agreement that any broadband pilot program should be geographically
diverse, and technology-neutral, and should be flexible enough to allow different pilots to test different elements of a
pilot program. See Benton Comments at 6; see also AT&T Comments at 22-23. As one commenter noted, “[p]ilot
programs, by definition, are expected to be experimental and exploratory. As the Commission seeks to determine
what the best path forward is, it must assess the widest range of models, strategies, and networks, and other
components.” NAF Comments at 9.
942 Some commenters suggested that some Pilot Program funds be directed at low-income consumers residing on
Tribal lands. See, e.g., SBI Comments at 6-7; GRTI PN Comments at 7; Standing Rock PN Comments at 10-11.
943 See EXPLORING THE DIGITAL NATION (noting that level of education is a strong predictor of broadband use
among adults); SOCIAL SCIENCE RESEARCH COUNCIL, BROADBAND ADOPTION IN LOW-INCOME COMMUNITIES,
available at http://webarchive.ssrc.org/pdfs/Broadband_Adoption_v1.1.pdf (Mar. 2010).
944 Lifeline and Link Up NPRM, 26 FCC Rcd at 2858, para. 284.
945 See infra section XIII.B (Advancing Broadband Availability for Low-Income Americans through Digital Literacy
Training).
946 Lifeline and Link Up NPRM , 26 FCC Rcd at 2860-61, para 284. The SBDD program, led by state entities or
non-profit organizations working at their direction, facilitates the integration of broadband and information
(continued….)
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that partner with non-ETCs in designing and implementing proposals that include components
involving digital literacy and equipment.947 In particular, we believe ETCs should consider
partnering with successful BTOP/BIP grantees, those involved in “Connect to Compete,”
existing library programs or other entities currently providing broadband adoption and education
services to low-income consumers in order to develop pilot projects that integrate federal
universal service support into existing or planned adoption efforts. 948
353.
We recognize the importance of digital literacy in encouraging broadband
adoption and in providing the tools consumers need to fully explore and exploit the benefit of
having broadband services.949 Indeed, as discussed above, the “Connect to Compete” program
recently announced includes a substantial digital literacy component.950 Therefore, we strongly
encourage applicants for Pilot Program funding to explore cost-effective ways to incorporate
existing digital literacy programs into their pilot programs and to include in their proposals a
plan for overcoming digital literacy barriers.951
2.
Pilot Project Data Gathering and Evaluation
354.During the Pilot Program and at its conclusion, the Bureau will hold workshops
discussing the interim and final results of the various projects as well as the Pilot Program as a
whole, and provide an opportunity for participants to share information with the Commission,
other policy makers, and stakeholders about how best to use limited universal service funds to
increase low-income consumers’ adoption of broadband services. Funded projects must commit
(Continued from previous page)
technology into state and local economies. The program awarded a total of $293 million to 56 grantees or their
designees and the grantees use this funding to support the use of broadband technology. Among other objectives,
these state-created projects use the grants to research and investigate barriers to broadband adoption and created
state and local task forces to expand broadband access and adoption. See id.at para. 295.
947 We received a wealth of comments discussing the importance of partnerships-- public-private partnerships,
private-non-profit partnerships; and federal-state partnerships – in finding ways to speed broadband adoption among
low-income consumers and we received comments from entities, including state and local governments, nonprofit
groups, academics, and others, that are not ETCs describing their own work or work of third parties that could add
substantial value to ETC-led pilot projects. See, e.g.,Benton/NAF PN Comments at 5-6; Cox PN Comments at 9-10;
Connected Living PN Comments at 1-2; LISTA PN Comments at 1-2.
948 The Commission will plan to publicly recognize those multi-stakeholder partnerships, and their members, that
successfully integrate federal universal service support with digital literacy programs to increase broadband
adoption.
949 A number of commenters also stressed that digital literacy is a significant barrier to broadband adoption and
stressed the need to include digital literacy in pilot projects. See, e.g. Connected Living PN Comments at 2; Cox PN
Comments at 6-7; Joint Center PN Reply Comments at 7; USTelecom Comments at 25. There was disagreement
among the commenters, however, about whether the Commission can and should use USF funds to pay for digital
literacy training. See GRTI PN Comments at 4-5; see also Cox PN Comments at 4-7.
950 See generally http://connect2compete.org/; see also FCC & “Connect to Compete” Tackle Broadband Adoption
Challenge Through Expanded Digital Literacy Training, Fact Sheet (Oct. 12, 2011) (Connect to Compete Digital
Literacy Fact Sheet), available at http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db1012/DOC-
310346A1.pdf.
951 See, e.g., One Economy Comments at 9 (recognizing the benefits of partnerships between private and nonprofit
sectors); see Connected Living PN Comments (providing examples of how digital literacy programs increase
adoption for seniors); MMTC PN Comments at 4 (recognizing digital literacy as barrier to broadband adoption).
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to participate in those workshops and to respond to informal inquiries from the Bureau about the
data gathered and the information generated by the Pilot Program.
X.
MANAGING THE SIZE OF THE LOW-INCOME FUND
355.Today’s Order takes a number of substantial and unprecedented steps to eliminate
waste, fraud, and abuse from Lifeline, including establishing a database to eliminate duplicative
support, requiring electronic or documentary evidence of program-based eligibility, and
eliminating support for services such as toll limitation and Link Up that are no longer the best
uses of funds given current product offerings available in the marketplace. These reforms build
on significant action the Commission has already taken to curb waste in the program. In June,
the Commission directed USAC to undertake a series of in-depth data validations to identify
duplicative support. Through the IDV process, now completed in 12 states, USAC examined 3.6
million customer records and directed ETCs to de-enroll over 292,000 customers receiving
duplicative support, saving the Fund approximately $35 million annually.952 As explained above,
the IDV process will continue and expand to additional states until the duplicates database is
online, resulting in additional savings.953 In addition, the Commission is actively investigating
allegations that some providers have signed up subscribers who may not be eligible for
Lifeline.954
356.
The Joint Board recommended that the Commission develop a full record on the
recent growth in low-income program support.955 In the NPRM, the Commission sought
comment generally on how to balance the principles of deterring waste, fraud, and abuse with the
need to enable households in economic distress to access essential communications services.956
Specifically, the Commission sought comment on whether and how it should constrain the
growth of the Fund.957
357.
As the reforms adopted in this Order take effect, they will substantially constrain
program growth. Program disbursements have reached a $2.1 billion annual rate.958 We project
that, absent the reforms adopted in this Order, the program would disburse $3.3 billion in 2014, a
952 See USAC 2011 IDV Process Letter.
953 See supra para. 211.
954 See Lifeline Enforcement Advisory, DA 11-1971.
955 See 2010 Joint Board Recommended Decision, 25 FCC Rcd 15598, at 15630, para. 91.
956 As the United States Court of Appeals for the Fifth Circuit held in Alenco, “[t]he agency’s broad discretion to
provide sufficient universal service funding includes the decision to impose cost controls to avoid excessive
expenditures that will detract from universal service.” Alenco Commc’ns, Inc. v. FCC, 201 F.3d 608, 620–21 (5th
Cir. 2000) (Alenco). The Alenco court also found that “excessive funding may itself violate the sufficiency
requirements.” Id. at 620. The United States Court of Appeals for the Tenth Circuit has stated that “excessive
subsidization arguably may affect the affordability of telecommunications services, thus violating the principle in
[section] 254(b)(1).” Qwest Comm’ns Int’l Inc. v. FCC, 398 F.3d 1222, 1234 (10th Cir. 2005).
957 NPRM at 2817-18, paras. 143-45.
958 $2.1 billion is equal to approximately four times the average quarterly run rate of disbursements for the fourth
quarter of calendar year 2011 as calculated by USAC ($502 million) and staff’s projections for disbursements for the
first quarter of calendar year 2012 ($547 million). See USAC Jan. 30 Support Letter; n. 959.
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57 percent increase over three years.959 With today’s reforms, we project program growth will
start declining in 2012 and turn negative in 2013, reducing Lifeline disbursements so that by
2014 the program will be at or below its current size of approximately $2.1 billion annually.960
959 This estimate is arrived at by starting with a baseline estimate of program disbursements for 2012 in the absence
of this Order’s reforms. Based on growth trends in disbursements in 2011, during which the quarter over quarter
growth in disbursements declined from 13 percent (Q1-Q2) to 11 percent (Q2-Q3) to 9 percent (Q3-Q4). Staff
conservatively assumed that disbursements would grow nine percent from the fourth quarter of 2011 to the first
quarter of 2012, and seven percent quarterly for the rest of 2012. See USAC Q1 2012 Filing, Appendices at LI04
(Quarterly Low-Income Disbursement Amounts by Company (3Q 2011), available at
http://www.usac.org/about/governance/fcc-filings/2012/Q1/LI04-
Quarterly%20Low%20Income%20Support%20Disbursement%20Amounts%20by%20Company-%203Q2011.xlsx;
USAC Q4 2011 Filing, Appendices at LI04 (Quarterly Low-Income Disbursement Amounts by Company (2Q 2011)
available at http://www.usac.org/about/governance/fcc-filings/2011/Q4/LI04%20-
%20Quarterly%20Low%20Income%20Support%20Disbursement%20Amounts%20by%20Company%20-
%202Q2011.xlsx; USAC Jan. 30 Support Letter (providing actual 2011 Q4 disbursements). Based on these
assumptions, staff estimated disbursements would reach $547 million in Q1 2012 (a nine percent increase from the
$502 million in actual support disbursed in Q4 2011) and $2.4 billion by the end of 2012. $2.4 billion represents
approximately 18.5 million subscriptions, of which approximately 5.3 million would represent either duplicate
subscriptions or ineligible subscribers. See supra para 102 and accompanying footnotes (explaining calculation of
ineligible consumers); Jan. 10 IDV Letter (describing the extent to which individuals and households are receiving
duplicative support). Based on the Current Population Survey) for the number of consumers receiving one of the
benefits that qualify consumers for Lifeline, staff estimated that there are approximately 32.6 million eligible
subscribers, suggesting that, not counting ineligibles and duplicates, approximately 13.2 million subscriptions in
2012 would constitute a take rate for Lifeline of approximately 41 percent. See UNITED STATES CENSUS BUREAU,
CURRENT POPULATION SURVEY, CPS March Supplement, available at
http://www.bls.census.gov/cps_ftp.html#cpsmarch.
For 2013 and 2014, staff used additional data to project from the 2012 baseline an estimated fund size in
the absence of reform of approximately $2.8 billion in 2013, and $3.3 billion in 2014. To derive these estimates,
staff assumed that competition, marketing, and expansion of operators offering prepaid wireless Lifeline service
would cause the subscriber take rate (not counting duplicates and ineligibles) to increase from 41 percent in 2012 to
46 percent and 51 percent in 2013 and 2014, respectively. In addition, staff made the conservative assumption that
from 2013-2014, absent reforms, the share of ineligible subscribers would remain at 15 percent (as was the case in
2012) and the duplicate rate would increase to 19 percent in 2013 and 22 percent in 2014, due to several factors,
including the continued use of self-certification for program-based eligibility and the lack of a database for
preventing duplicates. Furthermore, staff estimated that the eligible population for Lifeline would stay roughly
constant at 32.6 million from 2012 to 2014, reflecting the combined effect of an improving economy and a growing
U.S. population. Staff’s estimates of the eligible population are based on (1) the Congressional Budget Office’s
projection that the unemployment rate will decline from 9.1 percent in 2011 to 8.3 percent in 2014, from which staff
estimated that the poverty rate would decline 3 percent from 2011 to 2014; and (2) Census estimates of past
household growth nationwide from which staff projected continued household growth of 1.1 percent annually. See
CBO, THE BUDGET AND ECONOMIC OUTLOOK, AN UPDATE at 73 (Aug. 2011), available at
http://www.cbo.gov/ftpdocs/123xx/doc12316/08-24-BudgetEconUpdate.pdf); CENSUS, CURRENT POPULATION
REPORTS, PROJECTIONS OF THE NUMBER OF HOUSEHOLDS AND FAMILIES IN THE UNITED STATES: FROM 1995 TO 2010
at 7 (1996) available at http://www.census.gov/prod/1/pop/p25-1129.pdf
960 Staff estimated the impact of the reforms as follows: (1) in 2012, reforms are projected to eliminate 10 percent of
total duplicate and ineligible consumers, and by the end of 2013, nearly all duplicate and ineligible consumers will
be removed (we expect that the savings will accelerate as the reforms are implemented over the next three years); (2)
the combined effect of requiring electronic or documentary evidence of initial eligibility along with annual
recertification for all subscribers is expected to result in the subscriber take rate (not counting duplicates or
ineligibles) increasing from 41 percent in 2012 to 43 percent in 2013 and 45 percent in 2014; (3) Link Up support is
eliminated for all subscribers except Tier-4 subscribers initiating service with an ETC that also receives high-cost
(continued….)
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The reforms we adopt in this Order will save up to an estimated $2 billion over the next three
years.961
358.
As part of today’s comprehensive reform to eliminate waste, fraud, and abuse, we
adopt a savings target of $200 million for 2012–that is, we expect to realize $200 million in
savings in 2012 versus the program’s status quo path in the absence of reform. We direct the
Bureau to closely monitor the impact of the reforms adopted today in meeting that savings target,
and to provide each Commissioner a report no later than the first anniversary of the adoption of
this Order evaluating the impact of today’s reforms; determining whether the reforms have
succeeded in meeting the savings target; and, if they have not, analyzing the causes, providing
options for realizing those savings, and making specific recommendations for corrective action
to realize those savings. Such recommendations may include accelerating the development of
the database capabilities for duplicates and eligibility, as well as a possible reduction of the
monthly support amount ETCs receive. The Bureau shall also provide to each Commissioner an
interim report no later than six months from the adoption of this Order analyzing the reforms’
progress in meeting the savings target. Both reports shall be made available for public input on
the Commission’s website.
359.
In addition to the fundamental overhaul of the program we begin today, the
Commission is addressing in the FNPRM the key question of the appropriate monthly support
amount for the program, among other issues. We find that at this time, it is appropriate for us to
review how the reforms impact the size of the Fund and whether our assumptions and projections
are accurate, whether growth of the Fund is impacted by changes in macroeconomic conditions
and the number of consumers who seek to initiate Lifeline service, and the impact of competitive
Lifeline offerings on the program. With the information we will gather in the next year as a
result of the reforms and in response to the Further Notice, and from the Bureau’s reports
described in the previous paragraph, we fully expect to have the information needed to determine
an appropriate budget for the program and its appropriate duration. We will be in a position to
take into account the program’s goals—ensuring availability of communications service to low-
income Americans, and minimizing the contribution burden on consumers and businesses—and
the Commission’s review of the effects of the reforms adopted in this Order; the effects of any
further reforms and modernization of the program, including adoption of proposals in the
FNPRM; and changes in the economy. In doing so, the Commission may consider linking the
size of the monthly support amount to a communications price index as one way to constrain the
size of Lifeline, as discussed in the FNRPM.
(Continued from previous page)
funding; and (4) $25 million is budgeted for the broadband pilot program from Q1 2012 to Q3 2013. Combining the
impacts of all these reforms, staff estimated the size of the Lifeline fund as approximately $2.1 billion in 2014.
961 Considering the impacts of the reforms (including the one-time shift in 2012 to reimbursements based on actual
subscriber counts), staff estimated the size of the Lifeline fund as $2.2 billion, $2.2 billion, and $2.0 billion in 2012,
2013, and 2014, respectively. Thus, because of the reforms in the program, up to $2 billion less will be spent on the
Lifeline program by 2014 than would have been the case in the absence of reforms. See also, Tracfone Nov. 10 ex
parte Letter, Attach. at 3 (arguing that verification of ID, the minimization of Link Up, annual 100 percent
verification and non-usage requirements would result in an annual savings of $760 million); Nexus Oct. 25 ex parte
letter at 2 (supporting Tracfone’s savings estimates).
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360.
During this interim period between the adoption of today’s Order and the
Commission’s decision regarding an appropriate budget, we strongly discourage ETCs from
enrolling ineligible subscribers or taking other actions (or failing to take actions) that enable or
exacerbate waste, fraud, and abuse in the program. We note that today’s Order largely
eliminates Link Up based in part on our conclusion that Link Up has become too susceptible to
abuse and provides perverse incentives to ETCs. We will be particularly vigilant over the
coming year to ensure such problems do not persist or arise elsewhere in the program.
XI.
ELIGIBLE TELECOMMUNICATIONS CARRIER REQUIREMENTS
A.
Facilities-Based Requirements for Lifeline-Only ETCs
1.Background.
361.To be eligible for federal universal service support, the Act provides that an ETC
must offer the services supported by federal universal service support mechanisms throughout a
service area “either using its own facilities or a combination of its own facilities and resale of
another carrier’s services.”962 In the Universal Service First Report and Order, the Commission
interpreted this to mean that a carrier “must use its own facilities to provide at least one of the
supported services,” but did not specify or define the amount of its own facilities a carrier must
use.963 The Commission clarified, however, that “a carrier that serves customers by reselling
wholesale service may not receive universal service support for those customers that it serves
through resale alone.”964 It interpreted the term “facilities” to mean “any physical component of
the telecommunications network that are used in the transmission or routing of the services that
are designated for support.”965 As such, pursuant to the Act as interpreted by the Commission, a
carrier’s facilities that are not being used to route or transmit USF supported services do not
qualify as “facilities” to meet the ETC requirements in section 214(e)(1)(A).966
362.
In 2005, the Commission agreed to conditionally forbear from the own-facilities
requirement for the limited purpose of allowing TracFone to participate in the federal Lifeline
program and receive Lifeline-only support.967 By receiving forbearance, TracFone was able to
apply for and become an ETC for Lifeline-only support. The Commission subsequently granted
conditional forbearance from the facilities requirement for Lifeline support to several other
carriers, but refused to extend this forbearance for Link-Up support, finding that such carriers
had not demonstrated that doing so was in the public interest.968 In the most recent forbearance
962 47 U.S.C. § 214(e)(1)(A).
963 See USF First Report and Order at 8871, para. 169.
964 USF First Report and Order at 8873, para. 174.
965 47 C.F.R. § 54.201(e).
966 47 U.S.C. § 214(e)(1)(A).
967 See TracFone Forbearance Order.
968 See Virgin Mobile Forbearance Order; i-wireless Forbearance Order; Global Forbearance Order, WC Dkt.
No. 09-197, CC Dkt. No. 96-45, Order, 25 FCC Rcd 10510 (2010) (“Global Forbearance Order”); Conexions ETC
Order; PlatinumTel. Forbearance Order. The Commission has pending before it several petitions seeking
forbearance from the facilities requirement. See, e.g., American Broadband and Telecommunications Petition for
(continued….)
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orders, the Commission conditioned forbearance on carriers meeting several 911 and E911
obligations as a precaution to ensure that a lack of facilities would not impair emergency
services.969 Other conditions have focused on preventing waste, fraud, and abuse of universal
service funding.970
363.
In the Lifeline and Link Up NPRM, the Commission sought comment on whether
it should forbear from applying the Act’s facilities-based requirement to all carriers that seek
limited ETC designation to participate in the Lifeline program.971 In determining whether to
grant a blanket forbearance, the Commission also asked whether it should adopt rules codifying
any conditions it would impose on grant of forbearance, rather than imposing them on a case-by-
case basis.972 Section 10 of the Act requires that the Commission forbear from applying any
regulation of any provision of the Act to telecommunications services or telecommunications
carriers, or classes thereof, in any or some of its or their geographic markets, if the Commission
determines that the three conditions set forth in section 10(a) are satisfied.973
364.
In avoiding the forbearance process, some carriers seeking designation as ETCs
by state commissions for the limited purpose of participating in the federal low-income program
have relied on their provision of operator services and/or directory assistance to meet the ETC
(Continued from previous page)
Forbearance, WC Dkt. No. 09-197 (filed Feb. 25, 2011); Petition for Forbearance of Millennium 2000, Inc., WC
Dkt. No. 09-197 (filed Apr. 12, 2011); Petition for Forbearance of North American Local, LLC, WC Dkt. No. 09-
197 (filed Apr. 27, 2011); Total Call Mobile, Inc. Petition for Forbearance, WC Dkt. No. 09-197 (filed May 25,
2011); Petition of Airvoice Wireless, LLC, WC Dkt. No. 09-197 (filed Sept. 13, 2011).
969 See TracFone Forbearance Order, 20 FCC Rcd at 15101–02, paras. 15–16; Virgin Mobile Forbearance Order,
24 FCC Rcd at 3390–91, paras. 21–23; PlatinumTel,Forbearance Order, 26 FCC Rcd at 13793-94, paras. 12-14.
970 See, e.g., TracFone Forbearance Order, 20 FCC Rcd at 15102–03, paras. 17–18; Virgin Mobile Forbearance
Order, 24 FCC Rcd at 3393, para. 29; i-wireless Forbearance Order, 25 FCC Rcd at 8790, para. 16; PlatinumTel
Forbearance Order, 26 FCC Rcd at 13794-96, paras. 17-18. In granting forbearance from the facilities requirement
for Lifeline-only ETCs, the Commission has not approved Link Up support for any ETC. TracFone Forbearance
Order; Virgin Mobile Forbearance Order; i-wireless Forbearance Order; Global Forbearance Order; Conexions
Forbearance Order; PlatinumTel et. al. Forbearance Order.
971 Lifeline and Link Up NPRM, at 2863, para. 306.
972 Id.
973 Specifically section 10(a) provides that the Commission shall forbear from applying such provision or regulation
if the Commission determines that:
(1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices,
classifications, or regulations by, for, or in connection with that telecommunications carrier or
telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory;
(2) enforcement of such regulation or provision is not necessary for the protection of consumers;
(3) forbearance from applying such provision or regulation is consistent with the public interest.
47 U.S.C. § 160(a).
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“facilities” requirement.974 These carriers have received ETC status as facilities-based carriers
because they are using their own “facilities” to provide at least one of the supported services.975
365.
As noted above, in the USF/ICC Transformation Order FNPRM, the Commission
eliminated its former list of nine supported services and amended section 54.101 of the
Commission’s rules to specify that “voice telephony service” is supported by federal universal
service support mechanisms.976 In amending section 54.101, the Commission eliminated the
following functionalities as supported services: dual tone multi-frequency signaling or its
functional equivalent; single-party service or its functional equivalent; access to operator
services; access to interexchange service; and access to directory assistance.977
366.
On December 23, 2011, the Commission affirmed that only carriers that provide
voice telephony as defined under section 54.101(a) as amended using their own facilities will be
deemed to meet the requirements of section 214(e)(1).978 Thus, a Lifeline-only ETC does not
meet the “own-facilities” requirement of section 214(e)(1) if its only facilities are those used to
provide functions that are no longer supported “voice telephony service” under amended rule
54.101, such as access to operator service or directory assistance. The Commission stated that to
be in compliance with the rules, Lifeline-only carriers that seek ETC designation after the
December 29, 2011 effective date of the USF/ICC Transformation Order and FNPRM, as well
as such carriers that had previously obtained ETC designation prior to December 29, 2011 on the
basis of facilities associated solely with, for example, access to operator service or directory
assistance, must either use their own facilities, in whole or in part, to provide the supported
“voice telephony service,” or obtain forbearance from the “own-facilities” requirement from the
Commission.979 To avoid disruption to consumers of previously designated ETCs, however, the
Commission set July 1, 2012 as the effective date of amended rule 54.101 for Lifeline-only
ETCs in the service areas for which they were designated prior to December 29, 2011, to provide
974 See, e.g., Comments of Ohio Public Utilities Commission Staff, WC Dkt. No. 09-197, WC Dkt. No. 03-109, at 9-
10 (explaining how entrance of wireless carriers into the Lifeline market raises questions as to what constitutes
“wireless facilities” in the ETC designation process); Reply Comments of Michigan Public Service Commission, CC
Dkt. 96-45, WC Dkt. No. 09-197 at 2-3 (raising concerns on whether American Broadband and Telecommunications
Company claims that it is a facilities-based ETC meets the requirements under the Act); Comments of South
Carolina Office of Regulatory Staff, WC Dkt. No. 09-197, at 2-4 (arguing that Budget PrePay, Inc. should be denied
Link Up support because it is not providing facilities-based wireless service).
975 See id; see also Letter of Kerri J. DeYoung, Counsel, MA DTC, to Marlene H. Dortch, Secretary, Federal
Communications Commission, Dkt. No. 11-42 et al., (filed Nov. 10, 2011) (MA DTC Nov. 10 ex parte Letter
(reporting that in MA and elsewhere, many wireless carriers are filing ETC petitions claiming satisfaction of the
facilities requirement solely by facilities used for operator services and directory assistance).
976 USF/ICC Transformation Order and FNPRM, FCC 11-161 at paras. 3, 78; see also revised section 54.101(a).
977 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at paras. 3, 78, nn.114-115 (noting that the
Commission no longer mandates that ETCs provide those services that were eliminated from the definition of USF-
supported services under section 54.101, but encourages carriers to continue to offer them to customers).
978 See id. at para. 4.
979 See id.
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sufficient time to take further action related to the “own-facilities” requirement for Lifeline
providers in this proceeding.980
367.
Moreover, in light of the modifications to TLS adopted in this Order, TLS is no
longer required to be provided except in certain specified circumstances, and no longer will be
deemed a supported service. We provide support for TLS only on a transitional basis for those
carriers that are required to offer TLS – namely, ETCs that charge a fee for toll calls, whether
domestic or international, that is in addition to the per month or per billing cycle price of the
consumer’s Lifeline service. Furthermore, we clarify that call management functionality that
tracks usage for a Lifeline offering that provides a specified number of minutes for a set price
does not constitute TLS. As a consequence of such actions, a carrier that formerly relied on toll-
limitation facilities as its “own” facilities can no longer rely on those facilities to satisfy the
facilities-based requirement in section 214, and such carriers must also obtain forbearance from
this Commission.981
2.
Discussion.
368.We forbear, on our own motion, from applying the Act’s facilities requirement of
section 214(e)(1)(A) to all telecommunications carriers that seek limited ETC designation to
participate in the Lifeline program, subject to certain conditions noted below.982 For the reasons
explained below, we find that all three prongs of section (10)(a) are satisfied and that, as a result,
the Commission will forbear from the “own-facilities” requirement contained in section
214(e)(1)(A) for carriers that are, or seek to become, Lifeline-only ETCs, subject to the
following conditions: (1) the carrier must comply with certain 911 requirements, as explained
below; and (2) the carrier must file, and the Bureau must approve, a compliance plan providing
specific information regarding the carrier’s service offerings and outlining the measures the
carrier will take to implement the obligations contained in this Order as well as further
safeguards against waste, fraud and abuse the Bureau may deem necessary.983 The review and
980 See id.
981 See supra section VII.B, para. 230 (explaining how facilities that enable a subscriber to access a call center to
purchase additional minutes or to pay for an international call do not constitute toll limitation facilities).
982 See Section 214(e)(1)(A); see also Letter from John J. Heitmann, Link Up for America Coalition, to Marlene H.
Dortch, Federal Communications Commission, WC Dkt. No. 11-42 et al., .at 1-2 (filed Dec. 15, 2011) (Link Up
Coalition Dec. 15, 2011 ex parte Letter) (describing customer impact to existing Lifeline-only ETCs if Commission
does not issue blanket forbearance). Upon the effective date of this Order, we grant forbearance from the facilities
requirement of section 214(e)(1)(A) of the Act and section 54.201(d)(1), (i) of the Commission’s rules, subject to
the conditions contained in this Order, to carriers with petitions for forbearance from the facilities requirement of the
Act pending with the Commission, including American Broadband & Telecommunications, Millennium 2000, Inc.,
North American Local, LLC, Total Call Mobile, Inc., and Airvoice Wireless, LLC. See Petition for Forbearance of
American Broadband & Telecommunications, WC Dkt. No. 09-197 (filed Feb. 25, 2012); Petition for Forbearance
by Millennium 2000, Inc., CC Dkt. No. 96-45, WC Dkt. 09-197 (filed Apr. 12, 2011); Petition for Forbearance by
North American Local, LLC., WC Dkt. 09-197 (filed Apr. 28, 2011); Petition for Forbearance by Total Call Mobile,
Inc., WC Dkt. 09-197 (filed May 25, 2011); and Petition for Forbearance of Airvoice Wireless, LLC, WC Dkt. 09-
197 (filed Sep. 13, 2011); 47 U.S.C. § 214(e)(1)(A); 47 C.F.R § 54.201(d)(1), (i).
983 All ETCs availing themselves of forbearance from the facilities requirement as granted in this Order, including
carriers with forbearance petitions and compliance plans pending with the Commission must comply with this
requirement. Carriers with compliance plans currently pending Commission approval must revise, and if necessary
amend, its compliance plan to include a detailed description of its compliance with this Order.
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approval of all compliance plans is a critical element of our action today. These conditions will
give the states and the Commission the ability to evaluate the Lifeline providers’ offerings to
low-income consumers and adherence with program rules before such companies may receive
any Lifeline funds. At the same time, this grant of forbearance will re-allocate administrative
resources that would otherwise be devoted to evaluating forbearance petitions subject to a
statutory timeframe, resources that can otherwise be utilized to improve and oversee the Lifeline
program.
369.
Since 2005, the Commission has granted forbearance eleven times to carriers
seeking to participate in the Lifeline program without using their own facilities to provide
service.984 In each case, the Commission has concluded that the use of a carrier’s own facilities
when participating in the Lifeline program is not necessary to ensure just and reasonable rates or
to protect consumers and is in the public interest as long as such carriers meet certain conditions,
approved by the Bureau in each carrier’s compliance plan.985
370.
Just and Reasonable. Under section 10(a)(1) of the Act, we must consider
whether enforcement of the facilities requirement of section 214(e) for carriers that are, or seek
to become, Lifeline-only ETCs is necessary to ensure that the charges, practices, classifications,
or regulations are just and reasonable and not unjustly or unreasonably discriminatory.986
371.
We conclude that the section 214(e) facilities requirement is not necessary to
ensure that Lifeline-only ETCs have charges, practices, classifications, and regulations for
Lifeline service that are just and reasonable and not unjustly or unreasonably discriminatory.
Resellers necessarily will face existing competition in the marketplace from the Lifeline
offerings of the incumbent wireline carriers in the same designated areas, as well as other
carriers, such as facilities-based wireless providers. Competition should help to keep their rates
and other terms and conditions of service just and reasonable and not unjustly or unreasonably
discriminatory.987 The additional competition that they provide would do more to ensure just and
reasonable rates and terms than a requirement to use their own facilities. For these reasons, we
find that the first prong of section 10(a) is met.
372.
Consumer Protection. Section 10(a)(2) requires the Commission to consider
whether enforcement of the ”own-facilities” requirement of section 214(e) for the Lifeline-only
ETCs is necessary for protection of consumers. We find that imposing the “own-facilities”
requirement on Lifeline-only ETCs is not necessary for the protection of consumers so long as
the carriers comply with the obligations described below.
984 See, e.g., TracFone Forbearance Order; Virgin Mobile Forbearance Order; i-wireless Forbearance Order;
Global Forbearance Order; Conexions Petition for Forbearance, PlatinumTel Forbearance Order.
985 See, e.g.,Conexions Forbearance Order, 25 FCC Rcd at 13868, paras. 8-20.
986 47 U.S.C. §160(a)(1); 47 U.S.C. §214(e).
987 See TracFone Oct. 13 ex parte Letter at 4 (noting that both TracFone and Sprint, as ETCs, operate in the same
markets as other wireless ETCs).
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373.
We reaffirm the Commission’s previous finding that ensuring consumers’ access
to 911 and E911 services is an essential element of consumer protection.988 Given the
importance of public safety, we condition this grant of forbearance on each carrier’s compliance
with certain obligations as an ETC. Specifically, our forbearance from the facilities requirement
of section 214(e) is conditioned on each carrier: (a) providing its Lifeline subscribers with 911
and E911 access, regardless of activation status and availability of minutes; (b) providing its
Lifeline subscribers with E911-compliant handsets and replacing, at no additional charge to the
subscriber, noncompliant handsets of Lifeline-eligible subscribers who obtain Lifeline-supported
services; and (c) complying with conditions (a) and (b) starting on the effective date of this
Order.989
374.
The Commission has an obligation to promote “safety of life and property” and to
“encourage and facilitate the prompt deployment throughout the United States of a seamless,
ubiquitous, and reliable end-to-end infrastructure” for public safety.990 The provision of 911 and
E911 services is critical to our nation’s ability to respond to a host of crises, and the Commission
has a longstanding and continuing commitment to a nationwide communications system that
promotes the safety and welfare of all Americans, including Lifeline consumers.991 We find that
these conditions are necessary to ensure that Lifeline subscribers of these Lifeline-only ETCs
will continue to have meaningful access to emergency services.992
375.
Based on the record and the fact that wireless resellers are obligated to comply
with section 20.18(m) of the Commission’s rules, we are not requiring that each Lifeline-only
ETC obtain a certification from each PSAP where it currently provides Lifeline service.993
States, however, have a right to impose a state-specific obligation on each existing Lifeline-only
ETC to obtain either a certification from each PSAP where the company plans to offer service, or
988 See, e.g., Virgin Mobile Forbearance Order, 24 FCC Rcd at 3390-91, paras. 22-23; TracFone Forbearance
Order, 20 FCC Rcd at 15102-03, paras. 16-17.
989 Under section 20.18(m) of our rules, wireless resellers have an independent obligation, beginning December 31,
2006, to provide access to basic and E911 service, to the extent that the underlying facilities-based licensee has
deployed the facilities necessary to deliver E911 information to the appropriate Public Safety Answering Point
(PSAP). See 47 C.F.R. § 20.18(m). Section 20.18(m) further provides that resellers have an independent obligation
to ensure that all handsets or other devices offered to their customers for voice communications are location-capable.
Id. Under our rules, this obligation applies only to new handsets sold after December 31, 2006. Id.
990 Applications of Nextel Communications, Inc. and Sprint Corporation For Consent to Transfer Control of
Licenses and Authorization, WT Dkt. No. 05-63, Memorandum Opinion and Order, 20 FCC Rcd 13967, 14020,
para. 144 (2005).
991 Id.
992 See, e.g., TracFone Forbearance Order, 20 FCC Rcd at 15101-02, paras. 15-16; Virgin Mobile Forbearance
Order, 24 FCC Rcd at 3390-91, para. 21-23; i-wireless Forbearance Order, 25 FCC Rcd at 8788, para. 12; Global
Forbearance Order, 25 FCC Rcd at 10515, para. 12.
993 See 47 C.F.R. § 20.18(m); see also Letter from Jonathan Lee, Consumer Cellular, to Marlene H. Dortch, Federal
Communications Commission, WC Dkt. No. 11-42 et al., Attach. (filed, Dec. 21, 2011) (explaining how the
underlying facilities-based provider has complete control over deployment of 911/E911 and how AT&T, its
underlying network provider, provides Consumer Cellular with a certification stating that AT&T routes all 911 calls
on its network to PSAPs in accordance with applicable FCC rules).
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a self-certification, confirming that the carrier provides its subscribers with 911 and E911
access.994
376.
We find that, subject to the conditions contained herein, the facilities requirement
is not necessary for consumer protection with respect to Lifeline-only ETCs. We therefore
conclude that the second prong of section 10(a) is satisfied.
377.
Public Interest. Section 10(a)(3) requires that we consider whether enforcement
of the facilities-based requirement of section 214(e) for Lifeline-only ETCs is in the public
interest. Requiring Lifeline-only ETCs to use their own facilities to offer Lifeline service does
not further the statutory goal of the low-income program.995
378.
Our public-interest inquiry must include consideration of whether forbearance
would promote competitive market conditions, including the extent to which such forbearance
would enhance competition among providers of telecommunications services. 996 We conclude
that forbearance from the facilities requirement will enhance competition among retail providers
that service low-income subscribers. Lifeline-only ETCs offer eligible consumers an additional
choice of providers for telecommunications services. The prepaid feature that many Lifeline-
only ETCs offer is an attractive alternative for subscribers who need the mobility, security, and
convenience of a wireless phone, but who are concerned about usage charges or long-term
contracts.997
379.
The Commission has made clear its ongoing commitment to fight waste, fraud
and abuse in the Lifeline program. The Commission has historically conditioned forbearance
from the facilities requirement on the filing and approval by the Bureau of a compliance plan
describing the ETC’s adherence to certain protections designed to protect consumers and the
Fund, and we see no reason to disrupt that precedent.998 Accordingly, in addition to the
requirements currently imposed on all ETCs that participate in the Lifeline program, including
those we adopt in this Order, we condition this grant of forbearance from the “own-facilities”
requirement by requiring each carrier to submit to the Bureau for approval a compliance plan
that (a) outlines the measures the carrier will take to implement the obligations contained in this
Order, including but not limited to the procedures the ETC follows in enrolling a subscriber in
Lifeline and submitting for reimbursement for that subscriber from the Fund, materials related to
initial and ongoing certifications and sample marketing materials, as well as further safeguards
against waste, fraud and abuse the Bureau may deem necessary; and (b) provides a detailed
description of how the carrier offers service, the geographic areas in which it offers service, and
994 Section 214(e)(2) of the Act authorizes state commissions to designate ETCs for federal universal service
purposes. 47 U.S.C. § 214(e)(2).
995 See, e.g., i-wireless Forbearance Order, 25 FCC Rcd at 8789, para. 15. We also note that the Commission’s
traditional concern with a carrier doubling its recovery by reselling facilities that are already supported by the high-
cost fund does not apply in the low-income context. Id.
996 See 47 U.S.C. § 160(b) (requiring the Commission to consider whether forbearance will promote competitive
market conditions).
997 See Link Up Coalition Dec. 15 ex parte Letter at 5.
998 See, e.g., TracFone Forbearance Order; Virgin Mobile Forbearance Order; i-wireless Forbearance Order;
Global Forbearance Order; Conexions Petition for Forbearance, PlatinumTel Forbearance Order.
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a description of the carrier’s various Lifeline service plan offerings, including subscriber rates,
number of minutes included and types of plans available.
380.
We note that after each carrier submits its compliance plan, the Bureau will
review it for conformance with this Order. To avoid disruption to the millions of low-income
subscribers served by existing Lifeline-only ETCs that met the facilities requirement based solely
on operator services/directory assistance facilities and were designated prior to December 29,
2011,999 those ETCs may continue to receive reimbursement pending approval of their
compliance plans in the states in which they currently serve Lifeline subscribers, provided they
submit their compliance plans to the Bureau by July 1, 2012.1000 Such existing Lifeline-only
ETCs may not receive reimbursement, however, for additional states where they have not yet
been designated as of December 29, 2011, until their compliance plans are approved. No
designations shall be granted for any pending or new Lifeline-only ETC applications filed with
the states or the Commission after December 29, 2011, and carriers shall not receive
reimbursement from the program, until the Bureau approves their compliance plans. We find
that these requirements are necessary to ensure ongoing compliance with our rules.
381.
With the reforms adopted today, along with the conditions outlined herein to
address potential waste, fraud and abuse, including the Bureau’s review and approval of all
compliance plans, we find that the public interest is served by forbearing from the facilities
requirement in section 214(e) for all carriers that are, or seek to become, Lifeline-only ETCs, and
that the third prong of section 10(a) is therefore satisfied.
B.
Impact of New Rules on Prior Forbearance Conditions
382.The Commission has exercised its statutory authority to forbear from enforcing
the facilities requirement of the Act on several non-facilities based wireless resellers so that those
wireless resellers may be eligible to be designated as an ETC for participation in the Lifeline
program.1001 In each forbearance order, the Commission provisioned forbearance on several key
conditions aimed at consumer safety protection and at protecting the Lifeline fund from waste,
999 See Link Up Coalition Dec. 15 ex parte Letter (claiming that the rule change would threaten service disruption
for an estimated 2 million-plus Lifeline service customers served by members of the Link Up Coalition).
1000 If an existing Lifeline-only ETC fails to submit its compliance plan by July 1, 2012, however, that ETC will not
be able to continue to receive Lifeline support after July 1, 2012. If the Bureau finds that an existing Lifeline-only
ETC’s compliance plan does not conform to the requirements of the Order, it shall provide that ETC with notice that
it must file a revised compliance plan within 45 days that conforms to the requirements of the Order. If the ETC
fails to file a revised compliance plan pursuant to the Bureau’s direction, the Bureau may direct USAC to suspend
Lifeline disbursements to that ETC until such time as its compliance plan is revised to the satisfaction of the Bureau.
In the event there is a change in ownership control of an existing Lifeline-only ETC that received forbearance of the
facilities-based requirement, designated prior to December 29, 2011, and that Lifeline-only ETC is acquired by a
telecommunications carrier that does not meet the definition of a facilities-based carrier under section 214(e)(1)(A),
the controlling carrier may not rely on the existing Lifeline-only ETC’s compliance plan and must submit a
compliance plan for Bureau approval as detailed in paragraph 379 before receiving reimbursement from the
program.
1001 See TracFone Forbearance Order; Virgin Mobile Forbearance Order); i-wireless Forbearance Order; Global
Forbearance Order; Conexions Forbearance Order; PlatinumTel Forbearance Order. No wireless reseller has
received forbearance for the purpose of receiving Link Up support.
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fraud and abuse.1002 Each of the orders also requires that the carrier subject to forbearance
submit a compliance plan describing how that carrier would comply with the conditions of
forbearance.1003
383.
In this Order, the Commission adopts several new rules, many of which relate to
the requirements set forth in prior forbearance orders and compliance plans.1004 To the extent
that any of the conditions in the carrier-specific forbearance orders and compliance plans are
inconsistent with the rules adopted herein, the newly adopted rules established in this proceeding
shall prevail. However, the conditions and rules adopted in this Order set forth the minimum
obligations with which a carrier must comply for forbearance from the facilities requirement, and
any carrier whose grant of forbearance was conditioned on more stringent compliance plans must
comply with those additional obligations as well as the conditions adopted herein. In addition,
any ETC that has received forbearance from the facilities requirement prior to this Order must
continue to comply with the 911/E911 public safety obligations, as set forth in the preceding
paragraphs 373-375.1005
C.
Additional Rule Amendments
384.In the Lifeline & Link Up NPRM, we sought comment on whether the current
process for designating eligible telecommunications carriers should be revised for Lifeline
providers and, if so, how.1006 In this Order, we have made a number of important changes to our
rules in order to eliminate waste and inefficiency, and to increase accountability in the program.
Here, we make some conforming changes to our rules and several other changes that reflect the
growing role of Lifeline-only ETCs in today’s marketplace. We seek further comment in the
attached FNPRM on additional proposal to streamline the process of becoming a Lifeline-only
service provider.
385.
First, we modify the definition of “eligible telecommunications carrier” in section
54.5 of our rules to include not just ETCs designated by the states pursuant to section 54.201, but
1002 See, e.g., TracFone Forbearance Order, 20 FCC Rcd at 15101–03, paras. 15–18; Virgin Mobile Forbearance
Order, 24 FCC Rcd at 3390-93, paras. 21-29; i-wireless Forbearance Order, 25 FCC Rcd at 8790, para. 16; Global
Forbearance Order, 25 FCC Rcd 10517-18, paras. 16-18; Conexions Forbearance Order, 25 FCC Rcd at 13871,
paras. 17-18; PlatinumTel et. al Forbearance Order, 26 FCC Rcd 13795-96, paras. 17-18.
1003 See TracFone Forbearance Order, 20 FCC Rcd at 15105, para. 25; Virgin Mobile Forbearance Order, 24 FCC
Rcd at 3397, para. 44; i-wireless Forbearance Order, 25 FCC Rcd at 8790, para. 16; i-wireless Forbearance Order,
25 FCC Rcd at 8790, para. 17; Global Forbearance Order, 25 FCC Rcd 10517, paras. 16; Conexions Forbearance
Order, 25 FCC Rcd at 13871, para. 17; PlatinumTel et. al Forbearance Order, 26 FCC Rcd 13796, para. 17.
1004 See, e.g. supra para. 74 (adopting a one-per-household requirement similar to the head of household certification
condition in the TracFone Forbearance Order and the PlatinumTel. Forbearance Order); TracFone Forbearance
Order, 20 FCC Rcd at 15098, para. 6; PlatinumTel. Forbearance Order, 26 FCC Rcd 13795, para. 17.
1005 Given that section 20.18(m) already requires wireless resellers to provide access to basic and enhanced 911
service to the extent that the underlying licensee of the facilities the reseller uses to provide access to the public
switched network complies with 20.18(d)-(g), we are no longer requiring that Lifeline-only ETCs subject to existing
forbearance orders to obtain a certification from each PSAP where it currently provides Lifeline service. See 47
C.F.R. § 20.18(m). As noted in paragraph 375 above, states, however, have a right to impose a state-specific
obligation on these existing Lifeline-only ETCs. See supra para. 375.
1006 NPRM at 2865. para. 312.
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to include all ETCs designated pursuant to our rules. This modification is necessary because
section 214 of the Act, and our rules provide for designation of ETCs by the states and by the
Commission.1007 Furthermore this modification conforms the rule to the Commission’s
consistent use of the term since it was given specific authority to designate ETCs by Congress in
1997.1008 We therefore find good cause to amend this rule without notice and comment.1009
386.
Second, we amend section 54.202 to clarify that a common carrier seeking
designation as a Lifeline-only ETC is not required to submit a five-year network improvement
plan as part of its application for designation as an ETC. In the USF/ICC Transformation Order
and FNPRM, the Commission included a new requirement in section 54.202, requiring a
common carrier seeking to be designated as an eligible telecommunications carrier by the
Commission to submit a five-year plan describing proposed network improvements and
upgrades. Given that Lifeline-only ETCs are not receiving funds to improve or extend their
networks, we see little purpose in requiring such plans as part of the ETC designation process.
387.
Third, we amend sections 54.201 and 54.202 of our rules, which govern ETC
designations by states and this Commission, respectively, to require a carrier seeking designation
as a Lifeline-only ETC to demonstrate that it is financially and technically capable of providing
the supported Lifeline service in compliance with all of the low-income program rules. 1010 In
2005, the Commission declined to adopt such an explicit requirement for federally-designated
ETCs, concluding that the Commission’s existing rules, including the showings a common
carrier had to make to be designated as an ETC pursuant to section 54.202, would provide
sufficient assurance of the carrier’s financial and technical ability to provide the supported
service.1011
1007 See 47 U.S.C. 214(e)(2), (3) and (6); and 47 C.F.R. §§ 54.201-203. In 1997, Congress amended section 214 of
the Act to give the Commission specific authority to designate ETCs, and the Commission issued a public notice
setting forth the procedures it would use to designate ETCs, but did not amend its rules at that time. See Procedures
for FCC Designation of Eligible Telecommunications Carriers Pursuant to Section 214(e)(6) of the
Communications Act, Public Notice, 12 FCC Rcd 22947 (1997).
1008 See, e.g., ETC Designation Order, 20 FCC Rcd, at 6378-79, para. 17 (“State commissions and the Commission
are charged with reviewing ETC designation applications for compliance with section 214(e)(1) of the Act”); Virgin
Mobile Forbearance Order ,24 FCC Rcd at 3383-84. para. 5 (discussing the authority of the state commissions and
the Commission to designate ETCs); USF/ICC Transformation Order and FNRPM, FCC 11-161 at para. 390 (“By
statute the states, along with the Commission, are empowered to designate common carriers as ETCs.”).
1009 See 5 U.S.C. § 553(b)(3)(B).
1010 See Indiana Commission Comments at 15 (“[C]ompanies that have made a business case to serve a certain
market in a state prior to receiving Lifeline subsidies may be less inclined to risk being cited for non-compliance
with the program.”).
1011 See ETC Designation Order, 20 FCC Rcd at 6387-88, paras. 37-39.
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388.
Given recent growth in the number of companies obtaining ETC designation, 1012
we now conclude that it is appropriate to update our rules for federally-designated ETCs and
extend the requirement to all ETCs to ensure that Lifeline-only ETCs have the financial and
technical ability to offer Lifeline-supported services. Therefore, in order to ensure Lifeline-only
ETCs, whether designated by the Commission or the states, are financially and technically
capable of providing Lifeline services, we now include an explicit requirement in both 54.202
and 54.203 that a common carrier seeking to be designated as a Lifeline-only ETC demonstrate
its technical and financial capacity to provide the supported service.1013 Among the relevant
considerations for such a showing would be whether the applicant previously offered services to
non-Lifeline consumers, how long it has been in business, whether the applicant intends to rely
exclusively on USF disbursements to operate, whether the applicant receives or will receive
revenue from other sources, and whether it has been subject to enforcement action or ETC
revocation proceedings in any state.
389.
Fourth, we delete section 54.209 of our rules regarding certification and reporting
obligations for federally-designated ETCs, while moving those reporting requirements relevant
to ETCs providing Lifeline services to subpart E, which governs universal service support
provided to low-income consumers. 1014 In the USF/ICC Transformation Order and FNPRM, the
Commission indicated that recipients of high-cost support would henceforth report pursuant to
new section 54.313, and section 54.209 would continue to apply only to Lifeline-only ETCs.1015
In order to centralize and streamline certification and reporting requirements pertaining to
federally-designated Lifeline-only ETCs in subpart E of the rules, we move the relevant portions
of 54.209, as they related to ETCs offering Lifeline services to new section 54.422. In particular,
in order to receive support under subpart E, an ETC must provide the following information,
previously required by section 54.209: information regarding service outages, the number of
complaints received per 1,000 connections, certification of compliance with applicable service
quality standards and consumer protection rules, and certification that the carrier is able to
function in emergency situations. In doing so, we streamline annual reporting by eliminating
reporting requirements that no longer make sense in today’s marketplace for federally-designated
Lifeline providers.
1012 USAC assigns a study area code (SAC) for each state in which a company receives designation as an ETC, and
USAC reported disbursement information for 135 more SACs in the fourth quarter of 2011 than it did in the fourth
quarter of 2010. See Universal Service Administrative Company, 2Q 2011 Filing, Appendices at LI04
http://usac.org/about/governance/fcc-filings/2011/quarter-2.aspx (reporting fourth quarter 2010 disbursements for
2085 SACs); Universal Service Administrative Company, 2Q 2012 Filing, Appendices at LI04
(usac.org/about/governance/fcc-filings/2012/quarter-2.aspx (reporting 4th quarter 2011 disbursements for 2220
SACs).
1013 See Letter from Luisa Lancetti, T-Mobile, to Marlene H. Dortch, WC Dkt. No. 11-42 et al., Attach. at 10 (filed
Jan. 24) (arguing that the Commision should require ETCS to demonstrate that they are technically and financially
capable).
1014 See USTelecom Comments at 23 (participation in Lifeline should not be tied to high-cost requirements).
1015 USF/ICC Transformation Order and FNPRM, FCC 11-161 at 580, n.955.
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390.
We also establish targeted reporting requirements in this new rule section that will
apply to all ETCs receiving Lifeline. First, as discussed above,1016 an ETC receiving low-income
support must annually report the names and identifiers used by the ETC, its holding company,
operating companies and affiliates, which will assist us in the Lifeline audit program. Second,
we require every ETC receiving low-income support to provide to the Commission and USAC
general information regarding the terms and conditions of the Lifeline plans for voice telephony
service offered specifically for low income consumers through the program they offered during
the previous year, including the number of minutes provided, and whether there are additional
charges to the consumer for service, including minutes of use and/or toll calls, which will enable
us to monitor service levels provided to low-income consumers. 1017
391.
Because section 54.209 is now obsolete in light of the rule changes adopted in
this Order and in the USF/ICC Transformation Order and FNPRM, we find good cause to delete
it without notice and comment.1018
XII.
APCC PETITION FOR RULEMAKING AND INTERIM RELIEF
392.Background. On December 6, 2010, the American Public Communications
Council (APCC) petitioned the Commission (Petition) to initiate a rulemaking to make payphone
service eligible for Lifeline support at $10 per month per line for all publicly available
phones.1019 APCC also petitioned for interim relief (Petition for Interim Relief), seeking to allow
ETCs to receive Lifeline support for service provided over payphone lines.1020 APCC asserts that
Lifeline funds for payphone service will prevent the disappearance of payphones.1021 It urges the
Commission to “act on an interim basis to provide immediate relief before the decline in
payphones becomes irreversible as payphone deployment ceases to be a viable business.”1022 The
Wireline Competition Bureau sought comment on the petitions.1023
1016 See supra para. 296.
1017 In the event ETCs choose to offer, as an additional option to low income consumers, the Lifeline discount to
other retail service offerings, including bundles, that are available to the general public as described in section IX.A
above, ETCs are not required to submit the terms and conditions of such retail service offerings to the Commission
or USAC.
1018 See 5 U.S.C. § 553(b)(3)(B).
1019 Petition for Rulemaking to Provide Lifeline Support to Payphone Line Service, WC Dkt No. 03-109 et al. (filed
Dec. 6, 2010) (Petition). APCC is a national trade association that represents independent payphone providers.
1020 Emergency Petition for Interim Relief to Prevent the Disappearance of Payphones, CC Dkt. No. 96-45; WC
Dkt. No. 03-109 (filed December 6, 2010) (Petition for Interim Relief).
1021 Petition at 32; Petition for Interim Relief at 9.
1022 Petition for Interim Relief at 1.
1023 Wireline Competition Bureau Seeks Comment on American Public Communications Council Petitions
Regarding Universal Service and Payphone Issues, Public Notice, WC Dkt. No. 03-109 et al., 25 FCC Rcd 17345
(2010). Five commenters, Rosebud Telephone, the Florida Public Telecommunications Association, Minority
Media & Telecom Council, and, in a joint submission, Consumer Action and the National Consumers League
support APCC’s petitions. Verizon and Verizon Wireless, Sprint Nextel Corporation, TracFone, United States
Telecom Association, and NASUCA oppose the petitions.
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393.
According to APCC, in 1998, there were over 2 million payphones in service, but
there are now fewer than 475,000 payphones, a collapse APCC attributes to the growth in
wireless telephone service as well as in Lifeline-supported wireless service.1024 APCC seeks
universal service support for the 475,000 payphones in service.1025
394.
APCC argues that the Commission should amend its rules to give Lifeline support
to payphone service providers. APCC argues that section 276 of the Act was established to
promote widespread deployment of payphone services to the benefit of the general public, and
the Act requires the Commission to determine whether “public interest payphones” located
“where there would otherwise not be a payphone, should be maintained, and if so, to ensure that
such public interest payphones are supported fairly and equitably.”1026 APCC asserts that such
support would cost the Fund roughly $57 million annually.1027
395.
Discussion. After consideration of the petitions and filed comments, we deny both
the Petition for Rulemaking and the Petition for Interim Relief. We question whether the
requested relief is consistent with section 254, and we are not persuaded that the agency should
devote resources to commence a proceeding to explore these issues at a time when our focus is
on reforming the program to protect it against waste, fraud and abuse and modernizing it to
include broadband.
396.
As the Commission has long made clear, Lifeline is intended to benefit eligible
low-income consumers, not service providers.1028 There is no indication in the Petitions that
Lifeline support would be passed through to consumers. Indeed, APCC seeks to redefine
“qualifying low-income consumers” to include payphone service providers, without a
commitment to pass through the Lifeline discount to the consumers that would use those
payphones.1029 As proposed, this would merely provide a windfall to payphone service
providers. On its face, APCC’s request is inconsistent with our longstanding commitment to
1024 Petition at 3.
1025 Id. at 19-20.
1026 Id. at 17; 47 U.S.C. § 276(b)(1), (2). We note that APCC requests support for all publicly available payphones,
rather than petitioning for support only for public interest payphones. Congress stated clearly in its Conference
Report accompanying the Act that “public interest payphones” refers to “payphones at locations where payphone
service would not otherwise be available as a result of the operation of the market. Thus, the term does not apply to
a payphone located near other payphones, or to a payphone that, even though unprofitable by itself, is provided for a
location provider with whom the payphone provider has a contract.” S. Rept. 104-230, 104th Cong., 2d Sess. at 157
(1996).
1027 Petition for Interim Relief at 5.
1028 See Universal Service First Report and Order 12 FCC Rcd at 8952, para. 326. “First, we adopt the Joint
Board’s recommendation that Lifeline service should be made available to low-income consumers nationwide, even
in states that currently do not participate in Lifeline. To that end, we adopt the Joint Board’s recommendations that
Lifeline service should be provided to low-income consumers in every state, irrespective of whether the state
provides matching funds, and that all eligible telecommunications carriers should be required to provide Lifeline
service.” See also Sprint APCC Comments at 2-3.
1029 Petition at Attach. § 54.400(a)
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ensure that low-income consumers have access to phone service in their homes. Moreover, we
are not persuaded by APCC that section 276 somehow compels us to use contributions collected
pursuant to section 254 to advance the goals of section 276.
397.
Pursuant to section 254 of the Act, the Commission must define services eligible
for universal service based in part on a determination that the services “have, through the
operation of market choices by customers, been subscribed to by a substantial majority of
residential customers . . . .”1030 As APCC readily admits, payphone service cannot, by definition,
meet this criteria.1031 Indeed, in 2002, the Joint Board considered and rejected the idea of
providing universal service support to payphone service providers in part for the same reason.1032
In 2003, the Commission agreed with the Joint Board and explicitly excluded payphone service
from universal service support.1033 The Commission reasoned that “payphone lines are not
subscribed to by a substantial majority of residential consumers.”1034 We decline, at this time,
choose to overturn this previous Commission determination.
398.
For the reasons set forth above, we deny APCC’s petitions for interim relief and
for a rulemaking to make payphone service providers eligible for Lifeline support.
XIII. FURTHER NOTICE OF PROPOSED RULEMAKING
A.
Establishing an Eligibility Database
399.Background. In the Lifeline and Link Up NPRM, we sought comment on the
administrative, practical, and legal issues involved in establishing a database to check consumer
eligibility for Lifeline.1035 We asked a number of questions regarding whether it would be
beneficial and administratively feasible to establish a database at the national level or facilitate
the creation of databases at the state level to allow ETCs and other interested parties to check
whether a consumer is eligible for Lifeline. There was widespread agreement that such
databases would help ensure that only those customers who qualify for Lifeline benefits would
receive such benefits, while also reducing carriers’ costs.1036
400.
The record shows that some states have already implemented automated processes
and systems to ensure Lifeline eligibility.1037 Some states utilize eligibility databases as part of
1030 47 U.S.C. § 254(c)(1)(B).
1031 Petition at 5.
1032 Federal-State Joint Board on Universal Service, CC Dkt. No. 96-45, Recommended Descision, 17 FCC Rcd
14095 at 14114 (2002).
1033 2003 Tribal Lifeline Order, 18 FCC Rcd at 15090.
1034 Id.
1035 See Lifeline and Link Up NPRM at 2834, para 207.
1036 See, e.g., Nexus Nov. 18 ex parte Letter.
1037 See, e.g., Tracfone Nov. 11 ex parte Letter, Attach. at 8 (noting that it can access eligiblity data in Washington
state and Wisconsin to determine eligiblity).
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the coordinated enrollment process to further increase participation in the program.1038 Some
states also utilize databases to verify ongoing eligibility.1039 States also vary in how available
automated processes are to different types of ETCs. In Washington state, for instance, the extent
to which a carrier is required and authorized to access eligibility databases depends upon whether
that ETC is wireline, pre-paid wireless, or post-paid wireless.1040 In Maryland, the PSC makes a
list of consumers who are receiving benefits under certain state social service programs that
qualify consumers for Lifeline available to any ETC signing a confidentiality agreement.1041
401.
The record indicates that eligibility data is typically housed at state social service
agencies and separately administered from the Lifeline program, posing an obstacle to broader
implementation of electronic eligibility checks.1042 The Commission, ETCs, and in some cases
even state commissions are unable to easily access such eligibility data and determine quickly
whether a potential Lifeline subscriber is eligible for the program.1043 Some states do not have an
easily accessible centralized electronic depository for even the individual programs which
qualify consumers for Lifeline, let alone a coordinated system across all such programs, and even
those that have established such systems may face limitations, due to cost or privacy concerns, in
providing ETCs or their own state PUC access.1044 As a result, only a handful of states have
implemented eligibility databases, and fewer still have implemented databases that account for
all programs for which consumers can qualify for Lifeline.
402.
There is currently no robust federally administered national database that can be
utilized to check for Lifeline eligibility because nearly all of the program data is maintained
exclusively at the state level. However, efforts are currently underway within and across federal
agencies to facilitate eligibility determinations and eliminate waste in various government
programs, some of which qualify consumers for Lifeline. For example, a June 2010 Presidential
memorandum created a “do not pay” system through which federal benefits payments could be
cross-checked by agencies to prevent ineligible recipients from receiving payments.1045 The
Office of Management and Budget (OMB), through its Partnership Fund for Program Integrity
Innovation, has provided grants for states for pilot programs to computerize and share benefits
1038 See supra para. 177.
1039 See, e.g., OR PUC Comments at 6.
1040 See Washington State Aug. 30 ex parte Letter at 8.
1041 See filing from Ralph Markus, Maryland, WC Dkt. No. 11-42 (filed June 30, 2011) (describing data lists)
1042 See, e.g., Solix Comments at 2.
1043 See, e.g., Michigan PSC Comments at 9 (“In Michigan, it is unlikely that the social service agencies will allow
the ETCs or the MPSC to have direct access to the confidential information in their databases.”).
1044 See Cincinnati Bell Comments at 9-10; see also Missouri PSC Comments at 4 (“The Missouri Department of
Social Services is only able to verify eligibility in the following four programs: Missouri Healthnet, food stamps,
LIHEAP, and Temporary Assistance for Needy Families.”).
1045 Whitehouse.gov, President’s Memorandum on Enhancing Payment Accuracy through a “Do Not Pay List,” 75
Fed. Reg. 35,953 (June 18, 2010), available at
http://www.whitehouse.gov/sites/default/files/omb/assets/financial_improper/06232010_donotpaylist.pdf.
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data for social services programs across states.1046 For example, a group of southeastern states
received a grant to aggregate their Medicaid (a program that qualifies consumers for Lifeline)
eligibility information into a single database.1047 Another pilot provides funding for an interstate
food stamps database, which may be expanded to include TANF and Medicaid information.1048
In addition, other federal agencies and third parties have worked cooperatively to solve this
problem in other federal programs or initiatives. An intergovernmental board administers the
Public Assistance Reporting Information System (PARIS) database, an intergovernmental
database which permits states to check for duplicative claims for several government programs
across states (including Medicaid) through a social security number match.1049 One Economy has
explored with HUD whether it is feasible to make available the database containing information
for Section 8 housing assistance recipients, another program that qualifies consumers for
Lifeline.1050
403.
Discussion. As explained above, we conclude that establishing a fully automated
means for verifying consumers’ initial and ongoing Lifeline eligibility from governmental data
sources would both improve the accuracy of eligibility determinations and ensure that only
eligible consumers receive Lifeline benefits, and reduce burdens on consumers as well as ETCs.
We conclude that it is important to accelerate the adoption of a widespread, automated means of
verifying program eligibility. We therefore direct the Bureau and USAC to take all necessary
actions so that, as soon as possible and no later than the end of 2013, there will be an automated
means to determine Lifeline eligibility for, at a minimum, the three most common programs
through which consumers qualify for Lifeline.1051. To ensure that the Commission has sufficient
information to implement such a solution, we seek focused comment on the issues below.
1046 Office of Management and Budget (OMB), Partnership Fund for Program Integrity Innovation, About the
Partnership Fund, available at http://partner4solutions.gov/about (last visited Jan. 18, 2012).
1047 OMB, Partnership Fund for Program Integrity Innovation, Centers for Medicare and Medicaid Services
Partnership Fund Pilot Award Summary, available at
http://partner4solutions.gov/sites/www.partner4solutions.gov/files/CMS_Pilot_Award_Summary.pdf (last visited
Jan. 18, 2012) (“The pilot will test how open source technology reduces fraud and administrative costs to States and
the Federal government by enabling multiple states to check Medicaid provider eligibility.”).
1048 OMB, Partnership Fund for Program Integrity Innovation, USDA Partnership Fund Pilot Award Summary,
http://partner4solutions.gov/sites/www.partner4solutions.gov/files/USDA_Pilot_Award_Summary.pdf. (last visited
Jan. 18, 2012).
1049 Admin. for Children and Families, U.S. Dep’t of Health and Human Servs., Public Assistance Reporting
Information System (PARIS), About PARIS, http://www.acf.hhs.gov/programs/paris/about/index.html (last visited
Jan. 18, 2012).
1050 One Economy Comments at 4 (noting that One Economy, as leader of the Digital Adoption Coalition applied
for a BTOP grant in which Federal Public Housing assistance program beneficiaries would receive broadband, “only
because senior officials at HUD thought our program was so necessary for their residents that they agreed to
modernize their database structure and allow ‘blind’ access to the Digital Adoption Coalition to provide these
services. As we did not receive this grant, this vital modernization and access provision at HUD never occurred”).
1051 Based on the information in the record, most consumers qualify for Lifeline through Medicaid, Food Stamps
and SSI. See supra para. 104. We recognize that meeting this goal will require coordinated action among
numerous parties outside of the Commission.
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404.
Because much of the relevant federal eligibility data is housed at the state level,
we seek comment on how the Commission can encourage the accelerated deployment of
widespread state databases that can be used or accessed to streamline Lifeline eligibility
determinations. These databases could be queried directly by ETCs to determine customer
eligibility, and potentially used to provide information to a national eligibility database. We also
seek comment on whether federal benefit databases under development across states and at the
national level can be leveraged to assist in checking for Lifeline eligibility. We seek comment
on whether a state-specific or national eligibility database approach is more reliable, efficient, or
imposes greater costs on the states and ETCs.
405.
We seek to further develop the record on ways to mitigate the potential cost on
states if the Commission were to mandate the creation of Lifeline eligibility databases at the state
level or the transmission of state eligibility data to a national database. Several states argue, for
example, that they are unable to implement a Lifeline eligibility database because they lack
sufficient funding and expertise.1052 Should the Fund be used to assist states in implementing
their own eligibility databases and/or facilitate the transfer of state eligibility data to a federal
database? Does the Commission have the legal authority to provide Fund support to states for
this purpose? How much funding would be necessary to materially assist states in implementing
a database? To assist in our determination of the size of such funding, we seek comment on the
implementation and ongoing costs of those Lifeline databases that are currently in operation at
the state level.
406.
We seek comment on whether we should condition receipt of federal Lifeline
funds on state implementation of an eligibility database. Some commenters argue that the
Commission does not have the authority to impose requirements on states to implement state
eligibility databases for Lifeline.1053 However, we note that states must, as a condition of
receiving federal funds for certain other federal programs, such as Medicaid, participate in
national eligibility databases by transmitting beneficiary data to a national database.1054 Should
the Commission condition federal Lifeline support to a state’s consumers on the state’s ability to
facilitate access to eligibility data? Are there other measures we could adopt to encourage states
and other participating entities to implement a database or provide the necessary information to
support a federal database? What would the impact on Lifeline consumers be if the state, for
whatever reason, were unable to implement such a database?
1052 See, e.g., Alabama PSC Comments at 2 (“The APSC currently has at its disposal the data necessary for
populating a fully functional Lifeline eligibility database, but lacks the funding required to achieve that goal.
Therefore, the APSC seeks the financial assistance needed to fully develop, test, implement, and maintain the
software required for management of that database.”).
1053 See, e.g., Missouri PSC Comments at 2.
1054 State Health Access Data Assistance Ctr., New Opportunities for Medicaid data-matching using PARIS
database, available at http://www.shadac.org/blog/new-opportunities-medicaid-data-matching-using-paris-database
(Jul. 20, 2010) (“Participation in the Public Assistance Reporting Information System (PARIS) is required by states
to receive Medicaid funding for automated data systems (including the Medicaid Management Information
System). The requirement to participate, effective October 1, 2009 as part of the Qualifying Individual (QI)
Program Supplemental Funding Act of 2008, allows the sharing of enrollee and applicant information for state
public assistance agencies (SPAAs) and federal agencies.”).
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407.
We seek focused comment on the federal or state privacy requirements
implicated in the establishment of a national or state eligibility database. Some states appear to
assert that federal and state privacy rules preclude the transmission of eligibility information or
other personal data from state social services agencies to third parties.1055 However, other states
do not appear to have similar state laws, or they interpret federal laws to allow the transmission
of such information.1056 We ask commenters to specify the federal and state privacy laws that
they believe may preclude the transmission of eligibility information to a state or national
eligibility database. Would affirmative customer consent at the time of application allow for the
transmission of information notwithstanding such laws? If so, can and should we mandate that
ETCs seek to obtain such consent at the time the consumer applies for Lifeline?
408.
An alternative approach would be for the Commission to establish a national
eligibility database instead of or in addition to state databases. If the Commission establishes a
national database, should it be populated by individual customer eligibility data stored in state
eligibility databases? Should state or federal entities pay for the electronic interface between the
state and federal databases? If the national database did not house eligibility data, should it only
have the capability of querying the individual state databases to determine consumer eligibility?
409.
We seek comment on whether there are reasons to mandate a national eligibility
database if that database relies on data provided by states. One commenter argues that it would
be costly and administratively difficult to implement a national eligibility database and that
nothing would be gained over state database access because the data is housed at the state
level.1057 If a national database merely served as a conduit or gateway through which ETCs
could query state databases, what are the advantages of such a national database over and above
separate state databases? Do these advantages outweigh the costs of additional sources of error
that may be introduced when a state database interacts with a national database?
410.
We also seek comment on whether, as a practical matter, a national Lifeline
eligibility database could be established without the need to access or obtain eligibility data
housed at the state level. As explained above, there are several national databases at various
stages of development which contain beneficiary information for certain federal programs and
enable authorized parties to check federal program eligibility. Some of these databases are for
1055 See, e.g., Cincinatti Bell Aug. 30, 2011 ex parte Letter at 2.
1056 Compare id. (discussing how privacy concerns precluded the transmission of eligibility data to the Ohio PUC)
with Washington State Aug. 31 ex parte Letter at 4 (“DSHS is providing prepaid wireless ETCs with access to their
online Beneficiary Verification System (BVS). The BVS is an interactive online interface. When an authorized user
keys in a Lifeline applicant's 9-digit DSHS client ID or the combination of the applicant's full name and Social
Security number, the website will confirm if the customer is receiving one of the nine qualifying public assistance
programs administered by the DSHS.”).
1057 See CGM Comments at 2 (“It is much more difficult and time consuming to require states to provide timely state
centric eligibility data to a centralized national repository than it is to gain access to this data at the state level. The
vast majority of eligibility is determined at the state level. The eligibility criteria are not generally called into
question, only timely access to that data. Nationalizing this data and access to it doesn't do anything to make the
task easier or make its accuracy any better. It makes on-going maintenance more difficult and prone to error.
Transferring eligibility data from state care to a national database will also expose privacy and security issues.”).
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programs that qualify consumers for Lifeline.1058 We seek comment on how these national
databases for other programs can be leveraged to assist in the creation of a national Lifeline
database. How could the Commission best partner with other relevant agencies to share
information housed in other agencies’ databases? Can third parties, such as ETCs, query other
existing national benefit databases, or can only another federal or state agency do so? We also
seek comment on how issues relating to the accuracy of information in federal government
databases already in service are handled and corrected.1059 Moreover, we seek comment on
whether national databases are sufficiently robust to be utilized to check for eligibility in the
Lifeline program. For example, is the PARIS database updated frequently enough to be utilized
to check for Lifeline eligibility?
411.
To the extent that the program data available at the federal level is utilized to
establish a Lifeline database, we propose that the Commission should first focus on the three
programs which, based on the record, qualify the most consumers for Lifeline (i.e., Medicaid,
food stamps, SSI).1060 We expect that such a focus will impact the largest number of Lifeline
beneficiaries, and may also be able to leverage the work already done by HHS in its PARIS
program and recent OMB grants for Medicaid administration.
412.
In the Order, we adopt a national database to check for duplicative support. We
seek comment on the synergies that could result from combining the duplicates database and a
national eligibility database. Should a national eligibility database be built “on top of” the
duplicates database, and, if so, what is the most efficient way of doing so? What are the cost
savings and other benefits that would result from the integration of both duplicate and eligibility
databases and what, if any, are the drawbacks of such an approach?
413.
In the Order, we require ETCs to transmit the name, address, telephone number,
date of birth, last four digits of the social security number and the means through which the
consumer qualified for Lifeline to the duplicates database. We find that such data will allow the
database to check for duplicative support. However, it may be necessary for ETCs to collect and
transmit additional information (e.g., the full SSN) to a national eligibility database to determine
eligibility. For example, some state Lifeline databases require that any valid query to determine
eligibility include the transmission of a beneficiary’s full social security number and/or date of
birth.1061 At the same time, several parties have raised concerns regarding ETCs’ collection of
the full social security number.1062 We seek comment to refresh the record about the privacy
issues surrounding the creation of any eligibility database and the transmission of the full social
security number. Do state or federal laws require the submission of particular information (e.g.,
1058 See supra section VI.F (Automatic and Coordinated Enrollment).
1059 Letter from Cheryl Leanza, Leadership Conference on Civil Rights, to Marlene H. Dortch, FCC, WC Dkt. No.
11-42 at 5 (filed Nov. 21, 2011) (dicusssing how errors in the social security database are corrected).
1060 See supra para. 104; see also Holt et al., Making Telephone Service Affordable for Low Income Households at
40 (Jan. 28, 2007) available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=959692 (noting that, in Florida,
programs that increased the number of households the most . . . were Medicaid, Food Stamps and SSI).
1061 See Washington State Aug. 31 ex parte Letter at 4.
1062 See GCI Ex Parte Presentation, WC Dkt. Nos. 11-42 et al., Attach. 1 at 2 (filed June 13, 2011) (“The
Commission cannot use the whole Social Security number without express statutory authorization”).
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the full SSN) in order for a third party such as an ETC to be able to determine if a consumer is
receiving a federal or state benefit which qualifies a consumer for Lifeline? Does the answer
depend upon the program? Can the Commission decline to provide benefits to a consumer based
on the consumer’s refusal to provide a full social security number?1063
414.
Some commenters argue that the Commission should pursue other, non-electronic
methods to check for eligibility in lieu of or in the interim while an electronic means of verifying
eligibility is created. For example, both Verizon and AT&T suggest that a national third-party
administrator, not the ETCs, should examine income and program documentation submitted by
end-users and make a determination of eligibility.1064 We recognize that establishing a centralized
third-party review of documentation may involve a delay in time between the application and
proof of verification being submitted by the consumer and being approved. At the same time,
however, it would relieve carriers from the burden of having to make initial determinations of
eligibility as required by our rules and would result in increased standardization of eligibility
determinations.1065 We seek comment on the costs and benefits of mandating a non-electronic
means of checking program eligibility by a third-party administrator, including the cost of
implementing such a solution on a nationwide basis, and whether such a non-mechanized
approach can be integrated with the duplicates database at a later date. 1066 What would be the
benefits and costs if USAC were to assume this function given its role to implement the National
Lifeline Accountability Database to eliminate duplicative support?
415.
Finally, we seek comment on additional features and functions which can and
should be added to the National Accountability database. We seek comment on whether the
current features and functions of the database can be refined, including the manner in which
ETCs interact with the database.
1063 See Privacy Act § 7(a)(1), 5 U.S.C. § 552A (“It shall be unlawful for any Federal, State or local government
agency to deny to any individual any right, benefit, or privilege provided by law because of such individual's refusal
to disclose his Social Security account number.”); Ingerman v. Delaware River Port Authority, 630 F. Supp. 2d 426,
442 (D. N.J. 2009) (invalidating requirement of Social Security number for an EZ Pass seniors discount, which was
collected in part to prevent fraud).
1064 See Verizon Reply Comments at 4-5; Letter of Mary L Henze, AT&T, to Marlene H. Dortch, Federal
Communications Commission, WC Dkt. No. 11-42 at 2 (filed Jan. 24, 2012) (arguing that ETCs should not be
involved in making eligibility determinations). California engages a third party contractor to examine the program
documentation of those Lifeline customers who are audited during the renewal process. See California Comments,
WC Dkt. No. 03-109 et al., at 11 (filed Jul. 13, 2010) (“[T]he CPUC’s Certifying Agent vendor annually reviews a
sample of customers who are verifying their status for renewal of Lifeline eligibility. If a customer is randomly
selected for this ‘audit’ during the renewal process, the customer must provide documentation of participation in one
of the above programs, and the web-based system cannot be used.”).
1065 As we explain above, we direct USAC to establish a process so that, after 2012, ETCs may elect to have USAC
administer the re-certification process on their behalf. We seek additional comment here on whether a third party
administrator, such as USAC or another party, should perform initial certifications of Lifeline eligibility.
1066 Letter of Alan Buzzacott, Counsel, Verizon, to Marlene H. Dortch, Secretary, FCC, WC Dkt. No. 11-24 at 2
(filed Nov. 7, 2011) (“Even if the database administrator does not initially have direct, real-time access to state
systems that contain eligibility information, the database administrator’s responsibilities should not be limited solely
to checking for duplicates. At a minimum, the administrator should assume responsibility for the annual verification
process. The California Lifeline program is an example of how a centralized administrator can assume
responsibility for annual verifications even without access to state systems that contain eligibility information.”).
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B.
Advancing Broadband Availability for Low-Income Americans through
Digital Literacy Training
In the attached Order, the Commission established a goal of ensuring the
availability of broadband service for low-income Americans and adopted broadband penetration
rates among low-income Americans as an outcome measure for this goal. The most recently
available statistics suggest that approximately 32 percent of the American population has not
adopted high-speed Internet at home,1067 and the percentage of non-adopters among low-income
Americans may be as much as double the national rate.1068 As discussed in today’s Order, for
broadband to be “available” to a consumer, a broadband network must be deployed to the
consumer, the service must be of sufficient robustness to meet the needs of consumers, and the
broadband service offered over the network must be affordable.1069 The USF/ICC
Transformation Order and FNPRM recently adopted by the Commission reformed and
modernized USF’s high-cost program to address the first two of these barriers, while the attached
Order adopts a Broadband Pilot Program to assess how best to modernize the Lifeline program to
address affordability of broadband service.1070 However, barriers to broadband adoption also
include lack of digital literacy, and a perception that the Internet is not relevant or useful.1071 The
Commission has taken a number of steps to help tackle the digital literacy challenge, including
through the recent “Apps for Communities” contest, which focused on increasing the relevance
of Internet access.1072 In this section, we seek comment on the use of universal service funding to
address the barrier that lack of digital literacy creates to increased broadband adoption among
low-income Americans.
1.
Background
417.The National Broadband Plan (NBP) defined digital literacy as the skills needed
to “us[e] [information and communications technology] to find, evaluate, create and
communicate information,” while recognizing that digital literacy is an evolving concept.1073
Digital literacy is increasingly essential to obtaining an education, searching for a job, learning
job-related skills, accessing government information, participating in civic processes, and
managing household and financial responsibilities.1074 Additionally, increasing digital literacy
1067 See NTIA, U.S. DEP’T OF COMMERCE, DIGITAL NATION: EXPANDING INTERNET USAGE, NTIA RESEARCH
PREVIEW at 2 (Feb. 2011), available at
http://www.ntia.doc.gov/files/ntia/publications/ntia_internet_use_report_february_2011.pdf.
1068 AARON SMITH, PEW INTERNET & AMERICAN LIFE PROJECT, HOME BROADBAND 2010, at 8 (Aug. 11, 2010),
available at http://pewinternet.org/~/media//Files/Reports/2010/Home%20broadband%202010.pdf (2010
Broadband Adoption Report).
1069 See supra para. 34.
1070 See generally, USF/ICC Transformation Order and FNPRM.
1071 2010 Broadband Adoption Report at 2-3, 11.
1072 See Apps for Communities, available at http://appsforcommunities.challenge.gov (last visited Jan. 19, 2012).
Winning entries included tools to help people find jobs and connect the homeless with services.
1073 See, e.g., NATIONAL BROADBAND PLAN at 174-77.
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and use of the Internet can help bridge the skills gap, reduce job search discouragement,1075 and
aid the country’s economic recovery.1076
418.
Americans who lack the skills to use the Internet fall behind in a number of
important areas. Consumers who do not know how to participate in e-commerce lose the
financial benefit of online sales and discounts,1077 lose out on the cost savings and benefits of e-
banking,1078 and lose access to government services – also imposing additional costs on the
government to maintain duplicative service-delivery models.1079 Broadband Internet is also a
tremendous resource for health care information, including specific information about treatment
(Continued from previous page)
1074 See Remarks on Broadband Adoption, Federal Communications Commission, Chairman Julius Genachowski,
Washington, D.C. at 3 (Oct. 12, 2011) (Chairman Broadband Remarks), available at
http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db1012/DOC-310350A1.pdf (Chairman’s Broaband
Remarks); American Library Association, Public Library Funding & Technology Access Study 2010-2011: Public
Library Technology Study, at 24, http://www.ala.org/ala/research/initiatives/plftas/2010_2011/plftas11-
techlandscape.pdf (Library Tech Study); Carlos A. Manjarrez & Kyle Schoembs, Who’s In the Queue? A
Demographic Analysis of Public Access Computer Users and Uses in U.S. Public Libraries, Institute of Museum
and Library Services, at 5 (June 2011), http://www.imls.gov/assets/1/AssetManager/Brief2011_04.pdf (IMLS
Research Brief); George S. Ford, PhD, Phoenix Center Perspectives 11-04: Internet Use and Labor Market
Participation: Additional Insights from New and Old Data, Phoenix Center for Advanced Legal & Economic Public
Policy Studies, at 7 (Aug. 18, 2011), available at http://www.phoenix-center.org/perspectives/Perspective11-
04Final.pdf (Phoenix Center Perspective 11-04); Digital Literacy and Citizenship in the 21st Century, White Paper,
Common Sense Media, at 2 (Mar. 2011), available at
http://www.commonsensemedia.org/sites/default/files/DigitalLiteracyandCitizenshipWhitePaper-Mar2011.pdf
(Common Sense 2011 White Paper) (discussing the definition of digital literacy and digital citizenship).
1075 See, e.g., Phoenix Center Perspective 11-04 at 3; George S. Ford, PhD, Phoenix Center Perspective 10-01s:
Internet Use and Job Search: More Evidence, Phoenix Center for Advanced Legal & Economic Public Policy
Studies (Jan. 26, 2011), http://www.phoenix-center.org/perspectives/Perspective10-01Final.pdf (Phoenix Center
Perspective 10-01); T. Randolph Beard, et al., Phoenix Center Policy Paper Number 39: Internet Use and Job
Search, Phoenix Center for Advanced Legal & Economic Public Policy Studies, at 21 (Jan. 2010),
http://www.phoenix-center.org/pcpp/PCPP39Final.pdf (Phoenix Policy Paper No. 39).
1076 See, e.g., U.S. Commerce Secretary Gary Locke Announces Digital Literacy Initiative, Press Release, NTIA
(May 13, 2011), available at http://www.ntia.doc.gov/print/press-release/2011/us-commerce-secretary-gary-locke-
announces-digital-literacy-initiative; Fact Sheet: Digital Literacy, U.S. Department of Commerce,
http://www.commerce.gov/news/fact-sheets/2011/05/13/fact-sheet-digital-literacy (May 13, 2011); Robert D.
Atkinson, et al., The Internet Economy 25 Years After .com, Information Technology and Innovation Foundation at
42 (Mar. 15, 2010), available at http://www.itif.org/files/2010-25-years.pdf; Hamilton Consultants, Inc., Economic
Value of the Advertising-Supported Internet Ecosystem, Hamilton Consultants, at 12 (June 2009), available at
http://www.iab.net/media/file/Economic-Value-Report.pdf; Phoenix Center Perspective 11-04, at 6; ECDL
Foundation highlights role of digital literacy in economic recovery, awards top programs at Global Forum, Press
Release, AMEinfo.com (Dec. 13, 2009), available at http://www.ameinfo.com/218610.html; Digital Inclusion
Report New Report Shows the Economic Benefit of Getting Everyone Online, PR Newswire,
http://www.prnewswire.co.uk/cgi/news/release?id=268499 (Oct. 13, 2009) (stating that digital literacy could
potentially provide billions of dollars to the economy).
1077 Id. (stating that lack of Internet access can greatly impact personal finances and the national economy).
1078 Pew Research Center, Pew Internet & American Life Project (2006), available at
http://www.pewinternet.org/~/media//Files/Reports/2006/PIP_Online_Banking_2006.pdf.pdf, at 1-3.
1079 See PRNewswire Report (suggesting UK government could save hundreds of millions of pounds per year in
efficiencies if better use was made of online government services).
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options, safety and drug recall information, doctors and other health professionals, and health
insurance.1080 Americans who lack the skills to use broadband simply do not have the same
access to services and information as other consumers.
419.
The NBP recommended a number of steps to help all Americans obtain access to
broadband and acquire the skills to use it, including launching a National Digital Literacy Corps
to train young people and adults to teach digital literacy skills to non-adopters of computer and
Internet technology.1081 The NBP also recommended private and public sector programs with
similar digital literacy goals, and suggested an online digital literacy website.1082 In recent
months, several private sector organizations have announced significant commitments to tackle
barriers to digital literacy.1083 For example, the “Connect to Compete” initiative seeks to address
barriers to broadband adoption, including a focus on digital literacy and the employment skills
gap.1084 Additionally, the National Telecommunications and Information Administration
(NTIA), part of the U.S. Department of Commerce, has been providing funding to develop
digital literacy programs through its Broadband Technology Opportunities Program grants.1085
BTOP grant funds are currently being used in libraries across the country.1086 BTOP funds are
also being used by various community programs and technology corporations to improve digital
literacy and citizenship.1087
1080 See, e.g. ,Susannah Fox, The Social Life of Health Information, 2011, Pew Internet and American Life Project,
at 3 (May 12, 2011), available at
http://pewinternet.org/~/media//Files/Reports/2011/PIP_Social_Life_of_Health_Info.pdf.
1081 See NATIONAL BROADBAND PLAN at 174-78.
1082 See id. The website was developed by NTIA and is available at www.digitalliteracy.gov.
1083 See Chairman Julius Genachowski, FCC, Remarks at Comcast Internet Essentials Event, Washington, D.C.
(Sept. 20, 2011), available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-309693A1.pdf (recognizing
Comcast’s Internet Essentials program that seeks to provide low-cost high-speed Internet combined with digital
literacy training).
1084 See Chairman’s Broadband Remarks at 4-6; see also FCC & “Connect to Compete” Tackle Broadband
Adoption Challenge Through Expanded Digital Literacy Training, Fact Sheet (Oct. 12, 2011) (Connect to Compete
Digital Literacy Fact Sheet), available at
http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db1012/DOC-310346A1.pdf; Supporting Statements
From Connect to Compete Partners, (Oct. 12, 2011) (Connect to Compete Supporting Statements), available at
http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db1012/DOC-310348A1.pdf.
1085 See NTIA, BroadbandUSA, Grants Awarded: Sustainable Broadband Adoption,
http://www2.ntia.doc.gov/sustainableadoption (last visited Jan. 19, 2012). See also DIGITALLITERACY.GOV, In the
Community Stories, http://www.digitalliteracy.gov/communities (last visited Jan. 19, 2012).
1086 See, e.g., Enhancing Computer Centers in Montana Public Libraries, http://msl.mt.gov/btop/; New Jersey State
Library, available at http://njworks.org/; State Library of Louisiana, http://www.state.lib.la.us/; Technology
Expertise, Access and Learning for all Texans, https://www.tsl.state.tx.us/teal/; DC Public Library, Public
Computing Centers, http://dclibrary.org/broadbandusa/public-computing-centers.
1087 See, e.g., CFY, http://cfy.org/ (last visited Jan. 19, 2012) (providing services in NYC, Philadelphia, Atlanta, LA,
and San Francisco Bay Area); ONECOMMUNITY, http://www.onecommunity.org/ (last visited Jan. 19, 2012);
Common Sense Media, Digital Literacy and Citizenship Curriculum for Grades 6-8, COMMON SENSE MEDIA,
http://www.commonsensemedia.org/educators/curriculum/6-8 (last visited Jan. 19, 2012).
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420.
Although these initiatives are making significant progress in boosting the digital
literacy skills of Americans where such programs are available, much more needs to be done to
make digital literacy ubiquitous, particularly among low-income populations. BTOP’s
Sustainable Broadband Adoption and Public Computing Center programs are providing needed
funding, but its projects are available only in certain communities and during certain times.
Additionally, BTOP funding will end by 2013.1088 The number of public libraries offering formal
digital literacy programs is still relatively low, with only 38 percent of public libraries offering
formal digital literacy courses, and only 25 percent of those in rural America offering courses.1089
More than 60 percent of public libraries still do not provide any formal digital literacy services to
their patrons, and due to budgetary restrictions, some libraries have reported eliminating digital
literacy skills training programs.1090
2.
Discussion
421.We seek comment on using universal service support for targeted, time-limited
funding to ensure that low-income Americans who have not adopted broadband have the digital
literacy skills they need to access and use broadband. In particular, we seek comment on the
details of providing digital literacy funding, including whether such funding should be used for
digital literacy training programs, what types of entities should receive such funding, how much
funding to provide and for how long, and how funding should be administered.
422.
Legal Authority. As an initial matter, we seek comment on our statutory authority
to use universal service funds to support digital literacy. As we recently noted in the USF/ICC
Transformation Order and FNPRM, the principle that all Americans should have access to
communications services has been at the core of the Commission’s mandate since its creation.
Congress created the Commission in 1934 for the purpose of making “available . . . to all the
people of the United States . . . a rapid, efficient, Nation-wide, and world-wide wire and radio
communication service . . . .”1091 In the Telecommunications Act of 1996, Congress built upon
that longstanding principle by enacting section 254, which sets forth six principles upon which
we must “base policies for the preservation and advancement of universal service . . . .”1092
Among these principles are that “[a]ccess to advanced telecommunications and information
services should be provided in all regions of the Nation,” and that “[c]onsumers in all regions of
the nation, including low-income consumers . . . should have access to telecommunications and
information services, including . . . advanced telecommunications and information services, that
are reasonably comparable to those services provided in urban areas and that are available at
rates that are reasonably comparable to rates charged for similar services in urban areas.”1093
1088 BTOP Quarterly Status Report, NTIA, Department of Commerce, at 9 (Dec. 2011), available at
http://www.ntia.doc.gov/files/ntia/publications/btop-quarterly-congressional-report-dec-2011.pdf.
1089 See Library Tech Study at 32-33. Formal training generally refers to group/classroom type training. Informal
training generally refers to anything outside of formal classes, including one-on-one training, downloadable
references and guides and ad hoc point-of-use library staff assistance. See id.
1090 Id. at 35.
1091 47 U.S.C. § 151.
1092 47 U.S.C. § 254(b).
1093 47 U.S.C. § 254(b) (1) – (3).
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Congress also directed the Commission to take the steps necessary to ensure the delivery of
affordable telecommunications service to all Americans, including eligible schools and
libraries.1094 Section 254(h)(2) directs the Commission “to enhance, to the extent technically
feasible and economically reasonable, access to advanced telecommunications and information
services” for libraries and school classrooms.1095 Furthermore, the Commission has the authority
under section 254(c)(3) to designate “additional” services eligible for universal service support
under the schools and libraries program.1096 Under this authority, the Commission may provide
support to non-telecommunications carriers providing non-telecommunications services, such as
Internet access and internal connections.1097 Historically, the Commission has supported
transmission used to access advanced information services. Training on how to use information
services also enhances access to those services in classrooms and libraries and furthers the
purposes of section 254(h).1098
423.
Against this statutory backdrop, we seek comment on our legal authority to use
universal service funds to support digital literacy in general and digital literacy training in
particular. Should the directive to provide “access” be understood to include the ability for
consumers to use the services once they have access to them? Just as the Commission has long
relied upon sections 254(c)(3) and 254(h)(2) to provide support for internal connections to
enable access to the Internet in classrooms, could we also authorize funding for training to enable
library patrons to effectively utilize the Internet access provided at libraries, or to enable parents
and other members of the community to learn the skills to use E-rate funded connections at
School Spots1099 across the country?
424.
We seek comment on whether promoting digital literacy would serve the
objective of providing support that is sufficient but not excessive, so as to not impose an
excessive burden on consumers and businesses who ultimately pay to support USF. By
providing more consumers with the requisite skills to use broadband, we could expect to see
more demand for broadband, which would improve the business case for broadband providers to
deploy and expand networks and offer services to all consumers. Increased broadband
penetration rates could reduce the need for Connect America Fund subsidies to enable broadband
networks in high cost areas to provide service at reasonably comparable rates. As the
1094 47 U.S.C. § 254 (a)– (c). See Universal Service First Report and Order, 12 FCC Rcd at 8780, para. 1.
1095 47 U.S.C. § 254(h)(2).
1096 47 U.S.C. § 254(c)(3).
1097 See Texas Office of Public Utility Counsel v. FCC¸ 183 F.3d 393, 440-45 (5th Cir. 1999).
1098 See, e.g., S. Conf. Rep. No. 230, 104th Cong., 2d Sess. 132 (1996) (“The provisions of subsection (h) will help
open new worlds of knowledge, learning and education to all Americans . . . . They are intended, for example, to
provide the ability to browse library collections, review the collections of museums, or find new information on the
treatment of an illness, to Americans everywhere via schools and libraries.”); but see, e.g., Schools and Libraries
Universal Service Support Mechanism et al., CC Dkt. No. 02-6 et al., Sixth Report and Order, 25 FCC Rcd 18762,
18841 (2010) (2010 E-Rate Sixth Report and Order) (listing such training as “Ineligible for E-rate Funding as
Internet Access Services”).
1099 See 2010 E-Rate Sixth Report and Order, 25 FCC Rcd at 18901 (Statement of Chairman Julius Genachowski);
Schools and Libraries Universal Service Support Mechanism, CC Dkt. No. 02-6, Order and Notice of Proposed
Rulemaking, 25 FCC Rcd 1740, para. 13 (2010) (E-rate Community Use Order and NPRM).
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Commission explained in its most recent Broadband Progress Report, obstacles to broadband
adoption, such as poor digital literacy, are barriers to infrastructure investment because they
reduce the revenue available to providers who invest in broadband.1100 The Commission
recognized that one of the most significant barriers to investment in broadband infrastructure is
the lack of a “business case for operating a broadband network” in high-cost areas “[i]n the
absence of programs that provide additional support.”1101 In addition, to the extent digital
literacy contributes to consumers’ ability to search for, secure, and keep jobs, targeted
investment in digital literacy could, over time, help reduce demand on Lifeline by reducing
unemployment. Consistent with court holdings that the “purpose of universal service is to
benefit the customer, not the carrier,”1102 would providing digital literacy training be a way to
lessen demand for both low-income and high-cost funding, and thereby reduce contribution
obligations on consumers and businesses?
425.
In the wake of the 1996 Act, the Commission implemented the directives in
section 254 by adopting rules to administer universal service through four functionally separate
programs – high cost, low-income, E-rate, and rural health care. Our current rules direct USAC,
the USF program administrator, to project program demand separately for those four programs,
and to keep separate accounts for the amounts of money collected and disbursed for each
program.1103 Nothing in the statutory framework, however, dictates that the Commission must
keep these four programs functionally separate from one another, or precludes the Commission
from creating a new program that is administered separately from existing programs, so long as
that program is consistent with our statutory authority. We therefore seek comment on whether a
digital literacy program should be administered through the existing E-rate program, the low-
income program, or as a separate program outside of the current structure of any of the existing
programs. What are the practical and administrative implications of each of these alternatives?
426.
Digital Literacy Training. We seek comment on whether universal service
funding for digital literacy should be focused on training programs. By reducing the digital
literacy skills gap, training programs could help consumers, and particularly low-income
Americans, who have not yet adopted broadband to gain the digital skills necessary to adopt
broadband. Connect Ohio, a BTOP grantee that offers digital literacy training classes in libraries
and community centers across Ohio, found that approximately 87 percent of consumers who took
formal digital literacy classes said they intended to subscribe to broadband at home within a year
as a result of the training, demonstrating the effectiveness of digital literacy training as a tool for
increasing broadband adoption.1104 We seek comment and data on the effectiveness of formal
digital literacy training classes, and the benefits such training provides as compared to informal
1100 Seventh Broadband Progress Report, 26 FCC Rcd at 8040, paras. 64-65.
1101 Id. at 8040-41, para. 66.
1102 Rural Cellular Association 588 F.3d at 1103 (quoting Alenco Communications, Inc. 201 F.3d at 621).
1103 See 47 C.F.R. § 54.702(h).
1104 Amanda Murphy, 2011 Review: ECO Progress, Last Mile Successes, New Initiatives & Partnerships, Connect
Ohio, (Dec. 28, 2011), available at http://connectohio.org/blog/post/2011-review-eco-progress-last-mile-successes-
new-initiatives-partnerships.
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digital literacy guidance that may be provided by librarians and others to consumers who have
not adopted broadband.
427.
Although some digital literacy training programs are already being offered, many
Americans who haven’t adopted broadband still may not have access to digital literacy training,
because it may not be offered where they live or because the service may be offered through a
program or institution that is only available to certain populations. For example, a local area
senior center may provide computer or Internet classes, but the mission of these institutions and
the people they serve is limited to the elderly. Of the approximately 16,800 public libraries in
the United States,1105 only about 38 percent currently provide formal digital literacy training.1106
Providing additional funding for digital literacy training that is free and open to all consumers,
for example through programs offered at libraries and schools, could help close that gap by
ensuring that all Americans, particularly low-income Americans, can access the benefits of
digital literacy training. Furthermore, funding digital literacy training programs could provide
not only an immediate infusion of resources, but also produce a more sustainable impact by
fostering the development of curricula and training skills that would serve as building blocks for
future digital literacy training programs run without USF support. Accordingly, we seek
comment on whether funding digital literacy training is an effective way to help close the digital
literacy gap and thereby increase demand for and the availability of broadband to low-income
consumers and others. We also seek comment on how to ensure that the non-adopters we are
targeting are aware of and can access the digital literacy training programs that are established as
a result of our providing funding. Are there ways to utilize the expertise of other government
agencies, groups or organizations to assist us in better targeting digital literacy training?1107
428.
Funded Entities. We seek comment on what types of entities should be eligible to
receive digital literacy training funds, consistent with our statutory authority, efficient program
design, and the targeting of the funding towards low-income consumers. Many have advocated
that libraries are effective institutions for digital literacy training,1108 while schools, particularly
those offering School Spots pursuant to the E-rate Community Use Order and NPRM, could be
effective as well. Does our authority allow funding received from savings in the Lifeline
program to be directed to libraries and schools through our current E-rate program? Could this
minimize administrative overhead and provide a ready means to prioritize or limit receipt of
1105 See Funding & Technology Access Study, Public Libraries and Access, Information Policy & Access Center at 1
(2010-2011 data presented) (iPAC Information), available at www.ala.org/plinternetfunding. See also How
Libraries Stack Up: 2010, OCLC at 1 (2010) (OCLC Research), available at www.oclc.org/reports/stackup
1106 See Library Tech Report at 33, Figure C-17.
1107 See, e.g., Letter from Marijke Visser, American Library Association, to Marlene H. Dortch, Federal
Communications Commission, WC Dkt. No. 11-42 et al. (filed Jan. 24, 2012) (American Library Association Jan 24
ex parte Letter).
1108 Informing Communities Sustaining Democracy in the Digital Age, The Aspen Institute and The Knight
Foundation at 47 (2009), available at
http://www.knightfoundation.org/media/uploads/publication_pdfs/Knight_Commission_Report_-
_Informing_Communities.pdf; INFORMATION NEEDS OF COMMUNITIES REPORT: PART 3 - RECOMMENDATIONS,
Federal Communications Commission, Office of Strategic Planning and Policy Analysis at 358 (July 2011),
available at http://transition.fcc.gov/osp/inc-report/INoC-35-Recomendations.pdf.
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funds to libraries and schools in low-income areas?1109 Alternatively, as part of the low-income
program, could USF funding be provided to ETCs that apply for additional support for the
purpose of providing digital literacy training in locations like libraries that are targeted to low-
income communities?1110 We also seek comment on whether to provide funding to ETCs that
participate in the high-cost program, conditioned on their offering digital literacy training to
consumers in their service territory.1111 For example, such training could be provided by ETC
employees in public locations such as libraries or schools. Are there anchor institutions better
suited to serve low-income non-adopters than schools and libraries, or perhaps in addition to
schools and libraries? If so, what are they, and how could we target them? For example, would
Tribal government administrative buildings or other community centers be more accessible and
better suited to serve low-income non-adopters on Tribal lands?
429.
Libraries are open to the general public during operating hours, while digital
literacy training offered by schools to non-students would presumably be offered only outside of
school hours. In addition, libraries may be open during the evenings and on weekends, which
could increase the opportunities for digital literacy classes to be held at times when people could
attend them. Furthermore, for millions of Americans, libraries have become established
institutions where people feel comfortable accessing the Internet,1112 and libraries are a known
place in the community where people may already go to seek help in becoming digitally
literate.1113 For example, data shows that approximately 32 percent of the American public 14
years or older have accessed the Internet using a library computer or wireless network at least
once in the last 12 months.1114 Additionally, this access is highest among low-income and
1109 See 47 C.F.R. § 54.505(c) (E-rate Discount Matrix). An E-rate applicant filing for discounts on eligible services
must calculate the percentage discount that it is eligible to receive measured by the percentage of students eligible
for the National School Lunch Program and dependant upon whether it is located in an urban or rural location.FCC
Form 471 Instructions at 8-19 (identifying how an E-rate applicant should calculate its discount).
1110 See, e.g., Communications Workers of America Comments, WC Dkt No. 10-90 et al., at 16-17 (filed Apr. 18
2011).
1111 In the USF/ICC Transformation Order and FNPRM proceeding, several rural telecommunications companies
commented that they maintain relatively low broadband adoption rates. Some advocated for greater availability of
information to increase adoption. See, e.g., Hargray Telephone Company Reply Comments at ii, 2; Hawaiian
Telecom 9-10; IT&E Reply Comments at 3-5; San Juan Cable at 3, 6; ALA at 4; California Emerging Technology
Fund at 1; CA PUC at 11, 14-15; Connected Nation at 17; DC PSC at 3; Free Press at 6; Global Crossing at 18;
Information Technology Industry Council at 5; Internet2 at 3; Kansas Corporation Commission at 20-21; Maine
Public Advocate Office at 5; National Assoc of State Utility Advocates at 48, 51; NY PSC at 4-5; Schools, Health
and Libraries Broadband Coalition at 4; State of Hawaii at Reply Comments at 3-4.
1112 See NATIONAL BROADBAND PLAN at 176-77; OCLC Research at 1; iPAC Information; IMLS Research Brief;
Library Tech Study at 30, 32-39; The U.S. IMPACT Study, Opportunity for All: How Library Policies and Practices
Impact Public Internet Access, Institute of Museum and Library Studies (June 2011) (IMPACT Study), available at
http://tascha.washington.edu/usimpact.; Phoenix Center Perspective 11-04 at 3 (showing the impact that libraries
have made in reducing the probability of labor market discouragement).
1113 See IMPACT Study; OCLC Research; IMLS Research Brief at 2-4; iPAC Information at 3.
1114 See Opportunity for All: How the American Public Benefits from Internet Access at U.S. Libraries, The U.S.
IMPACT Study, IMLS at 32 (Mar. 2010) (2010 IMLS Study), available at
http://www.gatesfoundation.org/learning/Documents/OpportunityForAll.pdf; Library Tech Study at 34.
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working poor, people of mixed race, 14-18 year olds, men, and non-English speakers.1115
Schools can also provide meaningful opportunities for digital literacy courses and potentially
reach non-adopters, although they may be more limited in their reach and purpose – focusing
primarily on students and their immediate families and on digital citizenship, a concept that
teaches how to appropriately and safely use technology and the Internet in a technology-rich
society.1116
430.
We propose to limit funds to entities that do not already offer formal digital
literacy training services so that USF does not displace existing funding sources for such
training, whether derived from public or private sector sources. Further, to encourage outreach
to the community, we propose that any digital literacy training supported in schools be limited to
those schools that offer community access after regular school hours.1117 We propose to establish
these eligibility criteria to encourage the development of new digital literacy training programs
for the purpose of helping those people without digital literacy skills gain access to digital
literacy training. We believe these criteria will further the goal of promoting universal service,
instead of simply funding programs that already exist. We seek comment on these criteria, and
whether they will promote the goal of expanding access to and demand for broadband among
populations that disproportionately lack digital literacy skills, particularly low-income
consumers. We also seek comment on whether we should limit funding only to “communities”
that are not already served by digital literacy programs, such as BTOP-funded programs
designed to teach digital literacy skills. For purposes of administering such a requirement, how
should we define a “community” such that we could determine what community would not be
eligible for digital literacy training funding? Should the Commission establish additional
eligibility criteria, and, if so, what should those criteria include?
431.
We also seek comment on the criteria for selection of recipients in the event that
demand exceeds available funding. Research shows that certain demographic populations, such
as the elderly, disabled, low-income, and non-English speaking populations, need more help with
digital literacy.1118 Accordingly, for example, funding could be prioritized to areas, such as
1115 Id.
1116 See, e.g., Secretary Arne Duncan, Common Sense 2011 White Paper; Using Technology to Transform Schools,
Remarks to the 2010 Association of American Publishers Annual Meeting, Department of Education (Mar. 3, 2010)
(stating, “In the 21st century, students must be fully engaged. This requires the use of technology tools and
resources, involvement with interesting and relevant projects, and learning environments—including online
environments—that are supportive and safe”), available at
http://www2.ed.gov/news/speeches/2010/03/03032010.html; New York City Department of Education Connected
Learning, available at http://schools.nyc.gov/community/innovation/ConnectedLearning/default.htm (offering
digital literacy training in New York City for disadvantaged middle school students and their families); Ten
Elements of High Quality Digital Learning, Digital Learning Now! (Dec. 1, 2010), available at
http://digitallearningnow.com/wp-content/uploads/2011/11/Digital-Learning-Now-Report-FINAL.pdf. But see
Mexican Institute For Greater Houston – Computer Literacy, available at http://www.org/programs/computer-
training (Spanish-language program consists of 100 hours of classroom training taught in 2 weekly 2-3 hour
sessions, which take place largely in K-12 public schools; curriculum consists of training on how to navigate the
Internet; create E-mail accounts; and use Microsoft Word, PowerPoint, and Excel).
1117 See E-rate Community Use Order and NPRM.
1118 See Reply Comments of The United States Internet Industry Association and Netliteracy, GN Dkt. No. 09-51 at
8-11, Illustration #1 (June 8, 2009); see also John B. Horrigan, Closing the Broadband Divide, Pew Internet &
(continued….)
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census tracts, that have more low-income consumers. Should we direct funding to low-income
areas? If so, at what level and based on what criteria? Should we direct funding to entities
serving elderly, disabled, bilingual, Tribal or non-English speaking populations? How would we
verify that these entities serve the targeted population? The census data show that rural areas
generally have higher non-adoption rates than urban areas. Should we establish a rural priority
for the funding if the demand exceeds the amount we ultimately adopt for this program?
432.
On the other hand, if demand does not exceed available funding, should we
consider funding existing programs or entities that have already received funding for digital
literacy training? Should we consider funding programs focused on particular digital literacy
skills, e.g., job searching, e-government services, or financial services? We propose that the
Wireline Competition Bureau provide USAC with detailed criteria and guidelines for
determining which applicants receive funding if the demand exceeds the amount available. We
seek comment on delegating this authority to the Bureau.
433.
Funding Levels and Duration. We seek comment on how to fund digital literacy
training without increasing the overall size of the Universal Service Fund. Could we use funding
reclaimed through savings in one USF program to advance digital literacy, potentially
administered through another program? Could, for instance, digital literacy training be
administered in conjunction with the current E-rate program, but be funded through savings
realized by measures we adopt today to eliminate waste, fraud, and abuse in the Lifeline
program, or by savings realized in high-cost support?1119
434.
Would up to $50 million in annual funding over a four year period appropriately
balance the goal of advancing digital literacy for Americas that lack such skills, such as low-
income consumers, with minimizing the USF contribution burden on consumers and businesses?
Would this level and duration of funding appropriately balance advancing digital literacy for
Americas that lack such skills, such as low-income consumers, with minimizing the USF
contribution burden on consumers and businesses? To aid commenters in addressing the impact
of this amount of funding, we offer an example of how a digital literacy training program could
be structured if libraries and schools were the primary recipients of funding and the program
were administered through E-rate; we also estimate the likely number of libraries and schools
such a program could reach.
435.
Through E-rate, eligible schools and libraries may receive discounts from for
eligible services, including telecommunications services, Internet access, and internal
connections.1120 As noted above, section 254 gives the Commission authority to designate
(Continued from previous page)
American Life Project at 2-3 (Aug. 2007), available at http://www.pewinternet.org/Reports/2007/Closing-the-
Broadband-Divide.aspx; 2010 Broadband Adoption Report at 7.
1119 USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 138, n.221 (noting that Connect America
Fund support declined by carriers “could be held as part of accumulated reserve funds that would help minimize
budget fluctuations in the event the Commission grants some petitions for waiver,” or, in addition or instead, “[t]o
the extent that savings were available from CAF programs, the Commission could reallocate that funding for
broadband adoption programs, consistent with our statutory authority, while still remaining within our budget
target”).
1120 47 C.F.R. §§ 54.502, 54.503, 54.506, 54.517.
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additional services eligible for support through E-rate.1121 The Commission also has determined
that it has the authority to designate services eligible for E-rate support as part of its authority to
enhance access to advanced telecommunications and information services for all public and non-
profit elementary and secondary school classrooms and libraries, to the extent technically
feasible and economically reasonable.1122 If we were to administer support for digital literacy
training through E-rate, we seek comment on designating certain additional services as eligible
for funding for entities that separately apply and are authorized to receive such funding. We also
seek comment on whether we can designate these services as eligible under a different USF
program.
436.
A recent study of libraries shows that there are a number of challenges to
establishing and maintaining a robust digital literacy program, including limited funds to hire
staff, provide training, and acquire the tools and resources to provide digital literacy training to
patrons.1123 Accordingly, we seek comment as to whether any of the following specific services
to advance digital literacy should be added to the Eligible Services List (ESL) as supported
services eligible for E-rate program funding support if digital literacy support were administered
through the E-rate program:
• Labor costs for trainers: dedicated personnel to provide digital literacy training for a
minimum number of hours per week;
• Staff training for the trainers: providing effective in-person digital literacy training
courses, including supporting costs for in-person training, conferences, and online
training;
• Curriculum development: staff time developing curriculum, purchase of training
content for in-person digital literacy classroom courses, one-on-one training, and
online tutorials;
• Software and materials to facilitate in-person digital literacy training;
• Marketing: staff time spent on marketing the training classes, including time spent
developing marketing materials as well as printing and advertising costs;
• Volunteer recruitment: staff time spent on recruiting and training volunteer digital
literacy trainers; and
• Administrative costs: staff time spent administering the program, including
scheduling the classes and reserving rooms.
1121 See 47 U.S.C. § 254(c)(1), (c)(3), (h)(2)(A). Congress charged the Commission with establishing competitively
neutral rules to enhance access to advanced telecommunications and information services for all public and
nonprofit elementary and secondary school classrooms and libraries; and also provided the Commission with the
authority to designate “special” or “additional” services eligible for universal service support for schools and
libraries. 47 U.S.C. § 254 (c)(3), (h)(2).
1122 Universal Service First Report and Order, 12 FCC Rcd at 9008-9015, paras. 436-449; see also 47 U.S.C. §
254(h)(2)(A). We note that in the Universal Service First Report and Order, the Commission concluded that
training costs would not be deemed eligible for E-rate support for several reasons, including that the cost of
supporting training would be prohibitive, the E-rate program should provide funds to as many applicants as possible,
and participation in the program requires a showing that the applicant is ready and able to use the E-rate supported
services. See id. at 9038, 9077, paras. 497, 572.
1123 See Library Tech Study at 24-25, 32-39; see also IMPACT Study.
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In the alternative, if the digital literacy program were administered through the low-income or
the high-cost program, would the costs of these specific services or activities be appropriate to
support and how would the support be disbursed through those existing programs?
437.
We seek comment on whether these are the digital literacy resources that USF
funding should support. Are there other necessary resources that digital literacy training funding
should support? If so, what are they and why are they vital to providing digital literacy training?
438.
We also seek comment on whether and how funding should be allocated across
libraries and schools. Is it reasonable to assume that libraries are better situated to provide
digital literacy training to low-income consumers, and therefore that an allocation of digital
literacy funding such as 80 percent to libraries and 20 percent to schools would be appropriate?
Does this allocation between two groups of eligible entities allow for sufficient funding to
encourage the development of sustainable digital literacy training programs? If not, what would
be a better allocation?
439.
We estimate that approximately $15,000 a year would be sufficient to cover the
cost of approximately eight to 10 hours of digital literacy training per week at one funded
location (e.g., one library or school).1124 If we structured the support to provide up to $10,500 per
library or school per year, requiring that the participant matches this funding by providing an
additional $4,500 per year, each entity would have a total of $15,000 per year to use for digital
literacy training. A program structured in this way could provide funding to nearly 4,800 entities
annually within a $50 million annual budget.1125 We note that providing funding for digital
literacy training to 4,000 libraries could increase the percentage of public libraries that provide
formal digital literacy training from 38 percent to about 60 percent.
440.
We seek comment on this structure and its impact. Would a $15,000 annual
program budget per entity be sufficient to support a digital literacy training program? Would
that level of support allow eligible entities to provide meaningful training programs in the
community? How many low-income non-adopters could be reached with such a digital literacy
training budget? Would ensuring digital literacy training is available in 60 percent of libraries as
well as nearly a thousand schools be sufficient to ensure that all or nearly all low-income
Americans who have not adopted broadband have access to a digital literacy training program?
Should a priority be established for schools and libraries on Tribal lands, which historically have
lagged behind in terms of both infrastructure deployment and subscribership?1126 Is the $10,500
USF/$4,500 entity contribution (i.e., a 30 percent match, equivalent to the 70 percent discount
rate in the E-rate program) a reasonable balance between USF funding and entity contribution, or
would there be a greater impact if we required a smaller match and funded a smaller number of
1124 This estimate is based on a review of the average hourly trainer salary, benefits and administrative costs of
various ongoing digital literacy training programs administered by NTIA.
1125 If the funding were allocated 80% to libraries and 20% to schools, this would provide funding to 3,809 libraries
($40M/$10,500) and 952 schools ($10M/$10,500) annually.
1126 See Native Nations NOI, 26 FCC Rcd 2672, at 2673-74, para. 1 (estimating broadband deployment on Tribal
lands at less than 10 percent). See also id. at 2674, para. 2 (“where Native Nations and their community members
do have access to broadband, studies indicate that their rates of use are on par with, if not higher than, national
averages”) (citing Traci L. Morris Ph.D, Native Public Media and Sascha D. Meinrath, New America Foundation,
NEW MEDIA, TECHNOLOGY AND INDIAN USE IN INDIAN COUNTRY (Nov. 19, 2009).
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entities? Is a $4,500 entity contribution an attainable amount for most libraries and schools? If
not, what would be a reasonable amount? Should the contribution amount be different for
libraries and schools? If so, on what basis and what should the amount be? Should we establish
different discount rates or match requirements for libraries and schools? If so, on what basis and
what should they be? We note that providing a set amount per entity, regardless of poverty level
or urban versus rural location, is different from the way libraries currently receive USF
funding.1127 However, libraries have consistently maintained that the current structure is not
ideal for the way libraries serve their communities.1128 Given the objective of increasing the
number of and access to digital literacy training programs, a funding framework different from
the current USF funding structure could be beneficial. We seek comment on providing a set
discount level for funding all eligible entities.
441.
We seek comment on whether four years is an appropriate length of time to
provide funding for digital literacy training. Should it be longer or shorter? Is four years
sufficient time to improve significantly the digital literacy skills of low-income Americans and
thereby increase broadband adoption? Would funding for a shorter period of time discourage
recipients from hiring permanent staff, fully implementing a digital literacy curriculum, and
providing training? Will there be a continued need for digital literacy funding in the future?
442.
Administrative Structure. We propose that any digital literacy training funding
that might be established be administered through USAC. We anticipate the number of entities
applying for funding to offer digital literacy training could be high, and USAC has the
experience and the resources to process applications and distribute funding. We seek comment
on this proposal. Is an alternative approach to administration preferable, and, if so, why and
what should that approach be?
443.
We seek comment on whether there should be an annual application process,
comparable to the E-rate process, or whether an eligible entity should be authorized to receive
funding for the full four years upon initially satisfying any applicable requirements. Are there
other methods of disbursing support that are more appropriate or more efficient considering the
amount of support for each recipient and the number of anticipated recipients? Could we utilize
another government agency or organization to review applications or distribute the funds to
recipients?1129
444.
If the funding were to be administered as part of E-rate, should we establish a
separate filing window for digital literacy training applications? If a majority of funding is
provided to libraries, would there be less need to tie the funding cycle to the calendar of a typical
school year? Given the idea to provide a set amount of funding per applicant, linked to a
specified number of hours of training per week, there may be less of a need for a competitive
bidding process for eligible recipients to procure the necessary training resources and services.
1127 See E-rate Discount Matrix.
1128 See, e.g., ALA Comments, CC Dkt. No. 10-14 et al. (filed Jul. 9, 2010).
1129 See, e.g., American Library Association Jan. 24 ex parte Letter at 1 (suggesting the FCC seek comment on the
suitability of disbursing Lifeline reform savings to the Institute for Museum and Library Services (IMLS) so that
IMLS “may award grants to promote digital literacy training through public, school and tribal libraries.”)
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Does it generally make sense to apply the E-rate rules to this program? If not, why not? If so,
are there existing E-rate program rules that should not apply?
445.
If digital literacy funding were to be administered as part of another USF
program, what modifications to existing rules for that program rules should be made? Are there
other USF program rules or requirements we should consider waiving or should not apply?
446.
We also seek comment on the content and the format of the application forms.
Should we amend any of our current forms or create new forms only for the purpose of providing
digital literacy training support? What data should be submitted along with the digital literacy
funding application? How would applicants be required to demonstrate they are contributing the
requisite amount of funding? We propose to delegate the development of any new forms to the
Bureau, and we seek comment on this proposal.
447.
What reporting requirements and certifications should be imposed on recipients of
funding, and how would we ensure that the minimum number of hours of training per week are
provided? Should we require recipients to report to the Commission and/or to the public the
number of individuals that receive training, the number of individuals receiving training that go
on to adopt broadband at home, and/or any other metrics? If so, how frequently should such data
be reported? Is there other information that would enable us to monitor the impact of using
universal service funds for this purpose? How often should funding be disbursed – annually,
quarterly, monthly, or some other interval?
C.
Limits on Resale of Lifeline-Supported Services
1.Background
448.Some telecommunications carriers are offering Lifeline-supported services
directly to consumers through resale arrangements with incumbent LECs.1130 Pursuant to section
251(c)(4) of the Communications Act of 1934 (as amended), incumbent LECs have the duty to
offer for resale at wholesale rates any telecommunications service that the carrier provides at
retail to subscribers who are not telecommunications carriers.1131 In 1996, the Commission
concluded that all retail services are subject to this resale obligation.1132 In 1997, in its initial
implementation of section 254, the Commission rejected arguments that all carriers, not just
ETCs, should be able to participate in Lifeline, noting that section 254 allows universal service
support to be provided only to ETCs. It concluded, however, that a large class of companies that
would not be eligible to receive universal service support directly would nonetheless be able to
offer Lifeline-supported service because “resellers could obtain Lifeline service at wholesale
rates that include the Lifeline discount and pass these discounts through to qualifying low-
1130 See 47 U.S.C. § 251(c)(4).
1131 See id.
1132 The Commission concluded there was no reason to limit the resale duty to basic telephone services, and that all
retail services are subject to wholesale rate obligations under section 251(c)(4). See Implementation of the Local
Competition Provisions in the Telecommunications Act of 1996, First Report and Order, CC Dkt. No. 96-98 et al.,
11 FCC Rcd 15499, 15934 (1996) (Local Competition Order).
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income consumers.”1133 In its 2004 Lifeline Report and Order, the Commission required non-
ETCs that provide Lifeline-supported service to eligible consumers through resale arrangements
with the incumbent LECs to comply with all Lifeline/Link Up requirements, including
certification and verification of subscribers.1134
2.
Discussion
449.In the Order adopted today, our goal is to make sure that all providers of Lifeline
service operate under a common set of rules designed to protect consumers and the Fund. We
are very concerned that in today’s marketplace, the current resale arrangements pose risk to the
Fund in two respects.1135 First, in situations where both the wholesaler and the reseller are ETCs,
there is a risk that both the wholesaler and the reseller could seek reimbursement from the Fund
for the same subscriber.1136 Because ETCs submit line counts to USAC for reimbursement
without identifying customer information, there is no way for USAC to determine whether both
the wholesale provider and the ETC-reseller are seeking reimbursement from the Fund for the
same subscriber.
450.
Second, in situations where only the wholesaler is an ETC, allowing non-ETC
resellers to provide Lifeline-supported services to consumers poses a risk to the Fund because
non-ETCs are subject to less oversight to ensure compliance with the Commission’s Lifeline
rules. While our rules require resellers to maintain records sufficient to demonstrate compliance
with Commission rules,1137 it is difficult, as a practical matter, to oversee compliance with our
Lifeline rules in situations where the entity with the retail relationship with the consumer is not
interfacing directly with either USAC or regulators (state or federal). Non-ETC resellers may
lack incentives to comply with a number of the protective measures we adopt in this Order today,
including the measures related to the institution of the duplicates database.1138 In the most
extreme case, carriers that have been denied designation as an ETC or otherwise “red-lighted” as
ineligible to receive Fund support could effectively circumvent those decisions by entering into
resale arrangements with the incumbent LECs under section 251 of the Act.1139
1133 See Universal Service First Report and Order, 12 FCC Rcd at 8972, para. 370; see also id. at paras. 161, 178;
Tracfone Forbearance Order, 20 FCC Rcd at 15100-01, para. 12.
1134 See 2004 Lifeline and Link Up Order and FNPRM, 19 FCC Rcd 8302, 8325.
1135 The discussion in this section is confined to section 251 resale arrangements with incumbent local exchange
carriers for landline service; the questions posed here are confined to such arrangements and are not intended to seek
comment on issues relating to wireless resellers who are ETCs seeking reimbursement directly from the Fund.
1136 Pursuant to section 254(e) of the Act, only ETCs designated by a state commission or this Commission pursuant
to section 214(e) can receive federal universal service support. See 47 U.S.C. § 254(e).
1137 See 47 C.F.R. § 54.417.
1138 For example, we impose a number of new obligations on ETCs including, among other requirements, the
transmission of all subscribers’ information into the National Lifeline Accountability Database and initial and
annual certification requirements. See supra sections VII.A and VI.C.
1139 The “Red Light Rule” is codified at 47 C.F.R. § 1.1910, and provides that anyone filing an application or
seeking a benefit from the Commission or one of its components (including USAC and the Pooling Administrator)
that is delinquent in debt owed to the Commission, will be barred from receiving a license or other benefit until the
delinquency has been resolved. Any entity that files an application or seeks a benefit from the Commission or one
(continued….)
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a.
Limiting Lifeline Support to the ETCs Directly Serving the
Lifeline Customers
Consistent with our obligation to protect the program and reduce waste and abuse
in the Fund, we therefore propose to allow ETCs to receive Lifeline support from the Fund only
when they provide Lifeline service directly to subscribers. ETCs offering services at wholesale
to resellers would no longer be eligible to receive reimbursement from the Fund for such services
when they are resold as Lifeline services directly to end-users by resellers. This means that the
incumbent LEC wholesale provider would not be eligible to seek reimbursement from the Fund
for any low-income subscriber for whom it does not directly provide service. We seek comment
on this proposal. How could such a requirement be implemented? For example, could the
Commission adopt a new Lifeline rule specifying this requirement? Could we define the
supported Lifeline service to be “voice telephony service provided directly to end users,” thus
excluding wholesale services that are used to serve Lifeline customers? If we do not limit
Lifeline support only to ETCs when they provide Lifeline service directly to eligible subscribers,
what other measures could we take to address the potential risks to the Fund?
b.
Re-examining the Scope of the Incumbent LEC Resale
Obligation
Even if incumbent LECs no longer receive support from the Fund when providing
a wholesale service used to serve Lifeline customers, we acknowledge that, as long as the
incumbent LEC continues to offer Lifeline-supported voice telephony service to retail customers,
the section 251(c)(4) resale obligation could be interpreted to require that incumbent LECs offer
their Lifeline-discounted retail voice telephony services for resale “at wholesale rates.”1140 This
result could be avoided, however, if we interpret the statute not to require incumbent LECs to
resell their voice telephony services at a wholesale discount based on their ordinary retail rate
further discounted by the amount of the Lifeline subsidy when resold to carriers seeking to serve
Lifeline customers. Although certain Commission precedent could be read to adopt a contrary
interpretation,1141 we believe that this interpretation of section 251(c)(4) is reasonable here,
especially in light of intervening changes in the marketplace. In interpreting section 251(c)(4) in
the Local Competition Order, the Commission found that “[t]he 1996 Act does not define ‘retail
rate;’ nor is there any indication that Congress considered the issue” and “[i]n view of this
ambiguity” and thus concluded “that ‘retail rate’ should be interpreted in light of the pro-
competitive policies underlying the 1996 Act.”1142 In resolving the ambiguity in “retail rates” in
this context, we believe that section 251(c)(4) might also appropriately be interpreted in light of
(Continued from previous page)
of its components, and is delinquent in debt to the Commission, will be notified of the delinquency and given 30
days to resolve it. Failure to resolve it will result in dismissal of the application or other request for a benefit.
1140 See 47 U.S.C. § 251(c)(4).
1141 See, e.g., Universal Service First Report and Order, 12 FCC Rcd at 8866, 8875, 8972, paras. 161, 178, 370
(discussing reliance on resale to provide Lifeline services); see also Tracfone Forbearance Order, 20 FCC Rcd at
15100-01, para. 12 (same); Local Competition Order, 11 FCC Rcd 15499, 15975, para. 962 (1996) (“We also
conclude that section 251(c)(4)(B) allows states to make similar prohibitions on the resale of Lifeline or any other
means-tested service offering to end users not eligible to subscribe to such service offerings.”).
1142 Local Competition Order, 11 FCC Rcd 15499 at 15970, para. 949.
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certain universal service policies. In particular, we believe that section 251(c)(4) could be
interpreted in light of the goals of section 254, including avoiding waste, fraud, and abuse of
universal service, and section 214(e), which anticipates that universal service support will be
flowing to ETCs that meet certain criteria, including that they will not be providing service
solely using resale.1143 Balancing the pro-competitive goals of the Act with these universal
service-specific considerations, we believe that we could conclude that the “retail rate” in this
context is the rate for the incumbent LEC’s voice telephony service before applying the Lifeline
discount. In the case of such resold services, only an ETC-reseller that has the direct relationship
with the end-user could apply for and obtain subsidies from the Fund.1144 Consequently, this
approach would retain section 251(c)(4) resale as a competitive option in the case of ETCs
serving Lifeline customers, which can get wholesale-priced service for resale plus direct Lifeline
support from the Fund, while protecting against waste, fraud, and abuse under section 254 and
remaining consistent with the framework of section 214(e). We seek comment on that
interpretation of section 251(c)(4), as well as other approaches that would achieve the statutory
and regulatory goals of universal service. For example, could the Commission achieve a similar
result through the interpretation of the phrase “other costs that will be avoided by the [LEC]” in
the resale pricing standard in section 252(d)(3)?1145
453.
As an alternative to that statutory interpretation, we seek comment on whether we
could relieve incumbent LECs of any section 251(c)(4) obligations they may have to resell
Lifeline-discounted services by forbearing, on our own motion, from applying those obligations
to the resale of Lifeline-discounted services.1146 We seek comment on our analysis for each of
the criteria for forbearance set forth in section 10(a). We also seek further comment on the
competitive effect if the Commission were to forbear from the resale requirement of section
251(c)(4) as it applies to Lifeline-discounted services sold to non-ETC providers.
1143 See generally 47 U.S.C. §§ 214(e), 254.
1144 Non-ETC resellers are precluded from obtaining subsidies directly from the Fund for their provision of service
to Lifeline eligible subscribers. See 47 U.S.C. §214(e).
1145 See 47 U.S.C. § 252(d)(3).
1146 Section 10 of the Act requires the Commission to forbear from any statutory provision or regulation if it
determines that: (1) enforcement of the regulation is not necessary to ensure that the telecommunications carrier’s
charges, practices, classifications, or regulations are just, reasonable, and not unjustly or unreasonably
discriminatory; (2) enforcement of the regulation is not necessary to protect consumers; and (3) forbearance from
applying such provision or regulation is consistent with the public interest. See 47 U.S.C. § 160. In making a
forbearance determination regarding the public interest, the Commission must also consider “whether forbearance
from enforcing the provision or regulation will promote competitive market conditions, including the extent to
which forbearance will promote competition among providers of telecommunications services.” Id. We note that
section 10(d) provides that the Commission may not forbear from applying the requirements of section 251(c) unless
it determines that those requirements are “fully implemented.” See id. § 160(d). In the Qwest Omaha Forbearance
Order, the Commission determined that, for purposes of section 10(d), the requirements of section 251(c) are fully
implemented nationwide and may be forborne from. See Petition of Qwest Corporation for Forbearance Pursuant
to 47 U.S.C. § 160(c) in the Omaha Metropolitan Statistical Area, WC Dkt. No. 04-223, Memorandum and Order,
20 FCC Rcd 19415, 19439-42, paras. 51-56 (2005). The D.C. Circuit affirmed the Commission’s interpretation, see
Qwest Corp. v. FCC, 482 F.3d 471, 477-79 (2007).
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454.
Just and Reasonable. Under section 10(a)(1) of the Act, we must consider
whether enforcement of a section 251(c)(4) duty to offer Lifeline-discounted services at
wholesale rates is necessary to ensure that the charges, practices, classifications, or regulations
are just and reasonable and not unjustly or unreasonably discriminatory.1147 Requiring incumbent
LECs to offer for resale Lifeline-discounted services at wholesale rates may not be necessary to
ensure that the charges, practices, classifications, and regulations for Lifeline service are just and
reasonable, because low-income consumers would still be able to receive Lifeline-supported
services from other providers. Would eliminating this resale requirement be unjustly or
unreasonably discriminatory against non-ETCs—which could not compete to offer Lifeline
services because they would not be eligible to obtain such support directly from the Fund—given
the intent in the Act that only ETCs be eligible to offer Lifeline-supported services?1148
455.
Consumer Protection. Section 10(a)(2) requires the Commission to consider
whether requiring incumbent LECs to offer Lifeline-supported services at wholesale under
section 251(c)(4) is necessary to protect consumers. Imposing this aspect of a resale requirement
may not be necessary for the protection of consumers as they will continue to have access to
Lifeline-supported services from numerous providers, including competitive ETCs that resell
voice telephony services and receive Lifeline support directly from the Fund.
456.
Public Interest. Section 10(a)(3) requires that we consider whether enforcement
of a section 251(c)(4) resale requirement for Lifeline-discounted services is in the public interest.
The Commission has made clear its ongoing commitment to fight waste, fraud, and abuse in the
Lifeline program. Restricting Lifeline support to resellers that also are ETCs, thereby limiting
reimbursements to only those entities that have a direct reporting requirement to the Commission
and USAC, should function to prevent waste, fraud, and abuse of the program, which is in the
public interest. Section 10(b) requires that the analysis under section 10(a)(3) include
consideration of whether forbearance would promote competitive market conditions. Although
we do not believe that forbearance will necessarily increase competition in the market for
Lifeline services, given the number of Lifeline providers currently in the market and ongoing
efforts to market and make available Lifeline services, commenters should address whether the
proposed forbearance will in any way harm the already-competitive Lifeline services market.
We seek comment on this analysis.
457.
We seek comment on whether there are any policy concerns with the Commission
precluding the flow-through of Lifeline support to resellers, whether through statutory
interpretation or limited forbearance, and instead providing such support only directly to the ETC
serving the Lifeline customer. If so, what other ways exist to achieve the intended objective of
preventing waste, fraud, and abuse of the Fund and ensuring Commission rules regarding the
provision of Lifeline services are being followed by all Lifeline service providers? For example,
if the Commission does not interpret the statute or forbear as described above, what, if any,
1147 See 47 U.S.C. §160(a)(1); 47 U.S.C. §251(c)(4); see also CTIA v. FCC, 330 F.3d 502, 512 (D.C. Cir. 2003)
(finding reasonable the Commission’s view that the term “necessary” means that there is a strong connection
between the requirement and its regulatory goal).
1148 See 47 U.S.C. § 214(e)(1)(A). Although non-ETC resellers currently do not receive reimbursement directly
from the Fund, they do receive a benefit from the Fund in the form of a discounted wholesale price that effectively
passes the Lifeline subsidy through to the reseller.
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additional recordkeeping, reporting, or other measures should be imposed to ensure that the
Lifeline rules and requirements are being followed by the resellers?
c.
Implementation Issues
458.We seek comment on how best to implement these changes if we were to adopt
them. Would limiting Lifeline funding to ETCs directly serving the Lifeline customers, coupled
with either of the alternatives to protecting against an unfunded incumbent LEC resale
obligation, harm any existing Lifeline subscribers? We seek input on how we could ensure
continuity of service to current subscribers of Lifeline resold service. Resellers are free to take
steps, consistent with statutory requirements, to become ETCs and, therefore, continue to resell
Lifeline services. Should we defer the implementation date of any rules for a limited time to
provide sufficient time for existing non-ETC resellers to obtain ETC designation, and if so, what
time period would be appropriate? If non-ETC resellers do not choose to apply for, or do not
obtain, ETC designation, how should their subscribers be handled? Alternatively, should
existing resold lines be grandfathered? If so, how can the Commission ensure that the non-ETC
resellers offering such services to Lifeline subscribers are complying with the Commission’s
rules?
459.
We also seek comment on the extent to which incumbent LEC Lifeline services
today are tariffed offerings that include a discount for the Lifeline subsidy as part of the
wholesale price in the tariff. Under the proposed alternatives, would incumbent LECs need to
amend such tariffs to separate the amount of the Lifeline subsidy from the wholesale price of the
underlying service that is being resold, and could they do so consistent with federal and state
regulations? We also seek comment on how a rule that restricts reimbursement from the Fund to
ETCs providing Lifeline directly to end-users would impact existing contractual arrangements,
including interconnection agreements, that may exist between incumbent LECs and resellers.
Should we provide some period of transition before such a rule would become effective to allow
parties to renegotiate or terminate such agreements? Are there any other actions the Commission
should take with respect to such agreements under either of the approaches discussed here?
460.
We seek comment on procedures that could be implemented to provide assurance
that ETCs are not seeking reimbursement for their wholesale service offerings. For instance,
should wholesale carriers be required to certify that they are not seeking reimbursement for
resold services when they submit line counts to USAC? Should incumbent LECs and other
wholesalers be required to maintain records of their resold lines for purposes of annual self-
certification to USAC and any audit requirements?
461.
The Order requires ETCs to populate a database with Lifeline subscriber
information to ensure that duplicate services are not awarded to qualifying individuals.1149 In the
case of resold services, the carrier that is providing Lifeline service directly to the low-income
consumer is in the best position to obtain the necessary information. We propose requiring that
the Lifeline service provider with the direct relationship to the end-user be responsible for
entering all pertinent information into the database as described in today’s Order. In the
alternative, we propose that the Lifeline resellers be required to provide the information,
including subscribers’ names and service addresses, to the Lifeline wholesaler, which then would
1149 Supra Order at paras. 182-208.
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be responsible for entering that information into the database. Regardless of which party is
required to populate the database, we also seek comment on methods to ensure that resellers are
adhering to the requirement to not enroll existing subscribers. We also seek comment on which
entity, the incumbent LEC wholesaler or the ETC-reseller, will be responsible for obtaining
annual subscriber certifications and who will de-enroll ineligible subscribers pursuant to the rules
we adopt in this Order.
D.
Lifeline Support Amount for Voice Service
462.In the Order, we adopted on an interim basis a uniform reimbursement amount of
$9.25 in monthly Lifeline support for voice service.1150 In this FNPRM, we seek to further
develop the record on what a modernized Lifeline support amount should be, including the
appropriate structure of support (e.g., whether it should be uniform or vary in some way) and
how the level or levels of support should be determined. We are seeking to determine the optimal
level of Lifeline discount that will help us accomplish our goals.1151
463.
First, we seek comment on whether to continue with a flat rate of reimbursement.
We note that a uniform Lifeline support level is administratively simple and unlikely to
significantly distort the aims of the Lifeline program in any specific cases. While prices do vary
somewhat from place to place, reflecting market conditions such as underlying costs and the
nature and extent of competition, we are aware that many regional and national carriers set
relatively uniform prices across a wide geographic area.1152 Are there other approaches, such as
one based on the price of the lowest-priced available offering in a particular geographic area, that
the Commission should consider instead of a flat rate of reimbursement? Should the
Commission provide support for any non-recurring up-front charges associated with the
provision of the service?
464.
We also seek comment on how we should determine the size of the support
amount for voice service. In the attached Order, we adopt a pilot program to test the impact of
different support amounts on broadband penetration rates. In the voice context, however, we
could potentially develop an estimate of the impact of different support amounts on voice service
penetration based on data from the existing program.
465.
For example, we could estimate low-income consumers’ demand response to
price, and hence estimate the subsidy levels that would achieve our goals. To do this we would
need demand data – both price and quantity information – from the Lifeline program, including
data from the enhanced Lifeline program on Tribal lands. Because Lifeline is a subsidy, “price”
means both the actual price paid by consumers for Lifeline service and the effective price
received by ETCs. These two prices differ by the support amount, currently set at $9.25, or up to
$34.25 on Tribal lands. In this case, “quantity” means the number of lines of a given quality
obtained for a given price. Because the quality of service may differ from one observation to the
next, information on service characteristics (i.e., wireline or wireless, number of minutes, value-
1150 Id. at para. 53.
1151 Id. at paras. 24-43.
1152 We note that one commenter suggests that a flat rate be based upon the “costs incurred by the least cost provider
for a given area.” Ohio PUC Comments at 26.
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added services, etc.) would also be needed. Ideally, this price and quantity information would be
obtained at the level of the Lifeline household. The more specific information available to us,
the better we could estimate demand for Lifeline-supported service, which would in turn help us
determine the optimal amount for the Lifeline discount. While a cross-section of households (or
study areas or states) may be sufficient for demand estimation, the more aggregated the data set
is, the more statistical fluctuation may be introduced into the estimate. Ideally, we would test
data over a period of time.
466.
We seek comment on the best method to determine the optimal support amount.
Should we require ETCs providing Lifeline service to submit the data described above to USAC
as part of the reimbursement process? Should this data be submitted directly to the
Commission? Or is there a less burdensome way to obtain the necessary information?
467.
In the alternative, could we rely on commenters’ estimates of the impact – on both
voice penetration and the Fund – of support amounts above or below the $9.25 or up to $34.25
on Tribal lands, adopted on an interim basis in the attached Order? For us to do so, commenters
would need to provide specific credible evidence in support of their positions. If they believe
that a lower rate would be sufficient to meet our program goals, they would need to provide
estimates of the expected savings obtained from a lower rate, and also of the expected impact on
penetration by low-income consumers, including low-income consumers on Tribal lands.
Conversely, if commenters believe a higher rate would have a material impact on achievement of
our goals for the program, they should describe with specificity how such a higher rate would
affect penetration rates for the targeted low-income population as well as the associated costs it
would impose on the Fund.
468.
We seek comment on whether support amount for voice should be uniform across
all providers or whether there should be different amounts for fixed v. mobile voice? Should the
support amount take into account varying business models for delivering the supported voice
telephony service, or the relative value that consumers may place on different types of service
offerings? Should support be provided on a monthly basis to those ETCs that do not charge for
service on a monthly basis?
469.
We seek comment on whether the support levels could in the future be linked to a
communications price index? If so, how often should it be updated?
470.
Finally, we seek additional comment on issues related to the one-per-household
rule adopted in the Order. We ask whether the flat rate discount amount should be provided in a
way that would provide support for multiple services within a household. For example, should a
household be able to split the Lifeline discount across two or more lines? Should a household be
able to use the discount for both a wireless and a wireline service?
471.
Some commenters propose that the Commission make additional support
available within a household. For example, T-Mobile argues that the Commission should permit
households receiving one Lifeline-supported service to obtain a second supported service at 50
percent of the Lifeline support level (e.g., 50 percent of $9.25, or $4.60).1153 We seek comment
1153 See T-Mobile Dec. 16 ex parte Letter, at 4 (stating that a reduced Lifeline subsidy should be available for
second (and subsequent, if applicable) household members, in recognition that wireless carriers generally offer
family plans with lower rates for additional connections); SBI Jan. 23 ex parte, at 2 (stating that the Commission
(continued….)
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on this proposal. First, how would such a rule be enforced? Would the extra support be
available only to the ETC already serving the household, or could the discount be split between
two ETCs? How could such a rule be applied to the purchase of a wireline connection and a
wireless phone for a household, as opposed to a wireless family shared calling plan? If such a
rule were adopted, how should the Commission determine an appropriate per-household support
amount, or should the total support amount be one and a half times the standard support amount
as T-Mobile proposed?
472.
In the Lifeline and Link Up Public Notice, we sought comment on the costs
associated with providing one Lifeline-supported service per eligible resident of Tribal lands.1154
We seek to refresh the record on this issue. Commenters are encouraged to provide written
analysis to support their recommendations.
473.
Should a household be able to allocate the set discount amount between both
voice service and broadband service? Finally, should the support amount for voice service be
reduced over time to the extent voice becomes an application that is available at no or minimal
charge over a broadband connection?1155 If so, how should the support amount be adjusted for
areas in which broadband is not available?
E.
Tribal Lands Lifeline and Link Up Support
474.Tribal Lands Lifeline Support. In the 2000 Tribal Lifeline Order, the
Commission adopted several measures to enhance Lifeline support for low-income residents
living on Tribal lands.1156 One such measure was the adoption of enhanced low-income support,
now known as Tribal Lands support, for eligible residents of Tribal lands.1157 Tribal Lands
Lifeline support provides up to an additional $25 per month in support to eligible low-income
consumers living on Tribal lands.1158 In the Lifeline and Link Up NPRM, the Commission sought
comment on whether the Tribal Lands support amount remains a reasonable additional
reimbursement rate for consumers receiving enhanced Tribal support.1159
475.
In the Order above, we codified a rule limiting Lifeline support to a single
subscription per household.1160 We concluded that a one-per-household rule is a reasonable way
(Continued from previous page)
could provide an additional ten dollars of Lifeline support to enable households to afford wireless family plans
which share minutes).
1154 See Lifeline and Link Up Public Notice, 26 FCC Rcd at 11103, para. 2(c).
1155 Supra section III (Performance Goals and Measures).
1156 See 2000 Tribal Lifeline Order, 15 FCC Rcd at 12231-32, paras. 20-85. See also supra discussion at section
VI.D (Tribal Lifeline Eligibility).
1157 2000 Tribal Lifeline Order, 15 FCC Rcd at 12230-31, 12238-39, paras. 42, 59.
1158 Tribal Lands Link Up support provides up to an additional $70 in support to eligible low-income consumers
living on Tribal lands.
1159 Lifeline and Link Up NPRM, 26 FCC Rcd at 2847, para. 250.
1160 Order at para. 74. We further defined “household” in a manner consistent with the definition used in the Low-
Income Home Energy Assistance Program, as “any individual or group of individuals who are living together at the
(continued….)
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to ensure that voice and broadband service are available to low-income consumers, while
minimizing the contribution burden on consumers and businesses.1161 Thus, eligible residents of
Tribal lands may currently receive one Tribal Lands-supported service per household. However,
as noted in the Order, some commenters responding to the Lifeline and Link Up NPRM suggest
that the Commission adopt a less restrictive “one-per-person rule” applicable only to eligible
residents of Tribal lands.1162
476.
We seek comment on whether to adopt a rule permitting eligible residents of
Tribal lands to apply their allotted Tribal Lands discount amount to more than one supported
service per household. Under such a rule, ETCs would have the flexibility to permit their
consumers to apply their discount to multiple services, up to the maximum allowable discount
amount. For example, should a household receiving a $34 Lifeline discount per month be
permitted to “split” the discount between a wireline and a mobile phone service (e.g., the
household could receive a $17 discount off of the cost of each service) or between two mobile
services? Should eligible households on Tribal lands also be permitted to apply Link Up to
reduce the connection or activation costs for multiple services? Are there other areas of the
country that are similarly situated to Tribal lands such that subscribers in those areas should be
permitted to apply their allotted Lifeline discount amount to more than one supported service per
household?1163
477.
We also seek comment on how such a rule could be administered. Should eligible
households on Tribal lands be permitted to obtain supported services from more than one ETC,
or should low-income support be limited to one ETC per household? What changes, if any,
would need to be made to sections 54.403 and 54.407 of the Lifeline rules, as amended today, if
multiple ETCs are permitted to seek support for the same household on Tribal lands? What steps
could the Commission take to prevent improper payments in that scenario? Additionally, how
could the Commission and the Administrator ensure compliance with the Commission’s
reimbursement rules?1164
478.
In the Order above, we remove section 54.403(a)(4)(i) of the Commission’s
current rules, which required that the basic local residential rate for Tribal Lands subscribers not
fall below $1 per month.1165 Thus, Tribal lands Lifeline support will be available to an ETC
providing service to an eligible household on Tribal lands regardless of whether that amount
brings the rate for voice telephony service below $1 per month per qualifying low-income
(Continued from previous page)
same address as one economic unit.” Id. We also defined an “economic unit” for the purposes of this rule as “all
adult individuals contributing to and/or sharing in the income and expenses of a household.” Id.
1161 Id. at para. 82; see supra Order at section III.C.
1162 Order at para. 81 (citing SBI Comments at 9-10; SBI Nov. 23 ex parte; GCI Dec. 6 ex parte).
1163 See, e.g., PR Wireless Jan. 24 ex parte Letter at 5.
1164 See Order at Appendix A, 47 C.F.R. §§ 54.407, 54.413 (adopted rules).
1165 See Order at para. 270.
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household.1166 We seek comment on what precautions we could implement to prevent waste,
fraud, and abuse in this situation.
479.
Enhanced Link Up Support on Tribal Lands. In the Order, we eliminate Link Up
support, except for those ETCs receiving high-cost support on Tribal lands. In this FNPRM, we
seek comment on whether the Link Up program for residents of Tribal lands as currently
implemented is the most effective way to use these funds, or whether we should alter or
eliminate Link Up support for Tribal lands.
480.
As the Commission has previously observed, Tribal lands have significant
communications deployment and access challenges.1167 In the past, the Commission has targeted
additional universal service support for residents of Tribal lands in a variety of ways, including
by providing enhanced Lifeline and expanded Link Up support and by exempting competitive
ETCs serving Tribal lands from the interim cap on competitive ETC support the Commission
adopted in 2008. Under the exemption from the interim cap, high-cost support to competitive
ETCs for Tribal lands more than doubled between 2008 and 2011, to an estimated $150 million,
while support for other parts of the nation was frozen. While significant strides have been made
with this funding, including bringing new services to many Tribal lands, more remains to be
done. The Commission remains committed to continuing to expand access to advanced
telecommunications services on Tribal lands.
481.
In the recent USF/ICC Transformation Order and FNPRM, the Commission
adopted comprehensive reforms to the high-cost support program. Those reforms will make
more efficient use of limited federal universal service resources and ensure that carriers
accepting funding are accountable for meeting clearly defined universal service obligations,
including buildout obligations. The Commission’s reforms will expand access to both wireline
and wireless services in high-cost, difficult-to-serve areas across the nation—both Tribal and
non-Tribal. In addition, the Commission took several steps specifically targeted to facilitate
deployment and improve access on Tribal lands. First, the Commission’s Mobility Fund I,
which allocates $300 million in one-time support to fund deployment of 3G or better mobile
services where no 3G service currently exists, provides for a 25 percent bidding credit for
Tribally owned or controlled carriers that seek to provide service on their own Tribal lands.1168
In addition, the Commission established the Tribal Mobility Fund I, which allocates $50 million
in one-time support for advanced mobile services on Tribal lands where no such services
currently exist. The Commission also created Mobility Fund II, which will provide $500 million
in ongoing support for wireless service. While the details of that support mechanism are the
subject of a further notice of proposed rulemaking, the Commission has stated that it anticipates
that up to $100 million annually will be reserved exclusively for Tribal lands. In addition, the
Commission budgeted at least $100 million per year for the new Remote Areas Fund to support
affordable access to broadband and voice service, including through the use of alternative
technologies, in areas in the nation that are most costly to serve.
1166 See id.
1167 See generally Native Nations NOI, 26 FCC Rcd 2672; see, e.g.,USF/ICC Transformation Order and FNPRM,
FCC 11-161 at paras. 479-88 (discussing the Tribal Mobility Fund Phase I).
1168 USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 490.
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482.
These comprehensive reforms to the high-cost program will efficiently target
support for voice and broadband service both in the nation generally and on Tribal lands
specifically. In light of those reforms, and the reforms we make to the program in this Order, we
seek comment on whether the Link Up program for Tribal lands should be modified or
eliminated. In this context, we note that when the Commission first established the enhanced
Link Up program for Tribal lands, it observed that doing so would create incentives for carriers
to construct facilities where none existed.1169 Today, enhanced Link Up could support multiple
providers extending facilities in the same geographic area (to the extent that there is a business
case for multiple providers to serve Tribal lands), which is inconsistent with our overall
framework of not providing support to multiple providers. We seek comment on whether
enhanced Link Up support for Tribal lands remains necessary given the recent reforms in high-
cost support. We also seek comment on the benefits of enhanced Link Up support and the
impact of elimination of that benefit for low-income consumers living on Tribal lands. We
further seek comment on ways any savings might be used to more efficiently serve the purposes
of the program, the specific needs of low-income consumers on Tribal lands, or both.
F.
Adding Women, Infants, and Children Program to the Eligibility Criteria
483.Lifeline currently permits consumers to qualify for a Lifeline supported service if
the consumer participates in one of several federal or Tribal assistance programs.1170 Several
commenters suggest that we add the Special Supplemental Nutrition Assistance Program for
Women, Infants, and Children (WIC) administered by the Department of Agriculture to the list
of qualifying federal assistance programs for Lifeline.1171 We seek comment on whether adding
WIC to the eligibility criteria will advance our goal of ensuring universal availability of phone
service to low-income consumers.1172
484.
The WIC program was “established to counteract the negative effects of poverty
on prenatal and pediatric health and provides a combination of direct nutritional
supplementation, nutrition education and counseling, and increased access to health care and
social service providers for pregnant, breastfeeding, and postpartum women; infants; and
1169 2000 Tribal Lifeline Order.
1170 See 47 C.F.R. § 54.409. Currently, participation in any of several federal assistance programs qualifies
participants for Lifeline. These programs are Medicaid; Supplemental Nutrition Assistance Program (Food Stamps);
Supplemental Security Income; Federal Public Housing Assistance (Section 8); Low-Income Home Energy
Assistance Program; National School Lunch Program's free lunch program; and Temporary Assistance for Needy
Families (TANF). In addition to these programs, participation in Bureau of Indian Affairs General Assistance,
Tribally administered TANF, or Head Start (only those meeting its income standard), qualifies participants living on
Tribal lands for Lifeline.
1171 See Letter of Debra Whitford, Supplemental Food Programs Division, to Marlene H. Dortch, Federal
Communications Commission, WC Dkt. No. 11-42 (filed Aug. 17, 2011) (Aug. 17 WIC ex parte Letter); YourTel
Comments at 11; Media Action Grassroots Network and Consumers Union Reply Comments at 12; Letter from
Geraldine Henchy, Director, Food and Research Action Center, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 (filed Sept. 2, 2011) (Food and Research Action Center Sept. 2
ex parte Letter); LCCHR Comments at 9.
1172 One commenter states that WIC participants are “particularly likely to benefit from discounted telephone
services…; families with young children require extensive connection to the community, whether it be pediatricians,
child care providers or schools.” Media Action Grassroots Network and Consumers Union Reply Comments at 12.
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children up to the age of five years.”1173 As such, it functions as a complement to the National
School Lunch Program’s Free Lunch Program, a qualifying program for Lifeline that provides
nutritional assistance to low-income, at-risk, children enrolled in school.1174 To qualify for WIC,
applicants must meet four requirements:1175 categorical,1176 residential,1177 income,1178 and
nutrition risk.1179 WIC is offered in all states, and over 35 percent of WIC participants do not
participate in another federal assistance program.1180 One commenter estimates that more than
two-thirds of WIC participants are at or below the federal poverty line, though we note that such
WIC participants are already eligible for Lifeline through the income eligibility standard1181
485.
We seek comment on whether adding WIC to the list of programs that
automatically confers Lifeline eligibility would advance our universal service goals. Is
expansion of program eligibility to households participating in WIC necessary given the multiple
assistance programs and income-eligibility standard that already confer Lifeline eligibility?
Would there be any administrative complexities given that WIC benefits are also available to
infants and children? Would the Lifeline benefit, as with the National School Lunch Free Lunch
Program eligibility criterion, attach to the household? How many households that are not
eligible today would qualify if we were to allow participation based on WIC? Could WIC clinics
potentially be a partner of ETCs in outreach to low-income consumers?1182 Would WIC clinics
be willing to do this? If so, how would such a partnership work? What would be the monetary
1173 See Aug. 17 WIC ex parte Letter, at Attach.
1174 See 7 C.F.R. § 210.1; 7 C.F.R. § 245.3.
1175 See Food and Nutrition Service, WIC Eligibility Requirements, available at
http://www.fns.usda.gov/wic/howtoapply/eligibilityrequirements.htm (last visited Feb. 5, 2012).
1176 To meet the categorical criterion for WIC, an individual must be: a woman who is pregnant (during pregnancy
and up to 6 weeks after the birth of an infant or the end of the pregnancy), postpartum (up to six months after the
birth of the infant or the end of the pregnancy), or breastfeeding (up to the infant’s first birthday); an infant; or a
child (up until the child’s fifth birthday). See id.
1177 Applicants must live in the state in which they apply for WIC benefits in order to meet the residential eligibility
criterion. See id.
1178 WIC applicants must also meet an income standard as established by the state agency administering WIC. This
income standard must be between 100 percent of the Federal Poverty Guidelines and 185 percent of the Federal
Poverty Guidelines and varies by state. Applicants automatically meet the income criterion through participation in
certain programs, including SNAP, Medicaid, and Temporary Assistance for Needy Families. At the state agency’s
option, applicants who are eligible to participate in certain other State-administered programs may be granted
automatic income eligibility. See id.
1179 To meet the nutritional risk criterion, applicants must be seen by a health professional such as a physician,
nurse, or nutritionist who must determine whether the individual is at nutrition risk. “Nutrition risk” means that an
individual has medical-based or dietary-based conditions. See id.
1180 See id; Media Action Grassroots Network and Consumers Union Reply Comments at 12; Aug. 17 WIC ex parte
Letter.
1181 Food and Research Action Center Sept. 2 ex parte letter.
1182 WIC requires participant interaction with caregivers on a regular basis. See id.
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impact of potential inclusion of WIC as an eligibility criterion? Finally, given the temporary
nature of WIC participation, should there be additional verification requirements?1183
G.
Establishing Eligibility for Homeless Veterans
486.The Department of Veterans Affairs (VA) has a number of programs designed to
assist homeless veterans and veterans at risk of homelessness.1184 The Veterans Benefits
Administration-Veterans Health Administration Special Outreach and Benefits Assistance
program consists of “outreach, benefits counseling, referral, and additional assistance to eligible
veterans.”1185 The program has homeless veterans coordinators spread out nationally who work
with homeless veterans.1186 The Healthcare for Homeless Veterans program identifies homeless
veterans to the VA for eligibility determinations and then connects the veterans to assistance
programs.1187
487.
The Veterans Homeless Initiative Office, a division of VA, suggested that we
include homeless veterans programs as qualifying eligibility criteria.1188 Our rules for
demonstrating income eligibility require the subscriber to provide documentation such as an
income tax return or current income statement from an employer to establish income is at or
below 135 percent of the Federal Poverty Guidelines. The rule does not address, however,
situations in which the consumer has no income at all, and therefore lacks any such
documentation. We seek comment on measures that would enable veterans who lack any
income, but are not otherwise enrolled in a qualifying program, to demonstrate eligibility for
Lifeline. For instance, should a low-income consumer that lacks any income be permitted to
sign a certification under penalty of perjury that he or she has no income, with some form of
additional certification from an authorized VA official, such as an outreach worker or program
coordinator, that the person in question is a homeless veteran or at risk of becoming homeless?
Given the unique difficulties in verifying transient and homeless Lifeline consumers' eligibility,
are there any additional measures that should be implemented in situations where an eligible
veteran has no documentation of income eligibility to minimize waste, fraud, and abuse while
ensuring Lifeline access?
H.
Mandatory Application of Lifeline Discount to Bundled Service Offerings
488.In the above Order, we amend sections 54.401 and 54.403 of the Commission’s
rules to adopt a federal policy providing all ETCs (whether designated by a state or this
Commission) the flexibility to permit Lifeline subscribers to apply their Lifeline discount to
1183 See 47 C.F.R. § 54.409(d)(3). Our rules already require Lifeline participants to notify their carrier if they cease
to participate in the qualifying program conferring Lifeline eligibility.
1184 Department of Veterans Affairs, Homeless Programs & Initiatives, available at
http://www.va.gov/homeless/programs.asp.
1185 Id.
1186 Id.
1187 Department of Veterans Affairs, HCHV Frequently Asked Questions, available at
http://www.va.gov/HOMELESS/HCHV_Frequently_Asked_Questions.asp.
1188 Letter from C.Q. Tillery, VA Homeless Veterans Initiative Office, to Marlene Dortch, WC Dkt. No. 11-42 (filed
Jan. 30, 2012).
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bundled service packages or packages containing optional calling features available to Lifeline
consumers.1189 Giving ETCs the flexibility to offer expanded service packages to Lifeline
consumers will enhance consumer choice by making broadband and mobile voice services more
accessible and affordable for low-income consumers.1190
489.
In the Lifeline and Link Up NPRM, the Commission also sought comment on
amending the Commission’s rules to adopt a uniform federal requirement that Lifeline discounts
may be used on any Lifeline calling plan offered by an ETC with a voice component, including
bundled service packaging combining voice and broadband, or packages containing optional
calling features.1191 Some argued that by requiring ETCs to permit eligible low-income
consumers to apply their Lifeline discount to the purchase of expanded service offerings,
particularly packages that include broadband, the Commission will help make broadband
available to consumers who may otherwise be underserved.1192 Others argued that the
Commission should not interfere with the products offered by ETCs and should allow the market
to resolve this issue.1193 Certain ETCs argued that requiring such ETCs to offer these added
features as part of their Lifeline service offerings could upset their respective business
models.1194
490.
Several states, including Oregon, Texas, and Kansas, have enacted rules requiring
ETCs to offer Lifeline discounts on all voice service offerings, including expanded service
plans.1195 We now seek comment on whether to further revise our rules to require ETCs to
permit subscribers to apply their Lifeline discount on any bundle that includes a voice
component.1196 Would a uniform federal requirement mandating that ETCs permit Lifeline
subscribers to apply their discount on any service offering that includes voice further the
statutory principle that consumers have access to quality services at “just, reasonable, and
1189 Order at para. 316. Pursuant to this rule, each subscriber’s Lifeline discount can be no larger than if he or she
chose a basic voice plan. Id. at para. 315.
1190 Id. at para. 317.
1191 Lifeline and Link Up NPRM, 26 FCC Rcd at 2850, para. 258.
1192 See, e.g., NATOA Comments at 2-3; NJ DRC Comments at 24; NASUCA Comments at 29-30. In the Order,
we adopted a program performance goal of ensuring the availability of broadband service for low-income
Americans. See Order at paras. 33-36. A uniform federal policy requiring that ETCs permit Lifeline consumers to
apply their discount to the service plan of their choice could help us to more effectively achieve this goal.
1193 See, e.g., Letter from Mitchell F. Brecher, Counsel, TracFone, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Dkt. No. 11-42 et al., at 1-2 (filed Nov. 14, 2011) (TracFone Nov. 14 ex parte
Letter).
1195 Or. Admin. R. 860-033-0010 (2009); Tex. Admin. Code tit. 16, § 26.412(e)(6)-(7); see also Petition of Sprint
Spectrum L.P. for a Declaratory Ruling that the Kansas Corporation Commission’s October 2, 2006 Order in Dkt.
06-GIMT-446-GIT, Violates Federal Law, WC Dkt. No. 03-109 et al., (filed June 8, 2007) (challenging an order of
the Corporation Commission of the State of Kansas, which modified the state’s Lifeline rules to require that ETCs
allow Lifeline customers to choose a calling plan and apply the Lifeline discount to the plan selected by the
customer).
1196 ETCs would apply federal Lifeline support to reduce the cost of any voice calling plan or package selected by an
eligible consumer. See Appendix A, 47 C.F.R. § 54.401(b) (adopted rule).
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affordable rates” because it would make bundled offerings more affordable to low-income
consumers?1197
491.
We seek further comment on and information about current ETC practices. In
states that do not mandate use of a discount on any offering, to what extent do ETCs currently
offer Lifeline discounts on plans that include bundles of services or optional calling features? If
so, what services are Lifeline consumers permitted to purchase? We also seek comment on the
extent to which specific states mandate that ETCs allow the application of Lifeline discounts to
expanded service plans. Where available, commenters are encouraged to submit supporting
documentation of ETC or state practices along with any written submissions.
492.
We also seek comment on the potential benefits and costs of such a requirement.
For example, would such a requirement stimulate broadband adoption by low-income
individuals? Is there any evidence that voice telephone penetration rates have been positively
impacted by state requirements mandating the extension of program discounts to the purchase of
bundled packages and optional services? Would there be any growth in Lifeline subscription
rates stemming from the extension of Lifeline support to expanded service packages?1198 What
are the potential administrative costs to carriers in complying with the proposed rule? Finally,
are there any potential unidentified costs to consumers associated with the proposed rule?
493.
We also ask whether there should be any limitations on this potential requirement,
if we were to adopt such a rule. Should ETCs be obligated to offer a Lifeline discount on all of
their service plans, including premium plans and packages that contain services other than voice
and broadband (e.g., packages that include video)? To what extent could Lifeline consumers risk
the termination of their local voice service based on an inability to pay for the remaining portion
of their chosen calling plan?1199 In the states that currently mandate that discounts be used on all
offerings, has this been an issue, and how have the states addressed this potential concern? Do
Lifeline providers have the capability to block Lifeline consumers’ ability to purchase and be
billed for additional service offerings, such as pay-per-view offerings in a bundled package that
includes video, or to specify certain usage amounts that may be incurred per billing cycle? Do
the carriers that operate in the states that mandate the use of discounts on any service package
provide consumers with any way to limit their usage of premium features that would result in
additional charges?
I.
“Own Facilities” Requirements494.
Background. To be eligible for universal service support, a common carrier must
offer the services supported by federal universal service support mechanisms throughout a
service area “either using its own facilities or a combination of its own facilities and resale of
another carrier’s services.”1200 The Commission has interpreted the term “facilities” to mean
1197 See 47 U.S.C. § 254(b)(1).
1198 See, e.g., Verizon Comments at 16 (“Assuming the extension of Lifeline support to bundled services will
increase participation in the Lifeline program, this approach will further grow the fund and has the potential to
effectively negate other efforts to constrain the size of the fund.”); Verizon Jan. 17 ex parte Letter at 2.
1199 See, e.g., NJ DRC PN Comments at 17.
1200 47 U.S.C. § 214(e)(1)(A).
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“any physical component of the telecommunications network that are used in the transmission or
routing of the services that are designated for support.”1201 As such, a carrier’s facilities that are
not being used to route or transmit voice telephony services do not qualify as “facilities” to meet
the ETC requirements in section 214(e)(1)(A). In the USF First Report and Order, the
Commission held that a carrier “must use its own facilities to provide at least one of the
supported services” but did not qualify the term “own facilities” with respect to the amount of
facilities a carrier must use.1202
495.
In the USF/ICC Transformation Order and FNPRM, the Commission eliminated
its former list of nine supported services and amended section 54.101 of the Commission’s rules
to specify that “voice telephony service” is supported by federal universal service support
mechanisms.1203 On December 23, 2011, the Commission affirmed that only carriers that provide
voice telephony as defined under section 54.101(a), as amended, using their own facilities will
be deemed to meet the requirements of section 214(e)(1).1204 Thus, a Lifeline-only ETC does not
meet the “own-facilities” requirement of section 214(e)(1) if its only facilities are those used to
provide functions that are no longer supported “voice telephony service” under amended rule
54.101, such as access to operator service or directory assistance. The Commission stated that to
be in compliance with the rules, Lifeline-only carriers must either use their own facilities, in
whole or in part, to provide the supported “voice telephony service,” or obtain forbearance from
the “own-facilities” requirement from the Commission.1205
496.
In today’s Order, the Commission issued a blanket forbearance from the facilities-
based requirement contained in section 214(e)(1)(A) to all telecommunications carriers that seek
limited ETC designation to participate in the Lifeline program, subject to certain conditions
contained in sections XI.A & B of the Order. 1206 In light of these actions, we now seek further,
focused comment on whether there remains a need for the Commission to resolve any further
issues concerning the facilities requirement of section 214(e)(1)(A).1207
1201 47 C.F.R. § 54.201(e).
1202 See USF First Report and Order, 12 FCC Rcd at 8871, para. 169.
1203 USF/ICC Transformation Order and FNPRM, FCC 11-161 at paras. 3, 78; see also revised section 54.101(a).
1204 See USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 4.
1205 See id.
1206 Order section XI.A & B.
1207 47 U.S.C. § 214(e)(1)(A) (imposing a requirement that ETCs must “either us[e] its own facilities or a
combination of its own facilities and resale of another carrier’s services”). Several state commissions as well as
carriers seeking ETC designation have expressed concern regarding what may be considered “facilities” under
section 214(e)(1)(A) for purposes of ETC designation. In addition, the Commission has pending before it a Petition
for Declaratory Ruling filed by TracFone in which this question of the facilities requirement is at issue. See
generally South Carolina PUC Comments (recommending denial of Budget Prepay, Inc.’s request for Link Up
support in its Petition for limited designation as a facilities based ETC on the grounds it only provides ancillary
services using its own facilities and resells all other supported services); see also MI PSC Comments at 2-3
(requesting that Commission provide guidance to states on “level of facilities an applicant must own” to be
considered facilities-based). In addition, the Commission has pending before it a Petition for Declaratory ruling
filed by TracFone in which this question of the facilities requirement is at issue. See TracFone Petition.
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497.
Discussion. In light of the reforms adopted in today’s Order to limit waste, fraud,
and abuse and our continued requirement for non-facilities-based Lifeline-only ETCs to obtain
approval of a compliance plan before receiving Lifeline reimbursements, is there a need to
establish additional uniform standards for the designation of Lifeline-only ETCs?1208 In order to
ensure compliance with the Lifeline rules and prevent waste and abuse in the program, should we
consider any additional requirements if a carrier does not own network assets or meets the
requirements of section 214(e)(1)(A)?
498.
We seek comment on whether we should amend our rules to clarify the term
“combination of its own facilities” with respect to the facilities a carrier must own and use to
provide USF supported services.1209 Historically, ETCs have had broad flexibility in how they
combine the use of their own facilities with the resale of another carrier’s services so long as at
least one supported service is offered using that carrier’s “own facilities.”1210 Several ETCs,
some of which call themselves “facilities-based resellers,” have previously maintained they are
facilities-based based on facilities that provision operator and/or directory assistance services,
which are provided in conjunction with their retail offering.1211 Parties in the record have
suggested that ETC applicants seeking Link Up support have an incentive to become facilities-
based carriers to avoid the Commission’s forbearance process. 1212
499.
If a carrier does claim that it is a facilities-based provider and meets the
requirements of section 214(e)(1)(A), should there be a minimum combination of facilities that
the carrier should own and use in order to qualify as a facilities-based ETC under the rules? Is
there a continuing financial incentive for carriers to be classified as a facilities-based ETC?
Should the rules specify in more detail what facilities must be used to provide voice telephony
service, in order for a carrier to be deemed facilities-based? Several parties filed comments on
TracFone’s Petition for Declaratory Ruling on the issue of what constitutes facilities.1213 We
1208 The Commission recognizes that most of the existing Lifeline-only ETCs operating in today’s market do not
own network facilities or could not meet the requirements of section 214(e)(1)(A) based on the Commission’s recent
action to amend Section 54.101. See USF/ICC Transformation Order and FNRPM, FCC 11-161 at para. 4; Link Up
Coalition Dec. 15 ex parte Letter at 2-3 (recognizing that its members would not meet the amended definition of
54.101 based on Commission staff interpretation); see TracFone Oct. 13 ex parte Letter (acknowledging that as one
of the largest recipients in the Lifeline program, it is not a facilities-based wireless carrier). See also generally
TracFone Forbearance Order.
1209 See Universal Service First Report and Order, 12 FCC Rcd 8776, at 8861-62, para. 152 (1997).
1210 See id. at 8871, para. 169.
1211 See Letter from John Heitmann, et al., Link Up For America Coalition, to Marlene H. Dortch, Federal
Communications Commission, WC Dkt. No. 11-42 et al,, (filed Oct. 25, 2011) (calling themselves “facilities-based
resellers”); Ex Parte Conexions LLC d/b/a Conexion Wireless, WC Dkt. No. 09-197 (Jan. 20, 2011) (explaining
how company believes it is a facilities-based ETC).
1212 See Ohio PUC Comments at 5 (explaining how some wireless companies are claiming to own “wireless
facilities” in order to receive Link Up funding); see also Michigan PUC Comments at 2-4 (noting that American
Broadband and Telecommunications Company claimed it was a facilities-based ETC in Michigan because it owned
and used a switch in Ohio even though the company has previously held that it is not a facilities-based provider in
Ohio through the American Broadband and Telecommunications Company Petition for Forbearance).
1213 See AT&T Comments; Budget Pre-Pay and Great Call Comments; CETC Commenters Comments; NASUCA
Comments; Nexus Comments; Nexus Reply Comments; Ohio PUC Comments; TracFone Reply Comments.
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seek to refresh the record in light of the reforms set forth in the Order, so that we may
appropriately consider whether there is a need to clarify any minimum requirements of what is
classified as “facilities” under section 214(e)(1)(A).
500.
We seek comment on whether the location and continued use of facilities is
relevant to the ETC designation process for Lifeline-only ETCs under section 214(e)(1)(A). The
Commission has previously provided guidance on the location of an ETC’s facilities for
purposes of satisfying section 214(e)(1)(A).1214 Our current rules provide that a common
carrier’s facilities need not be located within the relevant service area as long as the carrier uses
them within the designated service area.1215 Our rules do not address, however, how the
designated carrier must utilize those facilities. If a carrier relies on certain “facilities” to get
designated as a Lifeline-only ETC by a state or the Commission, but subsequently discontinues
use of those facilities, is the ETC designation invalid given that the facilities are no longer being
used to transmit or route the services designated for support? In such cases, should the
designation be re-opened to determine whether the ETC is using its own facilities to provide the
service?
501.
We also seek input on whether, in light of marketplace and other changes, we
should revise or clarify our requirements regarding ownership of the facilities in question.1216 In
the USF First Report and Order, the Commission made clear that the facilities used must be the
ETC’s “own,” meaning that the ETC must have the exclusive right to use the facilities to provide
the supported services.1217 The Commission concluded that if a carrier has obtained exclusive use
of facilities, such as an unbundled loop, it would be treated as a carrier’s “own facilities.”1218 The
Commission has also held that if an ETC leases facilities from another carrier and uses such
facilities to provision the USF supported services, the ETC has exclusive rights to those facilities
and therefore “owns” the facilities as required under section 214(e)(1)(A).1219 We seek comment
on whether we should further clarify the meaning of how a carrier should “own” the facilities
used to provision the supported services. If the ETC leases facilities jointly with one or more
carriers that it uses to provision the supported services, does that ETC have exclusive right to use
the facilities? To provide further guidance for the designation process, is it necessary for the
Commission to clarify what is meant by requiring that a facilities-based ETC have exclusive
right to use facilities in the provisioning of the supported services?
J.
Eligible Telecommunications Carrier Requirements
502.In the recent USF/ICC Transformation Order and FNPRM, the Commission
sought comment on various issues relating to ETCs’ existing service obligations to ensure that
1214 See 47 C.F.R. § 54.201(g).
1215 See id.
1216 See Virgin Mobile Forbearance Order, 25 FCC Rcd at 3388, paras. 15-16 (explaining that due to Sprint’s
acquisition of Virgin Mobile, the company is “facilities-based” because it now enjoys “beneficial use of Sprint’s
wireless facilities” without arm’s length transactions or purchase of service from Sprint).
1217 See Universal Service First Report and Order,12 FCC Rcd at 8866, para. 160.
1218 47 C.F.R. § 54.201(f); Universal Service First Report and Order, 12 FCC Rcd at 8865, para. 158.
1219 See Universal Service First Report and Order, 12 FCC Rcd at 8865, para. 158, n. 407.
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obligations and high-cost funding are appropriately matched, while avoiding consumer
disruption in access to communications services. The Commission acknowledged that
relinquishment of ETC status is governed by section 214(e)(4) of the Act, which directs states (or
the Commission, for federally designated ETCs) to “permit an eligible telecommunications
carrier to relinquish its designation as such a carrier in any area served by more than one eligible
telecommunications carrier.”1220 The Commission proposed that existing ETC relinquishment
and service area redefinition procedures, backstopped by the availability of forbearance from
federal requirements, would provide an appropriate case-by-case framework in which to address
these issues in the near term.1221 It also sought comment on how to ensure that low-income
consumers across America continue to have access to Lifeline service, both in urbanized areas
and in rural areas. In particular, it asked whether as a matter of federal policy, it would “thwart
achievement of the objectives established by Congress to relieve an existing ETC of the
obligation to provide Lifeline if there was no other ETC in that particular area willing to offer
Lifeline services.”1222
503.
In this proceeding, AT&T suggests that the Commission should allow incumbent
wireline Lifeline providers to choose whether to participate in the Lifeline program, arguing that
wireline telephone companies are no longer the dominant provider of voice services.1223 We
seek further targeted comment on this suggestion in this docket, and how it might be
implemented given the statutory framework for revocation of ETC designations set forth in
section 214. How would this Commission, or the states, ensure that low-income consumers in all
regions of the country have “access to telecommunications and information services”?1224 How
would one take into account that there may be portions of a given state where the incumbent
Lifeline provider is the only provider of service? What factual determinations would need to be
made regarding the presence of other eligible telecommunications carriers?
504.
In the Lifeline and Link Up NPRM, the Commission also sought comment on
AT&T’s proposal that all providers of voice and broadband services register to become Lifeline
providers, outside of the current ETC designation process.1225 In response, a number of parties
supported the idea of simplifying the process for carriers to participate in the Lifeline
program,1226 while others opposed eliminating the ETC designation process.1227 MetroPCS
suggests that the Commission implement a voucher-based Lifeline program in which Lifeline
discounts would be provided directly to eligible low-income consumers.1228 Are there
1220 47 U.S.C. § 214(e)(4).
1221 USF/ICC Transformation Order and FNPRM, FCC 11-161 at para. 1097.
1222 Id. at para. 1102.
1223 See AT&T Jan. 24 ex parte Letter at 1.
1224 47 U.S.C. § 254(b)(3).
1225 Lifeline and Link Up NPRM, 26 FCC Rcd at 2864-65, paras. 310-312.
1226 See, e.g., Viasat Comments at 7-8; Consumer Cellular Comments at 23; Iridium Comments at 5.
1227 See, e.g., DC PSC Comments at 8; NE PSC Comments at 14.
1228 See Letter from Carl Northrop, Telecommunications Law Professionals, on behalf of MetroPCS, to Marlene H.
Dortch, Secretary, Federal Communications Commission, WC Dkt. No. 11-42 et al., (filed Jan. 25, 2012).
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modifications to this proposal that would be necessary to comply with statutory requirements?
We seek to further develop the record on these proposals and concrete steps that we could take to
simplify carrier participation in the program, while protecting against waste, fraud and abuse.
K.
Record Retention Requirements
505.Without proper documentation, it is difficult to conduct effective audits of
Lifeline service providers. Our rules currently require ETCs to maintain records to document
their compliance with state and federal low-income program rules for the three full preceding
calendar years.1229 ETCs must also maintain documentation of consumer eligibility for as long as
the consumer receives Lifeline service from that ETC.1230 In the USF/ICC Transformation Order
and FNPRM, the Commission revised the record retention requirements for recipients of high-
cost support to extend the retention period from five years to ten years. In so doing, the
Commission determined that the high cost retention requirement of five years was inadequate for
the purposes of litigation under the False Claims Act,1231 which can involve conduct that relates
back substantially more than five years.
506.
We conclude that the same is true with respect to the record retention
requirements for eligible telecommunications carriers receiving low-income universal service
support. The current three-year record retention requirements, although adequate to facilitate
audits of ETCs, are not adequate for purposes of litigation under the False Claims Act. Thus, we
propose to amend section 54.417 of the Commission’s rules to extend the retention period for
Lifeline documentation, including subscriber-specific eligibility documentation, to at least ten
years. ETCs will continue to maintain documentation of consumer eligibility for at least ten
years and for as long as the consumer receives Lifeline service from that ETC, even if that period
extends beyond ten years. We seek comment on this proposal.
XIV.
DELEGATION TO REVISE RULES
507.Given the complexities associated with modifying existing rules as well as other
reforms adopted in this Order, we delegate authority to the Wireline Competition Bureau to
make any further rule revisions as necessary to ensure the reforms adopted in this Order are
reflected in the rules. This includes correcting any conflicts between the new and or revised
rules and existing rules as well as addressing any omissions or oversights. If any such rule
changes are warranted, the Wireline Competition Bureau shall be responsible for such change.
We note that any entity that disagrees with a rule change made on delegated authority will have
the opportunity to file an Application for Review by the full Commission.1232
1229 47 C.F.R. § 54.417(a).
1230 Id.
1231 31 U.S.C. §§ 3729-33. Under the False Claims Act, carriers receiving funds under fraudulent pretenses may be
held liable for a civil penalty of between $5,000 and $10,000, plus treble damages. 31 U.S.C. § 3729(a)(1).
1232 See 47 U.S.C. § 155(c)(1).
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XV.
PROCEDURAL MATTERS
A.
Filing Requirements
508.Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 47 C.F.R. §§
1.415, 1.419, interested parties may file comments and reply comments on or before the dates
indicated on the first page of this document. Comments may be filed using the Commission’s
Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking
Proceedings, 63 FR 24121 (1998).
Electronic Filers: Comments may be filed electronically using the Internet by accessing
the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
Paper Filers: Parties who choose to file by paper must file an original and one copy of
each filing. If more than one docket or rulemaking number appears in the caption of this
proceeding, filers must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial overnight courier, or
by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the
Commission’s Secretary, Office of the Secretary, Federal Communications Commission.
All hand-delivered or messenger-delivered paper filings for the Commission’s
Secretary must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-
A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All
hand deliveries must be held together with rubber bands or fasteners. Any
envelopes and boxes must be disposed of before entering the building.
Commercial overnight mail (other than U.S. Postal Service Express Mail and
Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD
20743.
U.S. Postal Service first-class, Express, and Priority mail must be addressed to
445 12th Street, SW, Washington DC 20554.
People with Disabilities: To request materials in accessible formats for people with disabilities
(braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).
B.
Paperwork Reduction Act Analysis
509.This Report and Order contains new information collection requirements subject
to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the
Office of Management and Budget (OMB) for review under Section 3507(d) of the PRA. OMB,
the general public, and other Federal agencies are invited to comment on the new or modified
information collection requirements contained in this proceeding. In addition, we note that
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4), we previously sought specific comment on how the Commission might
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further reduce the information collection burden for small business concerns with fewer than 25
employees. We describe the impacts that might affect small businesses, which include most
businesses with fewer than 25 employees, in the FRFA in Appendix J, infra.
510.
The Further Notice of Proposed Rulemaking (FNPRM) contains proposed new
information collection requirements. The Commission, as part of its continuing effort to reduce
paperwork burdens, invites the general public and OMB to comment on the information
collection requirements contained in this document, as required by PRA. In addition, pursuant to
the Small Business Paperwork Relief Act of 2002,1233 we seek specific comment on how we
might “further reduce the information collection burden for small business concerns with fewer
than 25 employees.”1234
C.
Congressional Review Act
511.The Commission will send a copy of this Report and Order and Further Notice of
Proposed Rulemaking to Congress and the Government Accountability Office pursuant to the
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
D.
Final Regulatory Flexibility Analysis
512.The Regulatory Flexibility Act (RFA)1235 requires that an agency prepare a
regulatory flexibility analysis for notice and comment rulemakings, unless the agency certifies
that “the rule will not, if promulgated, have a significant economic impact on a substantial
number of small entities.”1236 Accordingly, we have prepared a Final Regulatory Flexibility
Analysis concerning the possible impact of the rule changes contained in the Report and Order
on small entities. The Final Regulatory Flexibility Analysis is set forth in Appendix J.
E.
Initial Regulatory Flexibility Analysis
513.As required by the Regulatory Flexibility Act of 1980 (RFA),1237 the Commission
has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on a substantial number of small entities of the proposals addressed in the
Further Notice of Proposed Rulemaking. The IRFA is set forth in Appendix K. Written public
comments are requested on the IRFA. These comments must be filed in accordance with the
same filing deadlines for comments on the FNPRM, and they should have a separate and distinct
heading designating them as responses to the IRFA. The Commission’s Consumer and
Governmental Affairs Bureau, Reference Information Center, will send a copy of this Report and
Order and Further Notice of Proposed Rulemaking, including the IRFA, to the Chief Counsel for
1233 Pub. L. No. 107-198.
1234 44 U.S.C. § 3506(c)(4).
1235 See 5 U.S.C. § 601–612. The RFA has been amended by the Small Business Regulatory Enforcement Fairness
Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
1236 5 U.S.C. § 605(b).
1237 See 5 U.S.C. § 603.
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Advocacy of the Small Business Administration, in accordance with the Regulatory Flexibility
Act.1238
XVI. ORDERING CLAUSES
514.ACCORDINGLY, IT IS ORDERED, that pursuant to the authority contained in
sections 1, 2, 4(i), 10, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, and 403 of the
Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of
1996, 47 U.S.C. §§ 151, 152, 154(i), 160, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r),
332, 403, 1302, and sections 1.1 and 1.427 of the Commission’s rules, 47 C.F.R. §§ 1.1, 1.427,
this Report and Order is ADOPTED.
515.
IT IS FURTHER ORDERED that. Part 54 of the Commission’s rules, 47 C.F.R.
Part 54, is AMENDED as set forth in Appendix A, and such rule amendments shall be effective
thirty (30) days after publication of the text or summary thereof in the Federal Register, except
for those rules and requirements that involve Paperwork Reduction Act burdens, which shall
become effective immediately upon announcement in the Federal Register of OMB approval and
of effective dates of such rules, and except for the amendments contained herein to 47 C.F.R. §§
54.411, 54.412, 54.413 and 54.414 which shall become effective April 1, 2012; and 47 C.F.R.
§§ 54.409 which shall become effective June 1, 2012.
516.
IT IS FURTHER ORDERED that, pursuant to the authority contained in sections
1, 2, 4(i), 10, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, and 403 of the
Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of
1996, 47 U.S.C. §§ 151, 152, 154(i), 160, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r),
332, 403, 1302, and sections 1.1 and 1.421 of the Commission’s rules, 47 C.F.R. §§ 1.1, 1.421,
this Further Notice of Proposed Rulemaking is ADOPTED.
517.
IT IS FURTHER ORDERED that, pursuant to applicable procedures set forth in
sections 1.415 and 1.419 of the Commission’s Rules, 47 C.F.R. §§ 1.415, 1.419, interested
parties may file comments on the Further Notice of Proposed Rulemaking 30 days from
publication in the Federal Register, and reply comments on or before 60 days from publication in
the Federal Register.
518.
IT IS FURTHER ORDERED that, pursuant to the authority contained in sections
4(i), 4(j), 10, 214, and 254 of the Communications Act of 1934, as amended, 47 U.S.C.
§§
154(i), 154(j), 160, 214, 254, the petition for forbearance filed by AMERICAN
BROADBAND & TELECOMMUNICATIONS is GRANTED to the extent discussed herein and
conditioned on fulfillment of the obligations set forth in this order.
519.
IT IS FURTHER ORDERED that, pursuant to the authority contained in sections
4(i), 4(j), 10, 214, and 254 of the Communications Act of 1934, as amended, 47 U.S.C.
§§ 154(i), 154(j), 160, 214, 254, the petition for forbearance filed by MILLENNIUM 2000, INC.
is GRANTED to the extent discussed herein and conditioned on fulfillment of the obligations set
forth in this order.
1238 See 5 U.S.C. § 603(a).
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520.
IT IS FURTHER ORDERED that, pursuant to the authority contained in sections
4(i), 4(j), 10, 214, and 254 of the Communications Act of 1934, as amended, 47 U.S.C.
§§ 154(i), 154(j), 160, 214, 254, the petition for forbearance filed by NORTH AMERICAN
LOCAL, LLC is GRANTED to the extent discussed herein and conditioned on fulfillment of the
obligations set forth in this order.
521.
IT IS FURTHER ORDERED that, pursuant to the authority contained in sections
4(i), 4(j), 10, 214, and 254 of the Communications Act of 1934, as amended, 47 U.S.C.
§§ 154(i), 154(j), 160, 214, 254, the petition for forbearance filed by TOTAL CALL MOBILE,
INC. is GRANTED to the extent discussed herein and conditioned on fulfillment of the
obligations set forth in this order.
522.
IT IS FURTHER ORDERED that, pursuant to the authority contained in sections
4(i), 4(j), 10, 214, and 254 of the Communications Act of 1934, as amended, 47 U.S.C.
§§ 154(i), 154(j), 160, 214, 254, the petition for forbearance filed by AIRVOICE WIRELESS,
LLC IS GRANTED to the extent discussed herein and conditioned on fulfillment of the
obligations set forth in this order.
523.
IT IS FURTHER ORDERED that, pursuant to the authority contained in sections
4(i), 4(j), 10, 214, and 254 of the Communications Act of 1934, as amended, 47 U.S.C.
§§ 154(i), 154(j), 160, 214, 254, we forbear from applying section 214(e)(1)(A) of the
Communications Act, 47 U.S.C. § 214(e)(1)(A), and section 54.201(d)(1) and (i) of the
Commission’s rules, 47 C.F.R. §
54.201(d)(1), (i), to American Broadband &
Telecommunications, Millennium 2000, Inc., North American Local, LLC, Total Call Mobile,
Inc. and Airvoice Wireless, LLC to the extent discussed herein and conditioned on fulfillment of
the obligations set forth in this order.
524.
IT IS FURTHER ORDERED that the Petition of Qwest, Inc. regarding self-
certification of subscribers on Tribal lands, filed April 5, 2008, is GRANTED.
525.
IT IS FURTHER ORDERED that the Petition of AMERICAN PUBLIC
COMMUNICATIONS COUNCIL seeking a rulemaking regarding payphone service eligibility
for Lifeline support, filed December 6, 2010, is DENIED.
526.
IT IS FURTHER ORDERED that the Petition of AMERICAN PUBLIC
COMMUNICATIONS COUNCIL for interim relief seeking to allow ETCs to receive Lifeline
support for services provided to payphones, filed December 6, 2010, is DENIED.
527.
IT IS FURTHER ORDERED that the Commission SHALL SEND a copy of this
Report and Order and Further Notice of Proposed Rulemaking to Congress and to the
Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. §
801(a)(1)(A).
528.
IT IS FURTHER ORDERED that the Commission’s Consumer and
Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this
Report and Order and Further Notice of Proposed Rulemaking, including the Final Regulatory
Flexibility Analysis and the Initial Regulatory Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
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FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
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APPENDIX A
Final Rules
For the reasons discussed in the preamble, the Federal Communications Commission
amends 47 CFR part 54 as follows:PART 54 – UNIVERSAL SERVICE
1. The authority citation for part 54 continues to read as follows:47 U.S.C. 151, 154(i), 201, 205, 214, 219, 220, 254, 303(r), 403, and 1302 unless otherwise
noted.
Subpart A – General Information
2. Amend § 54.5 by revising the definition of “eligible telecommunications carrier” to readas follows:
§ 54.5 Terms and definitions.
*****
Eligible telecommunications carrier. “Eligible telecommunications carrier” means a carrier
designated as such under subpart C of this part.
*****
Subpart B – Services Designated for Support
3. Amend § 54.101 by revising paragraph (a) to read as follows:§ 54.101 Supported services for rural, insular and high cost areas.
(a) Services designated for support. Voice Telephony services shall be supported by federal
universal service support mechanisms. Eligible voice telephony services must provide voice
grade access to the public switched network or its functional equivalent; minutes of use for local
service provided at no additional charge to end users; access to the emergency services provided
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by local government or other public safety organizations, such as 911 and enhanced 911, to the
extent the local government in an eligible carrier’s service area has implemented 911 or
enhanced 911 systems; and toll limitation services to qualifying low-income consumers as
provided in subpart E of this part.
*****
Subpart C – Carriers Eligible for Universal Service Support
4. Amend § 54.201 by revising paragraphs (a)(1) and (h) to read as follows:§ 54.201 Definition of eligible telecommunications carriers generally.
(a) ***
(1) Only eligible telecommunications carriers designated under this subpart shall receive
universal service support distributed pursuant to part 36 of this chapter, and subparts D
and E of this part.
*****
(h) A state commission shall not designate a common carrier as an eligible telecommunications
carrier for purposes of receiving support only under subpart E of this part unless the carrier
seeking such designation has demonstrated that it is financially and technically capable of
providing the supported Lifeline service in compliance with subpart E of this part.
*****
5. Revise § 54.202 to read as follows:
§ 54.202 Additional requirements for Commission designation of eligible
telecommunications carriers.
(a) In order to be designated an eligible telecommunications carrier under section 214(e)(6), any
common carrier in its application must:
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(1)
(i) Certify that it will comply with the service requirements applicable to the
support that it receives.
(ii) Submit a five-year plan that describes with specificity proposed improvements
or upgrades to the applicant's network throughout its proposed service area. Each
applicant shall estimate the area and population that will be served as a result of
the improvements. Except, a common carrier seeking designation as an eligible
telecommunications carrier in order to provide supported services only under
subpart E of this part does not need to submit such a five-year plan.
(2) Demonstrate its ability to remain functional in emergency situations, including a
demonstration that it has a reasonable amount of back-up power to ensure functionality
without an external power source, is able to reroute traffic around damaged facilities, and
is capable of managing traffic spikes resulting from emergency situations.
(3) Demonstrate that it will satisfy applicable consumer protection and service quality
standards. A commitment by wireless applicants to comply with the Cellular
Telecommunications and Internet Association's Consumer Code for Wireless Service will
satisfy this requirement. Other commitments will be considered on a case-by-case basis.
(4) For common carriers seeking designation as an eligible telecommunications carrier
for purposes of receiving support only under subpart E of this part, demonstrate that it is
financially and technically capable of providing the Lifeline service in compliance with
subpart E of this part.
(5) For common carriers seeking designation as an eligible telecommunications carrier
for purposes of receiving support only under subpart E of this part, submit information
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describing the terms and conditions of any voice telephony service plans offered to
Lifeline subscribers, including details on the number of minutes provided as part of the
plan, additional charges, if any, for toll calls, and rates for each such plan. To the extent
the eligible telecommunications carrier offers plans to Lifeline subscribers that are
generally available to the public, it may provide summary information regarding such
plans, such as a link to a public website outlining the terms and conditions of such plans.
(b) Public Interest Standard. Prior to designating an eligible telecommunications carrier pursuant
to section 214(e)(6), the Commission determines that such designation is in the public interest.
(c) A common carrier seeking designation as an eligible telecommunications carrier under
section 214(e)(6) for any part of Tribal lands shall provide a copy of its petition to the affected
tribal government and tribal regulatory authority, as applicable, at the time it files its petition
with the Federal Communications Commission. In addition, the Commission shall send any
public notice seeking comment on any petition for designation as an eligible telecommunications
carrier on Tribal lands, at the time it is released, to the affected tribal government and tribal
regulatory authority, as applicable, by the most expeditious means available.
§ 54.209 [Removed]
6. Section 54.209 is removed.
Subpart E – Universal Service Support for Low-Income Consumers
7. Revise § 54.400 to read as follows:54.400 Terms and definitions.
As used in this subpart, the following terms shall be defined as follows:
(a) Qualifying low-income consumer. A “qualifying low-income consumer” is a consumer who
meets the qualifications for Lifeline, as specified in § 54.409.
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(b) Toll blocking service. “Toll blocking service” is a service provided by an eligible
telecommunications carrier that lets subscribers elect not to allow the completion of outgoing toll
calls from their telecommunications channel.
(c) Toll control service. “Toll control service” is a service provided by an eligible
telecommunications carrier that allows subscribers to specify a certain amount of toll usage that
may be incurred on their telecommunications channel per month or per billing cycle.
(d) Toll limitation service. “Toll limitation service” denotes either toll blocking service or toll
control service for eligible telecommunications carriers that are incapable of providing both
services. For eligible telecommunications carriers that are capable of providing both services,
“toll limitation service” denotes both toll blocking service and toll control service.
(e) Eligible resident of Tribal lands. An “eligible resident of Tribal lands” is a “qualifying low-
income consumer,” as defined in paragraph (a) of this section, living on Tribal lands. For
purposes of this subpart, “Tribal lands” include any federally recognized Indian tribe's
reservation, pueblo, or colony, including former reservations in Oklahoma; Alaska Native
regions established pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688); Indian
allotments; Hawaiian Home Lands – areas held in trust for Native Hawaiians by the state of
Hawaii, pursuant to the Hawaiian Homes Commission Act, 1920 July 9, 1921, 42 Stat. 108, et.
seq., as amended; and any land designated as such by the Commission for purposes of this
subpart pursuant to the designation process in § 54.412.
(f) Income. “Income” is all income actually received by all members of a household. This
includes salary before deductions for taxes, public assistance benefits, social security payments,
pensions, unemployment compensation, veteran's benefits, inheritances, alimony, child support
payments, worker's compensation benefits, gifts, lottery winnings, and the like. The only
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exceptions are student financial aid, military housing and cost-of-living allowances, irregular
income from occasional small jobs such as baby-sitting or lawn mowing, and the like.
(g) Duplicative support. “Duplicative support” exists when a Lifeline subscriber is receiving
two or more Lifeline services concurrently or two or more subscribers in a household are
receiving Lifeline services or Tribal Link Up support concurrently.
(h) Household. A “household” is any individual or group of individuals who are living together
at the same address as one economic unit. A household may include related and unrelated
persons. An “economic unit” consists of all adult individuals contributing to and sharing in the
income and expenses of a household. An adult is any person eighteen years or older. If an adult
has no or minimal income, and lives with someone who provides financial support to him/her,
both people shall be considered part of the same household. Children under the age of eighteen
living with their parents or guardians are considered to be part of the same household as their
parents or guardians.
(i) National Lifeline Accountability Database or Database. The “National Lifeline
Accountability Database” or “Database” is an electronic system, with associated functions,
processes, policies and procedures, to facilitate the detection and elimination of duplicative
support, as directed by the Commission.
(j) Qualifying assistance program. A “qualifying assistance program” means any of the federal,
state, or Tribal assistance programs participation in which, pursuant to § 54.409(a) or (b),
qualifies a consumer for Lifeline service, including Medicaid; Supplemental Nutrition Assistance
Program; Supplemental Security Income; Federal Public Housing Assistance (Section 8); Low-
Income Home Energy Assistance Program; National School Lunch Program’s free lunch
program; Temporary Assistance for Needy Families; Bureau of Indian Affairs general assistance;
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Tribally administered Temporary Assistance for Needy Families (Tribal TANF); Head Start
(only those households meeting its income qualifying standard); or the Food Distribution
Program on Indian Reservations (FDPIR), and with respect to the residents of any particular
state, any other program so designated by that state pursuant to § 54.409(a).
8. Revise § 54.401 to read as follows:
§ 54.401 Lifeline defined.
(a) As used in this subpart, Lifeline means a non-transferable retail service offering:
(1) For which qualifying low-income consumers pay reduced charges as a result of
application of the Lifeline support amount described in § 54.403; and
(2) That provides qualifying low-income consumers with voice telephony service as
specified in § 54.101(a). Toll limitation service does not need to be offered for any
Lifeline service that does not distinguish between toll and non-toll calls in the pricing of
the service. If an eligible telecommunications carrier charges Lifeline subscribers a fee
for toll calls that is in addition to the per month or per billing cycle price of the
subscribers’ Lifeline service, the carrier must offer toll limitation service at no charge to
its subscribers as part of its Lifeline service offering.
(b) Eligible telecommunications carriers may allow qualifying low-income consumers to apply
Lifeline discounts to any residential service plan that includes voice telephony service, including
bundled packages of voice and data services; and plans that include optional calling features such
as, but not limited to, caller identification, call waiting, voicemail, and three-way calling.
Eligible telecommunications carriers may also permit qualifying low-income consumers to apply
their Lifeline discount to family shared calling plans.
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(c) Eligible telecommunications carriers may not collect a service deposit in order to initiate
Lifeline service for plans that:
(1) Do not charge subscribers additional fees for toll calls; or
(2) That charge additional fees for toll calls, but the subscriber voluntarily elects toll
limitation service.
(d) When an eligible telecommunications carrier is designated by a state commission, the state
commission shall file or require the eligible telecommunications carrier to file information with
the Administrator demonstrating that the carrier's Lifeline plan meets the criteria set forth in this
subpart and describing the terms and conditions of any voice telephony service plans offered to
Lifeline subscribers, including details on the number of minutes provided as part of the plan,
additional charges, if any, for toll calls, and rates for each such plan. To the extent the eligible
telecommunications carrier offers plans to Lifeline subscribers that are generally available to the
public, it may provide summary information regarding such plans, such as a link to a public
website outlining the terms and conditions of such plans. Lifeline assistance shall be made
available to qualifying low-income consumers as soon as the Administrator certifies that the
carrier's Lifeline plan satisfies the criteria set out in this subpart.
(e) Consistent with § 52.33(a)(1)(i)(C), eligible telecommunications carriers may not charge
Lifeline customers a monthly number-portability charge.
9.
Amend § 54.403 to read as follows:
§ 54.403 Lifeline support amount.
(a) The federal Lifeline support amount for all eligible telecommunications carriers shall equal:
(1) Basic support amount. Federal Lifeline support in the amount of $9.25 per month
will be made available to an eligible telecommunications carrier providing Lifeline
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service to a qualifying low-income consumer, if that carrier certifies to the Administrator
that it will pass through the full amount of support to the qualifying low-income
consumer and that it has received any non-federal regulatory approvals necessary to
implement the rate reduction.
(2) Tribal lands support amount. Additional federal Lifeline support of up to $25 per
month will be made available to an eligible telecommunications carrier providing
Lifeline service to an eligible resident of Tribal lands, as defined in § 54.400 (e), to the
extent that the eligible telecommunications carrier certifies to the Administrator that it
will pass through the full Tribal lands support amount to the qualifying eligible resident
of Tribal lands and that it has received any non-federal regulatory approvals necessary to
implement the required rate reduction.
(b) Application of Lifeline Discount Amount.
(1) Eligible telecommunications carriers that charge federal End User Common Line
charges or equivalent federal charges must apply federal Lifeline support to waive the
federal End User Common Line charges for Lifeline subscribers. Such carriers must
apply any additional federal support amount to a qualifying low-income consumer’s
intrastate rate, if the carrier has received the non-federal regulatory approvals necessary
to implement the required rate reduction. Other eligible telecommunications carriers
must apply the federal Lifeline support amount, plus any additional support amount, to
reduce the cost of any generally available residential service plan or package offered by
such carriers that provides voice telephony service as described in § 54.101, and charge
Lifeline subscribers the resulting amount.
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(2) Where a subscriber makes only a partial payment to an eligible telecommunications
carrier for a bundled service package, the eligible telecommunications carrier must apply
the partial payment first to the allocated price of the voice telephony service component
of the package and then to the cost of any additional services included in the bundled
package.
(c) Toll limitation service. An eligible telecommunications carrier providing toll limitation
service voluntarily elected by Lifeline subscribers whose Lifeline plans would otherwise include
a fee for placing a toll call that would be in addition to the per month or per billing cycle price of
the subscriber’s Lifeline service, shall, for April 2012 Lifeline disbursements through December
2013 Lifeline disbursements, receive support in an amount equal to the lesser of:
(1) The eligible telecommunications carrier’s incremental cost of providing either toll
blocking services or toll control services to each Lifeline subscriber who has selected
such service; or
(2) The following amounts for each Lifeline subscriber who has selected toll blocking
services or toll control services:
(i)
$3.00 per month per subscriber during 2012; and
(ii)
$2.00 per month per subscriber during 2013.
10. Add § 54.404 to Subpart E to read as follows
§ 54.404 The National Lifeline Accountability Database.
(a) State certification. An eligible telecommunications carrier operating in a state that provides
an approved valid certification to the Commission in accordance with this section is not required
to comply with the requirements set forth in paragraphs (b) and (c) of this section with respect to
the eligible telecommunications carriers’ subscribers in that state. A valid certification must
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include a statement that the state has a comprehensive system in place to prevent duplicative
federal Lifeline support that is at least as robust as the system adopted by the Commission and
that incorporates information from all eligible telecommunications carriers receiving low-income
support in the state and their subscribers. A valid certification must also describe in detail how
the state system functions and for each requirement adopted by the Commission to prevent
duplicative support, how the state system performs the equivalent functions. The certification
must be submitted to the Commission no later than six months from the effective date of this
section of the Commission’s rules to be valid. Such certification will be considered approved
unless the Wireline Competition Bureau rejects the certification within 90 days of filing.
(b) The National Lifeline Accountability Database. In order to receive Lifeline support, eligible
telecommunications carriers operating in states that have not provided the Commission with
approved valid certification pursuant to paragraph (a) of this section must comply with the
following requirements:
(1) All eligible telecommunications carriers must query the National Lifeline
Accountability Database to determine whether a prospective subscriber who has executed
a certification pursuant to § 54.410(d) is currently receiving a Lifeline service from
another eligible telecommunications carrier; and whether anyone else living at the
prospective subscriber’s residential address is currently receiving a Lifeline service.
(2) If the Database indicates that a prospective subscriber, who is not seeking to port his
or her telephone number, is currently receiving a Lifeline service, the eligible
telecommunications carrier must not provide and shall not seek or receive Lifeline
reimbursement for that subscriber.
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(3) If the Database indicates that another individual at the prospective subscriber’s
residential address is currently receiving a Lifeline service, the eligible
telecommunications carrier must not seek and will not receive Lifeline reimbursement for
providing service to that prospective subscriber, unless the prospective subscriber has
certified, pursuant to § 54.410(d) that to the best of his or her knowledge, no one in his or
her household is already receiving a Lifeline service.
(4) An eligible telecommunications carrier is not required to comply with paragraphs
(b)(1)-(3) of this section if it receives notice from a state Lifeline administrator or other
state agency that the administrator or other agency has queried the Database about a
prospective subscriber and that providing the prospective subscriber with a Lifeline
benefit would not result in duplicative support.
(5) Eligible telecommunications carriers may query the Database only for the purposes
provided in paragraphs (b)(1)-(b)(3) of this section, and to determine whether information
with respect to its subscribers already in the Database is correct and complete.
(6) Eligible telecommunications carriers must transmit to the Database in a format prescribed
by the Administrator each new and existing Lifeline subscriber’s full name; full residential
address; date of birth and the last four digits of the subscriber’s social security number or
Tribal Identification number, if the subscriber is a member of a Tribal nation and does not
have a social security number; the telephone number associated with the Lifeline service;
the date on which the Lifeline service was initiated; the date on which the Lifeline service
was terminated, if it has been terminated; the amount of support being sought for that
subscriber; and the means through which the subscriber qualified for Lifeline.
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(7) In the event that two or more eligible telecommunications carriers transmit the
information required by this paragraph to the Database for the same subscriber, only the
eligible telecommunications carrier whose information was received and processed by the
Database first, as determined by the Administrator, will be entitled to reimbursement
from the Fund for that subscriber.
(8) All eligible telecommunications carriers must update an existing Lifeline subscriber’s
information in the Database within ten business days of receiving any change to that
information, except as described in paragraph (b)(10) of this section.
(9) All eligible telecommunications carriers must obtain, from each new and existing
subscriber, consent to transmit the subscriber’s information. Prior to obtaining consent,
the eligible telecommunications carrier must describe to the subscriber, using clear, easily
understood language, the specific information being transmitted, that the information is
being transmitted to the Administrator to ensure the proper administration of the Lifeline
program, and that failure to provide consent will result in subscriber being denied the
Lifeline service.
(10) When an eligible telecommunications carrier de-enrolls a subscriber, it must transmit to
the Database the date of Lifeline service de-enrollment within one business day of de-
enrollment.
(c) Tribal Link Up and the National Lifeline Accountability Database. In order to receive universal
service support reimbursement for Tribal Link Up, eligible telecommunications carriers operating in
states that have not provided the Commission with a valid certification pursuant to paragraph (a) of this
section, must comply with the following requirements:
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(1) Such eligible telecommunications carriers must query the Database to determine
whether a prospective Link Up recipient who has executed a certification pursuant to §
54.410(d) has previously received a Link Up benefit at the residential address provided
by the prospective subscriber.
(2) If the Database indicates that a prospective subscriber has received a Link Up benefit
at the residential address provided by the subscriber, the eligible telecommunications
provider must not seek Link Up reimbursement for that subscriber.
(3) An eligible telecommunications carrier is not required to comply with paragraphs
(c)(1) through (c)(2) of this section, if it receives notice from a state Lifeline
administrator or other state agency that the administrator or other agency has queried the
Database about a prospective subscriber and that providing the prospective subscriber
with a Link Up benefit would not result in duplicative support or support to a subscriber
who had already received Link Up support at that residential address.
(4) All eligible telecommunications carriers must transmit to the Database in a format
prescribed by the Administrator each new and existing Link Up recipient’s full name;
residential address; date of birth; and the last four digits of the subscriber’s social security
number, or Tribal identification number if the subscriber is a member of a Tribal nation
and does not have a social security number; the telephone number associated with the
Link Up support; and the date of service activation. Where two or more eligible
telecommunications carriers transmit the information required by this paragraph to the
Database for the same subscriber, only the eligible telecommunications carrier whose
information was received and processed by the Database first, as determined by the
Administrator, will be entitled to reimbursement from the Fund for that subscriber.
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(5) All eligible telecommunications carriers must obtain, from each new and existing
subscriber, consent to transmit the information required in paragraph (c) of this section.
Prior to obtaining consent, the eligible telecommunications carrier must describe to the
subscriber, using clear, easily understood language, the specific information being
transmitted, that the information is being transmitted to the Administrator to ensure the
proper administration of the Link Up program, and that failure to provide consent will
result in the subscriber being denied the Link Up benefit.
11. Revise § 54.405 to read as follows:
§ 54.405 Carrier obligation to offer Lifeline.
All eligible telecommunications carriers must:
(a) Make available Lifeline service, as defined in § 54.401, to qualifying low-income consumers.
(b) Publicize the availability of Lifeline service in a manner reasonably designed to reach those
likely to qualify for the service.
(c) Indicate on all materials describing the service, using easily understood language, that it is a
Lifeline service, that Lifeline is a government assistance program, the service is non-transferable,
only eligible consumers may enroll in the program, and the program is limited to one discount
per household. For the purposes of this section, the term “materials describing the service”
includes all print, audio, video, and web materials used to describe or enroll in the Lifeline
service offering, including application and certification forms.
(d) Disclose the name of the eligible telecommunications carrier on all materials describing the
service.
(e) De-enrollment.
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(1) De-enrollment generally. If an eligible telecommunications carrier has a reasonable
basis to believe that a Lifeline subscriber no longer meets the criteria to be considered a
qualifying low-income consumer under § 54.409, the carrier must notify the subscriber of
impending termination of his or her Lifeline service. Notification of impending
termination must be sent in writing separate from the subscriber's monthly bill, if one is
provided, and must be written in clear, easily understood language. A carrier providing
Lifeline service in a state that has dispute resolution procedures applicable to Lifeline
termination, that requires, at a minimum, written notification of impending termination,
must comply with the applicable state requirements. The carrier must allow a subscriber
30 days following the date of the impending termination letter required to demonstrate
continued eligibility. A subscriber making such a demonstration must present proof of
continued eligibility to the carrier consistent with applicable annual re-certification
requirements, as described in § 54.410(f). An eligible telecommunications carrier must
terminate any subscriber who fails to demonstrate continued eligibility within the 30–day
time period. A carrier providing Lifeline service in a state that has dispute resolution
procedures applicable to Lifeline termination must comply with the applicable state
requirements.
(2) De-enrollment for duplicative support. Notwithstanding paragraph (e)(1) of this
section, upon notification by the Administrator to any eligible telecommunications carrier
that a subscriber is receiving Lifeline service from another eligible telecommunications
carrier or that more than one member of a subscriber’s household is receiving Lifeline
service and therefore that the subscriber should be de-enrolled from participation in that
carrier’s Lifeline program, the eligible telecommunications carrier must de-enroll the
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subscriber from participation in that carrier’s Lifeline program within five business days.
An eligible telecommunications carrier shall not be eligible for Lifeline reimbursement
for any de-enrolled subscriber following the date of that subscriber’s de-enrollment.
(3) De-enrollment for non-usage. Notwithstanding paragraph (e)(1) of this section, if a
Lifeline subscriber fails to use, as “usage” is defined in § 54.407(c)(2), for 60 consecutive
days a Lifeline service that does not require the eligible telecommunications carrier to
assess or collect a monthly fee from its subscribers, an eligible telecommunications
carrier must provide the subscriber 30 days’ notice, using clear, easily understood
language, that the subscriber’s failure to use the Lifeline service within the 30-day notice
period will result in service termination for non-usage under this paragraph. If the
subscriber uses the Lifeline service within 30 days of the carrier providing such notice,
the eligible telecommunications carrier shall not terminate the subscriber’s Lifeline
service. Eligible telecommunications carriers shall report to the Commission annually
the number of subscribers de-enrolled for non-usage under this paragraph. This de-
enrollment information must be reported by month and must be submitted to the
Commission at the time an eligible telecommunications carrier submits its annual
certification report pursuant to § 54.416.
(4) De-enrollment for failure to re-certify. Notwithstanding paragraph (e)(1) of this
section, an eligible telecommunications carrier must de-enroll a Lifeline subscriber who
does not respond to the carrier’s attempts to obtain re-certification of the subscriber’s
continued eligibility as required by § 54.410(f); who fails to provide the annual one-per-
household re-certifications as required by § 54.410(f); or who relies on a temporary
address and fails to respond to the carrier’s address re-certification attempts pursuant to §
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54.410(g). Prior to de-enrolling a subscriber under this paragraph, the eligible
telecommunications carrier must notify the subscriber in writing separate from the
subscriber’s monthly bill, if one is provided using clear, easily understood language, that
failure to respond to the re-certification request within 30 days of the date of the request
will trigger de-enrollment. If a subscriber does not respond to the carrier’s notice of
impending de-enrollment, the carrier must de-enroll the subscriber from Lifeline within
five business days after the expiration of the subscriber’s time to respond to the re-
certification efforts.
12. Revise § 54.407 to read as follows:
§ 54.407 Reimbursement for offering Lifeline.
(a) Universal service support for providing Lifeline shall be provided directly to an eligible
telecommunications carrier, based on the number of actual qualifying low-income consumers it
serves.
(b) An eligible telecommunications carrier may receive universal service support reimbursement
for each qualifying low-income consumer served. For each qualifying low-income consumer
receiving Lifeline service, the reimbursement amount shall equal the federal support amount,
including the support amounts described in § 54.403(a) and (c). The eligible
telecommunications carrier's universal service support reimbursement shall not exceed the
carrier's rate for that offering, or similar offerings, subscribed to by consumers who do not
qualify for Lifeline.
(c) An eligible telecommunications carrier offering a Lifeline service that does not require the
eligible telecommunications carrier to assess or collect a monthly fee from its subscribers:
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(1) Shall not receive universal service support for a subscriber to such Lifeline service
until the subscriber activates the service by whatever means specified by the carrier, such
as completing an outbound call; and
(2) After service activation, an eligible telecommunications carrier shall only continue to
receive universal service support reimbursement for such Lifeline service provided to
subscribers who have used the service within the last 60 days, or who have cured their
non-usage as provided for in § 54.405(e)(3). Any of these activities, if undertaken by the
subscriber will establish “usage” of the Lifeline service:
(i) Completion of an outbound call;
(ii) Purchase of minutes from the eligible telecommunications carrier to add to the
subscriber’s service plan;
(iii) Answering an incoming call from a party other than the eligible
telecommunications carrier or the eligible telecommunications carrier’s agent or
representative; or
(iv) Responding to direct contact from the eligible communications carrier and
confirming that he or she wants to continue receiving the Lifeline service.
(d) In order to receive universal service support reimbursement, an eligible telecommunications
carrier must certify, as part of each request for reimbursement, that it is in compliance with all of
the rules in this subpart, and, to the extent required under this subpart, has obtained valid
certification and re-certification forms from each of the subscribers for whom it is seeking
reimbursement.
(e) In order to receive universal service support reimbursement, an eligible telecommunications
carrier must keep accurate records of the revenues it forgoes in providing Lifeline services. Such
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records shall be kept in the form directed by the Administrator and provided to the Administrator
at intervals as directed by the Administrator or as provided in this Subpart.
13. Revise § 54.409 to read as follows:
§ 54.409 Consumer qualification for Lifeline.
(a) To constitute a qualifying low-income consumer:
(1) A consumer’s household income as defined in § 54.400(f) must be at or below 135%
of the Federal Poverty Guidelines for a household of that size; or
(2) The consumer, one or more of the consumer’s dependents, or the consumer’s
household must receive benefits from one of the following federal assistance programs:
Medicaid; Supplemental Nutrition Assistance Program; Supplemental Security Income; Federal
Public Housing Assistance (Section 8); Low-Income Home Energy Assistance Program;
National School Lunch Program’s free lunch program; or Temporary Assistance for Needy
Families; or
(3) The consumer must meet eligibility criteria established by a state for its residents,
provided that such state-specific criteria are based solely on income or factors directly related to
income.
(b) A consumer who lives on Tribal lands is eligible for Lifeline service as a “qualifying low-
income consumer” as defined by § 54.400(a) and as an “eligible resident of Tribal lands” as
defined by § 54.400(e) if that consumer meets the qualifications for Lifeline specified in
paragraph (a) of this section or if the consumer, one or more of the consumer’s dependents, or
the consumer’s household participates in one of the following Tribal-specific federal assistance
programs: Bureau of Indian Affairs general assistance; Tribally administered Temporary
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Assistance for Needy Families; Head Start (only those households meeting its income qualifying
standard); or the Food Distribution Program on Indian Reservations.
(c) In addition to meeting the qualifications provided in paragraph (a) or (b) of this section, in
order to constitute a qualifying low-income consumer, a consumer must not already be receiving
a Lifeline service, and there must not be anyone else in the subscriber’s household subscribed to
a Lifeline service.
14. Amend § 54.410 to read as follows:
§ 54.410 Subscriber eligibility determination and certification.
(a) All eligible telecommunications carriers must implement policies and procedures for
ensuring that their Lifeline subscribers are eligible to receive Lifeline services.
(b) Initial income-based eligibility determination.
(1) Except where a state Lifeline administrator or other state agency is responsible for
the initial determination of a subscriber’s eligibility, when a prospective subscriber seeks
to qualify for Lifeline or using the income-based eligibility criteria provided for in §
54.409(a)(1) or (a)(3) an eligible telecommunications carrier:
(i) Must not seek reimbursement for providing Lifeline to a subscriber, unless the
carrier has received a certification of eligibility from the prospective subscriber
that complies with the requirements set forth in paragraph (d) of this section and
has confirmed the subscriber’s income-based eligibility using the following
procedures:
(A) If an eligible telecommunications carrier can determine a prospective
subscriber’s income-based eligibility by accessing one or more databases
containing information regarding the subscriber’s income (“income databases”),
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the eligible telecommunications carrier must access such income databases and
determine whether the prospective subscriber qualifies for Lifeline.
(B) If an eligible telecommunications carrier cannot determine a prospective
subscriber’s income-based eligibility by accessing income databases, the eligible
telecommunications carrier must review documentation that establishes that the
prospective subscriber meets the income-eligibility criteria set forth in sections
54.409(a)(1) or (a)(3). Acceptable documentation of income eligibility includes
the prior year’s state, federal, or Tribal tax return; current income statement from
an employer or paycheck stub; a Social Security statement of benefits; a Veterans
Administration statement of benefits; a retirement/pension statement of benefits;
an Unemployment/Workers’ Compensation statement of benefit; federal or Tribal
notice letter of participation in General Assistance; or a divorce decree, child
support award, or other official document containing income information. If the
prospective subscriber presents documentation of income that does not cover a
full year, such as current pay stubs, the prospective subscriber must present the
same type of documentation covering three consecutive months within the
previous twelve months.
(ii) Must not retain copies of the documentation of a prospective subscriber’s
income-based eligibility for Lifeline.
(iii) Must, consistent with § 54.417, keep and maintain accurate records detailing
the data source a carrier used to determine a subscriber’s eligibility or the
documentation a subscriber provided to demonstrate his or her eligibility for
Lifeline.
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(2) Where a state Lifeline administrator or other state agency is responsible for the initial
determination of a subscriber’s eligibility, an eligible telecommunications carrier must
not seek reimbursement for providing Lifeline service to a subscriber, based on that
subscriber’s income eligibility, unless the carrier has received from the state Lifeline
administrator or other state agency:
(i) Notice that the prospective subscriber meets the income-eligibility criteria set
forth in §§ 54.409(a)(1) or (a)(3); and
(ii) A copy of the subscriber’s certification that complies with the requirements
set forth in paragraph (d) of this section.
(c) Initial program-based eligibility determination.
(1) Except in states where a state Lifeline administrator or other state agency is
responsible for the initial determination of a subscriber’s program-based eligibility, when
a prospective subscriber seeks to qualify for Lifeline service using the program-based
criteria set forth in §§ 54.409 (a)(2), (a)(3) or (b), an eligible telecommunications carrier:
(i) Must not seek reimbursement for providing Lifeline to a subscriber unless the
carrier has received a certification of eligibility from the subscriber that complies
with the requirements set forth in paragraph (d) of this section and has confirmed
the subscriber’s program-based eligibility using the following procedures:
(A) If the eligible telecommunications carrier can determine a prospective
subscriber’s program-based eligibility for Lifeline by accessing one or
more databases containing information regarding enrollment in qualifying
assistance programs (“eligibility databases”), the eligible
telecommunications carrier must access such eligibility databases to
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determine whether the prospective subscriber qualifies for Lifeline based
on participation in a qualifying assistance program; or
(B) If an eligible telecommunications carrier cannot determine a
prospective subscriber’s program-based eligibility for Lifeline by
accessing eligibility databases, the eligible telecommunications carrier
must review documentation demonstrating that a prospective subscriber
qualifies for Lifeline under the program-based eligibility requirements.
Acceptable documentation of program eligibility includes the current or
prior year’s statement of benefits from a qualifying assistance program, a
notice or letter of participation in a qualifying assistance program,
program participation documents, or another official document
demonstrating that the prospective subscriber, one or more of the
prospective subscriber’s dependents or the prospective subscriber’s
household receives benefits from a qualifying assistance program.
(ii) Must not retain copies of the documentation of a subscriber’s program-based
eligibility for Lifeline services.
(iii) Must, consistent with § 54.517, keep and maintain accurate records detailing
the data source a carrier used to determine a subscriber’s program-based
eligibility or the documentation a subscriber provided to demonstrate his or her
eligibility for Lifeline.
(2) Where a state Lifeline administrator or other state agency is responsible for the initial
determination of a subscriber’s eligibility, when a prospective subscriber seeks to qualify
for Lifeline service using the program-based eligibility criteria provided in § 54.409, an
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eligible telecommunications carrier must not seek reimbursement for providing Lifeline
to a subscriber unless the carrier has received from the state Lifeline administrator or
other state agency:
(i) Notice that the subscriber meets the program-based eligibility criteria set forth
in §§ 54.409(a)(2), (a)(3) or (b); and
(ii) a copy of the subscriber’s certification that complies with the requirements set
forth in paragraph (d) of this section.
(d) Eligibility certifications. Eligible telecommunications carriers and state Lifeline
administrators or other state agencies that are responsible for the initial determination of a
subscriber’s eligibility for Lifeline must provide prospective subscribers Lifeline certification
forms that in clear, easily understood language:
(1) Provide the following information:
(i) Lifeline is a federal benefit and that willfully making false statements to obtain
the benefit can result in fines, imprisonment, de-enrollment or being barred from
the program;
(ii) Only one Lifeline service is available per household;
(iii) A household is defined, for purposes of the Lifeline program, as any
individual or group of individuals who live together at the same address and share
income and expenses;
(iv) A household is not permitted to receive Lifeline benefits from multiple
providers;
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(v) Violation of the one-per-household limitation constitutes a violation of the
Commission’s rules and will result in the subscriber’s de-enrollment from the
program; and
(vi) Lifeline is a non-transferable benefit and the subscriber may not transfer his
or her benefit to any other person.
(2) Require each prospective subscriber to provide the following information:
(i) The subscriber’s full name;
(ii) The subscriber’s full residential address;
(iii) Whether the subscriber’s residential address is permanent or temporary;
(iv) The subscriber’s billing address, if different from the subscriber’s residential
address;
(v) The subscriber’s date of birth;
(vi) The last four digits of the subscriber’s social security number, or the
subscriber’s Tribal identification number, if the subscriber is a member of a Tribal
nation and does not have a social security number;
(vii) If the subscriber is seeking to qualify for Lifeline under the program-based
criteria, as set forth in § 54.409, the name of the qualifying assistance program
from which the subscriber, his or her dependents, or his or her household receives
benefits; and
(viii) If the subscriber is seeking to qualify for Lifeline under the income-based
criterion, as set forth in § 54.409, the number of individuals in his or her
household.
(3) Require each prospective subscriber to certify, under penalty of perjury, that:
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(i) The subscriber meets the income-based or program-based eligibility criteria for
receiving Lifeline, provided in § 54.409;
(ii) The subscriber will notify the carrier within 30 days if for any reason he or she
no longer satisfies the criteria for receiving Lifeline including, as relevant, if the
subscriber no longer meets the income-based or program-based criteria for
receiving Lifeline support, the subscriber is receiving more than one Lifeline
benefit, or another member of the subscriber’s household is receiving a Lifeline
benefit.
(ii) If the subscriber is seeking to qualify for Lifeline as an eligible resident of
Tribal lands, he or she lives on Tribal lands, as defined in 54.400(e);
(iii) If the subscriber moves to a new address, he or she will provide that new
address to the eligible telecommunications carrier within 30 days;
(iv) If the subscriber provided a temporary residential address to the eligible
telecommunications carrier, he or she will be required to verify his or her
temporary residential address every 90 days;
(v) The subscriber’s household will receive only one Lifeline service and, to the
best of his or her knowledge, the subscriber’s household is not already receiving a
Lifeline service;
(vi) The information contained in the subscriber’s certification form is true and
correct to the best of his or her knowledge,
(vii) The subscriber acknowledges that providing false or fraudulent information
to receive Lifeline benefits is punishable by law; and
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(viii) The subscriber acknowledges that the subscriber may be required to re-
certify his or her continued eligibility for Lifeline at any time, and the subscriber’s
failure to re-certify as to his or her continued eligibility will result in de-
enrollment and the termination of the subscriber’s Lifeline benefits pursuant to §
54.405(e)(4).
(e) State Lifeline administrators or other state agencies that are responsible for the initial
determination of a subscriber’s eligibility for Lifeline must provide each eligible
telecommunications carrier with a copy of each of the certification forms collected by the state
Lifeline administrator or other state agency from that carrier’s subscribers.
(f) Annual eligibility re-certification process.
(1) All eligible telecommunications carriers must annually re-certify all subscribers
except for subscribers in states where a state Lifeline administrator or other state agency
is responsible for re-certification of subscribers’ Lifeline eligibility.
(2) In order to re-certify a subscriber’s eligibility, an eligible telecommunications carrier
must confirm a subscriber’s current eligibility to receive Lifeline by:
(i) Querying the appropriate eligibility databases, confirming that the subscriber
still meets the program-based eligibility requirements for Lifeline, and
documenting the results of that review; or
(ii) Querying the appropriate income databases, confirming that the subscriber
continues to meet the income-based eligibility requirements for Lifeline, and
documenting the results of that review; or
(iii) Obtaining a signed certification from the subscriber that meets the
certification requirements in paragraph (d) of this section.
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(3) Where a state Lifeline administrator or other state agency is responsible for re-
certification of a subscriber’s Lifeline eligibility, the state Lifeline administrator or other
state agency must confirm a subscriber’s current eligibility to receive a Lifeline service
by:
(i) Querying the appropriate eligibility databases, confirming that the subscriber
still meets the program-based eligibility requirements for Lifeline, and
documenting the results of that review; or
(ii) Querying the appropriate income databases, confirming that the subscriber
continues to meet the income-based eligibility requirements for Lifeline, and
documenting the results of that review; or
(iii) Obtaining a signed certification from the subscriber that meets the
certification requirements in paragraph (d) of this section.
(4) Where a state Lifeline administrator or other state agency is responsible for re-
certification of subscribers’ Lifeline eligibility, the state Lifeline administrator or other
state agency must provide to each eligible telecommunications carrier the results of its
annual re-certification efforts with respect to that eligible telecommunications carrier’s
subscribers.
(5) If an eligible telecommunications carrier is unable to re-certify a subscriber or has
been notified of a state Lifeline administrator’s or other state agency’s inability to re-
certify a subscriber, the eligible telecommunications carrier must comply with the de-
enrollment requirements provided for in § 54.405(e)(4).
(g) Re-certification of temporary address. An eligible telecommunications carrier must re-
certify, every 90 days, the residential address of each of its subscribers who have provided a
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temporary address as part of the subscriber’s initial certification or re-certification of eligibility,
pursuant to paragraphs (d), (e), or (f) of this section.
§ 54.411 [Removed]
15. Section 54.411 is removed.
16. Add § 54.412 to Subpart E to read as follows:
§ 54.412 Off reservation Tribal lands designation process.
(a) The Commission’s Wireline Competition Bureau and the Office of Native Affairs and
Policy may, upon receipt of a request made in accordance with the requirements of this
section, designate as Tribal lands, for the purposes of the Lifeline and Tribal Link Up
program, areas or communities that fall outside the boundaries of existing Tribal lands but
which maintain the same characteristics as lands identified as Tribal lands defined as in §
54.400(c).
(b) A request for designation must be made to the Commission by a duly authorized official
of a federally recognized American Indian Tribe or Alaska Native Village and must be filed
pursuant to the Commission’s rules.
(c) A request for designation must clearly describe a defined geographical area for which the
requesting party seeks designation as Tribal lands.
(d) A request for designation must demonstrate the Tribal character of the area or
community.
(e) A request for designation must provide sufficient evidence of a nexus between the area or
community and the Tribe, and describe in detail how program support to the area or
community would aid the Tribe in serving the needs and interests of its citizens and further
the Commission’s goal of increasing telecommunications access on Tribal lands.
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(f) Upon designation by the Wireline Competition Bureau and the Office of Native Affairs
and Policy, the area or community described in the designation shall be considered Tribal
lands for the purposes of this subpart.
17. Revise § 54.413 to read as follows:
§ 54.413 Link Up for Tribal lands.
(a) Definition. For purposes of this subpart, the term “Tribal Link Up” means an assistance
program for eligible residents of Tribal lands seeking telecommunications service from a
telecommunications carrier that is receiving high-cost support on Tribal lands, pursuant to
subpart D of this part, that provides:
(i) A 100 percent reduction, up to $100, of the customary charge for commencing
telecommunications service for a single telecommunications connection at a subscriber’s
principal place of residence imposed by an eligible telecommunications carrier that is also
receiving high-cost support on Tribal lands, pursuant to subpart D of this part. For purposes of
this subpart, a “customary charge for commencing telecommunications service” is the ordinary
charge an eligible telecommunications carrier imposes and collects from all subscribers to
initiate service with that eligible telecommunications carrier. A charge imposed only on
qualifying low-income consumers to initiate service is not a customary charge for commencing
telecommunications service. Activation charges routinely waived, reduced, or eliminated with
the purchase of additional products, services, or minutes are not customary charges eligible for
universal service support; and
(ii) A deferred schedule of payments of the customary charge for commencing
telecommunications service for a single telecommunications connection at a subscriber’s
principal place of residence imposed by an eligible telecommunications carrier that is also
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receiving high-cost support on Tribal lands, pursuant to subpart D of this part, for which the
eligible resident of Tribal lands does not pay interest. The interest charges not assessed to the
eligible resident of tribal lands shall be for a customary charge for connecting
telecommunications service of up to $200 and such interest charges shall deferred for a period
not to exceed one year.
(b) An eligible resident of Tribal lands may receive the benefit of the Tribal Link Up program
for a second or subsequent time only for otherwise qualifying commencement of
telecommunications service at a principal place of residence with an address different from the
address for which Tribal Link Up assistance was provided previously.
18. Add § 54.414 to Subpart E to read as follows:
§ 54.414 Reimbursement for Tribal Link Up.
(a) Eligible telecommunications carriers that are receiving high-cost support, pursuant to subpart
D of this part, may receive universal service support reimbursement for the reduction in their
customary charge for commencing telecommunications service and for providing a deferred
schedule for payment of the customary charge for commencing telecommunications services for
which the subscriber does not pay interest, in conformity with § 54.413.
(b) In order to receive universal support reimbursement for providing Tribal Link Up,
eligible telecommunications carriers must follow the procedures set forth in § 54.410 to
determine an eligible resident of Tribal lands’ initial eligibility for Tribal Link Up. Eligible
telecommunications carriers must obtain a certification form from each eligible resident of
Tribal lands that complies with § 54.410 prior to enrolling him or her in Tribal Link Up.
(c) In order to receive universal service support reimbursement for providing Tribal Link Up,
eligible telecommunications carriers must keep accurate records of the reductions in their
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customary charge for commencing telecommunications service and for providing a deferred
schedule for payment of the charges assessed for commencing service for which the subscriber
does not pay interest, in conformity with § 54.413. Such records shall be kept in the form
directed by the Administrator and provided to the Administrator at intervals as directed by the
Administrator or as provided in this subpart. The reductions in the customary charge for which
the eligible telecommunications carrier may receive reimbursement shall include only the
difference between the carrier's customary connection or interest charges and the charges
actually assessed to the subscriber receiving Lifeline services.
§ 54.415 [Removed]
19. Section 54.415 is removed.
20. Revise § 54.416 to read as follows:
§ 54.416 Annual certifications by eligible telecommunications carriers.
(a) Eligible telecommunications carrier certifications. Eligible telecommunications carriers are
required to make and submit to the Administrator the following annual certifications, under
penalty of perjury, relating to the Lifeline program:
(1) An officer of each eligible telecommunications carrier must certify that the carrier has
policies and procedures in place to ensure that its Lifeline subscribers are eligible to
receive Lifeline services. Each eligible telecommunications carrier must make this
certification annually to the Administrator as part of the carrier’s submission of annual
re-certification data pursuant to this section. In instances where an eligible
telecommunications carrier confirms consumer eligibility by relying on income or
eligibility databases, as defined in §§ 54.410(b)(1)(A) or (c)(1)(A), the representative
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must attest annually as to what specific data sources the eligible telecommunications
carrier used to confirm eligibility.
(2) An officer of the eligible telecommunications carrier must certify that the carrier is in
compliance with all federal Lifeline certification procedures. Eligible
telecommunications carriers must make this certification annually to the Administrator as
part of the carrier’s submission of re-certification data pursuant to this section.
(3) An officer of the eligible telecommunications carrier must certify annually that the
carrier has obtained a valid certification form for each subscriber for whom the carrier
seeks Lifeline reimbursement.
(b) All eligible telecommunications carriers must annually provide the results of their re-
certification efforts, performed pursuant to § 54.410(f), to the Commission and the
Administrator. Eligible telecommunications carriers designated as such by one or more states
pursuant to § 54.201 must also provide, on an annual basis, the results of their re-certification
efforts to state commissions for subscribers residing in those states where the state designated the
eligible telecommunications carrier. Eligible telecommunications carriers must also provide
their annual re-certification results for subscribers residing on Tribal lands to the relevant Tribal
governments.
(c) States that mandate Lifeline support may impose additional standards on eligible
telecommunications carriers operating in their states to ensure compliance with state Lifeline
programs.
21. Revise § 54.417 to read as follows:
§ 54.417 Recordkeeping requirements.
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(a) Eligible telecommunications carriers must maintain records to document compliance with all
Commission and state requirements governing the Lifeline and Tribal Link Up program for the
three full preceding calendar years and provide that documentation to the Commission or
Administrator upon request. Notwithstanding the preceding sentence, eligible
telecommunications carriers must maintain the documentation required in §§ 54.410(d) and
54.410(f) for as long as the subscriber receives Lifeline service from that eligible
telecommunications carrier.
(b) If an eligible telecommunications carrier provides Lifeline discounted wholesale services to a
reseller, it must obtain a certification from that reseller that it is complying with all Commission
requirements governing the Lifeline and Tribal Link Up program.
(c) Non-eligible-telecommunications-carrier resellers that purchase Lifeline discounted
wholesale services to offer discounted services to low-income consumers must maintain records
to document compliance with all Commission requirements governing the Lifeline and Tribal
Link Up program for the three full preceding calendar years and provide that documentation to
the Commission or Administrator upon request. To the extent such a reseller provides
discounted services to low-income consumers, it must fulfill the obligations of an eligible
telecommunications carrier in §§ 54.405(e), 54.405(f), and 54.410.
22. Add § 54.419 to Subpart E to read as follows:
§ 54.419 Validity of electronic signatures.
(a) For the purposes of this subpart, an electronic signature, defined by the Electronic Signatures
in Global and National Commerce Act, as an electronic sound, symbol, or process, attached to or
logically associated with a contract or other record and executed or adopted by a person with the
intent to sign the record, has the same legal effect as a written signature.
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(b) For the purposes of this subpart, an electronic record, defined by the Electronic Signatures in
Global and National Commerce Act as a contract or other record created, generated, sent,
communicated, received, or stored by electronic means, constitutes a record.
23. Add § 54.420 to Subpart E to read as follows:
§ 54.420 Low income program audits.
(a) Independent audit requirements for eligible telecommunications carriers. Companies that
receive $5 million or more annually in the aggregate, on a holding company basis, in Lifeline
reimbursements must obtain a third party biennial audit of their compliance with the rules in this
subpart. Such engagements shall be agreed upon performance attestations to assess the
company’s overall compliance with rules and the company’s internal controls regarding these
regulatory requirements.
(1) For purposes of the $5 million threshold, a holding company consists of operating
companies and affiliates, as that term is defined in section 3(2) of the Communications
Act of 1934, as amended, that are eligible telecommunications carriers.
(2) The initial audit must be completed one year after the Commission issues a
standardized audit plan outlining the scope of the engagement and the extent of
compliance testing to be performed by third-party auditors and shall be conducted every
two years thereafter, unless directed otherwise by the Commission. The following
minimum requirements shall apply:
(i) The audit must be conducted by a licensed certified public accounting firm that
is independent of the carrier.
(ii) The engagement shall be conducted consistent with government accounting
standards (GAGAS).
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(3) The certified public accounting firm shall submit to the Commission any rule
interpretations necessary to complete the biennial audit, and the Administrator shall
notify all firms subject to the biennial audit requirement of such requests. The audit issue
will be noted, but not held as a negative finding, in future audit reports for all carriers
subject to this requirement unless and until guidance has been provided by the
Commission.
(4) Within 60 days after completion of the audit work, but prior to finalization of the
report, the third party auditor shall submit a draft of the audit report to the Commission
and the Administrator, who shall be deemed authorized users of such reports. Finalized
audit reports must be provided to the Commission, the Administrator, and relevant states
and Tribal governments within 30 days of the issuance of the final audit report. The
reports will not be considered or deemed confidential.
(5) Delegated authority. The Wireline Competition Bureau and the Office of Managing
Director have delegated authority to perform the functions specified in §§ 54.22(a)(2) and
(a)(3).
(b) Audit requirements for new eligible telecommunications carriers. After a company is
designated for the first time in any state or territory the Administrator will audit that new eligible
telecommunications carrier to assess its overall compliance with the rules in this subpart and the
company’s internal controls regarding these regulatory requirements. This audit should be
conducted within the carrier’s first twelve months of seeking federal low-income Universal
Service Fund support.
24. Add § 54.422 to Subpart E to read as follows:
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§ 54.422 Annual reporting for eligible telecommunications carriers that receive low-
income support.
(a) In order to receive support under this subpart, an eligible telecommunications carrier must
annually report the company name, names of the company’s holding company, operating
companies and affiliates, and any branding (a “dba,” or “doing-business-as company” or brand
designation) as well as relevant universal service identifiers for each such entity by Study Area
Code. For purposes of this paragraph, “affiliates” has the meaning set forth in section 3(2) of the
Communications Act of 1934, as amended.
(b) In order to receive support under this subpart, a common carrier designated as an eligible
telecommunications carriers under section 214(e)(6) of the Act must annually provide:
(1) Detailed information on any outage in the prior calendar year, as that term is defined
in 47 CFR § 4.5, of at least 30 minutes in duration for each service area in which the
eligible telecommunications carrier is designated for any facilities it owns, operates,
leases, or otherwise utilizes that potentially affect
(i) At least ten percent of the end users served in a designated service area; or
(ii) A 911 special facility, as defined in 47 CFR § 4.5(e).
(iii) Specifically, the eligible telecommunications carrier's annual report must
include information detailing:
(A) The date and time of onset of the outage;
(B) A brief description of the outage and its resolution;
(C) The particular services affected;
(D) The geographic areas affected by the outage;
(E) Steps taken to prevent a similar situation in the future; and
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(F) The number of customers affected.
(2) The number of complaints per 1,000 connections (fixed or mobile) in the prior
calendar year;
(3) Certification of compliance with applicable service quality standards and consumer
protection rules;
(4) Certification that the carrier is able to function in emergency situations as set forth in
§ 54.202(a)(2);
(5) Information describing the terms and conditions of any voice telephony service plans
offered to Lifeline subscribers, including details on the number of minutes provided as
part of the plan, additional charges, if any, for toll calls, and rates for each such plan. To
the extent the eligible telecommunications carrier offers plans to Lifeline subscribers that
are generally available to the public, it may provide summary information regarding such
plans, such as a link to a public website outlining the terms and conditions of such plans.
(c) All reports required by this section must be filed with the Office of the Secretary of
the Commission, and with the Administrator. Such reports must also be filed with the
relevant state commissions and the relevant authority in a U.S. territory or Tribal
governments, as appropriate.
APPENDIX
B
Proposed Rules
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Current rule language = italics
New rule language = black standard text
Deletions from current rules = italics, strikethrough text
§ 54.417 Recordkeeping Requirements
(a) Eligible telecommunications carriers must maintain records to document compliance with all
Commission and state requirements governing the Lifeline/Link Up programs for the three ten
full preceding calendar years and provide that documentation to the Commission or
Administrator upon request. Notwithstanding the preceding sentence, eligible
telecommunications carriers must maintain the documentation required in §§ 54.409(d) and
54.410(b)(3) for as long as the consumer receives Lifeline service from that eligible
telecommunications carrier. If an eligible telecommunications carrier provides Lifeline
discounted wholesale services to a reseller, it must obtain a certification from that reseller that it
is complying with all Commission requirements governing the Lifeline/Link Up programs.
(b) Non-eligible-telecommunications-carrier resellers that purchase Lifeline discounted
wholesale services to offer discounted services to low-income consumers must maintain records
to document compliance with all Commission requirements governing the Lifeline/Link Up
programs for the three full preceding calendar years and provide that documentation to the
Commission or Administrator upon request. To the extent such a reseller provides discounted
services to low-income consumers, it constitutes the eligible telecommunications carrier
referenced in §§ 54.405(c), 54.405(d), 54.409(d), 54.410, and 54.416.
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APPENDIX
C
Certification Requirements for Lifeline Subscribers
Pursuant to the Universal Service Low-Income Order, all ETCs (or the state Lifeline program
administrator, where applicable) must provide the following information in clear, easily
understandable language on their initial and annual Lifeline certification forms:
Household Information for Initial and Annual Certification Forms
•
Contact Information: All certification forms must ask for the Lifeline subscriber’s name and
address information.
o
Residential Address: Prior to providing service to a consumer, ETCs must collect a
residential address from each subscriber, which the subscriber must indicate is his/her
permanent address, and a billing address, if different than the subscriber’s residential
address. ETCs should inform subscribers that, if the subscriber moves, they must provide
their new address to the ETC within 30 days of moving.
A consumer who lacks a permanent residential address (e.g., address not recognized
by the Post Office, temporary living situation) must provide a temporary residential
service address or other address identifying information that could be used to perform
a check for duplicative support.
o
Consumers using Post Office Box Addresses: Lifeline subscribers may not use a post
office box as their residential address. An ETC may accept a P.O. Box or General
Delivery address as a billing address, but not a residential address.
o
Consumers with Temporary Addresses: ETCs must collect permanent addresses from
subscribers. If a subscriber does not have a permanent address, ETCs must:
Inform applicants that, if they use a temporary address, the ETC will attempt to verify
every 90 days that the subscriber continues to rely on that address, and (as noted
above) the subscriber must notify the ETC within 30 days of their new address after
moving.
Inform the subscriber that if he or she does not respond to the ETC’s address
verification attempts within 30 days, the subscriber may be de-enrolled from the
ETC’s Lifeline service.
•
Multiple Households Sharing an Address: Upon receiving an application for Lifeline
support, all ETCs must check the duplicates database to determine whether an individual at
the applicant’s residential address is currently receiving Lifeline-supported service. The ETC
must also search its own internal records to ensure that it does not already provide Lifeline-
supported service to someone at that residential address.
o
If nobody at the residential address is currently receiving Lifeline-supported service, the
ETC may initiate Lifeline service after determining that the household is otherwise
eligible to receive Lifeline and obtaining all required certifications from the household.
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o
If the ETC determines that an individual at the applicant’s residential address is currently
receiving Lifeline-supported service, the ETC must collect from the applicant upon initial
enrollment and annually thereafter a worksheet that: (1) explains the Commission’s one-
per-household rule; (2) contains a check box that an applicant can mark to indicate that
he or she lives at an address occupied by multiple households; (3) provides a space for
the applicant to initial or certify that he or she shares an address with other adults who do
not contribute income to the applicant’s household and/or share in the household’s
expenses; and (4) notifies applicants of the one-per-household certification requirement
adopted below and the penalty for a consumer’s failure to make the required one-per-
household certification (i.e., de-enrollment).
•
One-per-Household Certification: All consumers must certify that they receive Lifeline
support for a single subscription per household.
o
All ETCs (or state agencies or third-parties, where they are responsible for Lifeline
enrollment in a state) must obtain a certification from the subscriber at sign up and
annually thereafter attesting under penalty of perjury that the subscriber’s household is
receiving no more than one Lifeline-supported service. In addition, the certification form
must include a place for the subscriber to separately acknowledge that, to the best of his
or her knowledge, no one at the consumer’s household is receiving a Lifeline-supported
service from any other provider.
o
The certification form must explain in clear, easily understandable language that: (1)
Lifeline is a federal benefit; (2) Lifeline service is available for only one line per
household; (3) a household is defined, for purposes of the Lifeline program, as any
individual or group of individuals who live together at the same address and share income
and expenses; and (4) households are not permitted to receive benefits from multiple
providers.
o
The certification form must also contain clear, easily understandable language stating that
violation of the one-per-household requirement would constitute a violation of the
Commission’s rules and would result in the consumer’s de-enrollment from the program,
and potentially, prosecution by the United States government.
Eligibility Information for Initial and Annual Certification Forms
•
Identity Information: all certification forms must ask for the Lifeline subscriber’s date of
birth and the last 4 digits of the subscriber’s social security number.
•
Establishing eligibility for Lifeline:
o
The certification form should be written in clear, easily understandable language and
should include a place for the customer to sign under penalty of perjury attesting to
his/her eligibility for Lifeline. All ETCs (or the state Lifeline program administrator,
where applicable) should obtain the consumer's signature certifying under penalty of
perjury that:
The consumer either participates in a qualifying federal program or meets the income
qualifications to establish eligibility for Lifeline;
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The consumer has provided documentation of eligibility, if required to do so;
The consumer attests that the information contained in his or her application is true
and correct to the best of his or her knowledge and acknowledging that providing
false or fraudulent information to receive Lifeline benefits is punishable by law. The
certification form should explain that Lifeline is a government benefit program and
consumers who willfully make false statements in order to obtain the benefit can be
punished by fine or imprisonment or can be barred from the program.
o
The certification form must include space for consumers qualifying for Lifeline under an
income-based criterion to certify the number of individuals in their household.
o
ETCs (or the state administrator, where applicable) should also obtain the consumer’s
initials or signature on the certification form acknowledging that the consumer may be
required to re-certify his or her continued eligibility for Lifeline at any time, and that
failure to do so will result in the termination of the consumer’s Lifeline benefits.
•
Consumer no longer eligible for Lifeline: The certification form must notify the consumer
using clear, easily understandable language that he or she must inform the ETC within 30
days if (1) the consumer ceases to participate in a federal qualifying program or programs or
the consumer’s annual household income exceeds 135% of the Federal Poverty Guidelines;
(2) the consumer is receiving more than one Lifeline-supported service; or (3) the consumer,
for any other reason, no longer satisfies the criteria for receiving Lifeline support.
Additionally, prior to enrolling in Lifeline, consumers must certify attest under penalty of
perjury that they understand the notification requirement, and that they may be subject to
penalties if they fail to follow this requirement.
•
Tribal eligibility: Consumers seeking Tribal lands Lifeline support must certify that they
reside on Federally-recognized Tribal lands.
•
Non-transferability of Lifeline benefit: The certification form should inform consumers that
Lifeline service is a non-transferable benefit, and that a Lifeline subscriber may not transfer
his or her service to any other individual, including another eligible low-income consumer.
Annual Re-certification of Consumer Eligibility for Lifeline
•
By the end of 2012, each Lifeline subscriber enrolled in the program as of June 1, 2012 must
provide a signed re-certification form to the ETC (or the state Lifeline administrator, where
applicable) attesting to their continued eligibility for Lifeline. This signed certification
should collect all of the subscriber information noted above, including an updated address.
Consumers may provide the re-certification in writing, by phone, by text message, by email,
or otherwise through the Internet.
•
Alternatively, where a database containing consumer eligibility data is available, the carrier
(or state Lifeline administrator, where applicable) must query the database by the end of
2012 and maintain a record of what specific data was used to re-certify the consumer’s
eligibility and the date that the consumer was re-certified.
•
The ETC or the state administrator, where applicable, must report the results of their re-
certification efforts to USAC, the Commission, and the relevant state commission (where the
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state has jurisdiction over the carrier) by January 31, 2013. ETCs or the state administrator,
where applicable, should also provide their re-certification results to the relevant Tribal
government, for subscribers residing on reservations or Tribal lands.
•
ETCs must remind consumers about the annual re-certification requirement on the ETC’s
certification form that is completed upon program enrollment and annually thereafter.
Database
•
Consent to provide information to the database: An ETC must obtain acknowledgement and
consent from each of its subscribers that is written in clear, easily understandable language
that the subscriber’s name, telephone number, and address will be divulged to the Universal
Service Administrative Company (USAC) (the administrator of the program) and/or its
agents for the purpose of verifying that the subscriber does not receive more than one
Lifeline benefit. In the event that USAC identifies a consumer as receiving more than one
Lifeline subsidy per household, all carriers involved may be notified so that the consumer
may select one service and be de-enrolled from the other.
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APPENDIX
D
Lifeline Verification Survey Results for 2011 and 2007
Table 1 – Lifeline Verification Results for 20111
State /
Average
Subscribers
52,865
Found
4,694
No response
14,219
Percentage
9%
Percentage
27%
Territory
Surveyed
ineligible
to survey
Deemed
Non-
Ineligible
Responders
Federal Default States
American
62 0 16
0% 26%
Samoa
Delaware 534
56
217
10%
41%
Hawaii 499 61
116
12%
23%
Indiana 2,066 340
647
16%
31%
Iowa 12,015
711 4,936 6% 41%
Louisiana 3,656
331
926
9%
25%
New
629 115 156
18% 25%
Hampshire
North
2,240 419 706
19%
32%
Dakota
Northern
1,857 0
0
0%
0%
Mariana
Islands
South
2,411 243 802
10%
33%
Dakota
Non-Federal-Default States Mandating that ETCs Follow Federal Verification Procedures
Arkansas 6,114 384
653
6%
11%
New York
6,276
401
1,755
6%
28%
North
4,288 171 689
4%
16%
Carolina
Non-Federal-Default States Requiring ETCs to submit verification results to USAC
Alabama 4,594 858
1,193
19%
26%
Arizona 1,982 180
674
9%
34%
Pennsylvania 2,519
226
395
9%
16%
West
1,123 198 338
18%
30%
Virginia
1 Letter from Karen Majcher, Vice President High Cost and Low Income Division, Universal Service
Administrative Company, to Sharon Gillett, Chief, Wireline Competition Bureau, Federal Communications
Commission, WC Dkt. Nos. 11-42, 03-109, CC Dkt. No. 96-45, at 3 (Jan. 24, 2012) (USAC 2011 Verification
Results Letter). As USAC noted, In 2010, USAC could not confirm that Kentucky, Puerto Rico, and Tennessee
required ETCs to submit verification results to USAC. Id. at 1 n.3. Therefore, USAC excluded those states from
the list of non-federal default states that require ETCs to submit verification results to USAC for 2011. Id.
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Table 2 – Lifeline Verification Results for 20072
State /
Subscribers
Found
No response
Percentage
Percentage
Territory
Surveyed
ineligible
to survey
Deemed
Non-
Ineligible
Responders
Federal Default States
American
154 3
0
2%
0%
Samoa
Delaware 250
4
162
2%
65%
Hawaii 296 54
11
18%
4%
Iowa 9,492
1,646
1,219 17% 13%
Indiana 2,669 991
1,065
37%
40%
Louisiana 2,141
673
175
31%
8%
New
483 108 212
22% 44%
Hampshire
North
2,795 342 574
12%
21%
Dakota
Northern
947 0
0
0%
0%
Mariana
Islands
South
1,823 472 447
26%
25%
Dakota
Non-Federal-Default States Mandating that ETCs Follow Federal Verification Procedures
Arkansas 5,650 1,608 296
28%
5%
New York
4,208
624
585
15%
14%
North
10,534 940
600
9%
6%
Carolina
Non-Federal-Default States Requiring ETCs to submit verification results to USAC
Alabama 4,618 1,393 454
30%
10%
Arizona 1,313 619
525
47%
40%
Kentucky 11,482 1,253
1,788
11%
16%
Pennsylvania 138,453
10,956
9,866
8%
7%
Puerto Rico
4
3
0
75%
0%
Tennessee 4,907
1,562
891
32%
18%
West 838 109 702
13% 84%
2 Letter from Karen Majcher, Vice President High Cost and Low Income Division, to Sharon Gillett, Chief, Wireline
Competition Bureau, Federal Communications Commission, WC Dkt. Nos. 11-42, 03-109, CC Dkt. No. 96-45, at 3
(Jan. 10, 2012) (USAC Certification & Verification Letter and Data).
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Virginia
Average
203,057
23,360
19,572
12%
10%
278
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APPENDIX
E
Initial Commenters
Commenter Abbreviation
AARP
AARP
Advocates for Basic Legal Equality, Inc.
Community Counseling Bristol County
Community Voice Mail
Crossroads Urban Center
Disability Right Advocates
Legal Services Advocacy Project
Low Income Utility Advocacy Project
National Center for Medical-Legal Partnership
National Consumer Law Center, On Behalf of Our
Low-Income Clients
New Jersey Shares
Ohio Poverty Law Center
Open Access Connections
Pennsylvania Utility Law Project
Pro Seniors, Inc.
Salt Lake Community Action Program
Texas Legal Services Center
Virginia Citizens Consumer
Council Consumer
Groups
Alaska
Telephone
Association
ATA
American
Library
Association
ALA
American Public Communications Council, Inc.
APCC
Amvensys Telecom Holdings, LLC
Amvensys
Area Agency on Aging of West Central Arkansas
Area Agency on Aging WCA
Arkansas Advocates for Nursing Home Residents
AANHR
Association of Programs for Rural Independent
Living APRIL
AT&T
AT&T
Benton Foundation and Center for Rural Strategies
Public Knowledge and United Church of Christ,
OC
Inc.
Benton/PK/UCC
Box
Top
Solutions,
Inc.
Box
Top
Budget
Prepay,
Inc.
GreatCall,
Inc.
and PR Wireless Inc. d/b/a Open
Mobile
Budget/GreatCall/PR
CenturyLink
CenturyLink
CGM, LLC
CGM
Cincinnati
Bell
Inc.
Cincinnati
Bell
City Councilor Sean Paulhus (ME)
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City of New York
City of NY
City of North Las Vegas
North Las Vegas
Comcast
Corporation
Comcast
Commissioner Brenda Howerton (NC)
Commissioner Joe Bowser (NC)
Commissioner Lawrence Weekly (NV)
Commissioner Michael Page (NC)
Ogden-Weber Community Action Partnership
OWCAP
COMPTEL
COMPTEL
Conexions LLC d/b/a Conexion Wireless
Conexions
Consumer Cellular, Inc.
CCI
Connecticut Department of Public Utility Control
CT DPUC
Councilman Christopher A. Hilbert (VA)
Councilman Howard Clement (NC)
Councilman Jamie Benoit (MD)
Councilman Kelvin E. Washington, Sr. (SC)
Councilman Ricki Y. Barlow (NV)
Councilwoman Cora Cole-McFadden (NC)
Cox
Communication
Inc.
Cox
CTIA–The
Wireless
Association
CTIA
Daniel Reyes, III
Delegate Benjamin S. Barnes
Delegate Eileen Filler-Corn
Delegate Joe Morrissey (VA)
Delegate Paula J. Miller (VA)
Public Service Commission of the District of Columbia
DC PSC
Educational
Services
Network,
Corp.
EDNet
Executive Councilor Daniel St. Hilaire (NH)
Florida Public Service Commission
FL PSC
General
Communication,
Inc.
GCI
Gila River Telecommunications, Inc.
GRTI
House Democratic Caucus (GA)
Indiana Family and Social Services Administration
Indiana FSSA
Indiana Utility Regulatory Commission
IN
URC
Institute for Health, Law & Ethics
IHLE
Iridium
Satellite
LLC
Iridium
Keep USF Fair Coalition
Keep USF Fair
Kevan Lee Deckelmann
Las Vegas Urban League
Las Vegas Urban League
The Leadership Conference on Civil and Human Rights
LCCHR
Leap Wireless International, Inc.
and Cricket Communications,
Inc.
Cricket
Massachusetts Department of Telecommunications
and
Cable
MA
DTC
Mayor Jim Bouley (NH)
Media Action Grassroots Network
MAG-Net
280
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Michigan Public Service Commission
MI PSC
Minority Media and Telecommunications Council
MMTC
Mississippi
Public
Service
Commission
MS
PSC
Public Service Commission of the State of Missouri
MO PSC
National ALEC Association/Prepaid Communications
Association
NALA/PCA
National Association for the Advancement of Colored
People Reno / Sparks Branch #1112
NAACP Reno Sparks
National Association of State Utility Consumer Advocates NASUCA
National Association of Telecommunications Officers
and
Advisors
NATOA
National Cable & Telecommunications Association
NCTA
National
Consumer
Law
Center
NCLC
National Telecommunications Cooperative Association
NTCA
Nebraska
Public
Service
Commission NE
PSC
New
America
Foundation
NAF
New Hampshire Coalition of Aging Services
NH Coalition of Aging
New Hampshire Coalition Against Domestic and
Sexual Violence
NHCADSV
New Jersey Division of Rate
Counsel NJ
DRC
New York State Public Service Commission
NY PSC
Nexus
Communications,
Inc.
Nexus
Ohio Association of Second Harvest Food Banks
OASHF
Open Access Connections (formerly Twin Cities
Community Voice Mail)
Energy Cents Coalition
Main Street Project
Minnesota Center for Neighborhood
Organizaing Voices for Change
Open Access
One
Economy
Corp.
One
Economy
Partnership for a Connected Illinois
PCI
Public Utilities Commission of Ohio
OH PUC
Public Utilities Commission of Oregon
OR PUC
Rainbow
PUSH
Coalition
Rainbow
PUSH
Reunion
Communications,
Inc.
Reunion
San Juan Cable LLC d/b/a OneLink Communications
OneLink
Several Members of the Texas House Democratic
Caucus
Smith
Bagley,
Inc.
SBI
Solix, Inc.
Solix
Southern
Nevada
Children
First
SNCF
Sprint
Nextel
Corp.
Sprint
State Representative Barbara B. Boyd, Ed. D. (OH)
State Representative Bob Turner (WI)
State Representative Christopher J. England (AL)
State Representative Cory Mason (WI)
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State Representative Demetrius C. Newton (AL)
State Representative Denise Driehaus (OH)
State Representative Denise Harlow (ME)
State Representative Diane Russell (ME)
State Representative Dennis Murray (OH)
State Representative J. M. Lozano (TX)
State Representative John F. Knight (AL)
State Representative John Robinson (AL)
State Representative John W. Rogers (AL)
State Representative Leslie Milam Post (AR)
State Representative Mark Eves (ME)
State Representative Peter Stuckey (ME)
State Representative Ralph Howard (AL)
State Representative Richard Laird (AL)
State Representative Sheila Lampkin (AR)
State Representative Stacy Adams (GA)
State Representative Tony Payton (PA)
State Senator Jason Wilson (OH)
State Senator John C. Astle (MD)
State Senator Thomas Mac Middleton (MD)
Suzanne Burke
TCA
TCA
TracFone
Wireless,
Inc.
TracFone
United States Telecom Association
USTelecom
Verizon
and
Verizon
Wireless Verizon
ViaSat,
Inc.
ViaSat
Virginia Interfaith Center for Public Policy
Virginia Interfaith Center
YourTel
America,
Inc.
YourTel
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283
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APPENDIX
F
Reply Commenters
Commenter Abbreviation
Advocates for Basic Legal Equality, Inc.
Community Voice Mail National
Disability Rights Advocates
Low Income Utility Advocacy Project
The National Consumer Law Center, on Behalf of our
Low-Income
Clients
Ohio Poverty Law Center
Open Access Connections
Pennsylvania Utility Law Project
Pro Seniors, Inc.
Texas Legal Services Center
Virginia Citizens Consumer
Council Consumer
Groups
American Public Communications Council, Inc.
APCC
Amvensys Telecom Holdings, LLC
Amvensys
AT&T
AT&T
California Public Utilities Commission
CA PUC
COMPTEL
COMPTEL
CTIA–The
Wireless
Association
CTIA
Emerios
Emerios
Fletcher School (Tufts University)
Fletcher
School
General
Communication,
Inc.
GCI
Leap Wireless International, Inc. and Cricket
Communications, Inc.
Cricket
Media Action Grassroots Network
MAG-Net
MFY
Legal
Services,
Inc.
MFY
Legal
Services
Michigan Public Service Commission
MI PSC
Montana Independent Telecommunications Systems, LLC MITS
National ALEC Association/Prepaid Communications
Association
NALA/PCA
National Association of State Utility Consumer Advocates NASUCA
National Hispanic Media Coalition
NHMC
New Jersey Division of Rate
Counsel NJ
DRC
Nexus
Communications,
Inc.
Nexus
One Economy Corp.
League of United Latin America Citizens
Minority Media and Telecommunications Council
One Economy
Open
Access
Connections
Open
Access
Connections
PR Wireless, Inc. d/b/a Open Mobile
PR
Wireless
Regulatory Commission of Alaska
Alaska
Commission
284
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Reunion
Communications,
Inc.
Reunion
Sprint
Nextel
Corporation
Sprint
State
of
Alaska Alaska
Texas Statewide Telephone Cooperative, Inc.
TX
Telephone
Cooperative
TracFone
Wireless,
Inc.
TracFone
Verizon
and
Verizon
Wireless Verizon
YourTel
America,
Inc.
YourTel
285
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APPENDIX
G
Further Inquiry Public Notice (DA 11-1346) Commenters
Commenter Abbreviation
Advocates for Basic Legal Equality, Inc.
Center for Accessible Technology
Community Voice Mail
Crossroads Urban Center
Legal Services Advocacy Project
The Low Income Utility Advocacy Project
National Consumer Law Center
National Center for Medical-Legal Partnership
Ohio Poverty Law Center
Pennsylvania Utility Law Project
Pro Seniors, Inc.
Salt Lake Community Action Program
Texas Legal Services Center
Virginia Citizens Consumer Council
Alabama Public Service Commission
APSC
American Public Communications Council
APCC
Atlantic
Tele-Network,
Inc.
ATNI
Allied Wireless Communications Corporation
Allied
Wireless Comnet of Nevada, LLC
Comnet
Choice
Communications,
LLC
Choice
AT&T
AT&T
Benton Foundation
New America Foundation
Public Knowledge
United Church of Christ
OC Inc.
Center For Rural Strategies
Access Humboldt and Deep Tech
Benton
Budget PrePay, Inc.
Budget PrePay
GreatCall,
Inc.
GreatCall
PR Wireless Inc. d/b/a Open Mobile
PR
Wireless
California Public Utilities Commission
CA PUC
CenturyLink
CenturyLink
COMPTEL
Connected
Living
Inc.
Connected
Living
Cox
Communications,
Inc.
Cox
Don
S.
Samuelson
Associates
DSSA
Emerios
Emerios
Free State Foundation
286
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General
Communication,
Inc.
GCI
Gila River Telecommunications, Inc.
GRTI
Latinos in Information Sciences and Technology
Association
LISTA
Leap Wireless International, Inc.
Cricket Communications, Inc.
Cricket
Link Up for America Coalition
LUAC
Michigan Public Service Commission
MPSC
Minority Media and Telecommunications Council
MMTC
Public Service Commission of the State of Missouri
MoPSC
National Association of State Utility Consumer Advocates NASUCA
New Jersey Division of Rate
Counsel
NJ
DRC
National
Consumer
Law
Center
NCLC
Nexus
Communications,
Inc.
Nexus
Smith
Bagley,
Inc.
SBI
Sprint
Nextel
Corporation
Sprint
Standing Rock Sioux Tribe
SRST
Standing Rock Telecommunications Inc.
SRTI
TracFone
Wireless,
Inc.
TracFone
287
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APPENDIX
H
Further Inquiry Public Notice Reply Commenters
Commenter
Abbreviation
AT&T Inc.
AT&T
Benton
Foundation
Benton
Foundation
CenturyLink
CenturyLink
Cincinnati
Bell
Inc.
Cincinnati
Bell
Cintex
Wireless,
LLC
Cintex
COMPTEL
COMPTEL
CTIA–The
Wireless
Association
CTIA
General
Communication,
Inc.
GCI
Gila River Telecommunications, Inc.
GRTI
Joint Center for Political and Economic
Studies
Joint
Center
The
Leadership
Conference
Leap Wireless International, Inc.
Cricket Communications, Inc.
Cricket
Link Up for America Coalition
Coalition
Massachusetts Department of Telecommunications
and Cable
MDTC
Media Action Grassroots Network
MAG-Net
National Association of State Utility Consumer Advocates NASUCA
New Jersey Division of Rate
Counsel
NJ
DRC
National Telecommunications Cooperative Association
NTCA
Nexus
Communications,
Inc.
Nexus
Rainbow
PUSH
Coalition
Rainbow
PUSH
Smith Bagley, Inc.
SBI
Sprint
Nextel
Corporation
Sprint
Third Party Verification, Inc.
3PV
TracFone
Wireless,
Inc.
TracFone
Verizon
and
Verizon
Wireless
Verizon
288
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APPENDIX
I
USAC Disbursement Public Notice Commenters
Commenter Abbreviation
Alexicon Telecommunications Consulting
Alexicon
CenturyLink
CenturyLink
COMPTEL
Comptel
Michigan Public Service Commission
MI PSC
PR Wireless, Inc. d/b/a Open Mobile
PR
Wireless
Smith
Bagley,
Inc.
Smith
Bagley
South Carolina Office of Regulatory Staff
South Carolina Office of Regulatory
Staff
Sprint
Nextel
Corporation
Sprint
United States Telecom Association
USTelecom
Verizon and Verizon Wireless
Verizon and Verizon Wireless
Reply Commenter
MDTC
National Tribal Telecommunications Association
NTTA
Nexus
Communications,
Inc.
Nexus
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APPENDIX
J
Final Regulatory Flexibility Analysis
1. As required by the Regulatory Flexibility Act of 1980, as amended (RFA),1 an InitialRegulatory Flexibility Analysis (IRFA) was incorporated in the Lifeline and Link Up Reform
and Modernization Notice of Proposed Rulemaking (Lifeline and Link Up NPRM).2 The
Commission sought written public comments on the proposals in the Lifeline and Link Up
NPRM, including comment on the IRFA. This present Final Regulatory Flexibility Analysis
(FRFA) conforms to the RFA.3
A.
Need for, and Objectives of, the Order
2. The Commission is required by section 254 of the Act to promulgate rules toimplement the universal service provisions of section 254.4 On May 8, 1997, the Commission
adopted rules that reformed its system of universal service support mechanisms so that universal
service is preserved and advanced as markets move toward competition.5 Among other
programs, the Commission adopted a program to provide discounts that make basic, local
telephone service affordable for low-income consumers.6
3.
In this Order, we comprehensively reform and begin to modernize the Universal
Service Fund’s Lifeline program (Lifeline or the program). Building on recommendations from
the Federal-State Joint Board on Universal Service (“Joint Board”), proposals in the National
Broadband Plan, input from the Government Accountability Office (GAO), and comments
received in response to the Commission’s March Notice of Proposed Rulemaking7 the reforms
adopted in this Order substantially strengthen protections against waste, fraud, and abuse;
improve program administration and accountability; improve enrollment and consumer
disclosures; initiate modernization the program for broadband; and constrain the growth of the
program in order to reduce the burden on all who contribute to the Universal Service Fund (USF
1 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601-612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (“SBREFA”), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
2 Lifeline and Link Up Reform and Modernization, WC Dkt. No. 11-42, CC Docket No. 96-45, WC Docket No. 03-
109, Notice of Proposed Rulemaking, 26 FCC Rcd 2770, FCC 11-32 (2011) (Lifeline and Link Up NPRM).
3 See 5 U.S.C. § 604.
4 47 U.S.C. § 254.
5 Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776,
paras. 326-328 (1997).
6 See id.
7 Federal-State Joint Board on Universal Service, Lifeline and Link Up, CC Docket No. 96-45, WC Docket No. 03-
109, Recommended Decision, 25 FCC Rcd 15598 (Jt. Bd. 2010) (2010 Recommended Decision); see FEDERAL
COMMUNICATIONS COMMISSION, OMNIBUS BROADBAND INITIATIVE, CONNECTING AMERICA: THE NATIONAL
BROADBAND PLAN (2010) (NATIONAL BROADBAND PLAN), available at http://www.broadband.gov/plan; U.S.
GOVERNMENT ACCOUNTABILITY OFFICE, REPORT TO CONGRESSIONAL REQUESTERS, GAO 11-11,
TELECOMMUNICATIONS: IMPROVED MANAGEMENT CAN ENHANCE FCC DECISION MAKING FOR THE UNIVERSAL
SERVICE FUND LOW-INCOME PROGRAM (2010) (2010 GAO Report); Federal-State Joint Board on Universal
Service, Lifeline and Link Up, WC Dkt. No. 11-42 et al., Notice of Proposed Rulemaking, 26 FCC Rcd 2770 (2011)
(NPRM or Lifeline and Link Up NPRM). See also Appendices E & F listing comments and replies.
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or the Fund). We take these significant actions, while ensuring that eligible low-income
consumers who do not have the means to pay for telephone service can maintain their current
voice service through the Lifeline program and those who are not currently connected to the
networks will have the opportunity to benefit from this program and the numerous opportunities
and security that telephone service affords.
4.
This Order is another step in the Commission’s ongoing efforts to overhaul all
Universal Service Fund programs to fulfill the goals Congress gave us to promote the availability
of modern networks and the capability of all American consumers to access and use those
networks. Consistent with previous efforts, we act here to eliminate waste and inefficiency,
increase accountability, and transition the Fund from supporting standalone telephone service to
broadband.8 In June 2011, the Commission adopted the Duplicative Program Payments Order,
which made clear that an eligible consumer may only receive one Lifeline-supported service,
established procedures to detect and de-enroll subscribers receiving duplicative Lifeline-
supported services, and directed USAC to implement a process to detect and eliminate
duplicative Lifeline support—a process now completed in 12 states and expanding to other states
in the near future.9 Building on those efforts, we estimate that the unprecedented reforms
adopted in today’s Order could save the Fund up to an estimated $2 billion over the next three
years, keeping money in the pockets of American consumers that otherwise would have been
wasted on duplicative benefits, subsidies for ineligible consumers, or fraudulent misuse of
Lifeline funds.
5.
These savings will reduce growth in the Fund but at the same time provide
telephone service to consumers who remain disconnected from the voice networks of the
Twentieth Century. Moreover, by using a fraction of the savings from eliminating waste and
abuse in the program to create a broadband pilot program, we explore how Lifeline can best be
used to help low-income consumers access the networks of the Twenty-First Century by closing
the broadband adoption gap. This complements the recent USF/ICC Transformation Order and
8 See Joint Statement on Broadband, GN Dkt. No. 10-66, Joint Statement on Broadband, 25 FCC Rcd 3420 (2010).
The Commission has already made important strides in this area: We have modernized the E-rate program, by
enabling schools and libraries to get faster Internet connections at lower cost. Schools and Libraries Universal
Service Support Mechanism, A National Broadband Plan For Our Future, CC Docket No. 02-6, GN Docket No. 09-
51, Sixth Report and Order, 25 FCC Rcd 18762 (2010) (E-rate Sixth Report and Order). We have established a
Connect America Fund (CAF) to spur the build out of broadband networks, both mobile and fixed, in areas of the
country that are uneconomic to serve. See Connecting America et al., WC Dkt. No. 01-92 et al., Report and Order
and Further Notice of Proposed Rulemaking, 26 FCC Rcd 16522 paras. 115-567 (2011) (USF/ICC Transformation
Order and FNPRM). We have proposed changes to the rural health care program so patients at rural clinics can
benefit from broadband-enabled care, such as remote consultations with specialists anywhere in the country. Rural
Health Care Universal Service Support Mechanism, WC Docket No. 02-60, Notice of Proposed Rulemaking, 25
FCC Rcd 9371 (2010) (Rural Health Care NPRM).
9 Lifeline and Link Up Reform and Modernization et al, Report and Order, WC Dkt. No. 11-42 et al., 26 FCC Rcd
9022 (2011) (Duplicative Program Payments Order); Letter from Sharon E. Gillett, Chief, Wireline Competition
Bureau, Federal Communications Commission, to D. Scott Barash, Acting Chief Executive Officer, Universal
Service Administrative Company (USAC), WC Docket Nos. 11-42, 03-109, CC Docket No. 96-45, DA 11-1082
(Wireline Comp. Bur. Jun. 21, 2011) (June Guidance Letter); Letter from Sharon E. Gillett, Chief, Wireline
Competition Bureau, Federal Communications Commission, to D. Scott Barash, Acting Chief Executive Officer,
Universal Service Administrative Company (USAC), WC Docket Nos. 11-42, 03-109, CC Docket No. 96-45, DA
11-1986, (Wireline Comp. Bur. Dec. 11, 2011) (December Guidance Letter).
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FNPRM, which reoriented intercarrier compensation and the high-cost fund toward increasing
the availability of broadband networks, as well as the recently launched Connect to Compete
private-sector initiative to increase access to affordable broadband service for low-income
consumers.
6.
To make the program more accountable, the Order establishes clear goals and
measures and establishes national eligibility criteria to allow low-income consumers to qualify
for Lifeline based on either income or participation in certain government benefit programs. The
Order adopts rules for Lifeline enrollment, including enhanced initial and annual certification
requirements, and confirms the program’s one-per-household requirement. The Order simplifies
Lifeline reimbursement and makes it more transparent. The Commission adopts a number of
reforms to eliminate waste, fraud and abuse in the program, including creating a National
Lifeline Accountability Database to prevent multiple carriers from receiving support for the same
subscribers; phasing out toll limitation service support; eliminating Link Up support except for
recipients on Tribal lands that are served by eligible telecommunications carriers (“ETCs”) that
participate in both Lifeline and the high-cost program; reducing the number of ineligible
subscribers in the program; and imposing independent audit requirements on carriers receiving
more than $5 million in annual support. These reforms are expected to save the Fund
approximately $2 billion over the next three years. Using savings from the reforms, the Order
establishes a Broadband Adoption Pilot Program to test and determine how Lifeline can best be
used to increase broadband adoption among Lifeline-eligible consumers. We also establish an
interim base of uniform support amount of $9.25 per month for non-Tribal subscribers to
simplify program administration.
B.
Summary of Significant Issues raised by Public Comments in Response to the
IRFA
No comments were filed in response to the IRFA attached to the Lifeline and Link
Up NPRM. Notwithstanding the foregoing, general comments discussing the impact of the
proposed rules on small business were submitted in response to the Lifeline and Link Up NPRM.
With respect to the proposal to provide household identifying information as a measure to
prevent duplicate enrollment, one commenter expressed concern that the imposition of a data
transmission requirement would result in new training, programming, and administrative
expenses which would be burdensome on small entities.10 One commenter opposed any
limitations placed on Link Up support arguing that such limitations would inhibit small ETCs’
ability to participate in the low income program.11 Commenters expressed concern that the
newly proposed audit requirements would be expensive and difficult for small companies to
comply with.12 One commenter opposed the proposed verification proposals asserting that such
new requirements would be unnecessarily expensive and disproportionately burden small
businesses.13 Commenters opposed the proposed sampling methodology to confirm eligibility as
10 See TSTCI Reply Comments at 2; see also, e.g., NTCA Comments at 3 (efforts to comply with the one-per-
household limitation should not impose additional administrative costs on small companies).
11 See Nexus Reply Comments at 5, 6.
12 See NTCA Comments at 5-7; see also MITS Reply Comments at 5; TSTCI Reply Comments at 4.
13 See NTCA Comments at 5, 7).
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it would have the result of requiring small entities to sample most if not all of their Lifeline
subscribers.14 Commenters asserted that outreach efforts may be unreasonably burdensome for
small ETCs.15 In making the determinations reflected in the Order, we have considered the
impact of our actions on small entities.
C.
Description and Estimate of the Number of Small Entities to which the
Proposed Rules Will Apply:
The RFA directs agencies to provide a description of and, where feasible, an
estimate of the number of small entities that may be affected by the proposed rules, if adopted.16
The RFA generally defines the term “small entity” as having the same meaning as the terms
“small business,” “small organization,” and “small governmental jurisdiction.”17 In addition, the
term “small business” has the same meaning as the term “small business concern” under the
Small Business Act.18 A small business concern is one that: (1) is independently owned and
operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA).19 Nationwide, there are a total of
approximately 29.6 million small businesses, according to the SBA.20 A “small organization” is
generally “any not-for-profit enterprise which is independently owned and operated and is not
dominant in its field.”21 Nationwide, as of 2002, there were approximately 1.6 million small
organizations.22 The term “small governmental jurisdiction” is defined generally as
“governments of cities, towns, townships, villages, school districts, or special districts, with a
population of less than fifty thousand.”23 Census Bureau data for 2002 indicate that there were
87,525 local governmental jurisdictions in the United States.24 We estimate that, of this total,
14 See MITS Reply Comments at 5; see also NTCA Comments at 6.
15 See LEAP Comments at 12-13; see also NJ FRC Corrected Reply Comments at 13 (citing Cricket Comments at
12).
16 5 U.S.C. § 603(b)(3).
17 5 U.S.C. § 601(6).
18 5 U.S.C. § 601(3) (incorporating by reference the definition of “small business concern” in 15 U.S.C. § 632).
Pursuant to the RFA, the statutory definition of a small business applies “unless an agency, after consultation with
the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes
one or more definitions of such term which are appropriate to the activities of the agency and publishes such
definition(s) in the Federal Register.” 5 U.S.C. § 601(3).
19 Small Business Act, 15 U.S.C. § 632.
20 See Small Business Administration, Office of Advocacy, Frequently Asked Questions,
http://www.sba.gov/advocacy/7495 (last visited March 2, 2011).
21 5 U.S.C. § 601(4).
22 Independent Sector, The New Nonprofit Almanac & Desk Reference (2002).
23 5 U.S.C. § 601(5).
24 U.S. Census Bureau, Statistical Abstract of the United States: 2006, Section 8, page 272, Table 415.
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84,377 entities were “small governmental jurisdictions.”25 Thus, we estimate that most
governmental jurisdictions are small.
1.
Wireline Providers
9.Incumbent Local Exchange Carriers (Incumbent LECs). Neither the Commission
nor the SBA has developed a small business size standard specifically for incumbent local
exchange services. The appropriate size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500
or fewer employees.26 Census Bureau data for 2007, which now supersede data from the 2002
Census, show that there were 3,188 firms in this category that operated for the entire year. Of
this total, 3,144 had employment of 999 or fewer and 44 firms had had employment of 1000 or
more. According to Commission data, 1,307 carriers reported that they were incumbent local
exchange service providers.27 Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer
employees and 301 have more than 1,500 employees.28 Consequently, the Commission estimates
that most providers of local exchange service are small entities that may be affected by the rules
and policies proposed in the Notice. Thus under this category and the associated small business
size standard, the majority of these incumbent local exchange service providers can be
considered small providers.29
10.
Competitive Local Exchange Carriers (Competitive LECs), Competitive Access
Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers.
Neither the Commission nor the SBA has developed a small business size standard specifically
for these service providers. The appropriate size standard under SBA rules is for the category
Wired Telecommunications Carriers. Under that size standard, such a business is small if it has
1,500 or fewer employees.30 Census Bureau data for 2007, which now supersede data from the
2002 Census, show that there were 3,188 firms in this category that operated for the entire year.
Of this total, 3,144 had employment of 999 or fewer and 44 firms had had employment of 1,000
employees or more. Thus under this category and the associated small business size standard,
the majority of these Competitive LECs, CAPs, Shared-Tenant Service Providers, and Other
25 We assume that the villages, school districts, and special districts are small, and total 48,558. See U.S. Census
Bureau, Statistical Abstract of the United States: 2006, section 8, page 273, Table 417. For 2002, Census Bureau
data indicate that the total number of county, municipal, and township governments nationwide was 38,967, of
which 35,819 were small. Id.
26 13 C.F.R. § 121.201, NAICS code 517110.
27 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry
Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service).
28 See id.
29 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517110 in the left column for “Wired telecommunications
carriers”) (last visited March 2, 2011).
30 13 C.F.R. § 121.201, NAICS code 517110.
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Local Service Providers can be considered small entities.31 According to Commission data,
1,442 carriers reported that they were engaged in the provision of either competitive local
exchange services or competitive access provider services.32 Of these 1,442 carriers, an
estimated 1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees.33 In
addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are
estimated to have 1,500 or fewer employees.34 In addition, 72 carriers have reported that they are
Other Local Service Providers.35 Seventy of which have 1,500 or fewer employees and two have
more than 1,500 employees.36 Consequently, the Commission estimates that most providers of
competitive local exchange service, competitive access providers, Shared-Tenant Service
Providers, and Other Local Service Providers are small entities that may be affected by rules
adopted pursuant to the Notice.
11.
Interexchange Carriers. Neither the Commission nor the SBA has developed a
small business size standard specifically for providers of interexchange services. The
appropriate size standard under SBA rules is for the category Wired Telecommunications
Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.37
Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there
were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had
employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more.
Thus under this category and the associated small business size standard, the majority of these
Interexchange carriers can be considered small entities.38 According to Commission data, 359
companies reported that their primary telecommunications service activity was the provision of
interexchange services.39 Of these 359 companies, an estimated 317 have 1,500 or fewer
employees and 42 have more than 1,500 employees.40 Consequently, the Commission estimates
31 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517110 in the left column for “Wired telecommunications
carriers”) (last visited March 2, 2011).
32 See Trends in Telephone Service at Table 5.3.
33 See id.
34 Id.
35 See id.
36 See id.
37 13 C.F.R. § 121.201, NAICS code 517110.
38 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517110 in the left column for “Wired telecommunications
carriers”) (last visited March 2, 2011).
39 See Trends in Telephone Service at Table 5.3.
40 See id.
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that the majority of interexchange service providers are small entities that may be affected by
rules adopted pursuant to the Notice.
12.
Operator Service Providers (OSPs). Neither the Commission nor the SBA has
developed a small business size standard specifically for operator service providers. The
appropriate size standard under SBA rules is the category Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or fewer employees.41 Under
that size standard, such a business is small if it has 1,500 or fewer employees.42 Census Bureau
data for 2007, which now supersede 2002 Census data, show that there were 3,188 firms in this
category that operated for the entire year. Of the total, 3,144 had employment of 999 or fewer,
and 44 firms had had employment of 1,000 employees or more.43 Thus under this category and
the associated small business size standard, the majority of these interexchange carriers can be
considered small entities.44 According to Commission data, 33 carriers have reported that they
are engaged in the provision of operator services. Of these, an estimated 31 have 1,500 or fewer
employees and 2 have more than 1,500 employees.45 Consequently, the Commission estimates
that the majority of OSPs are small entities that may be affected by our proposed action.
13.
Local Resellers. The SBA has developed a small business size standard for the
category of Telecommunications Resellers. Under that size standard, such a business is small if
it has 1,500 or fewer employees.46 Census data for 2007 show that 1,523 firms provided resale
services during that year. Of that number, 1,522 operated with fewer than 1000 employees and
one operated with more than 1,000.47 Thus under this category and the associated small business
size standard, the majority of these local resellers can be considered small entities. According to
Commission data, 213 carriers have reported that they are engaged in the provision of local
resale services.48 Of these, an estimated 211 have 1,500 or fewer employees and two have more
than 1,500 employees.49 Consequently, the Commission estimates that the majority of local
resellers are small entities that may be affected by rules adopted pursuant to the Notice.
41 13 C.F.R. § 121.201, NAICS code 517110.
42 Id.
43 See Wired Telecommunications Data, supra note 33.
44 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517110 in the left column for “Wired telecommunications
carriers”) (last visited March 2, 2011).
45 Trends in Telephone Service at Table 5.3.
46 13 C.F.R. § 121.201, NAICS code 517911.
47 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517911 in the left column for “Telecommunications Resellers”)
(last visited March 2, 2011).
48 See Trends in Telephone Service at Table 5.3.
49 Id.
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14.
Toll Resellers. The SBA has developed a small business size standard for the
category of Telecommunications Resellers. Under that size standard, such a business is small if
it has 1,500 or fewer employees.50 Census data for 2007 show that 1,523 firms provided resale
services during that year. Of that number, 1,522 operated with fewer than 1000 employees and
one operated with more than 1,000.51 Thus under this category and the associated small business
size standard, the majority of these resellers can be considered small entities. According to
Commission data,52 881 carriers have reported that they are engaged in the provision of toll
resale services. Of these, an estimated 857 have 1,500 or fewer employees and 24 have more
than 1,500 employees. Consequently, the Commission estimates that the majority of toll
resellers are small entities that may be affected by our action.
15.
Pre-paid Calling Card Providers. Neither the Commission nor the SBA has
developed a small business size standard specifically for pre-paid calling card providers. The
appropriate size standard under SBA rules is for the category Telecommunications Resellers.
Under that size standard, such a business is small if it has 1,500 or fewer employees.53 Census
data for 2007 show that 1,523 firms provided resale services during that year. Of that number,
1,522 operated with fewer than 1000 employees and one operated with more than 1,000.54 Thus
under this category and the associated small business size standard, the majority of these pre-
paid calling card providers can be considered small entities. According to Commission data, 193
carriers have reported that they are engaged in the provision of pre-paid calling cards.55 Of these,
an estimated all 193 have 1,500 or fewer employees and none have more than 1,500 employees.56
Consequently, the Commission estimates that the majority of pre-paid calling card providers are
small entities that may be affected by rules adopted pursuant to the Notice.
16.
800 and 800-Like Service Subscribers.57 Neither the Commission nor the SBA
has developed a small business size standard specifically for 800 and 800-like service (“toll
free”) subscribers. The appropriate size standard under SBA rules is for the category
Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500
50 13 C.F.R. § 121.201, NAICS code 517911.
51 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517911 in the left column for “Telecommunications Resellers”)
(last visited March 2, 2011).
52 See Trends in Telephone Service at Table 5.3.
53 13 C.F.R. § 121.201, NAICS code 517911.
54 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517911 in the left column for “Telecommunications Resellers”)
(last visited March 2, 2011).
55 See Trends in Telephone Service at Table 5.3.
56 See id.
57 We include all toll-free number subscribers in this category, including those for 888 numbers.
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or fewer employees.58 Census data for 2007 show that 1,523 firms provided resale services
during that year. Of that number, 1,522 operated with fewer than 1000 employees and one
operated with more than 1,000.59 Thus under this category and the associated small business size
standard, the majority of resellers in this classification can be considered small entities. To focus
specifically on the number of subscribers than on those firms which make subscription service
available, the most reliable source of information regarding the number of these service
subscribers appears to be data the Commission collects on the 800, 888, 877, and 866 numbers in
use.60 According to our data, at of September 2009, the number of 800 numbers assigned was
7,860,000; the number of 888 numbers assigned was 5,888,687; the number of 877 numbers
assigned was 4,721,866; and the number of 866 numbers assigned was 7,867,736. The
Commission does not have data specifying the number of these subscribers that are not
independently owned and operated or have more than 1,500 employees, and thus are unable at
this time to estimate with greater precision the number of toll free subscribers that would qualify
as small businesses under the SBA size standard. Consequently, the Commission estimates that
there are 7,860,000 or fewer small entity 800 subscribers; 5,888,687 or fewer small entity 888
subscribers; 4,721,866 or fewer small entity 877 subscribers; and 7,867,736 or fewer small entity
866 subscribers. We do not believe 800 and 800-Like Service Subscribers will be effected by
our proposed rules, however we choose to include this category and seek comment on whether
there will be an effect on small entities within this category.
2.
Wireless Carriers and Service Providers
17.Below, for those services subject to auctions, the Commission notes that, as a
general matter, the number of winning bidders that qualify as small businesses at the close of an
auction does not necessarily represent the number of small businesses currently in service. Also,
the Commission does not generally track subsequent business size unless, in the context of
assignments or transfers, unjust enrichment issues are implicated.
18.
Wireless Telecommunications Carriers (except Satellite). Since 2007, the Census
Bureau has placed wireless firms within this new, broad, economic census category.61 Prior to
that time, such firms were within the now-superseded categories of “Paging” and “Cellular and
Other Wireless Telecommunications.”62 Under the present and prior categories, the SBA has
58 13 C.F.R. § 121.201, NAICS code 517911.
59 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517911 in the left column for “Telecommunications Resellers”)
(last visited March 2, 2011).
60 Trends in Telephone Service at Tables 18.4, 18.5, 18.6, 18.7.
61 U.S. Census Bureau, 2007 NAICS Definitions: Wireless Telecommunications Categories (except Satellite),
http://www.census.gov/naics/2007/def/ND517210.HTM (last visited March 2, 2011).
62 U.S. Census Bureau, 2002 NAICS Definitions: Paging, http://www.census.gov/epcd/naics02/def/NDEF517.HTM
(last visited March 2, 2011); U.S. Census Bureau, 2002 NAICS Definitions: Other Wireless Telecommunications,
http://www.census.gov/epcd/naics02/def/NDEF517.HTM (last visited March 2, 2011).
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deemed a wireless business to be small if it has 1,500 or fewer employees.63 For the category of
Wireless Telecommunications Carriers (except Satellite), Census data for 2007, which supersede
data contained in the 2002 Census, show that there were 1,383 firms that operated that year.64 Of
those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees.
Thus under this category and the associated small business size standard, the majority of firms
can be considered small. Similarly, according to Commission data, 413 carriers reported that
they were engaged in the provision of wireless telephony, including cellular service, Personal
Communications Service (PCS), and Specialized Mobile Radio (SMR) Telephony services.65 Of
these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500
employees.66 Consequently, the Commission estimates that approximately half or more of these
firms can be considered small. Thus, using available data, we estimate that the majority of
wireless firms can be considered small.
19.
Wireless Communications Services. This service can be used for fixed, mobile,
radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small
business” for the wireless communications services (WCS) auction as an entity with average
gross revenues of $40 million for each of the three preceding years, and a “very small business”
as an entity with average gross revenues of $15 million for each of the three preceding years.67
The SBA has approved these definitions.68 The Commission auctioned geographic area licenses
in the WCS service. In the auction, which commenced on April 15, 1997 and closed on April 25,
1997, seven bidders won 31 licenses that qualified as very small business entities, and one bidder
won one license that qualified as a small business entity.
20.
Satellite Telecommunications Providers. Two economic census categories
address the satellite industry. The first category has a small business size standard of $15 million
or less in average annual receipts, under SBA rules.69 The second has a size standard of $25
million or less in annual receipts.70
21.
The category of Satellite Telecommunications “comprises establishments
primarily engaged in providing telecommunications services to other establishments in the
63 13 C.F.R. § 121.201, NAICS code 517210 (2007 NAICS). The now-superseded, pre-2007 C.F.R. citations were
13 C.F.R. § 121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS).
64 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517210 in the left column for “Wireless Telecommunications
Carriers (except Satellite)”) (last visited March 2, 2011).
65 See Trends in Telephone Service at Table 5.3.
66 See id.
67 Amendment of the Commission’s Rules to Establish Part 27, the Wireless Communications Service (WCS), GN
Docket No. 96-228, Report and Order, 12 FCC Rcd 10785, 10879, para. 194 (1997).
68 See Letter from Aida Alvarez, Administrator, SBA, to Amy Zoslov, Chief, Auctions and Industry Analysis
Division, Wireless Telecommunications Bureau, FCC (filed Dec. 2, 1998) (Alvarez Letter 1998).
69 13 C.F.R. § 121.201, NAICS code 517410.
70 13 C.F.R. § 121.201, NAICS code 517919.
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telecommunications and broadcasting industries by forwarding and receiving communications
signals via a system of satellites or reselling satellite telecommunications.”71 Census Bureau data
for 2007 show that 512 Satellite Telecommunications firms that operated for that entire year.72
Of this total, 464 firms had annual receipts of under $10 million, and 18 firms had receipts of
$10 million to $24,999,999.73 Consequently, the Commission estimates that the majority of
Satellite Telecommunications firms are small entities that might be affected by our action.
22.
The second category, i.e. “All Other Telecommunications” comprises
“establishments primarily engaged in providing specialized telecommunications services, such as
satellite tracking, communications telemetry, and radar station operation. This industry also
includes establishments primarily engaged in providing satellite terminal stations and associated
facilities connected with one or more terrestrial systems and capable of transmitting
telecommunications to, and receiving telecommunications from, satellite systems.
Establishments providing Internet services or voice over Internet protocol (VoIP) services via
client-supplied telecommunications connections are also included in this industry.”74 For this
category, Census Bureau data for 2007 show that there were a total of 2,383 firms that operated
for the entire year.75 Of this total, 2,347 firms had annual receipts of under $25 million and 12
firms had annual receipts of $25 million to $49, 999,999.76 Consequently, the Commission
estimates that the majority of All Other Telecommunications firms are small entities that might
be affected by our action.
23.
Common Carrier Paging. The SBA considers paging to be a wireless
telecommunications service and classifies it under the industry classification Wireless
Telecommunications Carriers (except satellite). Under that classification, the applicable size
standard is that a business is small if it has 1,500 or fewer employees. For the general category of
Wireless Telecommunications Carriers (except Satellite), Census data for 2007, which supersede
data contained in the 2002 Census, show that there were 1,383 firms that operated that year.77 Of
71 U.S. Census Bureau, 2007 NAICS Definitions, Satellite Telecommunications,
http://www.census.gov/naics/2007/def/ND517410.HTM (last visited March 2, 2011).
72 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ4: Receipts Size of Firms for the US: 2007.” Click
“Next” and find data related to NAICS code 517210 in the left column for “Satellite Telecommunications”) (last
visited March 2, 2011).
73 Id.
74 U.S. Census Bureau, 2007 NAICS Definitions, All Other Telecommunications,
http://www.census.gov/naics/2007/def/ND517919.HTM (last visited March 2, 2011).
75 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ4: Receipts Size of Firms for the US: 2007.” Click
“Next” and find data related to NAICS code 517919 in the left column for “All Other Telecommunications”) (last
visited March 2, 2011).
76 Id.
77 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
(continued….)
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those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees.
Thus under this category and the associated small business size standard, the majority of firms
can be considered small.78 The 2007 census also contains data for the specific category of
“Paging” “that is classified under the seven-number North American Industry Classification
System (NAICS) code 5172101.79 According to Commission data, 291 carriers have reported
that they are engaged in Paging or Messaging Service. Of these, an estimated 289 have 1,500 or
fewer employees, and 2 have more than 1,500 employees.80 Consequently, the Commission
estimates that the majority of paging providers are small entities that may be affected by our
action. In addition, in the Paging Third Report and Order, the Commission developed a small
business size standard for “small businesses” and “very small businesses” for purposes of
determining their eligibility for special provisions such as bidding credits and installment
payments.81 A “small business” is an entity that, together with its affiliates and controlling
principals, has average gross revenues not exceeding $15 million for the preceding three years.
Additionally, a “very small business” is an entity that, together with its affiliates and controlling
principals, has average gross revenues that are not more than $3 million for the preceding three
years.82 The SBA has approved these small business size standards.83 An auction of
Metropolitan Economic Area licenses commenced on February 24, 2000, and closed on March 2,
2000.84 Of the 985 licenses auctioned, 440 were sold. Fifty-seven companies claiming small
business status won.
24.
Wireless Telephony. Wireless telephony includes cellular, personal
communications services, and specialized mobile radio telephony carriers. As noted, the SBA
(Continued from previous page)
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517210 in the left column for “Wireless Telecommunications
Carriers (except Satellite)”) (last visited March 2, 2011).
78 13 C.F.R. § 121.201, NAICS code 517210.
79 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 5172101 in the left column for “Paging”) (last visited March 2,
2011). In this specific category, there were 248 firms that operated for the entire year in 2007. Of that number 247
operated with fewer than 100 employees and one operated with more than 1000 employees. Based on this
classification and the associated size standard, the majority of paging firms must be considered small.
80 See Trends in Telephone Service at Table 5.3.
81 Amendment of Part 90 of the Commission’s Rules to Provide for the Use of the 220-222 MHz Band by the
Private Land Mobile Radio Service, PR Docket No. 89-552, GN Docket No. 93-252, PP Docket No. 93-253, Third
Report and Order and Fifth Notice of Proposed Rulemaking, 12 FCC Rcd 10943, 11068-70, paras. 291-295 (1997)
(220 MHz Third Report and Order).
82 See Letter to Amy Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications
Bureau, FCC, from A. Alvarez, Administrator, Small Business Administration (Dec. 2, 1998).
83 Revision of Part 22 and Part 90 of the Commission’s Rules to Facilitate Future Development of Paging Systems,
WT Docket No. 96-18, PR Docket No. 93-253, Memorandum Opinion and Order on Reconsideration and Third
Report and Order, 14 FCC Rcd 10030, paras. 98-107 (1999).
84 Id. at 10085, para. 98.
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has developed a small business size standard for Wireless Telecommunications Carriers (except
Satellite).85 Under the SBA small business size standard, a business is small if it has 1,500 or
fewer employees.86 According to the 2008 Trends Report, 434 carriers reported that they were
engaged in wireless telephony.87 Of these, an estimated 222 have 1,500 or fewer employees and
212 have more than 1,500 employees.88 We have estimated that 222 of these are small under the
SBA small business size standard.
3.
Internet Service Providers
25.The 2007 Economic Census places these firms, whose services might include
voice over Internet protocol (VoIP), in either of two categories, depending on whether the
service is provided over the provider’s own telecommunications facilities (e.g., cable and DSL
ISPs), or over client-supplied telecommunications connections (e.g., dial-up ISPs). The former
are within the category of Wired Telecommunications Carriers,89 which has an SBA small
business size standard of 1,500 or fewer employees.90 The latter are within the category of All
Other Telecommunications,91 which has a size standard of annual receipts of $25 million or
less.92 The most current Census Bureau data for all such firms, however, are the 2002 data for
the previous census category called Internet Service Providers.93 That category had a small
business size standard of $21 million or less in annual receipts, which was revised in late 2005 to
$23 million. The 2002 data show that there were 2,529 such firms that operated for the entire
year.94 Of those, 2,437 firms had annual receipts of under $10 million, and an additional 47
firms had receipts of between $10 million and $24,999,999.95 Consequently, we estimate that the
majority of ISP firms are small entities.
26.
The RFA requires an agency to describe any significant alternatives that it has
considered in developing its approach, which may include the following four alternatives (among
others): “(1) the establishment of differing compliance or reporting requirements or timetables
that take into account the resources available to small entities; (2) the clarification, consolidation,
85 13 C.F.R. § 121.201, NAICS code 517210.
86 Id.
87 See Trends in Telephone Service at Table 5.3.
88 Id.
89 U.S. Census Bureau, 2007 NAICS Definitions: Wired Telecommunications Carriers,
http://www.census.gov/naics/2007/def/ND517110.HTM (last visited March 2, 2011).
90 13 C.F.R. § 121.201, NAICS code 517110 (updated for inflation in 2008).
91 U.S. Census Bureau, 2007 NAICS Definitions: All Other Telecommunications,
http://www.census.gov/naics/2007/def/ND517919.HTM (last visited March 2, 2011).
92 13 C.F.R. § 121.201, NAICS code 517919 (updated for inflation in 2008).
93 U.S. Census Bureau, 2002 NAICS Definitions: Internet Service Providers, Web Search Portals, and Data
Processing Services, http://www.census.gov/epcd/naics02/def/NDEF518.HTM (last visited March 2, 2011).
94 U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, “Establishment and Firm Size
(Including Legal Form of Organization),” at Table 4, NAICS code 518111 (issued Nov. 2005).
95 An additional 45 firms had receipts of $25 million or more.
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or simplification of compliance or reporting requirements under the rule for such small entities;
(3) the use of performance rather than design standards; and (4) an exemption from coverage of
the rule, or any part thereof, for small entities.”96
D.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
Support Amounts for Voice Service. In the Order, we adopt an interim rate of
reimbursement for Lifeline in lieu of the prior tiered system. The tiered system was tied to the
subscriber line charge (SLC), which we find to be an imprecise basis for Lifeline support given
the myriad changes in the telecommunications marketplace.97 This interim monthly rate is set at
$9.25 per subscriber. This interim support amount was determined by calculating the average
level of support from the most recent disbursement data available.98 Because the interim support
amount is an average, some ETCs will receive more monthly support while others receive less –
regardless of size. While there may be a slightly negative economic impact on some small
entities, such an impact will be felt by all entities currently receiving more than $9.25 per month
per subscriber in Lifeline support, not just small entities. However, as with our adoption of
uniform consumer eligibility rules, this uniform interim support amount will simplify program
administration by ETCs operating across different SLCs.
28.
Uniform Eligibility Criteria. As part of the Commission’s effort to streamline the
program, the Commission adopts a uniform set of consumer eligibility requirements throughout
the nation. This rule alleviates some of the administrative burdens on ETCs operating in
multiple states caused by varying consumer eligibility requirements. We anticipate that this new
rule will significantly simplify program administration by ETCs, resulting in greater program
efficiencies. Given that we permit states to adopt more permissive Lifeline eligibility criteria on
top of the base of federal Lifeline eligibility criteria, no ETCs will face a smaller Lifeline
subscriber base because of the change in eligibility criteria. We expect no economic impact on
entities through the adoption of the federal eligibility criteria across all states.
29.
One-per-Household. First, the Order adopts a one-per-household requirement.
“Household” is defined consistent with the Low-Income Home Energy Assistance Program as
“any individual or group of individuals who are living together at the same address as one
economic unit,” with an “economic unit” defined as “all individuals contributing to and sharing
in the income and expenses of a household” (which would include persons with no income who
benefit from another person’s financial support). Second, the Order adopts procedures to enable
Lifeline applicants to demonstrate when initially enrolling in the program that any other Lifeline
recipients residing at their residential address are part of a separate household and directs USAC,
within 30 days of the effective date of the Order, to develop a form that will allow low-income
households sharing an address to indicate they are part of a separate household. Third, the Order
also directs USAC, within 30 days of the effective date of the Order, to develop print and web
materials to be posted on USAC’s website that both USAC and ETCs can use to educate
96 5 U.S.C. § 603(c)(1) – (c)(4).
97 For further discussion on the elimination of the SLC and the adoption of an interim rate of reimbursement, see
Section V.
98 See Section V.
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consumers about the one-per-household rule (i.e., how to determine what persons comprise a
household). USAC will prepare materials that the ETCs can rely on to educate their subscribers
about the one-per-household requirement.
30.
We estimate that these rules will have a minimal economic impact. While the
rules will require eligible telecommunications carriers to obtain information from a limited
number of consumers about their household arrangements, it will only impact those low-income
consumers who reside in group living facilities or at addresses shared by multiple households.
This information will be collected using a worksheet to be designed and provided to the ETCs by
USAC. This information is necessary to assist qualifying consumers relying on addresses shared
by multiple households to obtain Lifeline service and to document their compliance with the one-
per-household rule. Additionally, USAC will develop print and web materials that ETCs can use
to educate consumers about the one-per-household rule. We do not expect these requirements to
have a disproportionate impact on carriers, including those that are small entities.
31.
Certification of Consumer Eligibility. First, the Order amends section 54.410 of
the Commission’s rules to require all Lifeline subscribers to provide certain certifications
pertaining to their eligibility for Lifeline upon initial program enrollment and annually thereafter.
Depending on the state, certifications should be collected from consumers by carriers or the state
Lifeline administrator or a state agency.
32.
Carriers and states (where applicable) may need to update their existing
certification forms to comply with the requirements of section 54.410, as amended. Carriers
already collect several similar certifications from Lifeline subscribers at enrollment; thus, we
expect that the costs of compliance with the amended rule will be marginally larger. Therefore,
we anticipate that the effect of this rule will have minimal economic impact. Carriers and states
(where applicable) may choose to use their existing certification forms so long as those forms are
updated to comply with the new certification rules. We also provide in the Order that the new
certification rules will not go into effect until June 1, 2012, which will give carriers (both large
and small) time to make any needed system updates. We also expect to recover cost savings to
the program based on the reduction of ineligible consumers stemming from the updated
certification requirements. We do not expect that this rule will disproportionately impact small
entities.
33.
Second, the Order requires ETCs (or the state administrator, where applicable) to
check the eligibility of new Lifeline subscribers at enrollment by accessing available state or
federal eligibility databases. Where underlying eligibility data cannot be accessed through a
database, the Order requires new Lifeline subscribers to provide documentation of program-
based eligibility or income-based eligibility, which the entity enrolling the subscriber should
review (but not retain). We acknowledge that compliance with the rule we adopt here will
involve some administrative costs for ETCs, for example, modifying their internal processes and
systems to comply with the new documentation requirement. However, we do not expect these
costs to have a significant economic impact especially since we limit this requirement to new
customers rather than requiring ETCs to re-verify all of their subscribers by obtaining
documentary proof of eligibility. We do not expect these costs to be disproportionately large for
small carriers. We also conclude that those costs are outweighed by the significant benefits
gained by protecting the Fund from waste, fraud, and abuse. We estimate in the Order that up to
15 percent of current Lifeline subscribers may be ineligible for the program, potentially
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representing as much as $375 million of support per year. We expect that a rule requiring ETCs
to obtain documentation of program participation from new Lifeline applicants, in conjunction
with our efforts to implement a Lifeline database, will enable the Commission to recapture those
funds and prevent unbridled future growth in the Fund. The resulting cost savings will in turn
benefit those consumers who contribute to the Universal Service Fund, new qualifying low-
income consumers, and our goal to modernize the program for a broadband future. Further,
while we will require consumers to provide documentation of program- and income-eligibility to
ETCs at enrollment, consumers will no longer be required to provide such documentation as part
of the annual verification process in federal default states. Moreover, consumers will not need to
demonstrate eligibility at enrollment (or annually) once that function is addressed through a
database. Lastly, we give ETCs until June 1, 2012, to implement processes to document
consumer eligibility for Lifeline. We expect that these changes will reduce the burdens on both
consumers and ETCs.
34.
Third, the Order requires ETCs to make certain certifications annually and when
submitting for reimbursement from the program. The Commission currently directs ETCs to
make certain certifications relating to the Lifeline program. Section 54.410 of the Commission’s
rules, as modified, does not substantially change those requirements; rather, the Commission
adds additional certifications that the ETC must make annually and when seeking reimbursement
from the Fund. USAC and the Commission have jointly developed the certification language
and the forms. Thus, carriers need only make the necessary internal inquiries (e.g., ensure that
they have received a signed certification form from each Lifeline subscriber) and sign the forms
as provided to them by USAC. We do not expect that this requirement will have an adverse
financial impact on small entities.
35.
Fourth, we replace the existing process used by ETCs and states to verify ongoing
consumer eligibility for Lifeline with a uniform rule requiring all ETCs (or states, where
applicable) to re-certify the eligibility of their complete Lifeline subscriber base as of June 1,
2012. By the end of 2012, all ETCs (or states, where applicable) must obtain from each Lifeline
subscriber a re-certification form that contains each of the required certifications listed in section
54.410, as amended, and report those results to USAC, the Commission, states (where the state
has jurisdiction over the carrier), and Tribal governments (where applicable). Alternatively, in
states where a state agency or a third party has implemented a database that carriers may query to
re-certify the consumer’s continued eligibility, the carrier (or state agency or third-party, where
applicable) must instead query the database by the end of 2012 and maintain a record of what
specific data was used to re-certify eligibility and the date of re-certification.
36.
We have taken steps in implementing this rule to minimize the impact on carriers
and states performing the re-certification function. This re-certification may be done on a rolling
basis throughout the year, at the ETC’s election. ETCs (or states, where applicable) may re-
certify the continued eligibility of an ETC’s Lifeline subscribers by contacting them—which can
be done in any of a number of ways, including in person, in writing, by phone, by text message,
by email, or otherwise through the Internet—to confirm their continued eligibility for Lifeline.
As noted above, where available, ETCs and states will access electronic eligibility data rather
than contact each subscriber to obtain an individual re-certification. Lastly, after 2012, ETCs
may elect to have USAC administer the self-certification process on their behalf. We do not
expect the costs of re-certification to disproportionately burden small entities, who will have a
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lesser number of subscribers to contact and may opt to use less costly means (such as text
message or e-mail) to contact their subscribers for re-certification.
37.
Tribal Lifeline Eligibility. First, the Order clarifies that residents of Tribal lands
are eligible for Lifeline (and Link Up support if served by a high cost recipient) based on (1)
income level; (2) participation in any Tribal-specific federal assistance program identified in the
Commission’s rules; or (3) participation in any other program identified in the Commission’s
rules. We do not expect that this clarification will have any financial impact, including on small
businesses, as it does not change existing program rules, but rather removes any ambiguity in the
interpretation of those rules by carriers and consumers.
38.
Second, the Order adopts the NPRM proposal to add the Food Distribution
Program on Indian Reservations (FDPIR) to the list of programs that confer eligibility. We
expect this rule change to have only minimal financial impact. For example, carriers serving
eligible residents of Tribal lands will need to update their certification/enrollment forms to add
FDPIR to their list of qualifying programs. However, the benefit that will accrue to eligible
residents of Tribal lands participating in FDPIR will outweigh the burdens to carriers. We do not
expect this rule to have a disproportionate impact on small entities, for whom the cost of
compliance would be the same as for other carriers.
39.
Third, the Order establishes a waiver and designation process for those Tribal
communities that are located outside of reservations, but can show ties to defined Tribal
communities, and removes the term “near reservation” from the Commission’s definition of
Tribal lands. We do not expect this rule to have any financial impact, including on small entities,
as carriers will not have any role in the designation process.
40.
Fourth, the Order clarifies that we will continue to allow self-certification of
residence on Tribal lands. We do not expect this rule to have any economic impact on any
entities, as it clarifies, rather than changes, existing program rules.
41.
Electronic Signatures and Interactive Voice Response Systems. In the Order, the
Commission clarifies that ETCs may use electronic signatures and interactive voice response
systems to obtain Lifeline subscriber certifications, provided the electronic signatures are
obtained in accordance with the requirements of the E-SIGN Act. We expect no negative
economic impact from this clarification because this clarification makes obtaining subscriber
signatures easier for all ETCs.
42.
National Accountability Database. The Order established a national
accountability database to reduce the likelihood that a consumer or household will receive more
than one subsidized service through the low-income program. The Order directs the Bureau to
work with USAC and OMB to establish and implement the database and associated processes.
The Order directs ETCs to (1) populate the database with the necessary subscriber information to
implement these processes and (2) query the database for each new subscriber prior to receiving
reimbursement from the fund for that subscriber. ETCs may have to collect customer
information which is not currently in their possession to populate the database.
43.
While the database imposes an economic impact on carriers to populate the
database, and potentially interface with the database, the entire system will be designed to
minimize burdens on small entities. There are a number of ways in which the database has been
designed to limit the burden on small entities. First, the Commission does not impose any real-
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time obligations on ETCs to update the database. The ETCs must update the database prior to
seeking reimbursement. Second, to the extent that ETCs have not collected the necessary data
from existing customers to send to the duplicates database, ETCs will have a significant period
of time before the database is operational to collect such information because the Commission
projects that the database could take up to a year to build and ETCs are given an additional 60
days to populate the database. The Commission has directed USAC to provide support to ETCs
regarding how they should populate the database, and this assistance should further reduce the
burden on ETCs, particularly those smaller entities with fewer back-office resources and less
sophisticated systems. For similar reasons, the burden on small entities will be limited because
the database will be designed to accept the subscriber information in many different formats, not
just via a machine to machine connection. The database will include an ID verification function,
which had heretofore been undertaken by some ETCs at their own expense. The database
includes an exception management and dispute resolution process so that the burden on ETCs to
handle disputes if a subscriber is classified as a duplicate by the database will be limited.
44.
Toll Limitation Service Support. In the Order, the Commission begins the process
of eliminating toll limitation service (TLS) support and modifies its rules for which ETCs must
offer TLS. The Commission finds that TLS is less relevant in a marketplace where many ETCs
do not separately charge for “toll” or “long distance” calls. To the extent an ETC still
distinguishes between local and long distance calling in its Lifeline service, it must provide at no
additional cost to the consumer the ability to limit or block calls that would result in additional
charge. Support for TLS will be eliminated over three years to mitigate the impact of this
change. In the first year of limited TLS support, support will be capped at $3 per month per
consumer. In the second year, support will be limited to $2 per month per consumer. In the third
year, support will be eliminated. ETCs seeking TLS reimbursement will need to adjust their
TLS provisioning methods as there will no longer be a separate TLS reimbursement outside of
the standard Lifeline support amount. This rule will have an economic impact only on ETCs
unable to provide TLS at an incremental cost above the limits set in the rule.
45.
Link Up. The Order will eliminate Link Up support to all ETCs on non-Tribal
lands and limit Link Up on Tribal lands to high cost recipients deploying infrastructure.
Marketplace trends indicate that Lifeline consumers increasingly have service options from
ETCs that neither draw on Link Up support nor charge the consumer a service initiation fee. In
balancing a number of universal service goals with finite resources, we conclude that dollars
currently spent for Link Up can be more effectively spent to improve and modernize the Lifeline
program. Some ETCs who had previously been receiving support from the Fund will no longer
receive such support, however, the rule will not disproportionately impact small entities because
the support is being eliminated for all ETCs serving non-Tribal areas—not just small entitites.
46.
Subscriber Usage of Customer Supported Service. The Order establishes a rule
that pre-paid ETCs who do not charge a fee for the service (pre-paid ETCs) may not seek
Lifeline reimbursement until a subscriber initiates service. Moreover, the rules require pre-paid
ETCs to de-enroll subscribers who fail to use the service within a consecutive 60-day period and
correspondingly update the duplicates database within one business day of any such de-
enrollment. These new rules require pre-paid ETCs to monitor usage prior to seeking
reimbursement from the low-income fund. In an effort to make compliance easier, the rules
identify what actions on the part of consumers constitute usage. Given that carriers already have
systems in place whereby usage is monitored so as to prevent consumers from using more than
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their allocated minutes, the burden of de-enrolling those consumers who do not use the service
within a 60-day period is likely minimal. Moreover, while there may be some administrative
expense related to updating the database, we anticipate such expense to be nominal. The new
rules also require pre-paid ETCs to inform subscribers at service initiation of the usage and de-
enrollment policies. This new requirement only applies to those ETCs choosing to provide
Lifeline service at no charge to subscribers.
47.
Minimum Consumer Charge. The Order does not adopt a minimum consumer
charge for Lifeline services and eliminates the current rule imposing a minimum local charge on
Tribal subscribers. The requirements do not impose any obligations on carriers, large or small,
therefore there is no associated cost of compliance.
48.
Marketing & Outreach. The Order requires ETCs to include plain, easy-to-
understand language in all of their Lifeline marketing materials that the offering is a Lifeline-
supported service; that Lifeline is a government assistance program; that only eligible consumers
may enroll in the program; what documentation is necessary for enrollment; and that the program
is limited to one benefit per household, consisting of either wireline or wireless service.
Additionally, we require ETCs to disclose the company name under which it does business and
the details of its Lifeline service offerings in its Lifeline-related marketing and advertising. We
do not anticipate this rule to have a significant economic impact on any entities because the costs
of including basic program information in all marketing materials should be minimal.
49.
Audits and Enforcement. The Order adopts a new audit requirement whereby
newly designated ETCs will be audited by USAC within the first 18 months of seeking Lifeline
support in any single state. This requirement is the same regardless of the size of the ETC.
Moreover, because all ETCs are required to maintain records for a period of three years, submit
annual recertification documentation, and be subjected to discretionary USAC audits, this first
year audit requirement does not pose any burden or hardship on new ETCs or a disproportionate
burden on small ETCs.The Order also requires those ETCs drawing more than $5 million in low-
income support from the fund, at the holding company level, to perform a biennial independent
audit. This requirement only pertains to large entities therefore there is no impact, let alone a
disproportionate one, on small ETCs.
50.
In the Order, the Commission requires the submission of certain ownership
information to USAC in order to implement our new biennial audit rule. ETCs are required to
report ownership information, including affiliates, holding companies, and any branding, to
USAC, along with relevant universal service identifiers so that we may determine at the holding
company level which ETCs meet the $5 million threshold.99 In addition, the Order requires
newly designated ETCs to describe service offerings and type of service being provided. These
reporting requirements apply to all ETCs equally and do not have a disproportionate impact on
small providers. This reporting will help the Commission increase accountability in our
universal service programs by simplifying the process of determining the total amount of public
support received by each recipient, regardless of corporate structure. This new requirement will
99 Section 153 of the Act defines “affiliate” as “a person that (directly or indirectly) owns or controls, is owned or
controlled by, or is under common ownership or control with, another person.” 47 U.S.C. § 153(2); see also 47
C.F.R. § 76.1200.
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impose a burden on all ETCs, though not one that has a significant economic impact. While
there will be some administrative costs associated with this requirement, the overall burden
should be minimal and will be greater for large ETCs operating with complex corporate
structures across multiple study areas.
51.
Payment of Low-Income Support. The Order adopts a three month transition for
low-income support to be disbursed based on actual support in place of the current administrative
process of paying low-income support based on projected service. The Order accelerates
USAC’s payment of low-income support for carriers filing the FCC Form 497 electronically by a
monthly deadline. The window by which carriers must file revisions or original FCC Form 497s
is reduced from fifteen months from the end of a calendar year, to a rolling twelve month
window. In order to accomplish this transition, the Commission sets forth a procedure whereby
entities determine which study area codes to transition in each of the transition months, thereby
allowing carriers to proportionately distribute any potential financial burden resulting from the
transition to payments based on actual support. The Commission sets the transition to payments
based on actual support to begin in July 2012, giving small entities, and all ETCs alike, ample
time to prepare for the transition to payments based on actual support. Any economic impact of
this revision would be equal to all entities.
52.
In addition, the Commission expedites payment of low-income funds for carriers
that file the FCC Form 497 electronically by the monthly deadline, thereby allowing ETCs to
receive payments in a timely manner for timely electronic filings, and helping small entities
reduce the negative financial impact of delayed payment. The Commission narrowed the
revision window for FCC Form 497s from fifteen months to a rolling twelve month window.
While carriers, large or small, may experience a minor burden by narrowing this revision
window, the burden is minimized by the transition to payments on actual support. Carriers
should not require as much time to scrutinize payments received because the calculations of
projections and true-ups is being eliminated, and payments will be based on actual support
provided by the ETC. A twelve month rolling window should be sufficient time for carriers to
reconcile their books and file any required revisions, without imposing an unfair burden.
53.
Bundled Services. In the Order, we amend sections 54.401 and 54.403 of the
Commission’s rules to adopt a federal policy providing all ETCs (whether designated by a state
or this Commission) the flexibility to permit Lifeline subscribers to apply their Lifeline discount
to bundled service packages or packages containing optional calling features available to Lifeline
consumers. We do not expect this rule change to have a substantial financial impact, as carriers
can elect not to offer bundled service packages or packages containing optional calling features
to Lifeline consumers. We are not mandating that they do so at this time and will continue to
weigh the effects of the flexible policy adopted in the Order. We believe that the benefits to
consumers that could result from this rule outweigh the potential costs of compliance for carriers
who choose to make such plans available to Lifeline consumers.
54.
Support for Broadband: Pilot Program. The Order will establish a broadband
pilot program aimed at generating statistically significant data that will allow the Commission,
ETCs, and the public to analyze the effectiveness of different approaches to using Lifeline funds
to making broadband more affordable for low-income Americans while providing support that is
sufficient but not excessive. The Commission directs the Bureau to solicit applications from
ETCs to participate in the Pilot Program and to select a relatively small number of projects to test
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the impact on broadband adoption with variations in the monthly discount for broadband
services, including variations on the discount amount, the duration of the discount (phased down
over time or constant) over a 12-month period. The Bureau will also give preference to ETCs
that partner with third parties that have already developed approaches to overcoming broadband
adoption barriers, including digital literacy, equipment costs, and relevance.
55.
We do not expect these requirements to have a significant economic impact on
ETCs because entities have a choice of participating. We also do not expect small entities to be
disproportionately impacted. The Bureau will consider whether the projects proposed will
promote entrepreneurs and other small businesses in the provision and ownership of
telecommunications services and information services, consistent with section 257 of the
Communications Act, including those that may be socially and economically disadvantaged
businesses. All ETCs that choose to participate will be required to collect and submit data
throughout the pilot to USAC. The collection of information is required to study the length and
amount of subsidy that is necessary for low-income consumers to adopt broadband. The benefits
of collecting information outweigh any costs.
56.
Facilities-Based Requirements. In the Order, the Commission forbears from
applying the Act's facilities requirement of section 214(e)(1)(A) to all telecommunications
carriers that seek limited ETC designation to participate in the Lifeline program, subject to
certain conditions. Specifically, each carrier must (i) comply with certain 911 requirements; and
(ii) file, subject to Bureau approval, a compliance plan providing specific information regarding
the carrier's service offerings and outlining the measures the carrier will take to implement the
obligations contained in this Order. To avoid disruption to subscribers served by existing
Lifeline-only ETCs designated prior to December 29, 2011, those ETCs can continue to receive
reimbursement pending approval of their compliance plan, provided they submit their plan to the
Bureau by July 1, 2012. Carriers designated after December 29, 2011 will not receive
reimbursement from the Fund until the Bureau approves their compliance plans.
57.
We do not expect these changes to have a disproportionate impact on entities,
including those that are small entities, because the Commission will no longer require carriers to
seek forbearance from the facilities requirement of section 214(e)(1)(a). The Commission,
however, will continue to require carriers seeking to forbear from the facilities requirement of
section 214 to comply with certain 911 requirements and to file and obtain approval from the
Bureau of a compliance plan describing the ETC’s adherence to certain protections designed to
protect consumers and the Fund. The Commission has historically imposed these requirements
on carriers seeking to forbear from the facilities requirement so this will not unduly burden to all
impacted entities.
E.
Steps Taken to Minimize Significant Economic Impact on Small Entities, and
Significant Alternatives Considered
The RFA requires an agency to describe any significant alternatives that it has
considered in developing its approach, which may include the following four alternatives (among
others): “(1) the establishment of differing compliance or reporting requirements or timetables
that take into account the resources available to small entities; (2) the clarification, consolidation,
or simplification of compliance or reporting requirements under the rule for such small entities;
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(3) the use of performance rather than design standards; and (4) an exemption from coverage of
the rule, or any part thereof, for small entities.”100
59.
Support Amounts for Voice Service. The Commission considered the
establishment of a separate rate of reimbursement for for different types of providers. The
Commission determined that such a system of reimbursement would create administrative
difficulties for USAC and for ETCs. A tiered system, be it the prior structure or the one
contemplated for the benefit of small entities, does not treat all subscribers equally and makes
comparison of Lifeline plans difficult for consumers. Therefore, we determined that the benefits
of such a structure do not outweigh the costs.
60.
One Per Household. We considered alternatives to a one-per-household rule,
including a rule permitting one Lifeline-supported service per adult and one Lifeline-supported
service per residential address. We did not, however, adopt these approaches – the former
because it would increase the size of the universal service fund, inconsistent with our program
goals, and the latter because it could potentially exclude eligible consumers from the Lifeline
program. Thus, we found that the benefits of a one-per-household rule and the associated
processes we adopt today outweigh the potential costs.
61.
Certification of Consumer Eligibility. We considered alternatives that would
require ETCs to verify only a portion of their Lifeline subscriber base, including allowing small
ETCs within a state to perform sampling in the aggregate rather than on an individual basis,
requiring ETCs with a minimal number of Lifeline subscribers to sample fewer subscribers than
larger ETCs, and allowing all ETCs to sample a lesser percentage of their Lifeline subscriber
base. The approach we adopt in the Order strikes an appropriate balance between these interests
by helping to identify and de-enroll ineligible subscribers, while imposing fewer burdens on
consumers and ETCs than a full census survey (i.e., requiring consumers to annually produce
documentation to verify continued eligibility).
62.
National Accountability Database. The Commission considered whether ETCs
would be obligated to update the database with customer information in real-time. The
Commission found that it would be overly burdensome for ETCs, particularly ETCs which are
also small entities, to implement real-time connections between the database and carriers given
the limited benefits that real-time updates would provide. We therefore did not adopt a rule that
the database would have to be updated in real-time. Furthermore, except for information
regarding customer de-enrollment, ETCs would have ten business days to update the database
once it has become aware that information regarding a subscriber has changed. The Commission
adopted a rule that the first ETC to populate the database with a particular customer’s
information would be able to receive reimbursement for that customer. The Commission
acknowledged that this rule would provide an advantage to those ETCs with real-time updating
capability, but the Commission found that this approach would reduce the amount of duplicative
support and encourage the prompt transmission of data without imposing burdens that a real-time
updating requirement might impose on small entities.
100 5 U.S.C. § 603(c)(1) – (c)(4).
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63.
Toll Limitation Service Support. The new TLS support rule, as discussed above,
may have an economic impact on entities, including an impact on small entities because they are
used to getting TLS support. This rule will have an economic impact only on ETCs unable to
provide TLS at an incremental cost above limits set in the rule. In the Order, we note that ILECs
typically seek TLS support at a much lower rate than competitive LECs. Small entities that
purchase TLS will no longer be able to seek reimbursement for the incremental costs of doing so
after 2013. Therefore, small competitive LECs may still be required to offer TLS to Lifeline
subscribers but unable to receive sufficient support for the incremental costs of doing so.
However, we adopt this TLS support rule to encourage efficiencies in the provisioning of TLS.
In light of the concerns expressed by competitive LECs, we considered several other approaches
to reforming TLS support, including a shorter timeframe for reduction of TLS support as well as
an immediate elimination of support. We chose the approach adopted in the Order because it is
the least burdensome method to reform TLS support.
64.
Link Up. While we considered some carriers’ proposal to decrease the Link Up
support amount, and others to define more narrowly appropriate and inappropriate uses of Link
Up, on balance, the Commission concluded that the dollars spent on Link Up in its current form
can be better spent on other uses, such as modernizing the program and constraining the overall
size of the fund. We acknowledge that some ETCs will receive less support as a result of the
elimination of Link Up funds but the Commission has concluded that Link Up support has been
abused by some carriers and that USF dollars are better spent supporting other aspects of the
program.
65.
Subscriber Usage of Customer Supported Services. We extend the consumer
usage condition (whereby subscribers will be de-enrolled if they fail to use the service within a
consecutive 60-day period) only to free pre-paid services, which are those services for which
subscribers do not receive monthly bills and do not have any regular billing relationship with the
ETC, and decline at this time to impose this condition on other types of Lifeline supported
services. We are sensitive to the administrative burden that a 60-day usage requirement may
have on post-paid services, and at this time do not extend the usage requirements to post-paid
services, whether wireline or wireless.
66.
Audits and Enforcement. We adopt a requirement that every ETC providing
Lifeline service and drawing $5 million or more in the aggregate on an annual basis from the
low-income program hire an independent audit firm to assess the ETC’s overall compliance with
the program’s requirements every two years. We considered imposing the biennial independent
audit requirement on all ETCs but rejected that as too burdensome on small entities. We
concluded it was appropriate to focus the mandatory independent audit requirement on the
largest recipients who post the biggest risk to the program if they lack effective internal controls
to ensure compliance with Commission requirements.
67.
Payment of Low-Income Support. The Commission sought comment on a one
month transition, as proposed by USAC, however the Commission found that the financial
impact of the one month proposed transition could have been overly burdensome on the financial
well-being of small entities participating in the Lifeline program. The Commission considered a
two month transition as suggested by commenters, and went one step further to extend the
transition to three months, thus allowing all carriers, especially small entities, to minimize any
potential negative financial impact by spreading the transition out over the three months.
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68.
Bundled Services. We considered adopting a rule mandating that all ETCs allow
Lifeline discounts to be applied to any package containing a voice component; however, we
determined that we did not have sufficient information in the record to evaluate the impact of a
rule at this time. We also adopt a rule that ETCs must explicitly notify Lifeline subscribers
purchasing bundled packages or packages containing optional calling features that partial
payments will first be applied to pay down the allocated price of the Lifeline voice services, and
require ETCs to provide clear language to this effect on the subscriber’s bill. We do not expect
that this rule will disproportionately impact small businesses, which, as above, may opt not to
offer such plans to Lifeline subscribers. Additionally, we expect that some carriers may already
have processes in place to apply partial payments to maintain the voice portion of a Lifeline
calling plan. Moreover, this rule will help to prevent Lifeline subscribers from being
disconnected from voice service for non-payment, thereby reducing potential burdens that may
result to ETCs from having to re-enroll disconnected subscribers.
69.
Report to Congress:
The Commission will send a copy of the Order, includingthis FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act.101 In
addition, the Commission will send a copy of the Order, including this FRFA, to the Chief
Counsel for Advocacy of the SVA. A copy of the Order and FRFA (or summaries thereof) will
also be published in the Federal Register.102
70.
IT IS FURTHER ORDERED that the Commission’s Consumer and
Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this
Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration.
101 See 5 U.S.C. § 801(a)(1)(A).
102 See 5 U.S.C. § 604(b).
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APPENDIX
K
Initial Regulatory Flexibility Analysis
1. As Required by the Regulatory Flexibility Act if 1980, as amended (RFA)103, theCommission has prepared this Initial Regulatory Flexibility analysis (IRFA) of the possible
significant economic impact on a substantial number of small entities by the policies and rules
proposed in this Further Notice of Proposed Rulemaking (FNPRM). Written comments are
requested on this IRFA. Comments must be identified as responses to the IRFA and must be
filed by the deadlines for comments on the FNPRM. The Commission will send a copy of the
FNPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA).104 In addition, the FNPRM and IRFA (or summaries thereof) will be
published in the Federal Register.105
A.
Need for, and Objectives of, the Proposed Rulemaking:
2.The FNPRM seeks comment on a variety of issues relating to the comprehensive
reform and modernization of the Universal Service Fund’s Lifeline program. As discussed in the
Order accompanying the FNPRM, the Commission believes that such reform will strengthen protections
against waste, fraud, and abuse; improve program administration and accountability; improve enrollment
and consumer disclosures; modernize the program for broadband; and constrain the growth of the
program. In proposing these reforms, the Commission seeks comment on various reporting,
recordkeeping, and other compliance requirements that may apply to all carriers, including small
entities. We seek comment on any costs and burdens on small entities associated with the
proposed rules, including data quantifying the extent of those costs or burdens.
3.
This FNPRM is one of a series of rulemaking proceedings designed to implement the
National Broadband Plan’s (NBP) vision of improving and modernizing the universal service
programs.106 In this FNPRM, we propose and seek comment on comprehensive reforms to the universal
service low-income support mechanism.
4.
Specifically, we propose and seek comment on the following eight reforms and
modernizations that may be implemented in funding year 2012 (July 1, 2012 – June 30, 2013).
5.
In the FNPRM, we recommend the creation of a centralized database for online
certification and verification on Lifeline consumers’ eligibility to participate in the low-income
program. In the FNPRM, we seek comment on the methods of creating the database including
whether, how, and with what information ETCs should populate the eligibility database.
103 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601-612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
104 See 5 U.S.C. § 603(a).
105 See id.
106 Connecting America: The National Broadband Plan (rel. Mar. 16, 2010)(NBP), available at
http://www.broadband.gov/download-plan/ (last visited January 26, 2012).
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6.
Additionally, we seek comment on establishing a digital literacy training program,
and specifically, we seek comment on what entities are best suited to provide such training (i.e.,
schools and libraries), including ETCs.
7.
As part of the effort to reduce waste, fraud, and abuse in the program, the
Commission proposes to allow only ETCs with a direct relationship with the end-user Lifeline
subscriber to seek reimbursement from the Fund. In addition we propose that the ETC with the
direct relationship with the end-user be responsible for populating the duplicates database. How
would this proposal affect entities economically? We seek comment on the matter. We seek
comment on procedures that should be implemented to ensure that Lifeline wholesalers are not
seeking Fund reimbursement for resold Lifeline offerings including self-certification, record
keeping, and audit requirements. We also seek comment on which ETC, the wholesaler or the
reseller, should be responsible for complying with the other certification and verification
requirements in the Order. Compliance with the proposed rule would require current Lifeline
resellers who are not designated ETCs to either (1) obtain ETC designation or (2) purchase
Lifeline for resale at wholesale rates and be prevented from seeking Fund reimbursement. As an
alternative, we seek comment on whether the Commission should forbear, on its own motion, on
incumbent LECs’ obligation to resell Lifeline services. In addition, we seek comment on how, if
at all, incumbent LECs would be required to amend tariffs to separate the amount of the Lifeline
subsidy from the wholesale price of the underlying Lifeline service being resold. We seek
further comment on how the proposed rule would impact existing contractual relationships
between incumbent LECs and Lifeline resellers.
8.
In the Order, we establish an interim amount of $9.25 per month for Lifeline
reimbursement. In the FNPRM, we seek comment on whether the interim reimbursement
amount of $9.25 is appropriate and should be made permanent. We also seek comment on how
to best determine a flat rate of reimbursement. In furtherance of that, we seek comment on the
best method of obtaining the necessary information to perform a demand estimation study.
Finally, we seek comment on whether the discount should be reduced over time as voice
becomes a secondary application compared to broadband service.
9.
In the FNPRM, we seek comment on whether to adopt a rule permitting eligible
residents of Tribal lands to apply their allotted Tribal Lands discount amount to more than one
supported service per household (e.g., a household would be permitted to “split” their Lifeline
discount between a wireline and a mobile phone service and receive a discount off of the cost of
each service). The Commission seeks comment on how such a rule could be administered and
how to prevent waste, fraud, and abuse if this rule is adopted.
10.
The Commission seeks comment in the FNPRM on whether to include three
additional programs in its eligibility criteria: the Supplemental Nutrition Assistance Program for
Women, Infants and Children, administered by the Department of Agriculture; the Veterans
Benefits Administration-Veterans Health Administration Special Outreach and Benefits
Assistance program; and the Healthcare for Homeless Veterans program.
11.
The Commission seeks comment regarding mandatory application of the Lifeline
discount to bundled service offerings. Specifically, we seek comment on whether to require
ETCs to permit subscribers to apply their Lifeline discount to any bundle that includes a voice
component and whether there should be any limitations on this requirement. We ask whether
there should be limitations on this potential requirement, should such a rule be adopted. Should
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ETCs be obligated to offer a Lifeline discount on all of their service plans, including premium
plans and packages that contain services other than voice and broadband? We also seek
comment on various implementation issues regarding any such rule (i.e., would Lifeline
subscribers face loss of voice service based on their inability to pay the entirety of a bundled
service bill; can carriers limit Lifeline consumers’ use of premium services).
12.
Finally, we propose to update our rules to extend the retention period for Lifeline
documentation, including subscriber-specific eligibility documentation, from three years to at
least ten years, because the current requirements are inadequate for purposes of litigation under
the False Claims Act.
B.
Legal Basis
13.The Further Notice of Proposed Rulemaking , including publication of proposed
rules, is authorized under sections 1,2, 4(i)-(j), 201(b), 254, 257, 303(r), and 503 of the
Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of
1996, as amended, 47 U.S.C. §§ 151, 152, 154(i)-(j), 201(b), 254, 257, 303(r), 503, and 1302.107
C.
Description and Estimate of the Number of Small Entities to which the
Proposed Rules Will Apply:
The RFA directs agencies to provide a description of and, where feasible, an
estimate of the number of small entities that may be affected by the proposed rules, if adopted.108
The RFA generally defines the term “small entity” as having the same meaning as the terms
“small business,” “small organization,” and “small governmental jurisdiction.”109 In addition,
the term “small business” has the same meaning as the term “small business concern” under the
Small Business Act.110 A small business concern is one that: (1) is independently owned and
operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA).111 Nationwide, there are a total of
approximately 29.6 million small businesses, according to the SBA.112 A “small organization” is
generally “any not-for-profit enterprise which is independently owned and operated and is not
dominant in its field.”113 Nationwide, as of 2002, there were approximately 1.6 million small
organizations.114 The term “small governmental jurisdiction” is defined generally as
107 47 U.S.C. §§ 151, 152, 154(i)-(j), 201(b), 254, 257, 303(r), 503, 1302.
108 5 U.S.C. § 603(b)(3).
109 5 U.S.C. § 601(6).
110 5 U.S.C. § 601(3) (incorporating by reference the definition of “small business concern” in 15 U.S.C. § 632).
Pursuant to the RFA, the statutory definition of a small business applies “unless an agency, after consultation with
the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes
one or more definitions of such term which are appropriate to the activities of the agency and publishes such
definition(s) in the Federal Register.” 5 U.S.C. § 601(3).
111 Small Business Act, 15 U.S.C. § 632.
112 See Small Business Administration, Office of Advocacy, Frequently Asked Questions,
http://www.sba.gov/advocacy/7495 (last visited March 2, 2011).
113 5 U.S.C. § 601(4).
114 Independent Sector, The New Nonprofit Almanac & Desk Reference (2002).
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“governments of cities, towns, townships, villages, school districts, or special districts, with a
population of less than fifty thousand.”115 Census Bureau data for 2002 indicate that there were
87,525 local governmental jurisdictions in the United States.116 We estimate that, of this total,
84,377 entities were “small governmental jurisdictions.”117 Thus, we estimate that most
governmental jurisdictions are small.
1.
Wireline Providers
15.
Incumbent Local Exchange Carriers (Incumbent LECs). Neither the Commission
nor the SBA has developed a small business size standard specifically for incumbent local
exchange services. The appropriate size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500
or fewer employees.118 Census Bureau data for 2007, which now supersede data from the 2002
Census, show that there were 3,188 firms in this category that operated for the entire year. Of
this total, 3,144 had employment of 999 or fewer and 44 firms had had employment of 1000 or
more. According to Commission data, 1,307 carriers reported that they were incumbent local
exchange service providers.119 Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer
employees and 301 have more than 1,500 employees.120 Consequently, the Commission
estimates that most providers of local exchange service are small entities that may be affected by
the rules and policies proposed in the Notice. Thus under this category and the associated small
business size standard, the majority of these incumbent local exchange service providers can be
considered small providers.121
16.
Competitive Local Exchange Carriers (Competitive LECs), Competitive Access
Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither
the Commission nor the SBA has developed a small business size standard specifically for these
service providers. The appropriate size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500
or fewer employees.122 Census Bureau data for 2007, which now supersede data from the 2002
115 5 U.S.C. § 601(5).
116 U.S. Census Bureau, Statistical Abstract of the United States: 2006, Section 8, page 272, Table 415.
117 We assume that the villages, school districts, and special districts are small, and total 48,558. See U.S. Census
Bureau, Statistical Abstract of the United States: 2006, section 8, page 273, Table 417. For 2002, Census Bureau
data indicate that the total number of county, municipal, and township governments nationwide was 38,967, of
which 35,819 were small. Id.
118 13 C.F.R. § 121.201, NAICS code 517110.
119 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry
Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service).
120 See id.
121U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517110 in the left column for “Wired telecommunications
carriers”) (last visited March 2, 2011).
122 13 C.F.R. § 121.201, NAICS code 517110.
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Census, show that there were 3,188 firms in this category that operated for the entire year. Of
this total, 3,144 had employment of 999 or fewer and 44 firms had had employment of 1,000
employees or more. Thus under this category and the associated small business size standard,
the majority of these Competitive LECs, CAPs, Shared-Tenant Service Providers, and Other
Local Service Providers can be considered small entities.123 According to Commission data,
1,442 carriers reported that they were engaged in the provision of either competitive local
exchange services or competitive access provider services.124 Of these 1,442 carriers, an
estimated 1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees.125 In
addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are
estimated to have 1,500 or fewer employees.126 In addition, 72 carriers have reported that they
are Other Local Service Providers.127 Seventy of which have 1,500 or fewer employees and two
have more than 1,500 employees.128 Consequently, the Commission estimates that most
providers of competitive local exchange service, competitive access providers, Shared-Tenant
Service Providers, and Other Local Service Providers are small entities that may be affected by
rules adopted pursuant to the Notice.
17.
Interexchange Carriers. Neither the Commission nor the SBA has developed a
small business size standard specifically for providers of interexchange services. The
appropriate size standard under SBA rules is for the category Wired Telecommunications
Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees.129
Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there
were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had
employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more.
Thus under this category and the associated small business size standard, the majority of these
Interexchange carriers can be considered small entities.130 According to Commission data, 359
companies reported that their primary telecommunications service activity was the provision of
123 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517110 in the left column for “Wired telecommunications
carriers”) (last visited March 2, 2011).
124 See Trends in Telephone Service at Table 5.3.
125 See id.
126 Id.
127 See id.
128 See id.
129 13 C.F.R. § 121.201, NAICS code 517110.
130 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517110 in the left column for “Wired telecommunications
carriers”) (last visited March 2, 2011).
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interexchange services.131 Of these 359 companies, an estimated 317 have 1,500 or fewer
employees and 42 have more than 1,500 employees.132 Consequently, the Commission estimates
that the majority of interexchange service providers are small entities that may be affected by
rules adopted pursuant to the Notice.
18.
Operator Service Providers (OSPs). Neither the Commission nor the SBA has
developed a small business size standard specifically for operator service providers. The
appropriate size standard under SBA rules is the category Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or fewer employees.133 Under
that size standard, such a business is small if it has 1,500 or fewer employees.134 Census Bureau
data for 2007, which now supersede 2002 Census data, show that there were 3,188 firms in this
category that operated for the entire year. Of the total, 3,144 had employment of 999 or fewer,
and 44 firms had had employment of 1,000 employees or more.135 Thus under this category and
the associated small business size standard, the majority of these interexchange carriers can be
considered small entities.136 According to Commission data, 33 carriers have reported that they
are engaged in the provision of operator services. Of these, an estimated 31 have 1,500 or fewer
employees and 2 have more than 1,500 employees.137 Consequently, the Commission estimates
that the majority of OSPs are small entities that may be affected by our proposed action.
19.
Local Resellers. The SBA has developed a small business size standard for the
category of Telecommunications Resellers. Under that size standard, such a business is small if
it has 1,500 or fewer employees.138 Census data for 2007 show that 1,523 firms provided resale
services during that year. Of that number, 1,522 operated with fewer than 1000 employees and
one operated with more than 1,000.139 Thus under this category and the associated small business
size standard, the majority of these local resellers can be considered small entities. According to
Commission data, 213 carriers have reported that they are engaged in the provision of local
131 See Trends in Telephone Service at Table 5.3.
132 See id.
133 13 C.F.R. § 121.201, NAICS code 517110.
134 Id.
135 See Wired Telecommunications Data, supra note 33.
136 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517110 in the left column for “Wired telecommunications
carriers”) (last visited March 2, 2011).
137 Trends in Telephone Service at Table 5.3.
138 13 C.F.R. § 121.201, NAICS code 517911.
139 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517911 in the left column for “Telecommunications Resellers”)
(last visited March 2, 2011).
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resale services.140 Of these, an estimated 211 have 1,500 or fewer employees and two have more
than 1,500 employees.141 Consequently, the Commission estimates that the majority of local
resellers are small entities that may be affected by rules adopted pursuant to the Notice.
20.
Toll Resellers. The SBA has developed a small business size standard for the
category of Telecommunications Resellers. Under that size standard, such a business is small if
it has 1,500 or fewer employees.142 Census data for 2007 show that 1,523 firms provided resale
services during that year. Of that number, 1,522 operated with fewer than 1000 employees and
one operated with more than 1,000.143 Thus under this category and the associated small business
size standard, the majority of these resellers can be considered small entities. According to
Commission data,144 881 carriers have reported that they are engaged in the provision of toll
resale services. Of these, an estimated 857 have 1,500 or fewer employees and 24 have more
than 1,500 employees. Consequently, the Commission estimates that the majority of toll
resellers are small entities that may be affected by our action.
21.
Pre-paid Calling Card Providers. Neither the Commission nor the SBA has
developed a small business size standard specifically for pre-paid calling card providers. The
appropriate size standard under SBA rules is for the category Telecommunications Resellers.
Under that size standard, such a business is small if it has 1,500 or fewer employees.145 Census
data for 2007 show that 1,523 firms provided resale services during that year. Of that number,
1,522 operated with fewer than 1000 employees and one operated with more than 1,000.146 Thus
under this category and the associated small business size standard, the majority of these pre-
paid calling card providers can be considered small entities. According to Commission data, 193
carriers have reported that they are engaged in the provision of pre-paid calling cards.147 Of
these, an estimated all 193 have 1,500 or fewer employees and none have more than 1,500
employees.148 Consequently, the Commission estimates that the majority of pre-paid calling card
providers are small entities that may be affected by rules adopted pursuant to the Notice.
140 See Trends in Telephone Service at Table 5.3.
141 Id.
142 13 C.F.R. § 121.201, NAICS code 517911.
143 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517911 in the left column for “Telecommunications Resellers”)
(last visited March 2, 2011).
144 See Trends in Telephone Service at Table 5.3.
145 13 C.F.R. § 121.201, NAICS code 517911.
146 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517911 in the left column for “Telecommunications Resellers”)
(last visited March 2, 2011).
147 See Trends in Telephone Service at Table 5.3.
148 See id.
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2.
Wireless Carriers and Service Providers
22.
Below, for those services subject to auctions, the Commission notes that, as a
general matter, the number of winning bidders that qualify as small businesses at the close of an
auction does not necessarily represent the number of small businesses currently in service. Also,
the Commission does not generally track subsequent business size unless, in the context of
assignments or transfers, unjust enrichment issues are implicated.
23.
Wireless Telecommunications Carriers (except Satellite). Since 2007, the Census
Bureau has placed wireless firms within this new, broad, economic census category.149 Prior to
that time, such firms were within the now-superseded categories of “Paging” and “Cellular and
Other Wireless Telecommunications.”150 Under the present and prior categories, the SBA has
deemed a wireless business to be small if it has 1,500 or fewer employees.151 For the category of
Wireless Telecommunications Carriers (except Satellite), Census data for 2007, which supersede
data contained in the 2002 Census, show that there were 1,383 firms that operated that year.152
Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100
employees. Thus under this category and the associated small business size standard, the
majority of firms can be considered small. Similarly, according to Commission data, 413
carriers reported that they were engaged in the provision of wireless telephony, including cellular
service, Personal Communications Service (PCS), and Specialized Mobile Radio (SMR)
Telephony services.153 Of these, an estimated 261 have 1,500 or fewer employees and 152 have
more than 1,500 employees.154 Consequently, the Commission estimates that approximately half
or more of these firms can be considered small. Thus, using available data, we estimate that the
majority of wireless firms can be considered small.
24.
Wireless Communications Services. This service can be used for fixed, mobile,
radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small
business” for the wireless communications services (WCS) auction as an entity with average
gross revenues of $40 million for each of the three preceding years, and a “very small business”
149 U.S. Census Bureau, 2007 NAICS Definitions: Wireless Telecommunications Categories (except Satellite),
http://www.census.gov/naics/2007/def/ND517210.HTM (last visited March 2, 2011).
150 U.S. Census Bureau, 2002 NAICS Definitions: Paging, http://www.census.gov/epcd/naics02/def/NDEF517.HTM
(last visited March 2, 2011); U.S. Census Bureau, 2002 NAICS Definitions: Other Wireless Telecommunications,
http://www.census.gov/epcd/naics02/def/NDEF517.HTM (last visited March 2, 2011).
151 13 C.F.R. § 121.201, NAICS code 517210 (2007 NAICS). The now-superseded, pre-2007 C.F.R. citations were
13 C.F.R. § 121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS).
152 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517210 in the left column for “Wireless Telecommunications
Carriers (except Satellite)”) (last visited March 2, 2011).
153 See Trends in Telephone Service at Table 5.3.
154 See id.
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as an entity with average gross revenues of $15 million for each of the three preceding years.155
The SBA has approved these definitions.156 The Commission auctioned geographic area licenses
in the WCS service. In the auction, which commenced on April 15, 1997 and closed on April 25,
1997, seven bidders won 31 licenses that qualified as very small business entities, and one bidder
won one license that qualified as a small business entity.
25.
Satellite Telecommunications Providers. Two economic census categories
address the satellite industry. The first category has a small business size standard of $15 million
or less in average annual receipts, under SBA rules.157 The second has a size standard of $25
million or less in annual receipts.158
26.
The category of Satellite Telecommunications “comprises establishments
primarily engaged in providing telecommunications services to other establishments in the
telecommunications and broadcasting industries by forwarding and receiving communications
signals via a system of satellites or reselling satellite telecommunications.”159 Census Bureau
data for 2007 show that 512 Satellite Telecommunications firms that operated for that entire
year.160 Of this total, 464 firms had annual receipts of under $10 million, and 18 firms had
receipts of $10 million to $24,999,999.161 Consequently, the Commission estimates that the
majority of Satellite Telecommunications firms are small entities that might be affected by our
action.
27.
The second category, i.e. “All Other Telecommunications” comprises
“establishments primarily engaged in providing specialized telecommunications services, such as
satellite tracking, communications telemetry, and radar station operation. This industry also
includes establishments primarily engaged in providing satellite terminal stations and associated
facilities connected with one or more terrestrial systems and capable of transmitting
telecommunications to, and receiving telecommunications from, satellite systems.
Establishments providing Internet services or voice over Internet protocol (VoIP) services via
155 Amendment of the Commission’s Rules to Establish Part 27, the Wireless Communications Service (WCS), GN
Docket No. 96-228, Report and Order, 12 FCC Rcd 10785, 10879, para. 194 (1997).
156 See Letter from Aida Alvarez, Administrator, SBA, to Amy Zoslov, Chief, Auctions and Industry Analysis
Division, Wireless Telecommunications Bureau, FCC (filed Dec. 2, 1998) (Alvarez Letter 1998).
157 13 C.F.R. § 121.201, NAICS code 517410.
158 13 C.F.R. § 121.201, NAICS code 517919.
159 U.S. Census Bureau, 2007 NAICS Definitions, Satellite Telecommunications,
http://www.census.gov/naics/2007/def/ND517410.HTM (last visited March 2, 2011).
160 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ4: Receipts Size of Firms for the US: 2007.” Click
“Next” and find data related to NAICS code 517210 in the left column for “Satellite Telecommunications”) (last
visited March 2, 2011).
161 Id.
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client-supplied telecommunications connections are also included in this industry.”162 For this
category, Census Bureau data for 2007 show that there were a total of 2,383 firms that operated
for the entire year.163 Of this total, 2,347 firms had annual receipts of under $25 million and 12
firms had annual receipts of $25 million to $49, 999,999.164 Consequently, the Commission
estimates that the majority of All Other Telecommunications firms are small entities that might
be affected by our action.
28.
Common Carrier Paging. The SBA considers paging to be a wireless
telecommunications service and classifies it under the industry classification Wireless
Telecommunications Carriers (except satellite). Under that classification, the applicable size
standard is that a business is small if it has 1,500 or fewer employees. For the general category of
Wireless Telecommunications Carriers (except Satellite), Census data for 2007, which supersede
data contained in the 2002 Census, show that there were 1,383 firms that operated that year.165
Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100
employees. Thus under this category and the associated small business size standard, the
majority of firms can be considered small.166 The 2007 census also contains data for the specific
category of “Paging” “that is classified under the seven-number North American Industry
Classification System (NAICS) code 5172101.167 According to Commission data, 291 carriers
have reported that they are engaged in Paging or Messaging Service. Of these, an estimated 289
have 1,500 or fewer employees, and 2 have more than 1,500 employees.168 Consequently, the
Commission estimates that the majority of paging providers are small entities that may be
affected by our action. In addition, in the Paging Third Report and Order, the Commission
developed a small business size standard for “small businesses” and “very small businesses” for
162 U.S. Census Bureau, 2007 NAICS Definitions, All Other Telecommunications,
http://www.census.gov/naics/2007/def/ND517919.HTM (last visited February 2, 2012).
163 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ4: Receipts Size of Firms for the US: 2007.” Click
“Next” and find data related to NAICS code 517919 in the left column for “All Other Telecommunications”) (last
visited March 2, 2011).
164 Id.
165 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 517210 in the left column for “Wireless Telecommunications
Carriers (except Satellite)”) (last visited March 2, 2011).
166 13 C.F.R. § 121.201, NAICS code 517210.
167 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder.census.gov, (find
“Economic Census” and choose “get data.” Then, under “Economic Census data sets by sector…,” choose
“Information.” Under “Subject Series,” choose “EC0751SSSZ5: Employment Size of Firms for the US: 2007.”
Click “Next” and find data related to NAICS code 5172101 in the left column for “Paging”) (last visited March 2,
2011). In this specific category, there were 248 firms that operated for the entire year in 2007. Of that number 247
operated with fewer than 100 employees and one operated with more than 1000 employees. Based on this
classification and the associated size standard, the majority of paging firms must be considered small.
168 See Trends in Telephone Service at Table 5.3.
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purposes of determining their eligibility for special provisions such as bidding credits and
installment payments.169 A “small business” is an entity that, together with its affiliates and
controlling principals, has average gross revenues not exceeding $15 million for the preceding
three years. Additionally, a “very small business” is an entity that, together with its affiliates and
controlling principals, has average gross revenues that are not more than $3 million for the
preceding three years.170 The SBA has approved these small business size standards.171 An
auction of Metropolitan Economic Area licenses commenced on February 24, 2000, and closed
on March 2, 2000.172 Of the 985 licenses auctioned, 440 were sold. Fifty-seven companies
claiming small business status won.
29.
Wireless Telephony. Wireless telephony includes cellular, personal
communications services, and specialized mobile radio telephony carriers. As noted, the SBA
has developed a small business size standard for Wireless Telecommunications Carriers (except
Satellite).173 Under the SBA small business size standard, a business is small if it has 1,500 or
fewer employees.174 According to the 2008 Trends Report, 434 carriers reported that they were
engaged in wireless telephony.175 Of these, an estimated 222 have 1,500 or fewer employees and
212 have more than 1,500 employees.176 We have estimated that 222 of these are small under the
SBA small business size standard.
3.
Internet Service Providers
30.
The 2007 Economic Census places these firms, whose services might include
voice over Internet protocol (VoIP), in either of two categories, depending on whether the
service is provided over the provider’s own telecommunications facilities (e.g., cable and DSL
ISPs), or over client-supplied telecommunications connections (e.g., dial-up ISPs). The former
are within the category of Wired Telecommunications Carriers,177 which has an SBA small
business size standard of 1,500 or fewer employees.178 The latter are within the category of All
169 Amendment of Part 90 of the Commission’s Rules to Provide for the Use of the 220-222 MHz Band by the
Private Land Mobile Radio Service, PR Docket No. 89-552, GN Docket No. 93-252, PP Docket No. 93-253, Third
Report and Order and Fifth Notice of Proposed Rulemaking, 12 FCC Rcd 10943, 11068-70, paras. 291-295 (1997)
(220 MHz Third Report and Order).
170 See Letter to Amy Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications
Bureau, FCC, from A. Alvarez, Administrator, Small Business Administration (Dec. 2, 1998).
171 Revision of Part 22 and Part 90 of the Commission’s Rules to Facilitate Future Development of Paging Systems,
WT Docket No. 96-18, PR Docket No. 93-253, Memorandum Opinion and Order on Reconsideration and Third
Report and Order, 14 FCC Rcd 10030, paras. 98-107 (1999).
172 Id. at 10085, para. 98.
173 13 C.F.R. § 121.201, NAICS code 517210.
174 Id.
175 See Trends in Telephone Service at Table 5.3.
176 Id.
177 U.S. Census Bureau, 2007 NAICS Definitions: Wired Telecommunications Carriers,
http://www.census.gov/naics/2007/def/ND517110.HTM (last visited March 2, 2011).
178 13 C.F.R. § 121.201, NAICS code 517110 (updated for inflation in 2008).
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Other Telecommunications,179 which has a size standard of annual receipts of $25 million or
less.180 The most current Census Bureau data for all such firms, however, are the 2002 data for
the previous census category called Internet Service Providers.181 That category had a small
business size standard of $21 million or less in annual receipts, which was revised in late 2005 to
$23 million. The 2002 data show that there were 2,529 such firms that operated for the entire
year.182 Of those, 2,437 firms had annual receipts of under $10 million, and an additional 47
firms had receipts of between $10 million and $24,999,999.183 Consequently, we estimate that
the majority of ISP firms are small entities.
D.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
Tribal Lands Lifeline Support. If we permit eligible residents of Tribal lands to
apply their allotted Tribal Lands discount amount to more than one supported service per
household, postpaid carriers may need to update their billing systems to reflect that more than
one supported service may be received per Tribal household. Additionally, several carriers
currently allow consumers to apply their Lifeline discount to the purchase of family shared
calling plans, and, if such a rule were adopted, a similar billing functionality could be used by
postpaid carriers serving eligible residents of Tribal lands. The Commission is continuing to
evaluate the potential costs and benefits of this proposal and will take the steps necessary to
mitigate the costs to small businesses.
32.
Mandatory Application of Lifeline Discount to Bundled Service Offerings. The
FNPRM seeks comment on whether to require ETCs to permit subscribers to apply their Lifeline
discount to any bundle that includes a voice component. The FNPRM also seeks comment on
whether there should be any limitations on this requirement (e.g., should ETCs be obligated to
offer a Lifeline discount on all of their service plans, including premium plans and packages that
contain services other than voice and broadband, such as video). While we do not anticipate that
these proposals will have an impact on small businesses at this time, we recognize that small
entities may incur costs due to a need to update their internal systems to comply with the rule.
33.
Record Retention Requirements. The Commission proposes to amend section
54.417 of the Commission’s rules to extend the retention period for Lifeline documentation,
including subscriber-specific eligibility documentation, from three years to at least ten years.
ETCs will continue to maintain documentation of consumer eligibility for at least ten years and
for as long as the consumer receives Lifeline service from that ETC, even if that period extends
beyond ten years. The amended recordkeeping requirement will continue to apply equally to all
179 U.S. Census Bureau, 2007 NAICS Definitions: All Other Telecommunications,
http://www.census.gov/naics/2007/def/ND517919.HTM (last visited March 2, 2011).
180 13 C.F.R. § 121.201, NAICS code 517919 (updated for inflation in 2008).
181 U.S. Census Bureau, 2002 NAICS Definitions: Internet Service Providers, Web Search Portals, and Data
Processing Services, http://www.census.gov/epcd/naics02/def/NDEF518.HTM (last visited March 2, 2011).
182 U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, “Establishment and Firm Size
(Including Legal Form of Organization),” at Table 4, NAICS code 518111 (issued Nov. 2005).
183 An additional 45 firms had receipts of $25 million or more.
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ETCs, all of whom are currently required to maintain Lifeline documentation, including
subscriber-specific eligibility documentation, for at least three years.
E.
Steps Taken to Minimize Significant Economic Impact on Small Entities, and
Significant Alternatives Considered
Eligibility database. For the period prior to the implementation of a national
eligibility database, in the FNPRM we consider the alternative of having third-party
administrators, as opposed to the ETCs, be responsible for verifying Lifeline consumers’
eligibility in the program. Accordingly, we seek comment on how to minimize or mitigate extra
costs to the Fund caused by the selection of third-party administrators.
35.
Limitations on the Resale of Lifeline-Supported Services. As part of the effort to
reduce waste, fraud, and abuse in the program, the Commission proposes to allow only ETCs
with a direct relationship with the end-user Lifeline subscriber to seek reimbursement from the
Fund. To the extent that a reseller who is not an ETC is receiving support from the Fund, there
could be an economic impact should this change be adopted, but the Commission believes that
the need to protect the Fund from abuse outweighs any concerns with existing carriers raising
concerns with the economic impact of the proposed rule. Furthermore, if there is an economic
impact from this proposal, we seek comment on how to minimize the burdens of such a
requirement on small entities. Accordingly, we seek comment on the potential economic impact
of these requirements.
F.
Federal Rules that May Duplicate or Conflict with Proposed Rules
36.None.
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STATEMENT OF
CHAIRMAN JULIUS GENACHOWSKI
Re:
Lifeline and Link Up Reform and Modernization, WC Dkt. No. 11-42; Lifeline and Link
Up, WC Dkt. No. 03-109; Federal-State Joint Board on Universal Service, CC Dkt. No.
96-45; Advancing Broadband Availability Through Digital Literacy Training, WC Dkt.
No. 12-23
For more than 25 years, the Lifeline program has played a vital role in ensuring that the
neediest among us stay connected to our communications networks.
Today, the FCC reforms and modernizes the program for the 21st century, eliminating
waste and misuse of public funds, imposing fiscal discipline and accountability, and ensuring
that the program satisfies Congress’s directive that – quote – “[c]onsumers in all regions,
including low-income consumers … should have access to telecommunications and information
services.”
The reforms we’re adopting today are major. This is a fundamental overhaul to make
sure that an important program is efficiently and effectively meeting its mission. It says to
anyone contemplating gaming the system: Don’t bother, you’ll be caught and punished.
Our steps today build on our earlier reforms – in particular our recent overhaul of the
largest part of the Universal Service Fund, where together we transformed an inefficient, out-of-
date program into the Connect America Fund – using market mechanisms to control costs and
put the country on the path to universal broadband by the end of the decade.
Today, as part of our modernization of Lifeline, we execute on another key
recommendation of the National Broadband Plan to begin transitioning Lifeline to support
broadband. We do so with a seriousness of purpose – because broadband is rapidly becoming a
necessity, not a luxury; and we do so with humility, because it is not easy to determine how
Lifeline can best be transformed into a program that supports broadband.
When this Commission inherited Lifeline more than two years ago, the program faced
real and serious challenges, including rules that failed to keep pace with the boom in mobile
service; created perverse incentives for some carriers; and, as we came to see, invited fraud and
abuse. Since then, we’ve rolled up our sleeves to put this program on a sound path and strong
foundation.
The process of reforming Lifeline started with the release of the National Broadband Plan
in early 2010. In the spring of 2010, I asked the Federal-State Joint Board on Universal Service
to scrutinize the Lifeline program and offer recommendations for reform. Last year, the FCC
proposed rules that built on the Joint Board’s recommendations – and today’s Order implements
many of those ideas.
But we haven’t waited to complete the rulemaking to take concrete steps to tackle fraud
and abuse. Last June, the Commission adopted an order clarifying that an eligible consumer may
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only receive one Lifeline-supported service, creating procedures to detect and de-enroll
subscribers with duplicate Lifeline-supported services. Working in close cooperation with CTIA
and major Lifeline providers including AT&T, CenturyLink, Sprint, TracFone, and Verizon,
we’ve established an unprecedented process to detect and eliminate duplicative Lifeline
support—a process now underway in 12 states, that will expand to additional states in the months
ahead.
I want to acknowledge the good faith and willingness to constructively engage that
industry has demonstrated in helping address this problem. Thanks to this joint effort, we’ve
already identified more than 200,000 duplicative Lifeline subscriptions for elimination – saving
millions of dollars every month.
Today’s Order builds on this progress.
Let me be clear: We will not tolerate waste or misuse of program funds. Today’s reforms
are strong and meaningful. In our Order, we set a savings target for 2012 of $200 million, and a
mechanism to ensure we realize those savings. Over the next three years, staff estimates that
today’s reforms will save up to $2 billion compared to the status quo. That is a lot of money in
the pockets of American consumers who otherwise would have been contributing to a program
that was wasting funds on duplicative benefits, subsidies for ineligible consumers, or fraudulent
misuse of Lifeline funds.
After evaluating the impact of today’s fundamental overhaul of the program and
addressing key issues teed up in the Further Notice of Proposed Rulemaking, including the
appropriate monthly support amount, the Commission will be in a position to adopt a budget for
the program in early 2013.
An important part of our reform is our establishment of databases, including a National
Lifeline Accountability Database. This database approach will prevent multiple carriers from
receiving support for the same subscriber and streamline the process of verifying consumers’
initial and ongoing eligibility for the program, significantly reducing burdens on carriers and
improving protections against waste and fraud. It will also reduce burdens on consumers
participating in the program.
This is another example of the commission harnessing communications and information
technology to do our work better, to help consumers, and to reduce burdens on both the
companies that participate in these programs and the FCC itself.
We seek comment on ways to further streamline burdens on participating carriers, to
improve program efficiency, and to encourage voluntary participation in Lifeline.
As Commissioner McDowell said earlier, we are moving forward today with fiscally
responsible entitlement reform.
And we are doing it in a way that saves hundreds of millions of dollars and that will not
cut off eligible, needy consumers from the vital lifeline to our basic communications grid.
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Who are the people that benefit from Lifeline? They are people like a woman we heard
about in South Pittsburg, Tennessee who was thrown from her car in a severe accident and used
her phone to call 9-1-1 and receive immediate assistance. Or a veteran in Shady Springs, Florida
who relies on his Lifeline phone to communicate with the V.A. hospital to obtain medications
and organize hospital visits. And the man in Memphis who used a Lifeline phone to help with
his job search, which ended with his now-current employer calling him – on his Lifeline phone --
to offer a job.
This Order is not only about increasing efficiency and eliminating waste. It’s also about
making sure the service is there for people who need it like the ones I mentioned. And it’s about
beginning to modernize Lifeline from telephone service to broadband.
Broadband, as Commissioner Clyburn has said, has gone from being a luxury to a
necessity in the 21st century.
It’s increasingly essential for finding a job, for example, as job postings have moved
online, and for landing a job, as companies increasingly require basic digital skills.
As everyone who has followed our work knows, one-third of Americans haven’t adopted
broadband at home, and the majority of low-income Americans are non-adopters.
Recognizing that Lifeline was established to make sure low-income Americans have
access to telecommunications and information services, and that voice will ultimately be just
another application on our broadband networks, it makes sense to begin to transition Lifeline to
support broadband.
Consistent with the language and purposes of the Communications Act, the Order starts
by establishing as a core program goal ensuring universal availability of broadband for low-
income Americans. To determine how best to achieve that goal, we’re using a fraction of the
savings we’re realizing from today’s reforms to launch a Broadband Adoption Pilot Program.
We’re asking broadband providers to submit project proposals, and data from the projects
we choose would be rigorously analyzed to ensure a full understanding of how best to transition
Lifeline to support broadband.
In addition to our work, the work that we seek from entities like Connect to Compete and
some of the BTOP programs will also be helpful in determining a smart course going forward.
In addition to cost, we know that a lack of digital literacy is a major barrier to broadband
adoption. That’s why we propose using savings from Universal Service Fund reforms to
increase digital literacy training at libraries and schools. Digital literacy training not only
promotes broadband adoption, but it could also arm more Americans with the skills they need to
fully participate in our 21st century economy and society.
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In my view, it would be irresponsible not to begin testing ideas to harness broadband to
help connect low-income Americans, improving our economy and our kids’ education. Other
countries are moving ahead in this area, and it’s essential to our global competitiveness that we
use every tool at our disposal to win the broadband race.
In moving forward, as I mentioned, we will build on the excellent projects that have
already been launched – ranging from BTOP programs focused on adoption, to the Connect to
Compete initiative supported by the cable industry and other major companies and non-profit
organizations.
I want to thank all those who contributed to this Order, including my fellow
Commissioners, whose deep engagement with this item is reflected in many parts of the
Order.I’m proud of the process we ran to produce this Order.
It presented many difficult issues, as you heard from our statements. Staff has worked on
this very hard for quite some time, and the three of us reached agreement quickly on many
issues. On other issues, we found ourselves in different places – three different places to be
precise. But with a shared commitment to doing the right thing – to connecting needy
Americans and to fiscal responsibility – we worked through some challenging issues together, as
recently as yesterday. I’m grateful for each of my colleagues and our staffs for staying at the
table and discussing the issues until we found a path through.
I want to thank the Joint Board and state commissions across the country, who again have
demonstrated the tremendous value they provide by serving as laboratories for policy innovation
and as partners in ensuring universal service.
Some of the best ideas we adopted today we learned about and felt comfortable adopting
because they had been implemented in states across the country and we can see the data and
measure the results.
Finally, thank you again to the outstanding staff who worked on this. For those of you
who have been working on various Universal Service Fund matters over the past years, thank
you very much, and to the new people who just joined the Lifeline effort and really focused on
the unique issues that related to modernizing, reforming, and improving this program, you have
the public’s gratitude as well as all of ours.
In addition to the Wireline Competition Bureau, these items benefited from the Wireless
Bureau, the General Counsel’s Office, the Consumer and Governmental Affairs Bureau and
other intra-agency cooperation.
It took a lot of months and a lot of hard work, and I hope you feel as proud as I do about
the results we are accomplishing today, and that the agenda is going forward.
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STATEMENT OF
COMMISSIONER ROBERT M. McDOWELL
APPROVING IN PART, CONCURRING IN PART, DISSENTING IN PART
Re:
Lifeline and Link Up Reform and Modernization, WC Docket No. 11-42; Lifeline and
Link Up, WC Docket No. 03-109; Federal-State Joint Board on Universal Service, CC
Docket No. 96-45; Advancing Broadband Availability Through Digital Literacy
Training, WC Docket No. 12-23
Today the Federal Communications Commission is making the most fundamental,
constructive and radical changes to the Lifeline program since its inception. We are infusing it
with fiscal discipline for the first time. As a result, the program will be on track to become a
more efficient tool to fulfill Congress’s intended purpose: helping low-income Americans stay
connected to society through telecommunications services.
In the Telecommunications Act of 1996, Congress explicitly mandated that we manage
this program to help the disadvantaged. At the same time, Congress wants us to be fiscally
prudent to maximize Lifeline’s effectiveness for the truly eligible. With this legislative intent in
mind, our action today will help eliminate waste, fraud and abuse to yield resources for those
most in need while bending the unabated growth curve downward.
As I have said repeatedly since first joining the Commission, my primary goal for
Universal Service reform is to instill fiscal discipline to the program. Today we largely achieve
that goal for the Lifeline program in the near term. Although I would have preferred a longer-
term fixed budget or cap, what we are rendering today is virtually unheard of in Washington:
fiscally responsible entitlement reform.
On the bright side, some of the most appealing aspects of today’s actions include the
following:
• Establishing an aggressive savings target of $200 million for this calendar year alone,
with a projected $600 million in savings in 2013;
• Largely eliminating the Link Up program to end perverse incentives for companies to
enroll those who may not be eligible, while granting a limited exception to the unique
circumstances facing Tribal and Alaska Native Lands;
• Limiting support to one recipient per household;
• Creating a database to weed out duplicate recipients;
• Accelerating the process of creating a database to verify eligibility;
• Requiring pre-paid ETC accounts that have been inactive for 60 days to be removed from
the Lifeline program; and
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• Commencing a process for a mechanism I have long advocated: basing subsidies on a
“communications price index” that should reduce financial support per subscriber as
communications networks become more efficient as technology advances.
Therefore, I am voting to approve these measures.
Today’s Order is not perfect, however. Due to their inherent nature, many of the
assumptions used to shape our decisions are not reliable for long-term planning, making a lasting
solution improbable until we can gather more critical data over the next year. Nonetheless,
Commission staff has worked diligently to find the best data and cost models available today to
make essential economic and financial projections. Accordingly, I have concerns about relying
on these assumptions and models to forecast costs and savings for longer than beyond the current
year. Among the variables that make a longer-term solution less practical are the effectiveness
of the database that is designed to eliminate duplicates, the design of the prospective database
that will verify eligibility and a variety of economic factors. While we bend the growth curve
this year, we will be able to make even more progress next year once we have built the systems
needed to administer meaningful reform.
In light of these limitations, the Commission will hold itself accountable and render an
assessment of the program within six months from today, followed by a more comprehensive
and formal report due next year. Based on the information and analyses contained in those
reports, next year the Commission will trim the sails of today’s reform to maintain our course
toward more fiscally prudent shores. In other words, our improvements to the Lifeline program
will remain in “beta” mode while we continue to work to maximize its efficiencies.
Please keep in mind that although Congress’s intent to maintain a communications
lifeline for low-income Americans is clear, the Universal Service program is structured so that
consumers who can afford phone service subsidize those who cannot. In short, some consumers
pay artificially high rates so others may enjoy artificially low rates, or no rate at all.
Accordingly, when we spend more on Universal Service to help the Fund’s recipients, we are
essentially “taxing” all other phone consumers whether they are rich or poor. This Universal
Service contribution mechanism, or “tax,” is highly regressive. I hope those who have advocated
we adopt no spending restraints at all will understand that many Americans are just scraping by
in this economy. Fiscal irresponsibility would hurt them the most. Recent estimates reveal that
approximately 24 million Americans are underemployed, and many are paying their phone bills
in full therefore subsidizing others. Our action today attempts to limit how much we rob Peter to
subsidize Paul. The Order is imperfect in this regard, however, which underscores the urgency
of tackling Universal Service contribution reform as soon as possible.
Although the Order optimistically claims that our action may save the program “up to $2
billion,” I am not confident in that assertion. As a result, I concur in part while being pleased
that we will review the progress of these reforms before the end of the year.
Furthermore, it should come as no surprise that I cannot support my colleagues’
continued interpretation of section 706 as granting us broad powers. It does not. Additionally, I
don’t believe it is fiscally prudent for us to launch pilot programs that are likely to increase the
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Lifeline program’s costs. We certainly shouldn’t be laying the foundation for inflating the
program before shoring up its finances. Accordingly, I respectfully dissent from these portions
of the Order.184
In sum, I commend the Chairman for his leadership and diligence in pushing forward
these unprecedented reform efforts. I also have appreciated working with Zac Katz who is
always willing to listen to our perspectives and has tried to find creative solutions. Congrats on
completing your last open meeting item before jumping into your new role as Chief of Staff. I
have also enjoyed working with Commissioner Clyburn and look forward to collaborating with
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In addition to the significant budgetary effects of expanding Lifeline to broadband, I have concerns
regarding the legal authority that the Commission relies upon to launch the broadband pilot. First, this Order relies
on section 706 of the 1996 Act, in part, for its legal authority for establishing a broadband pilot. By referencing the
findings of the previous two “706 reports,” this Order notes that those reports triggered the Commission’s duty
under Section 706(b) to “remove[e] barriers to infrastructure investment” and “promot[e] competition in the
telecommunications market.” I dissented from both of those 706 reports, and have often noted that section 706 is
narrow in scope and does not provide the Commission with specific or general authority to do much of anything.
As part of its analysis, this Order points to section 706(a), a provision which opens with a policy
pronouncement that the Commission “shall encourage the deployment on a reasonable and timely basis of advanced
telecommunications capability to all Americans.” 47 U.S.C. 1302(a). However, as the the D.C. Circuit Court has
previously noted, “under Supreme Court and D.C. Circuit case law statements of policy, by themselves, do not
create ‘statutorily mandated responsibilities.’” Comcast Corp. v. FCC, 600 F.3d 642, 644 (D.C. Cir. 2010). Rather,
“[p]olicy statements are just that – statements of policy. They are not delegations of regulatory authority.” Id. at
654. The same holds true for congressional statements of policy, such as the opening of Section 706, as it does for
any agency’s policy pronouncements. Equally troubling is this Order’s reliance on section 706(b) which states that
if the FCC determines that broadband is not being deployed to all Americans in a reasonable and timely fashion, the
Commission shall “take immediate action to accelerate deployment of such capability by removing barriers to
infrastructure investment and by promoting competition in the telecommunications market.” 47 U.S.C. § 1302(b)
(emphasis added). Providing a subsidy to consumers for broadband access does not constitute infrastructure
investment nor does it promote competition. I disagree with the Order’s line of reasoning that providing a
government subsidy to individuals somehow translates into removing infrastructure barriers because it could free up
revenue to be used for buildout.
This Order attempts to lay the groundwork for expansion of the broadband pilot in the future by
establishing a performance goal to “ensure the availability of broadband service for low-income Americans.” This
Order’s analysis is analogous to arguments set forth in last year’s 706 report which equated “availability” with
“affordability” in the context of section 706. I have previously disagreed with such arguments. By way of
background, last year’s 706 report made the leap that Congress did not mean “physical” deployment when referring
to “deployment” and “availability.” It conceded that the Act does not define the terms “deployment” and
“availability.” Instead of looking to the plain statutory language to determine Congress’ intent, however, the
Commission relied on legislative report language to argue that even if broadband is physically deployed to a
particular area but is not affordable, it is not considered available under section 706. But, the actual statutory
language says otherwise, stating that as part of the inquiry, the Commission should look at demographic information
for “geographical areas that are not served by any provider of advanced telecommunications capability.” 47 U.S.C.
1302(c) (emphasis added).
Thus, for the forgoing reasons, I respectfully dissent from any parts of this Order which rely on section 706.
Also, specifically, I dissent from the adoption of the goal to ensure the availability of broadband service for low-
income Americans (Order at paras. 25, 26, 33-36) and the establishment of the broadband pilot (Order at paras. 321-
354.)
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all of my colleagues on speeding up the process for the establishment of the eligibility database.
Finally, my heartfelt thanks go to Sharon Gillett, Carol Mattey, Trent Harkrader, Kim Scardino
and the legions of additional bureau staff who have worked countless hours on not only the
development of this item but have also been instrumental in uncovering much of the waste, fraud
and abuse in this program. We are making historic progress today, but we have even more work
to do in the coming year.
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STATEMENT OF
COMMISSIONER MIGNON L. CLYBURN
APPROVING IN PART, CONCURRING IN PART
Re:
Lifeline and Link Up Reform and Modernization, WC Docket No. 11-42; Lifeline and
Link Up, WC Docket No. 03-109; Federal-State Joint Board on Universal Service, CC
Docket No. 96-45; Advancing Broadband Availability Through Digital Literacy
Training, WC Docket No. 12-23
Our Lifeline program is exactly that—a lifeline—for millions of low-income consumers
who couldn’t otherwise afford telephone service. Today’s Order completely reforms and
stabilizes this program and will ensure its survivability so that it can continue to serve our most
vulnerable citizens.
Over the last few years, the FCC has spent an incredible amount of time, promoting and
advancing what most would agree, is the greatest infrastructure challenge of the 21st Century—
broadband. With its transformative and enabling powers, broadband is a means by which all
Americans can enhance their extraordinary vision and actualize their greatest potential. Today,
with respect to this Order, we are making yet another significant installment in our quest for
universal broadband deployment and adoption, especially for our low-income citizens. I agree
wholeheartedly that these consumers are significantly disadvantaged when broadband is not
within their reach. But without telephone service, the disadvantage for them is most severe.
Without the capability to call employers, schools, doctors, 911, and family and friends, those
already vulnerable consumers are further isolated, and managing their day-to-day lives becomes
extremely difficult.
We have hundreds of testimonials from economically challenged consumers about how
their subsidized Lifeline phone service has benefitted them and what that connection means to
them personally. Of course, when I read these stories, they touch my heart, but I also can’t help
but appreciate what those subsidized connections mean to all of us, as a society. Regardless of
our means, we are able to communicate with one another, whether we are separated by a city
block, or are miles apart, through the convenience of a simple device. The benefits that this
capability has contributed to our nation are immeasurable, and the Lifeline program has been key
in this achievement. Indeed, the telephone penetration rate for consumers with income less than
$10,000 has steadily increased in the last few years, and I think that’s a very good demonstration
that the Lifeline program is helping us realize the universal service goals Congress mandated in
Section 254 of the Act, which is to ensure affordable phone service for every American.
We have seen more low-income consumers participate in the Lifeline program than ever
before over the last few years, and I believe part of that is due to the economy. Over 46 million
Americans are living in poverty. This is about 15 million more people than in 2000. Of those,
we know that after paying for their basic necessities—not including phone service—I am talking
food, shelter and health care—these citizens don’t have any disposable income left. So you can
see why more low-income consumers are turning to the Lifeline program for help. The other
reason the number of Lifeline consumers has grown, is that new entrants, such as mobile phone
providers, have started offering Lifeline products. These new options have allowed many low-
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income consumers to access mobile networks for the first time. And for those on a strict budget,
that wireless option may be the most efficient means of staying in touch with family, employers
and caregivers. So none of us should be surprised that low-income consumers want access to
mobile networks.
Today we are taking steps to ensure that more eligible citizens are afforded the
opportunity to benefit from this worthwhile program. No qualifying consumer will be cut off or
unable to obtain the benefits of the Lifeline program as a result of our reforms today. There will
be no minimum charge on consumers participating in this program. Far too many of them are
unbanked, and the cost of sending even a small payment to the carrier far outweighs the charge
imposed and would just be another barrier to them participating in and receiving the benefits of
the program. Moreover, we are taking steps to better serve the homeless population, including
permitting those living in shelters to sign up, and we are seeking comment on how we can better
coordinate with the Department of Veterans Affairs in serving our brave heroes who have
sacrificed for us, yet do not have a permanent home.
We also are taking significant measures to ensure that all waste is expunged from the
Lifeline program. We have evidence on our record that there are duplicates—that is, individuals
who have obtained more than one benefit. This is primarily a result of more competition and the
lack of a nationwide database to ensure that individual low-income consumers aren’t signed up
twice. In addition, there has been some confusion about the program’s requirements, and not just
among the consumers, but also with the service providers. Consumers haven’t been properly
educated about the program’s rules, or even understood which services are Lifeline-subsidized,
as evidenced by the consumer reaction during last year’s duplicate resolution process, when
many were surprised and dismayed by the letters they received from USAC. The bottom line is
this: there are numerous reasons why the program has grown, and it’s important that the steps
we take today to reform the program are balanced with the purpose and goals of the program—to
ensure that affordable phone service is available for low-income consumers.
Many have weighed in on whether it is appropriate for us to cap the program or set a
budget at this time. However, I cannot support a cap of a program whose goal it is to ensure the
affordability, and thus the availability of basic telephone service for our most vulnerable citizens.
One national wireless carrier submitted its survey findings of the makeup of its Lifeline
subscribers in our record and found that approximately 83 percent of its Lifeline subscribers
make less than $15,000 a year. Their average age is 51, and most of them are female. If we
don’t ensure their ability to access phone service, then we will be doing a great disservice to
them and our nation, and we would not be meeting the requirements of Congress’ mandate to
provide universal service.
I want to thank the Chairman for working with me on the steps we should take today to
manage the size of the Fund. I understand and embrace the need for fiscal responsibility, and the
reforms we adopt today provide the best means to realize significant savings which will help us
accomplish that goal. But at this juncture it is best for us to provide a baseline for how the
reforms we adopt today unfold over the next year. I support the Chairman in setting a target for
the savings we expect will be realized in 2012. The Bureau will be reporting to us in six months
and then again in one year on whether the reforms met our savings target. I believe it is
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appropriate for us to first review how the reforms impact the size of the Fund, and whether our
assumptions and projections are accurate, whether growth of the Fund is impacted by changes in
the macroeconomic conditions and the number of consumers who initiate Lifeline service, and
the impact of competitive Lifeline offerings in the program this year. This enhanced information
will be important in any consideration for next steps. Only at that point, will we have the type of
information needed to revisit the issue of a budget. As always, I will keep an open mind, but I
cannot guarantee anyone that I will support any particular budget before we have seen this data.
Nevertheless, I look forward to working with the Chairman, Commissioner McDowell, and
hopefully two additional Commissioners next year on this issue, as well as the other matters
raised in the Further Notice.
I, of course, support the Chairman’s objective that the Lifeline program should include
the goal of addressing broadband affordability for low-income consumers. I believe pilot
projects are an appropriate first step to determine the best way to address the digital divide for
low-income consumers in the Lifeline program. Although I wish we had adopted this pilot
program soon after our workshop on this issue in 2010, I am grateful we are now charging ahead,
and am hopeful that this program, along with other public and private sector efforts underway,
will help us complete the modernization of this program that is contemplated in today’s Order.
When everyone is connected to the networks, then the value of those networks increases.
This is true for both voice and broadband services. Through the universal service fund and the
private sector, our nation has invested hundreds of billions of dollars in our voice networks. Last
October, we committed to spending $4.5 billion a year to build broadband-capable networks.
But when a segment of our fellow citizens cannot access those networks because they cannot
afford to, we are all experiencing a loss. With respect to broadband, the statistics are startling.
Less than a third of the poorest Americans in this country have adopted broadband. However,
access to broadband service is not a luxury, it is a necessity. The importance of broadband to
economic opportunity and quality of life in our nation is unquestionable. It is difficult to look
and apply for a job, complete a school assignment, or access government services and
resources—which consistently are moving online to save costs—without a broadband
connection. Studies repeatedly show that cost is the greatest barrier to broadband adoption for
low-income consumers. While we have seen some significant steps in the public and private
sectors to bridge the affordability gap, it will take a considerable commitment of this nation and
this agency to achieve a broadband penetration rate that mirrors our telephone penetration rate. I
believe that the Lifeline program can do for broadband service affordability what the Lifeline
program has done for telephone service affordability, but it will take a brave Commission to do
what is necessary to make a financial commitment to ensure that result.
An underlying theme in our discussion about transforming our fund to support the
availability of broadband, is that the concept of universal service evolves over time, based upon
the technological changes and expectations of consumers that result from those changes. When
the federal Lifeline program began, most consumers had only one personal phone—their home
phone. Today, about 30% of consumers have chosen a mobile phone over a home phone, and
tens of millions in our nation have access to both a home phone and a mobile phone. Our Order
adopts a one phone service per household restriction for low-income families. For those families
with two adults, I am concerned that a $9.25 subsidy for service may not stretch far enough for
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them to each have access to a phone when they need it. I believe it’s important that low-income
consumers have choices, but given the recent societal expectation that consumers should be able
to readily access a phone—whether at home or on the go, I believe asking low-income families
with multiple adults to manage with just one phone is inconsistent with the new norm. I also
worry what this means in their ability to manage their day-to-day lives and the public safety risks
of those members of the family who may not have access to the phone service.
Of course, this Commission just recognized the importance of consumer access to both
fixed and mobile networks, as evidenced by our recent commitment to fund both types of
networks in our high-cost reform. I appreciate the Chairman’s understanding about my
concerns, and his willingness to tee up this issue directly in our Further Notice. As such, we are
exploring recent proposals in the record about whether a modest increase in the subsidy for low-
income families with multiple adults, will allow them to better access the networks. I think this
is especially important for very remote areas, such as Tribal Lands and parts of Alaska, where
access to a mobile phone may mean the difference between life and death. For this reason, I am
concurring in our finding that the benefit of the Lifeline program, is one per household.
There is significant agreement in the record that by using modern database capabilities,
we can best reform this program to make it more efficient and effective. My two colleagues and
I couldn’t agree more, and I want to thank them both for working with me on this issue. I am
very pleased that we are setting the goal to address not just duplicates in the next two years, but
also eligibility through such database capacity. By doing so, we can better ensure that only
qualified consumers are signed up for the subsidy, and we can more effectively confirm
eligibility periodically. As a result, two of the new requirements we establish in this Order—
reviewing documentation for program eligibility and annual certification of 100 percent of
subscribers—will be temporary measures carriers will perform until a database can be used for
these functions.
In my initial review of the Order, I had real concerns about the burdens we were placing
on both consumers and the carriers with respect to these two new requirements. I understood
from the consumer perspective, that documenting their eligibility can be very difficult when they
are not initiating their service in person with the carrier. Access to copy and fax machines for
low-income consumers, and sometimes even the post office, can be significant barriers,
especially because many post offices no longer have copy machines, not to mention the fact that
the post office has been closing locations. From the carriers, I also appreciated that they don’t
want to make the judgment call on who is and isn’t qualified for the program. In addition, I
understood from both carriers and consumers, that an annual recertification process for 100
percent of Lifeline subscribers is likely to have the unintended effect of de-enrolling qualified
consumers.
I can agree with the Chairman that this year, every current Lifeline participant should be
checked for continued eligibility in the program through self-certification. Currently, about 65
percent of all Lifeline subscribers are being recertified annually, and checking the other 35
percent makes sense as an initial step in our reform of the program. By permitting consumers to
re-certify via text and through individual voice response systems, I believe we have struck a
balance for this temporary measure of 100 percent recertification. It is our intent that in 2013,
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carriers will be able to rely upon a database for recertification, and if the database isn’t ready, we
will permit carriers to rely upon USAC for recertifying consumers, should they choose to do so.
I believe this option not only addresses some carriers’ concerns that 100 percent re-certification
every year is too burdensome, but it also will address the concerns about consumer response
rates being too low.
The response rate to USAC last year during the duplicate process, exceeded our
expectations, and I expect that consumers may be more likely to respond to an official
notification from USAC, as compared to their phone company. Nonetheless, I could not agree
more with many of the participants in this proceeding, that the sooner we can make the database
capabilities function in this program for both duplicates and eligibility, the better off consumers,
carriers, and the Fund will be.
It is critical that we begin the process of educating consumers concerning the changes to
the Lifeline program. During the duplicates process last year, thanks to my partnership with
Commissioner Copps, the Chairman’s support, and the efforts of our Wireline and Consumer
Bureaus—this Commission worked diligently with state agencies, the carriers, and consumer
groups, to inform and educate the Lifeline subscribers about the duplicates process. We received
very few complaints as a result. In fact, we have heard positive feedback from many. The
information sent was easy to understand, and available in both English and Spanish. We are
planning to replicate that campaign this year with respect to these reforms. I want to thank the
Chairman and the staff for their willingness to work with me in getting the word out about the
changes to the program, and I encourage all the state agencies, carriers, and consumer groups, to
work with us again to ensure that no qualifying low-income consumer is cut off or unable to
access the benefits of the program.
I want to take a moment and thank the Joint Board for its significant input into this item.
Over the last year and a half, I have been working closely with my state colleagues and the Joint
Board staff on this program. The Joint Board’s Recommended Decision from November of
2010 was the cornerstone for all the work that has happened in this program in the last year. I
believe there are many steps we take today that the states will support, and I look forward to
further collaboration with the Joint Board as the reforms are implemented.
I also want to thank Sharon Gillett, and her capable staff, Carol Mattey, Trent Harkrader,
Kim Scardino, Lisa Hone, Jonathan Lechter, Soumitra Das, Jamie Susskind, Garnet Hanly, Beau
Finley, Rebecca Hirselj, Divya Shenoy, and Rebekah Bina. Their contributions to this Order and
Further Notice were remarkable. There was a significant amount of work in the Lifeline
program last year, in addition to their work on the Order and Further Notice. Thank you for your
dedication to the population served by this program and for your personal sacrifices to complete
today’s item. I know the implementation stage of the reforms will keep you busy, and I have
every confidence that you will continue to serve our citizens in a diligent and thoughtful manner.
I also want to thank my Wireline Legal Advisor, Angie Kronenberg, for her significant
contributions during the last 18 months with respect to this program, leading up to today’s
actions, and her commitment to achieving the balanced reforms we adopt today. Mr. Chairman,
I also thank you for your leadership in this proceeding.
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