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Released: April 2, 2014

PUBLIC NOTICE

Federal Communications Commission

News Media Information 202 / 418-0500

445 12th St., S.W.

Internet: http://www.fcc.gov

Washington, D.C. 20554

TTY: 1-888-835-5322

DA 14-450

Released: April 2, 2014

WIRELINE COMPETITION BUREAU ANNOUNCES RELEASE OF FINAL LIFELINE

BIENNIAL AUDIT PLAN

WC Docket No. 11-42

By this Public Notice, the Wireline Competition Bureau (Bureau) announces release of the final
Lifeline Biennial Audit Plan, attached hereto as Attachment 3 (Audit Plan). In the Lifeline Reform Order,
the Commission directed the Bureau, in conjunction with the Office of Managing Director (OMD), to
develop standard procedures for independent biennial audits of eligible telecommunications carriers
(ETCs) receiving $5 million or more annually from the low-income universal service support program.1
By establishing uniform audit procedures to review the internal controls and processes of Lifeline service
providers, the Bureau and OMD are implementing another major reform established by the Commission
to protect the federal universal service fund from waste, fraud and abuse.
The independent audit firms conducting these biennial audits must plan their engagements by
using the approved procedures outlined in the final Audit Plan. The independent audit firms must be
licensed, certified public accounting firms and must conduct the audits consistent with Generally
Accepted Government Auditing Standards (GAGAS).2 The audits shall be performed as agreed-upon
procedures (AUP) attestations.3 In addition, to ensure compliance with the Commission’s Lifeline
requirements, the Universal Service Administrative Company (USAC) will conduct training for
independent auditors performing the AUP engagements to ensure that the audits are performed in
accordance with the Audit Plan. The independent auditors will be required to collect from the ETCs
specific documents and completed questionnaires, which the independent auditors will inspect before
conducting fieldwork testing and then preparing attestation reports.
ETCs receiving $5 million or more from the low-income program, as determined on a holding
company basis taking into account all operating companies and affiliates, for calendar year 2013 will be
subject to the first round of biennial audits. A list of ETCs subject to this requirement is attached hereto
as Attachment 2.4 As detailed in the Audit Plan, the final attestation report for each audit must be
submitted within one year after release of the final Audit Plan, which is April 2, 2015 for the first biennial
audit.

1 See Lifeline and Link Up Reform and Modernization et al., WC Docket No. 11-42 et al., Report and Order and
Further Notice of Proposed Rulemaking, 27 FCC Rcd 6656, 6782, para. 291 (2012) (Lifeline Reform Order).
2 Id.; see also GOVERNMENT ACCOUNTABILITY OFFICE, GOVERNMENT AUDITING STANDARDS, December 2011,
http://www.gao.gov/assets/590/587281.pdf (GAGAS Standards).
3 See Lifeline Reform Order, 27 FCC Rcd at 6783, para. 293.
4 See id. at 6784, para. 296 (directing the Bureau to issue a Public Notice identifying the carriers that meet the $5
million threshold).

Changes to Audit Plan. In order to promote clarity, transparency and predictability in the Lifeline
program, the Bureau, in conjunction with OMD, released a public notice seeking comment on the
proposed Lifeline Biennial Audit Plan.5 The Bureau received several comments addressing the proposed
Lifeline Biennial Audit Plan.6 In response to comments, the Bureau and OMD hereby revise the Audit
Plan in certain parts. Specifically, we make the following revisions to the Audit Plan:7

Audit Period:

The audit period has been revised to cover the period of January 1
through December 31. Commenters raised concern that the independent audits would
cover activities that occurred outside of the proposed period of November 1 through
April 30, so we adjusted the period to cover the entire calendar year.8 The first biennial
audits will cover calendar year 2013.

Submission of Attestation Reports

: To ensure that ETCs have a reasonable period of
time to submit comments in response to the draft attestation reports, the Audit Plan has
been revised to state that ETCs have 30 days to submit comments in response to the draft
report.9 The final Audit Plan also clarifies when the fieldwork is deemed complete (i.e.,
when the audit results are presented to the ETC). Consistent with the Lifeline Reform
Order
, final reports must be provided by covered ETCs to the Commission, USAC, and
relevant state and Tribal governments.10 For the audits conducted in 2014, the final
report will be filed no later than April 2, 2015.

5 See Wireline Competition Bureau Seeks Comment on Lifeline Biennial Audit Plan, WC Docket No. 11-42, Public
Notice, 28 FCC Rcd 14016 (Wireline Comp. Bur. 2013) (Biennial Audit Plan Initial Public Notice).
6 See Comments of AT&T, WC Docket No. 11-42 (filed Dec. 13, 2013); Comments of Verizon and Verizon
Wireless, WC Docket No. 11-42 (filed Dec. 13, 2013); Comments of TracFone Wireless, Inc. (TracFone), WC
Docket No. 11-42 (filed Dec. 13, 2013); Comments of Nexus Communications, Inc. (Nexus), WC Docket No. 11-42
(filed Dec. 13, 2013); Comments of United States Telecom Association (USTelecom), WC Docket No. 11-42 (filed
Dec. 13, 2013); Comments of the Independent Telephone & Telecommunications Alliance (ITTA), WC Docket No.
11-42 (Dec. 13, 2013); Comments of Telrite Corporation, i-wireless LLC, Boomerang Wireless, LLC, Global
Connection, Inc. of America and Blue Jay Wireless, LLC (collectively, Joint Commenters), WC Docket No. 11-42
(filed Dec. 13, 2013); Comments of Smith Bagley, Inc. (SBI), WC Docket No. 11-42 (filed Dec. 13, 2013);
Comments of CenturyLink, WC Docket No. 11-42 (filed Dec. 30, 2013); Reply Comments of Joint Commenters,
WC Docket No. 11-42 (filed Dec. 30, 2013); Reply Comments of Nexus, WC Docket No. 11-42 (filed Dec. 30,
2013); and Reply Comments of the Massachusetts Department of Telecommunications and Cable (MA DTC), WC
Docket No. 11-42 (filed Jan. 2, 2014).
7 In addition to the substantive changes described in this public notice, we also made stylistic changes to the Audit
Plan for clarification purposes, without changing the substance. Additionally, the Audit Plan clarifies that future
biennial audits will be subject to any new or revised Lifeline program rules upon the effective date of such rule
revisions.
8 See Audit Plan at paras. 6-7. Various commenters sought clarification regarding the audit period. See, e.g.,
Verizon Comments at 5-6 (explaining how Verizon recertifies some of its subscribers in the June to December
timeframe); CenturyLink Comments at 8-9 (requesting clarity on audit period).
9 See Audit Plan at para. 15. Several commenters requested more structure around the commenting on and
submission of the audit reports. See, e.g., Nexus Comments at 2-3 (proposing that the audit plan give ETCs at least
30 days to provide written comments on the draft reports); AT&T Comments at 7-8. To maintain independence in
the auditing process, the Bureau is directing the independent auditor to create one draft of the audit report, despite
Nexus’ claim that there should be two draft reports, the first of which the ETC could comment on before submission
of the second draft report to USAC and the Commission. See Nexus Comments at 2-3.
10 Lifeline Reform Order, 27 FCC Rcd at 6783, para. 294.
2


Confidentiality of ETCs’ Information:

To ensure that all of an ETC’s work papers
and communications between the independent auditor and the ETC remain confidential,
the Audit Plan specifies that such communications can be maintained as confidential.11
The Audit Plan is also revised to clarify that the Commission will accept requests for
confidential treatment of a draft audit report. Whether a draft report is, in fact, protected
from disclosure will depend on the Commission’s analysis if and when access to such
information is sought. However, all final reports are considered public information.12 In
adopting the biennial audit requirements, the Commission, when describing the process
for submission of final reports, specifically states that “[t]hese audit reports will not be
considered confidential and requests to render them so will be denied.”13 To maintain
transparency in the program, the Audit Plan requires all final audit reports to be publicly
available. Enabling public access to this information promotes the public interest of
providing greater transparency into oversight of the Lifeline program.

Subscriber Data for Testing:

The Audit Plan includes procedures to require the auditor
to use a sampling of subscriber data (Subscriber List) to test compliance in key areas.14
Based on concerns raised by commenters that the sample was too broad, we have revised
the Subscriber List requirement to cover Lifeline subscribers served by the ETC in three
states or territories for one month.15 Specifically, the independent auditor shall randomly
select one of the three states or territories where the ETC received the largest amount of
Lifeline support and two additional states or territories randomly selected by the
independent auditor.16 In the event the ETC did not receive Lifeline support in at least 3

11 See Audit Plan at para. 5; see also Nexus Comments at 3-4 (recommending that all communications between
auditor and ETC, and associated work papers, are kept confidential due to competitive nature of such information);
AT&T Comments at 8 (arguing for audit work papers to be maintained as confidential).
12 Lifeline Reform Order, 27 FCC Rcd at 6783, para. 294. Several commenters asked the Commission to clarify that
draft audit reports are confidential. See, e.g., AT&T Comments at 3-4; Nexus Comments at 3-5; CenturyLink
Comments at 9. The MA DTC filed comments asking for greater involvement in the audit process and opportunity
to comment on draft audit reports. See MA DTC Comments at 3-4. The Lifeline Reform Order, however, directs
that draft reports be submitted to the Commission and USAC. See Lifeline Reform Order, 27 FCC Rcd at 6783, para
294. State regulatory agencies such as the MA DTC and all other interested parties will have public access to the
final reports, and an opportunity to further investigate those ETCs they believe warrant further inquiry based on the
results of the final reports. The MA DTC had also recommended that the Audit Plan be expanded to include a
review of ETCs’ financial capabilities. MA DTC Comments at 4-5. Since these audits are required to focus on the
company’s overall compliance program and internal controls, and for the independent auditors to check compliance
on key risk areas, we have not included audit procedures for every program rule, including the requirement that
ETCs demonstrate financial capability to provide Lifeline service. See Lifeline Reform Order, 27 FCC Rcd at 6782-
83, paras. 292-93.
13 Lifeline Reform Order, 27 FCC Rcd at 6783, para. 294.
14 See Audit Plan at para. 23.
15 Id. When creating a subscriber list by state, companies subject to the Audit Plan should include all study area
codes (SACs) included within a state or jurisdiction. For example, if a company has multiple ETCs designated
within the same state, the company should incorporate all Lifeline subscribers for that state in the subscriber list.
See CenturyLink Comments at 4 (explaining how CenturyLink is comprised of many operating companies and
affiliates of which more than 100 are separately designated as ETCs).
16 Id. When creating a subscriber list by state, companies subject to the Audit Plan should include all study area
codes (SACs) included within a state or jurisdiction. For example, if a company has multiple ETCs designated
within the same state, the company should incorporate all Lifeline subscribers for that state in the Subscriber
(continued...)
3

states or territories, the auditor shall select all of the states or territories where the ETC
received Lifeline support during the audit period. In addition, the Audit Plan has been
revised to exclude subscribers from the Subscriber List in those states or jurisdictions
where the state, or a state administrator, is responsible for obtaining the Lifeline
certification forms and performs the annual recertification.17

Fieldwork Testing Procedures, Objective I Procedures:


o Review of Marketing Materials. To address commenters concerns that ETCs
might not have ten (10) different examples of marketing materials, we have
modified the Audit Plan to require those ETCs that have less than ten (10)
different marketing materials to submit as many as it uses to advertise the ETC’s
Lifeline service plan. 18
o Customer Care for Lifeline Service. Based, in part, on concerns raised by
commenters,19 the Audit Plan has been revised to require auditors to review
recorded calls involving Lifeline service as opposed to requiring the auditor to
monitor incoming calls to telephone number(s) used as customer care for Lifeline
service. This change was made because many ETCs use such customer care
telephone number(s) for non-Lifeline services.20
o Non-Usage Requirement. We have added a procedure to ensure that the auditor
performs a thorough review of the ETCs’ compliance with the Commission’s
non-usage rules. Specifically, we have revised the Audit Plan to require that the
carrier explain how it monitors and identifies subscribers with no monthly fee
who have not used the service for a certain period of time.21
(Continued from previous page)
List. See CenturyLink Comments at 4 (explaining how CenturyLink is comprised of many operating companies and
affiliates of which more than 100 are separately designated as ETCs).
17 See Audit Plan at para. 23; see also, e.g., Verizon Comments at 4-5 (asking the Commission to modify the
subscriber sample to exclude those jurisdictions in which the carrier is not responsible for initial and annual
recertification); AT&T Comments at 6-7 (asking the Commission to exclude from a sample those study areas where
a state makes the eligibility determination and/or performs the annual recertification); CenturyLink Comments at 10
(arguing for a smaller sample of customers and study areas to accomplish goals of audit). Within the Audit Plan, the
subscriber sample does not exclude those states or jurisdictions where the ETC is required to complete
certification/recertification forms even though a state, or state administrator, establishes eligibility through electronic
means. For example, the state of Maryland has a means in which the state establishes eligibility for some qualifying
programs, but the ETC is still responsible for obtaining the ETC’s certification forms. In such instances, Maryland
subscribers could be included in the Subscriber List because the state requires the ETC to certify subscribers.
18 See Audit Plan at Fieldwork Testing Procedures, Objective I, Procedure 2; see also, e.g., AT&T Comments at 10
(explaining how some ETCs would have difficulty producing ten separate Lifeline marketing examples since the
same marketing materials can be used in multiple jurisdictions).
19 See, e.g., Verizon Comments at 6-7 (claiming that it would be more efficient for auditors to review recorded calls
rather than monitoring incoming calls); CenturyLink Comments at 9-10 (arguing that it would be costly and
inefficient with auditors’ time to wait for incoming Lifeline customer care calls rather than reviewing recorded
calls).
20 See Audit Plan at Fieldwork Testing Procedures, Objective I, Procedure 3.
21 See id. at Fieldwork Testing Procedures, Objective I, Procedure 4c.
4

Fieldwork Testing Procedures, Objective II:


o Testing of One-Per-Household Rule. Given the implementation of the National
Lifeline Accountability Database (NLAD) as a measure to detect and prevent
duplicate support in the Lifeline program and consistent with information noted
in the record, we have revised this objective to remove the procedure to check for
duplicate addresses. The auditor, however, is still required to check for the
existence of one-per-household worksheets in instances where multiple recipients
of Lifeline service reside at the same address.22 The Audit Plan also clarifies that
even if subscribers enrolled in the program prior to June 2012, the effective date
of the one-per-household requirement, at least one subscriber at that address is
still required to complete a one-per-household worksheet.23

Fieldwork Testing Procedures, Objective III:

The Audit Plan has been revised to
require the auditor to review the ETC’s procedures on how the ETC’s employees and
agents are trained on the use of and interaction with the NLAD, because all ETCs are
required to use the NLAD to confirm that a consumer is not already enrolled in the
program.24

Fieldwork Testing Procedures, Objective IV:

To reduce the burden on the ETCs, the
Audit Plan has been revised to limit the sample for testing each ETC’s recertification
process. The Audit Plan now requires testing of a sample of three states or territories.
The independent auditor shall randomly select one of the three states or territories where
the ETC received the largest amount of Lifeline support and two additional states or
territories randomly selected by the independent auditor. .25 Several commenters asked
that the sampling for the FCC Form 555 be modified to limit a sample to a smaller subset
of SACs rather than all SACs served by the ETC, and we agree that we can meet our
auditing goals with the smaller sample.26 We have also clarified that the FCC Form 555
filed by ETCs the January following the audit period is the form subject to each biennial
audit.27 As such, the FCC Form 555 subject to the first biennial audits is the one filed in
January 2014.

22 See id. at Fieldwork Testing Procedures, Objective II, Procedure 4; see also, e.g., Letter from Robert S. Koppel,
Counsel, SBI, to Marlene H. Dortch, Secretary, FCC, at Attach. (Smith Bagley Ex Parte) (recognizing that the audit
should use data sampling methods so the auditor can review a subset of customers to evaluate the company’s
controls). The Audit Plan continues to require the independent auditor to check procedures to ensure the Subscriber
List conforms with the ETC’s relevant FCC Form 497s for the sampled months. See Audit Plan at Fieldwork
Testing Procedures, Objective II, Procedure 2.
23 See id. at Fieldwork Testing Procedures, Objective II, Procedure 4; but see AT&T Comments at 10-11 (claiming
that the Commission did not require ETCs to obtain worksheets from Lifeline subscribers who enrolled in the
program prior to June 1, 2012). The Commission, however, requires that all ETCs collect the one-per-household
worksheet when they learn that a subscriber resides at the same address as another Lifeline subscriber. See Lifeline
Reform Order,
27 FCC Rcd at 6691, 6895-96, para. 78, App. C.
24 See Audit Plan at Fieldwork Testing Procedures, Objective III, Procedure 2; see also Smith Bagley Ex Parte.
25 See id. at Fieldwork Testing Procedures, Objective IV, Procedure 6; App. A (Requested Documentation).
26 See, e.g., CenturyLink Comments at 10-11 (requesting clarity on the FCC Form 555 procedures); TracFone
Comments at 6-7 (claiming that the sample for auditing recertification is overly broad and unnecessary).
27 Id.
5

Appendix A, Requested Documentation:

Scope of Sample. As discussed in the Subscriber Data for Testing section
above, to address concerns raised by commenters, we have revised the sample
size to provide a more measured target of the number of subscribers that could
be included in the Subscriber List.28 Additionally, we have revised the
subscriber samples to test whether the ETC’s procedures for implementing the
recertification process and non-usage requirements are effective.29
State-Specific Requirements. In the event there are state-specific requirements
that are more restrictive than the Commission’s requirements described in
Appendix F, the Audit Plan has been revised to require the ETC to provide such
state requirements to the independent auditor.30 This would allow the
independent auditors to understand such differences between Commission and
state requirements.

Appendix B, Background Questionnaire:

We have revised Appendix B of the Audit
Plan to require ETCs to only list the company’s supervisors if there are more than ten
individuals responsible for determining eligibility and recertification of Lifeline
subscribers.31

Appendix C, Internal Control Questionnaire:

Recognizing that ETCs may have
multiple individuals who would complete the Internal Control Questionnaire, we have
revised this appendix to delete the requirement that only one individual from each
company is required to complete the questionnaire. Additionally, the appendix has been
revised to clarify or remove certain questions deemed unnecessary for the purpose of this
audit.32 These revisions also include the addition of questions relating to the ETC’s use
of the NLAD.

28 See Audit Plan at Appendix A.
29 See SBI Comments at 6-8 (arguing that the Audit Plan should not require a customer-by-customer comparison of
subscriber lists to forms).
30 See Audit Plan at Appendix A; see also AT&T Comments at 9 (requesting that the Audit Plan recognize the state-
specific requirements that are different than the Commission’s rules, providing as an example a state that requires
the ETC to retain documentation). AT&T has also maintained that the Audit Plan should recognize as acceptable
that an audited company might acquire an ETC, and will need up to six months to complete integration in the event
these separate legal entities have different procedures and controls. See AT&T Comments at 9. In the event an
audited company purchases another ETC that has different procedures and controls than the audited company, the
audited company should explain the differences when summarizing their practices and procedures within the Audit
Plan. See Audit Plan at Appendix A.
31 See Audit Plan at Appendix B; see also AT&T Comments at 12.
32 See Appendix C (Internal Control Questionnaire); see also, e.g., AT&T Comments at 12 (requesting clarity or
removal of certain questions). Some commenters have claimed that certain questions ask about policies and
procedures that are not explicitly contained in the Commission’s rules. See, e.g., TracFone Comments at 9-10
(claiming questions on fraud policy and whistleblower program are outside scope of audit). The primary purpose of
this audit is for the auditor to check internal controls and procedures to ensure compliance. While a fraud policy or
whistleblower program is not required under the Commission’s rules, they are evidence of how the company has
implemented controls to ensure compliance, and are therefore relevant to the auditor.
6

Appendix F, Compliance Requirements:

The Audit Plan has been revised to remove
the appendix titled “Requested Documentation: USAC Management” as it is no longer
necessary based on other revisions.
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).
For further information, please contact Garnet Hanly, Telecommunications Access Policy
Division, Wireline Competition Bureau, at (202) 418-0995 or TTY (202) 418-0484; or Thomas Buckley,
Office of the Managing Director, at (202) 418-0725.
- FCC -
7

ATTACHMENT 1

Final Regulatory Flexibility Analysis

1.
As Required by the Regulatory Flexibility Act if 1980, as amended (RFA)1, the Wireline
Competition Bureau (Bureau), in conjunction with the Office of Managing Director (OMD), prepared an
Initial Regulatory Flexibility Analysis (IRFA) incorporated in the Public Notice on the Proposed Lifeline
Biennial Audit Plan.2 The Bureau, in conjunction with OMD, sought written public comment on the
proposed Audit Plan, including comment on the IRFA.3 This present Final Regulatory Flexibility
Analysis (FRFA) conforms to the RFA.4

A.

Need for, and Objectives of, the Lifeline Biennial Audit Plan:

2.
The Public Notice sets forth the standard procedures for independent biennial audits of
carriers drawing $5 million or more annually from the low-income universal service support program.

B.

Legal Basis

3.
The Public Notice, including publication of proposed procedures, 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.5

C.

Description and Estimate of the Number of Small Entities to which the Proposed
Biennial Audit Plan Will Apply:

4.
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 Biennial Audit Plan.6 The RFA
generally defines the term “small entity” as having the same meaning as the terms “small business,”
“small organization,” and “small governmental jurisdiction.”7 In addition, the term “small business” has
the same meaning as the term “small business concern” under the Small Business Act.8 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).9
Nationwide, there are a total of approximately 29.6 million small businesses, according to the SBA.10 A

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 See Biennial Audit Plan Initial Public Notice, 28 FCC Rcd at 14019-28, Attach. 1.
3 See id.
4 See 5 U.S.C. § 604.
5 47 U.S.C. §§ 151, 152, 154(i)-(j), 201(b), 254, 257, 303(r), 503, 1302.
6 5 U.S.C. § 603(b)(3).
7 5 U.S.C. § 601(6).
8 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).
9 Small Business Act, 15 U.S.C. § 632.
10 See Small Business Administration, Office of Advocacy, Frequently Asked Questions,
http://www.sba.gov/advocacy/7495 (last visited February 25, 2014).
8

“small organization” is generally “any not-for-profit enterprise which is independently owned and
operated and is not dominant in its field.”11 Nationwide, as of 2002, there were approximately 1.6 million
small organizations.12 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.”13 Census Bureau data for 2002 indicate that there were 87,525 local governmental
jurisdictions in the United States.14 We estimate that, of this total, 84,377 entities were “small
governmental jurisdictions.”15 Thus, we estimate that most governmental jurisdictions are small.
1.

Wireline Providers

5.
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.16 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.17 Of these 1,307 carriers, an estimated 1,006 have
1,500 or fewer employees and 301 have more than 1,500 employees.18 The Commission estimates that
most providers of local exchange service are small entities, but a small percentage are impacted by the
Biennial Audit Plan because it applies only to those entities that receive $5 million or more from the low-
income program, on an annual basis, as determined on a holding company basis taking into account all
operating companies and affiliates. 19
6.
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.20 Census

11 5 U.S.C. § 601(4).
12 Independent Sector, The New Nonprofit Almanac & Desk Reference (2002).
13 5 U.S.C. § 601(5).
14 U.S. Census Bureau, Statistical Abstract of the United States: 2006, Section 8, page 272, Table 415.
15 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.
16 13 C.F.R. § 121.201, NAICS code 517110.
17 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).
18 See id.
19 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
20 13 C.F.R. § 121.201, NAICS code 517110.
9

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 Local Service Providers can be considered small entities.21 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.22 Of these 1,442 carriers, an estimated
1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees.23 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.24 In addition, 72 carriers have reported that they are Other Local Service Providers.25
Seventy of which have 1,500 or fewer employees and two have more than 1,500 employees.26
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, but a small percentage are impacted by the Biennial Audit Plan because it applies only to
those entities that receive $5 million or more from the low-income program, on an annual basis, as
determined on a holding company basis taking into account all operating companies and affiliates.
7.
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.27 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.28 According to Commission
data, 359 companies reported that their primary telecommunications service activity was the provision of
interexchange services.29 Of these 359 companies, an estimated 317 have 1,500 or fewer employees and
42 have more than 1,500 employees.30 Consequently, the Commission estimates that the majority of

21 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
22 See Trends in Telephone Service at Table 5.3.
23 See id.
24 Id.
25 See id.
26 See id.
27 13 C.F.R. § 121.201, NAICS code 517110.
28 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
29 See Trends in Telephone Service at Table 5.3.
30 See id.
10

interexchange service providers are small entities that will not be affected by the Biennial Audit Plan
because it applies only to those entities that receive $5 million or more from the low-income program, on
an annual basis, as determined on a holding company basis taking into account all operating companies
and affiliates.
8.
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.31 Under that size standard, such a business is small if
it has 1,500 or fewer employees.32 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 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.33 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.34 Consequently, the Commission estimates that the majority of
OSPs are small entities, but will not be impacted by the Biennial Audit Plan because it applies only to
those entities that receive $5 million or more from the low-income program, on an annual basis, as
determined on a holding company basis taking into account all operating companies and affiliates.
9.
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.35 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
1,000.36 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.37 Of these, an estimated 211 have 1,500 or
fewer employees and two have more than 1,500 employees.38 Consequently, the Commission estimates
that the majority of local resellers are small entities, but will not be impacted by the Biennial Audit Plan
because it applies only to those entities that receive $5 million or more from the low-income program, on
an annual basis, as determined on a holding company basis taking into account all operating companies
and affiliates.

31 13 C.F.R. § 121.201, NAICS code 517110.
32 Id.
33 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
34 Trends in Telephone Service at Table 5.3.
35 13 C.F.R. § 121.201, NAICS code 517911.
36 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
37 See Trends in Telephone Service at Table 5.3.
38 Id.
11

10.
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.39 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
1,000.40 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,41 881 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, but will not be impacted by the Biennial Audit Plan
because it applies only to those entities that receive $5 million or more from the low-income program, on
an annual basis, as determined on a holding company basis taking into account all operating companies
and affiliates.
11.
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.42 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 1,000.43 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.44 Of these, an estimated all 193 have 1,500 or fewer employees and none have more than 1,500
employees.45 Consequently, the Commission estimates that the majority of pre-paid calling card
providers are small entities, but will not be impacted by the Biennial Audit Plan because it applies only to
those entities that receive $5 million or more from the low-income program, on an annual basis, as
determined on a holding company basis taking into account all operating companies and affiliates.
2.

Wireless Carriers and Service Providers

12.
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.

39 13 C.F.R. § 121.201, NAICS code 517911.
40 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
41 See Trends in Telephone Service at Table 5.3.
42 13 C.F.R. § 121.201, NAICS code 517911.
43 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
44 See Trends in Telephone Service at Table 5.3.
45 See id.
12

13.
Wireless Telecommunications Carriers (except Satellite). Since 2007, the Census
Bureau has placed wireless firms within this new, broad, economic census category.46 Prior to that time,
such firms were within the now-superseded categories of “Paging” and “Cellular and Other Wireless
Telecommunications.”47 Under the present and prior categories, the SBA has deemed a wireless business
to be small if it has 1,500 or fewer employees.48 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.49 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.50 Of these, an estimated 261 have 1,500 or fewer employees and 152 have
more than 1,500 employees.51 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.
14.
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.52 The SBA has approved these
definitions.53 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.
15.
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

46 U.S. Census Bureau, 2007 NAICS Definitions: Wireless Telecommunications Categories (except Satellite),
http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=517210&search=2007%20NAICS%20Search (last visited
February 25, 2014).
47 U.S. Census Bureau, 2002 NAICS Definitions: Paging, http://www.census.gov/cgi-
bin/sssd/naics/naicsrch?code=517&search=2002%20NAICS%20Search (last visited February 25, 2014); U.S.
Census Bureau, 2002 NAICS Definitions: Other Wireless Telecommunications, http://www.census.gov/cgi-
bin/sssd/naics/naicsrch?code=517&search=2002%20NAICS%20Search (last visited February 25, 2014).
48 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).
49 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
50 See Trends in Telephone Service at Table 5.3.
51 See id.
52 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).
53 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).
13

annual receipts, under SBA rules.54 The second has a size standard of $25 million or less in annual
receipts.55
16.
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.”56 Census Bureau data for 2007 show that 512 Satellite
Telecommunications firms that operated for that entire year.57 Of this total, 464 firms had annual receipts
of under $10 million, and 18 firms had receipts of $10 million to $24,999,999.58 Consequently, the
Commission estimates that the majority of Satellite Telecommunications firms are small entities, but are
unlikely impacted by the Biennial Audit Plan because it applies only to those entities that receive $5
million or more from the low-income program, on an annual basis, as determined on a holding company
basis taking into account all operating companies and affiliates.
17.
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.”59 For this category, Census Bureau data for 2007 show that there were a total of 2,383
firms that operated for the entire year.60 Of this total, 2,347 firms had annual receipts of under $25
million and 12 firms had annual receipts of $25 million to $49, 999,999.61 Consequently, the Commission
estimates that the majority of All Other Telecommunications firms are small entities that might be
affected by our action.
18.
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

54 13 C.F.R. § 121.201, NAICS code 517410.
55 13 C.F.R. § 121.201, NAICS code 517919.
56 U.S. Census Bureau, 2007 NAICS Definitions, Satellite Telecommunications, http://www.census.gov/cgi-
bin/sssd/naics/naicsrch?code=517410&search=2007%20NAICS%20Search (last visited February 25, 2014).
57 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
58 Id.
59 U.S. Census Bureau, 2007 NAICS Definitions, All Other Telecommunications, http://www.census.gov/cgi-
bin/sssd/naics/naicsrch?code=517919&search=2007%20NAICS%20Search (last visited February 25, 2014).
60 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
61 Id.
14

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.62 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.63 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 5172101.64 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.65 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.66 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.67 The SBA has approved these small business size
standards.68 An auction of Metropolitan Economic Area licenses commenced on February 24, 2000, and
closed on March 2, 2000.69 Of the 985 licenses auctioned, 440 were sold. Fifty-seven companies
claiming small business status won.
19.
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).70 Under the SBA

62 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February 25, 2014).
63 13 C.F.R. § 121.201, NAICS code 517210.
64 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 ECONOMIC CENSUS, http://factfinder2.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 February
25, 2014). 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.
65 See Trends in Telephone Service at Table 5.3.
66 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. 291-95 (1997).
67 See Alvarez Letter 1998.
68 Revision of Part 22 and Part 90 of the Commission’s Rules to Facilitate Future Development of Paging Systems;
Implementation of Section 309(j) of the Communications Act – Competitive Bidding
, 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, 10085-88, paras. 98-107 (1999).
69 Id. at 10085, para. 98.
70 13 C.F.R. § 121.201, NAICS code 517210.
15

small business size standard, a business is small if it has 1,500 or fewer employees.71 According to the
2008 Trends Report, 434 carriers reported that they were engaged in wireless telephony.72 Of these, an
estimated 222 have 1,500 or fewer employees and 212 have more than 1,500 employees.73 We have
estimated that 222 of these are small under the SBA small business size standard.
3.

Internet Service Providers

20.
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,74 which has an SBA small business size standard of 1,500 or fewer
employees.75 The latter are within the category of All Other Telecommunications,76 which has a size
standard of annual receipts of $25 million or less.77 The most current Census Bureau data for all such
firms, however, are the 2002 data for the previous census category called Internet Service Providers.78
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.79 Of those, 2,437 firms had annual receipts of under $10 million, and an additional 47
firms had receipts of between $10 million and $24,999,999.80 Consequently, we estimate that the
majority of ISP firms are small entities.

D.

Steps Taken to Minimize Significant Economic Impact on Small Entities, and
Significant Alternatives Considered

21.
As part of the effort to reduce waste, fraud, and abuse in the low-income program, the
Commission directed the Bureau, in conjunction with OMD, to finalize standard procedures for
independent audits of carriers drawing $5 million or more annually from the program. The Commission
limited this requirement to the largest recipients in the program, who pose the biggest risk to the program
if they lack effective internal controls to ensure compliance with the Commission’s rules. For the small
percentage of, if any, small entities who meet this $5 million revenue threshhold, we determined that the
benefits of the procedures contained in the Audit Plan outweigh the costs.

71 Id.
72 See Trends in Telephone Service at Table 5.3.
73 Id.
74 U.S. Census Bureau, 2007 NAICS Definitions: Wired Telecommunications Carriers, http://www.census.gov/cgi-
bin/sssd/naics/naicsrch?code=517110&search=2007%20NAICS%20Search (last visited February 25, 2014).
75 13 C.F.R. § 121.201, NAICS code 517110 (updated for inflation in 2008).
76 U.S. Census Bureau, 2007 NAICS Definitions: All Other Telecommunications, http://www.census.gov/cgi-
bin/sssd/naics/naicsrch?code=517919&search=2007%20NAICS%20Search (last visited February 25, 2014).
77 13 C.F.R. § 121.201, NAICS code 517919 (updated for inflation in 2008).
78 U.S. Census Bureau, 2002 NAICS Definitions: Internet Service Providers, Web Search Portals, and Data
Processing Services, http://www.census.gov/cgi-
bin/sssd/naics/naicsrch?code=518&search=2002%20NAICS%20Search (last visited February 25, 2014).
79 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).
80 An additional 45 firms had receipts of $25 million or more.
16

E.

Report to Congress

22.
The Commission will send a copy of the Public Notice, including this FRFA, in a report
to be sent to Congress pursuant to the Congressional Review Act.81 In addition, the Commission will
send a copy of the Public Notice, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A
copy of the Public Notice (and FRFA summaries thereof) will also be published in the Federal Register.

81 See 5 U.S.C. § 604(b).
17

ATTACHMENT 2

List of Carriers Subject to the First Lifeline Biennial Audit Plan Based on Low-Income

Disbursements for Calendar Year 2013

American Broadband Telecom
Assist Wireless
AT&T
Boomerang Wireless
Budget
CenturyLink
Cox Communications
Cricket Communications
Easy Telephone
GCI
Global Connection Of America
Head Start/Dart Phone
Icon
I-Wireless
Nexus
PlatinumTel
PR Wireless
Puerto Rico Telephone
Smith Bagley
Tag Mobile
Telrite
Terracom
Tracfone
True Wireless
UTPhone
Verizon
Virgin Mobile
Windstream/Alltel
Yourtel

18

ATTACHMENT 3

BIENNIAL AUDIT PLAN

UNIVERSAL SERVICE FUND – LIFELINE PROGRAM

GENERAL STANDARD PROCEDURES

FOR

BIENNIAL INDEPENDENT AUDITS

REQUIRED UNDER THE LIFELINE REFORM ORDER

FOR THE PERIOD JANUARY 1 THROUGH DECEMBER 31

1

GENERAL STANDARD PROCEDURES

FOR

BIENNIAL INDEPENDENT AUDITS

REQUIRED UNDER THE LIFELINE REFORM ORDER

FOR THE PERIOD JANUARY 1 THROUGH DECEMBER 31

TABLE OF CONTENTS

Page

I.

INTRODUCTION

4

II.

ENGAGEMENT PLAN

5
Engagement Period
5
Conditions of Engagement
5
Engagement Process
6
Timetables
7
Attestation Report
7
Audit Planning
9
Representation Letters
9
Sampling
12
2

III.

FIELDWORK TESTING PROCEDURES

Objective I:
Carrier Obligation to Offer Lifeline
13
Objective II:
Consumer Qualification for Lifeline
16
Objective III:
Subscriber Eligibility Determination and Certification
18
Objective IV:
Annual Certifications and Recordkeeping by Eligible
Telecommunication Carriers
21

APPENDIX A

Requested Documents
23

APPENDIX B

Background Questionnaire
27

APPENDIX C

Internal Control Questionnaire
31

APPENDIX D

Requested Documents: FCC Form 555 & One-per-household sample
36

APPENDIX E

Requested Documents: Subscriber Sample
37

APPENDIX F

Compliance Requirements
38
3

I.

INTRODUCTION

1.
The Wireline Competition Bureau (Bureau), in conjunction with the Office of Managing
Director (OMD), sets forth the standard procedures for the Lifeline program biennial audits (audits). 1
2.
As described in the Federal Communications Commission’s (Commission’s or FCC’s)
Lifeline Reform Order, the audits must be performed once every two years, unless otherwise directed by
the Commission or Bureau.2 Every eligible telecommunications carrier (ETC or carrier) providing
Lifeline services and receiving $5 million or more from the low-income program in the aggregate
annually, as determined on a holding company basis taking into account all operating companies and
affiliates, is subject to the biennial audit requirement.3 Each ETC that meets the requisite universal
service fund (USF) support threshold for Lifeline support is required to hire an independent audit firm to
assess the ETC’s overall compliance with the Lifeline program’s rules and requirements.4 The
independent audit firms conducting the audits must be licensed certified public accounting (CPA) firms.5
These audits shall be conducted consistent with Generally Accepted Government Auditing Standards
(GAGAS)6 and follow the audit guidelines described below.7
3.
Agreed-Upon Procedures Attestation Audit. In the Lifeline Reform Order, the
Commission directed the Bureau and OMD to set forth standards for ETCs that are engaging auditors to
perform agreed-upon procedures (AUP) attestations.8 To that end, all hired auditors shall follow the
standard procedures contained in this Biennial Audit Plan regarding ETCs’ compliance with key Lifeline
program requirements. If an auditor subsequently identifies an area of ambiguity regarding Commission
requirements, the issue should be reported to the Universal Service Administrative Company (USAC),
and if the ambiguity with Commission requirements continues (e.g., USAC indicates the issue will
require Commission guidance), the audit firm shall submit to the Commission any requests for rule
interpretations necessary to complete the audit.9 In all instances where an auditor contacts USAC for
guidance regarding Commission requirements, USAC will notify all outside auditors so that the issue in

1 See Lifeline and Link Up Reform and Modernization et al., WC Docket No. 11-42 et al., Report and Order and
Further Notice of Proposed Rulemaking, 27 FCC Rcd 6656, 6782, para. 291 (2012) (Lifeline Reform Order). The
term “audit” as used in the document refers to an agreed-upon procedures attestation engagement.
2 Id. 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 obligation to perform an independent audit in the next biennial audit
cycle. See id. at 6783-84, para. 295.
3 Id. at 6782, para. 291. An affiliate is determined in accordance with section 3 of the Communications Act of 1934,
as amended (Act), which defines an affiliate as “a person that (directly or indirectly) owns or controls, is owned of
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.
4 See Lifeline Reform Order, 27 FCC Rcd at 6782, para. 291.
5 See id.
6 GOVERNMENT ACCOUNTABILITY OFFICE, GOVERNMENT AUDITING STANDARDS, December 2011,
http://www.gao.gov/assets/590/587281.pdf (GAGAS Standards).
7 See Lifeline Reform Order, 27 FCC Rcd at 6782, para. 291.
8 See id. at 6783, para. 293.
9 See id.
4

question will not be treated as a negative finding until guidance has been provided by USAC or the
Bureau.10
4.
Focus of Audit. The Biennial Audit Plan is focused on an ETC’s corporate-wide
compliance rather than an ETC’s performance on a specific day in a particular study area.11 In other
words, the audits will focus on a company’s overall compliance with the Lifeline rules and assess whether
the company has internal controls necessary to comply with the Lifeline rules.12 For instance, when an
ETC has an automated system to verify initial and ongoing eligibility, the audit should focus on whether
the methods and procedures of such automated systems are appropriately structured to ensure compliance
with Lifeline program rules and requirements.13 The Biennial Audit Plan also calls for sample testing in
limited instances, to ensure that such policies, procedures and methods are being appropriately
implemented as described below.
5.
Submission of Attestation Report. Within 60 days after completion of the field work (i.e.,
presenting the audit results to the ETC) as described in the Fieldwork Testing Procedures section, but
prior to finalization of the report, the third-party auditor shall submit a draft of the Attestation Report to
the Commission and USAC. Comments to the draft report may be provided by the ETC to the audit firm
prior to submission of the final reports to the Commission and USAC.14 The Commission directs the
audited ETCs to provide the final Attestation Reports to the Commission, USAC, and relevant state and
Tribal governments within 30 days of issuance of the final report, which must be submitted no later than
one year from release of the final Biennial Audit Plan, and biennially thereafter, unless otherwise directed
by the Bureau. The Commission and USAC will be deemed authorized users of the reports.15 The final
reports will not be considered confidential.16 The draft report and all work papers and communications
between the auditors and the ETCs exchanged during the audits that are not included in the final audit
reports can be maintained as confidential.17

II.

ENGAGEMENT PLAN

6.
Engagement Period. The AUP engagement shall cover 12 months of Lifeline service
being offered by the ETC. The biennial audit scope may include all Low Income support disbursed from
the USF by the Administrator, USAC, as detailed below.
7.
Conditions of Engagement. Audits shall be performed in accordance with GAGAS
issued by the Comptroller General of the United States (as amended) as an Agreed-Upon Procedures

10 See id. at 6783-84, para. 294.
11 See id. at 6782-83, para. 292.
12 See id. In the event there are revisions to the Lifeline program rules, future biennial audits will be subject to any
new or revised Lifeline program rules upon the effective date of such rule revisions.
13 See id.
14 Id. at 6783, para. 294. The ETC should submit any comments to the draft report within 30 days after the auditor
submits the draft report to USAC and the Commission.
15 See id.
16 The Commission has already determined that the attestation reports will not be considered confidential. See id.
17 An ETC may request confidential treatment when submitting its draft audit report to the Commission. Whether a
draft report is, in fact, protected from disclosure will depend on the Commission’s analysis if and when access to
such information is sought.
5

Attestation Engagement. The audit test period will be from January 1 through December 31 (hereinafter,
the audit period).18 The audit firm leading the AUP engagement shall be a licensed CPA firm. All
members of the team performing the engagement shall be familiar with the GAGAS standards established
for an Agreed-Upon Procedures Attestation Engagement, have a sufficient general understanding of the
relevant Commission’s Lifeline program rules and requirements, as reflected in Compliance
Requirements section included in Appendix F,19 and the requirements for and objectives of the AUP
engagement. The team performing the engagement shall also be independent as defined by the GAGAS.
The audit firm shall disclose in its engagement letter to the carrier how the audit team will comply with
the GAGAS independence requirements.20
8.
In addition, to the extent that the auditor determines that procedures included in this
Biennial Audit Plan are unclear with respect to any Commission rules and requirements, the audit firm
shall contact USAC, and submit to the Commission any requests for rule interpretations necessary to
complete the audit. If the audit firm identifies or becomes aware of any situation that indicates waste,
fraud, or abuse of the Lifeline program or of any other USF program while performing the audit, the audit
firm has an obligation to immediately notify the Commission and USAC, as required by GAGAS
paragraphs 5.58 and 5.59.21
9.
For all references in this document to send information to USAC, please send to Karen
Majcher, USAC Vice President, High Cost & Low Income Division at LifelineBiennial@usac.org. For
all references in this document to send information to the Bureau and/or Commission, please send to
Charles Tyler, Telecommunications Access Policy Division, Wireline Competition Bureau, 445 12th
Street, SW, Room 5-A452, Washington, DC 20554; e-mail: Charles.Tyler@fcc.gov; and to Thomas
Buckley, Office of the Managing Director, 445 12th Street, SW, Room 1-A636, Washington, DC 20554;
e-mail: Thomas.Buckley@fcc.gov. Any changes to contact information will be published in a public
notice.
10.
The auditor’s use of internal auditors/employees provided by the ETC shall be limited to
the provision of general assistance and the preparation of schedules and gathering of data for use in the
engagement. Under no circumstances shall the internal auditors of the ETC subject to the engagement
perform any of the procedures contained in this document.
11.
Engagement Process. The general standard procedures contained herein are intended to
identify areas of audit work coverage and uniformity of audit work among each audit firm performing the
engagement. The standards identified throughout this document are not legal interpretations of any rules
or requirements. To the extent that these standards or procedures conflict with any Commission rules and
requirements, the audit firm should contact USAC to seek guidance as stated in the Conditions of
Engagement section.
12.
Upon engagement by an ETC, the audit firm shall plan the engagement by using the
procedures as listed in the Audit Planning section below. The section requires the audit firm to gain an

18 See supra n. 6.
19 See infra Compliance Requirements section.
20 See GAGAS at 27-29 (defining independence standards).
21 See id. at paras. 5.58 and 5.59. Pursuant to GAGAS requirements for AUP engagements, auditors are required to
communicate “significant deficiencies, material weaknesses, instances of fraud, noncompliance with provisions of
laws, regulations, contracts, or grant agreements, or abuse that comes to the auditors’ attention during an agreed-
upon procedures engagement.” Id. at para. 5.58.
6

understanding of the applicable rules that will be used to test compliance, which are listed in Appendix F.
USAC will conduct training for auditors performing the AUP engagements to ensure that the audits are
performed in accordance with the Biennial Audit Plan. The audit firm will perform the planning
procedures to help in gaining an understanding of how the ETC complies with applicable requirements.
The Audit Planning section of this Biennial Audit Plan includes a list of items the ETC shall provide to
the auditor to begin fieldwork testing. The auditor, however, can request additional documentation from
the ETC during the course of the audit in response to information collected in Appendices B and C.
13.
The specific audit objectives and procedures for compliance testing for applicable rules
are provided in the Fieldwork Testing Procedures section. The audit firm is expected to complete and
report on all applicable procedures except where noted. Certain procedures pertain to ETCs offering
Lifeline universal service support to subscribers on Tribal lands. If the ETC does not receive any Tribal
support, those procedures should be omitted.
14.
Upon completion of the Fieldwork Testing Procedures, the audit firm will draft an
Attestation Report in the format detailed in the Attestation Report section. The reporting section
describes the process for issuing draft and final reports.
15.
Timetables. In order to complete the engagement in a timely manner, the following time
schedule for completion of certain tasks is provided:
a.
Within 60 days after completion of the fieldwork as described in the Fieldwork
Testing Procedures section, but prior to finalization of the report, the independent auditor shall submit a
draft of the Attestation Report to the ETC, Commission and USAC. ETCs have the option of submitting
comments in response to the findings noted in the draft report within 30 days after submission of the draft
report.
b.
Comments to the draft Attestation Report may be provided by the Commission or
USAC to the audit firm prior to submission of the final report.
c.
The audited entity shall provide the Attestation Report to the Commission,
USAC and relevant state and Tribal governments within 30 days of issuance of the final report. The
Commission and USAC shall be deemed authorized users of such reports.
d.
The final Attestation Report shall be filed with the Commission and USAC no
later than one year after release of this Biennial Audit Plan, and biennially hereafter unless otherwise
specified by the Bureau.
16. Attestation Report. Consistent with the GAGAS standards for AUP engagements, the
audit firm must present the results of performing the procedures in the form of findings, as appropriate
and detailed within the Fieldwork Testing Procedures section, resulting from application of the
procedures. The presentation of findings related to each of the specified procedures shall include
sufficient detail and specificity that a reader may draw a reasonable conclusion as to whether the
respective objective has or has not been met. The audit firm must avoid vague or ambiguous language in
reporting the findings and shall describe in the draft and final reports all instances of noncompliance with
applicable Commission rules or its related implementing orders that were noted by the audit firm in the
course of the engagement, or that were disclosed by the ETC during the engagement and not covered by
the performance of these procedures. Where samples are used to test data, the report shall identify the
size of the sample, and results from testing the procedures. The draft and final reports shall list the
procedures with the results of the test-work performed, and any related findings, the ETC’s responses to
the findings, and if applicable, the audit firm’s reply comments. Upon request by the Commission or
7

USAC, the auditor shall provide its work papers. If there are no findings, the audit firm must indicate
such by stating, “No Exceptions Noted.” The auditor’s report must also contain the following elements:
a.
A title that includes the word independent;
b.
Identification of the specified parties in the engagement;
c.
Identification of the subject matter (or the written assertion related thereto) and
the character of the engagement;
d.
Identification of the FCC, USAC, and the ETC as the responsible parties;
e.
A statement that the procedures performed were those contained in this document
or as directed by the Bureau, as specified in Conditions of the Engagement
section.
f.
A statement that the AUP attestation engagement was conducted in accordance
with attestation standards established by the Government Accountability Office.
g.
A statement that the sufficiency of the procedures is solely the responsibility of
the specified parties and a disclaimer of responsibility for the sufficiency of those
procedures.
h.
A list of the procedures performed, the results of the testwork performed, and any
related findings, the ETC’s responses to the findings, and if applicable, the audit
firm’s reply comments.
i.
A statement that the audit firm was not engaged to and did not conduct an
examination of the subject matter, the objective of which would be the
expression of an opinion, a disclaimer of opinion on the subject matter, and a
statement that if the practitioner had performed additional procedures, other
matters might have come to his or her attention that would have been reported.
j.
A statement that this report becomes a matter of public record when the audit
firms file the final report with the FCC.
k.
A description of any limitations imposed on the audit firm by the carrier or any
other affiliate, or other circumstances that might affect the audit firm’s findings.
17.
The report must

NOT

include any subscriber phone numbers, names, addresses,
birthdates, social security numbers, tribal identification numbers, or any other personally identifiable
information or individually identifiable customer proprietary network information.22

22 See 18 U.S.C. § 1028(d)(7) (definition of means of identification); 47 U.S.C. § 222(h)(1) (definition of customer
proprietary network information). ETCs and auditors are required to have sufficient safeguards in place to maintain
the proprietary or personal nature of subscriber information subject to the audit. See id.; see also 18 U.S.C. §
1028(d)(7).
8

18. Audit Planning. To initiate the audit, the audit firm shall use the following documents to
plan the audit engagement: (1) The Requested Documents (Appendix A): (2) Background Questionnaire
(Appendix B); and (3) Internal Control Questionnaire (Appendix C). These documents should be
provided to the ETC with the audit announcement.
19.
Upon receipt and review of completed questionnaires and submission of the Requested
Documents, the audit firm will then provide Requested Documentation FCC Form 555 & One-Per-
Household Worksheet Sample (Appendix D) and Requested Documentation: Subscriber Sample
(Appendix E) to the ETC so that the ETC can provide the additional documentation necessary to complete
the procedures. As part of engagement, the audit firm shall:
a. Inspect the completed Background Questionnaire and note in the Attestation Report any
areas that are not in compliance with the FCC Lifeline rules set forth in Appendix F.
b. Inspect the completed Internal Control Questionnaire and note in the Attestation Report
any questions that were vague, not answered, or answered other than “Yes” and any
comments provided by the ETC.
20.
Representation Letters. The audit firms shall obtain two types of representation
(assertion) letters. The first type of representation letter shall address all items of an operational nature
(Operational Representation Letter). The second type of representation letter shall address applicable
Commission rules and requirements as detailed below (Compliance Representation Letter). The
following paragraphs detail the contents of each type of representation letter.
21.
The Operational Representation Letter shall be signed by the Chief Operating Officer, or
the equivalent, of the audited entity and shall include the following:
a. The audited entity has made available all records in its control, as a participant in the
Lifeline program under the federal USF, necessary to successfully execute the Lifeline
agreed-upon procedures attestation engagement.
b. Carrier is responsible for complying, and has complied, with requirements relating to 47
C.F.R. Part 54 Subparts B and E of the Commission rules governing the administration of
the USF for the Lifeline Program.
c. Pursuant to Commission’s Lifeline rules, the audited entity has only received
reimbursement for each qualifying low-income consumer served, and that the
reimbursement amount equals the federal support amount, including amounts described
in 47 C.F.R. § 54.403(a) and (c).
d. The audited entity has no knowledge of any fraud or suspected fraud by
management/employees of the ETC related to the administration of the Lifeline Program.
e. The audited entity has responded fully to all inquiries submitted by the auditor in the
agreed-upon procedures attestation engagement.
f. The audited entity has reviewed the draft Attestation Report findings and management
letter comments, where applicable, and concur that all non-compliance identified therein
are included in the reports or management letters.
9

g. The audited entity has no knowledge of any events subsequent to the period of the subject
matter being reported on that would have a material effect on the subject matter, or more
specifically, the report opinions provided by the auditor, except as has been disclosed.
h. There have been no notices of action from state or federal regulatory agencies, including
the Federal Communications Commission or state public utilities commission that would
affect the subject matter, or, more specifically, the report observations provided by the
audit firm.
22.
The Compliance Representation Letter shall be signed by the Chief Operating Officer, or
the equivalent, of the audited entity and shall include the following:

Report of Management on Compliance with Applicable Requirements of 47 C.F.R. Part 54 of the

Federal Communications Commission’s Rules, Regulations and Related Orders

Management of (name of telecommunications carrier) is responsible for ensuring that the carrier is in
compliance with applicable requirements of the Federal Communications Commission (FCC) rules at 47
C.F.R. §§ 54.101, 54.201, and 54.400-54.417 as well as related FCC Orders.
Management has performed an evaluation of the carrier’s compliance with the applicable requirements of
FCC rules at 47 C.F.R. §§ 54.101, 54.201, and 54.400-54.417, and related FCC Orders with respect to
providing discounts to eligible low income consumers and seeking reimbursement from the Universal
Service Fund (USF) during the period November 1, 20XX through April 30, 20XX (audit period).

The Carrier makes the following assertions with respect to the provision of Lifeline service during
the audit period:

A. Carrier Obligation to Offer Lifeline – the (name of Telecommunications Carrier) asserts that it:
1. is an eligible telecommunications carrier (ETC) (47 C.F.R. §§ 54.201(a); Definition of
eligible telecommunications carriers, generally, which discusses carrier eligibility) and
provides the services required for eligibility (54.101(a): Services designated for support, and
(b): Requirement to offer all designated services; which describe the services that an eligible
carrier must offer to receive federal universal service support)
2. makes available Lifeline service, as defined in 54.401, to qualifying low-income consumers
(47 C.F.R. § 54.405(a): Carrier obligation to offer lifeline, which discusses carriers’
obligations to offer, publicize, notify and allow lifeline services)
3. publicizes the availability of Lifeline service in a manner reasonably designed to reach those
likely to qualify for the service. (47 C.F.R. § 54.405(b): Carrier obligation to offer lifeline.)
(47 C.F.R. § 54.201(d)(2): Definition of eligible telecommunications carriers, generally,
which requires the advertising of the availability of services)
4. indicates 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. (47 C.F.R. §
54.405 (c): Carrier obligation to offer lifeline.)
10

5. discloses the name of the eligible telecommunications carrier on all materials describing the
service. (47 C.F.R. § 54.405(d): Carrier obligation to offer lifeline.)
B. Consumer Qualification for Lifeline – the (name of Telecommunications Carrier) asserts that it:
1. maintains policies and procedures that are effectively implemented to review and certify
consumer eligibility for Lifeline. (47 C.F.R. § 54.409: Consumer Qualification for Lifeline,
which discusses the certification and verification requirements) This includes that an officer
of the carrier:
a. asserts that the carrier has implemented policies and procedures for ensuring that
their Lifeline subscribers are eligible to receive Lifeline services. (47 C.F.R. §
54.410: Subscriber eligibility determination and certification, which also requires
compliance with state certification procedures to document consumer eligibility)
C. Submission of Lifeline Worksheet (Form FCC 497) – the (name of Telecommunications Carrier)
asserts that it:
1. submitted properly completed FCC Forms 497 for each month, representing discounts
actually provided to subscribers, and has the required supporting documentation for the
number of subscribers, rates and other information provided on the Form (47 C.F.R. §
54.407: Reimbursement for offering Lifeline, which discusses carrier reimbursement for
providing Low Income Program support and requires the carrier to keep accurate records in
the form directed by USAC and provide the records to USAC)
D. General Recordkeeping and Annual Certification Requirements – the (name of Telecommunications
Carrier) asserts that:
1. it maintains 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 (f) for as long as the subscriber receives
Lifeline service from that eligible telecommunications carrier. (47 C.F.R. § 54.417(a))
2. if it 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. (47 C.F.R. § 54.417(b))
3. complied with the annual certifications by eligible telecommunication carriers. (47 C.F.R. §§
54.416, 54.522)
Dated [Date], 20XX
______________________________
Name: Official or Owner of Carrier
and, if applicable
______________________________
CFO or Senior Official responsible for
Accounting or USF Compliance
11

23.
Sampling. Certain procedures may require testing on a sample basis. To test compliance
with certain key risk areas, the auditor will randomly select one month during the audit period and three
states or territories where the ETC is designated. In selecting the three states or territories, the auditor
shall randomly select one of the three states or territories where the ETC received the largest amount of
Lifeline support during the audit period and two additional states or territories randomly selected by the
auditor. The auditor shall request the ETC to submit to the auditor a subscriber list consisting of
subscribers served by the ETC for that randomly selected month within the three selected states or
territories (collectively, Subscriber List). Before the auditor selects three states to audit from, the ETC
shall deliver to the auditor and USAC a list of those states or territories in which the state, or a state
Lifeline administrator, is responsible for obtaining the ETC’s subscribers Lifeline certification forms and
performs the annual recertification process (State/Territory List).23 Upon receipt of the State/Territory
List, the auditor shall exclude from its selection of states, those states on the State/Territory List. Upon
request from the auditor, USAC shall identify the three states or territories where the ETC received the
largest amount of Lifeline support during the audit period.24 The auditor will randomly select subscribers
from the Subscriber List for the applicable procedures as described in the Fieldwork Testing Procedures
section. To test compliance with other key risk areas, the auditor will randomly select a certain number of
subscribers and request additional documentation (certification forms, recertification forms, re-
certification notice, termination notice, etc.) as described in the Fieldwork Testing Procedures section.

23 Only those states or territories, or state Lifeline administrators, responsible for establishing eligibility of all
qualifying programs for Lifeline and responsible for obtaining initial and annual certifications forms, should be
included within the State/Territory List.
24 In the event the ETC did not receive Lifeline support in at least 3 states or territories, the auditor shall select all of
the states or territories where the ETC received Lifeline support during the audit period.
12

III.

FIELDWORK TESTING PROCEDURES

OBJECTIVE I: Carrier Obligation to Offer Lifeline.

To determine if the ETC has procedures in
place to make Lifeline services available to qualifying low-income consumers with mandated disclosures
regarding requirements to participate in the Lifeline program, and procedures for de-enrolling subscribers
when they are no longer eligible to receive Lifeline services.

Standards

The Commission has adopted rules, set forth in 47 C.F.R. § 54.405, requiring carriers to make available
Lifeline services to qualifying low-income consumers using marketing materials that describe the service.
For purposes of this rule, the term “marketing materials” includes materials in all media, including but not
limited to print, audio, video, and Internet (including email, web, and social networking media) that
describe the Lifeline-supported service offering, including application and certification forms. The
Commission has also established requirements for de-enrollment where a Lifeline subscriber no longer
meets the criteria to be considered a qualifying low-income consumer under section 54.405 of the
Commission’s rules.

Procedures

1.
Inquire of management and obtain carrier policies and procedures in response to Item 4 of
Appendix A (Requested Documents) for offering Lifeline service to qualifying low-income
consumers. Examine the carrier policies and procedures, and compare management responses and
carrier policies and procedure with the Commission’s Lifeline rules set forth in Appendix F. Note
any discrepancy between the policies and procedures and the Commission’s rules.
2.
Inspect 10 examples of carrier marketing materials describing the Lifeline service (i.e., print,
audio, video and web materials used to describe or enroll in the Lifeline service offering, including
standard scripts used when enrolling new subscribers, application and certification forms), as
provided in response to Items 4, 6 and 7 of Appendix A, and note if the materials do not include
the following:
i.
The service is a Lifeline service, which is a government assistance program;
ii.
The service is non-transferable;
iii.
Only eligible subscribers may enroll;
iv.
Only one Lifeline discount is allowed per household; and
v.
The ETC’s name or any brand names used to market the service.
If all of the examples do not include this required information, identify and note the specific
element(s) that are missing from each example. In the event the ETC does not have 10 different
examples of marketing materials, it should submit as many as it uses to advertise the ETC’s
Lifeline service plans.
3.
Randomly select 10 recorded calls out of the 50 recorded calls, servicing the ETC’s Lifeline
subscribers, as provided in response to Item 8 of Appendix A. In reviewing the 10 recorded calls,
note whether: (1) the telephone number(s) involve the use of interactive voice response (IVR)
system; (2) a live customer care operator is available; and (3) and the time spent using the
customer care telephone service. Also note whether the customer care telephone number(s) can be
used by subscribers to notify the ETC of the subscriber’s intent to cancel service or give
notification that the subscriber is no longer eligible to receive service.
13

4.
Inspect applicable policies and procedures regarding de-enrollment from the program, including
when the ETC will de-enroll subscribers based on lack of eligibility, duplicative support, non-
usage, and failure to recertify, as further described below.
a.
Inspect the ETC’s policy and procedures for de-enrollment where the ETC has information
indicating that a Lifeline subscriber no longer meets the criteria to be considered a
qualifying low-income consumer under 47 C.F.R. §54.409, as provided in response to Item 4
of Appendix A. Note whether the policy and procedures detail the process for
communications between the subscriber and ETC regarding de-enrollment, including, but
not limited to: (1) notifying subscribers of impending termination of service; (2) allowing
subscriber to demonstrate continued eligibility; and (3) termination of service for failure to
demonstrate eligibility. Identify any areas that are not in compliance with section
54.405(e)(1) of the Commission’s rules.
b.
Inspect the carrier’s policy and procedures for de-enrolling subscribers that are receiving
Lifeline service from another ETC or where more than one member of a subscriber’s
household is receiving Lifeline service (duplicative support). Note if the policy and
procedures state that the ETC will de-enroll subscribers within five business days of
receiving notification from USAC program management that a subscriber or a subscriber’s
household is receiving duplicative Lifeline support, as required by section 54.405(e)(2) of
the Commission’s rules.
c.
Inspect the carrier’s policy and procedures for de-enrolling subscribers for non-usage (i.e.,
where a Lifeline subscriber fails to use Lifeline service for 60 consecutive days), including
the process of how the carrier monitors and identifies subscribers who are non-users of
Lifeline service but enrolled in the program. Using the list provided in response to Item 10
in Appendix A, perform the following:
i. For subscribers listed as de-enrolled or scheduled for de-enrollment, select a
sample of at least 10 accounts and request copies of the non-usage termination
notifications sent to the subscribers.
ii. Examine the non-usage termination notifications to verify if the termination
notifications explain that the subscriber has 30 days following the date of the
impending termination notification to use the Lifeline service. Note if any of the
non-usage termination notifications do not include this information, as required
by section 54.405(e)(3) of the Commission’s rules.
iii. Attach a sample non-usage termination notification(s).
d.
Review the carrier’s policy and procedures for de-enrolling a Lifeline subscriber that does
not respond to the carrier’s attempts to obtain recertification, as part of the annual eligibility
recertification process. For any subscribers identified in Item 9.i, j and m of Appendix A,
select a random sample of at least 30 and request copies of the notice of impending de-
enrollment letters and all other communications sent to the subscribers involving
recertification and perform the following:
i. Inspect the sampled notice of impending de-enrollment letters and any other
communications sent to the subscriber regarding re-certification to verify if the
communications explain that the subscriber has 30 days following the date of the
notice of impending de-enrollment letter to demonstrate continued eligibility or
the carrier will terminate the subscriber’s Lifeline service. Note if any of the
impending de-enrollment letters do not include this information.
14

ii. Review the de-enrollment letters, and other forms of communications, and the
carrier’s responses to the background questionnaire and verify through
observation that the de-enrollment letters, if that form of communication was
used, were sent by a method separate from the subscriber's bill (if a customer
receives a bill from the carrier).
iii. Attach a random sample of at least 5 examples of the impending de-enrollment
letters to this procedure, and attach other forms of communications provided to
the carrier.
15

OBJECTIVE II: Consumer Qualification for Lifeline. To determine if the ETC has procedures in
place to limit Lifeline service to qualifying low-income consumers and ensure that Lifeline service is
limited to a single subscription per household.

Standards

The Commission has adopted rules, set forth in 47 C.F.R. § 54.409, establishing eligibility criteria for
consumers to be qualified to receive Lifeline services and limiting Lifeline support to a single
subscription per household. The Commission has also adopted rules, set forth in 47 C.F.R. § 54.407,
establishing that universal service support for providing Lifeline shall be provided directly to an eligible
telecommunications carrier, based on the number of qualifying low-income consumers it serves.

Procedures

1.
Inquire of management and obtain carrier policies and procedures for limiting Lifeline support to a
single subscription per household as provided by the carrier in response to Item 4 of Appendix A.
Examine the policies and procedures. Compare management responses and carrier policies and
procedures with the Commission’s Lifeline rules set forth in 54.409(c) (Appendix F). Note any
discrepancies between the policies and procedures and the Commission’s rule.
2.
Review procedures the carrier has in place to ensure it has accurately completed the FCC Form
497. If the carrier does not have such procedures, inquire of management to describe the process
for completing a FCC Form 497. The procedures or process should include the following:

The position title of the person responsible for obtaining data for the FCC Form 497;

The process for determining which subscribers should be included monthly in the FCC
Form 497. Verify the procedures include cut-off and billing cycle dates, and only those
subscribers active as of the start or end of the month;

That a corporate officer signature is required for the FCC Form 497;

That a verification process exists to perform an independent review; that is, the person
reviewing or validating the form’s data is different from the person completing the form;

Provides the billing system name used to generate completion of the form; and

If applicable, describers the process for completing the Tribal Link Up portions of the
FCC Form 497.
Document any exceptions and include in the audit report.
3.
Obtain the Subscriber List in response to Item 1 of Appendix A and obtain the carrier’s FCC Form
497(s) for each study area in the selected states for the selected month. Examine the number of
subscribers claimed on the Form(s) 497. Compare the number of subscribers reported on the Form
497(s) to the number of subscribers contained on the Subscriber List for each study area. Note any
discrepancies in the number of subscribers.
4.
Using computer-assisted audit techniques, examine the Subscriber List and note if there are any
duplicate addresses with different subscribers. Create a list reflecting these results.
5.
From the list completed in #2. above, randomly select up to 30 subscribers from the list and
request copies from the ETC of the one-per-household certification form for each of the selected
subscribers. Verify that the selected subscribers certified to only receiving one Lifeline-supported
service in his/her household using the one-per household worksheet. Note the number of missing
or incomplete certifications. Even if subscribers enrolled in the program prior to June 2012, the
16

effective date of the one-per-household requirement, at least one subscriber at each address is
required to complete a one-per-household worksheet.25

25 The Commission requires that all ETCs collect the one-per-household worksheet when they learn that a subscriber
resides in the same address as another Lifeline subscriber. See Lifeline Reform Order, 27 FCC Rcd at 6691, 6895-
96, para. 78, App. C.
17

OBJECTIVE III: Subscriber Eligibility Determination and Certification. To determine if the ETC
implemented policies and procedures for ensuring that their Lifeline subscribers are eligible to
receive Lifeline services

.

Standards

The Commission has adopted rules, set forth in 47 C.F.R. § § 54.409 and 54.410, that require ETCs to
implement policies and procedures for ensuring that their subscribers are eligible to receive Lifeline
services. The Commission’s rules, set forth in 47 C.F.R. § 54.409, include requirements for determining
whether a consumer is qualified to receive Lifeline service. Pursuant to these rules: (1) the 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; (2) the consumer, one or more of the consumer’s dependents, or the
consumer’s household must receive benefits from one of the qualifying federal assistance programs; or
(3) the consumer must meet additional eligibility criteria established by a state for its residents, provided
that such-state specific criteria are based solely on income or other factors directly related to income.

Procedures

1.
Inquire of management and obtain carrier policies and procedures for ensuring that its Lifeline
subscribers are eligible to receive Lifeline services as provided by the carrier in response to Item
4 of Appendix A. Examine the policies and procedures. Compare management responses and
carrier policies and procedures with the Commission’s Lifeline rules set forth in section 54.410
(Appendix F). Note any discrepancies between the policies and procedures and the
Commission’s rule.
a. Inspect the ETC’s policies and look for evidence as to whether it includes a policy that
the ETC does not retain copies of subscribers’ proof of income- or program-based
eligibility. Note in the Attestation Report if such a policy is not included.
b. Inspect the ETC’s policies and look for evidence as to whether it includes a policy or
procedure that the ETC must fully verify the eligibility of each low-income consumer
prior to providing Lifeline service to that consumer, and that the ETC or its agents may
not provide the consumer with an activated device intended to enable access to Lifeline
service until that consumer’s eligibility is fully verified and all other necessary
enrollment steps have been completed.
2.
Examine the ETC’s policies and procedures for training employees and agents for ensuring that
the ETC’s Lifeline subscribers are eligible to receive Lifeline services, including any policies
regarding how the company ensures employees and agents have completed the training. In the
report, summarize the training requirements and ETC policies for ensuring employees and agents
are trained on the use and interaction with the NLAD, limiting access to the NLAD to select
individuals, and the rules for ensuring subscribers are eligible to receive Lifeline services and
have completed all forms necessary to receive service. Include information provided regarding
the timing, frequency and evidence of completion of the initial and any subsequent Lifeline
subscriber eligibility and certification trainings required of the ETC’s employees.
3.
Randomly select at least 100 subscribers from the Subscriber List and for the first 50 of the
sampled subscribers, the auditor will perform the test described below, for each of the
18

subscriber’s certification and recertification forms.26 After performing the tests described below
for the first 50 sampled subscriber, if the error rate is higher than 5 percent, the auditor should
apply the same procedure to the remaining 50 subscribers in the sample and record the results.
a. Examine the subscriber certification forms, if any, to verify the forms contain 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;
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;
vi. Lifeline is a non-transferable benefit and the subscriber may not transfer his or
her benefit to any other person;
vii. Require each prospective subscriber to provide the following information:
1. The subscriber's full name;
2. The subscriber's full residential address;
3. Whether the subscriber's residential address is permanent or temporary;
4. The subscriber's billing address, if different from the subscriber's
residential address;
5. The subscriber's date of birth;
6. 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;
7. 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
8. 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.
viii. Require each prospective subscriber to certify, under penalty of perjury, that:
1. The subscriber meets the income-based or program-based eligibility
criteria for receiving Lifeline, provided in § 54.409;
2. The subscriber will notify the ETC 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 service, the subscriber is receiving
more than one Lifeline benefit, or another member of the subscriber's
household is receiving a Lifeline benefit.

26 In the event the auditor chooses a sampled subscriber that enrolled in the program prior to June 1, 2012 (before the
effective date of section 54.410 of the Commission’s rules), the auditor should randomly select another subscriber
that enrolled in the program after June 1, 2012. Subscribers enrolled in Lifeline service subsequent to June 1, 2012
are subject to the initial certification process but are not subject to the recertification process for that year.
19

3. 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);
4. If the subscriber moves to a new address, he or she will provide that new
address to the ETC within 30 days;
5. 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;
6. The information contained in the subscriber's certification form is true
and correct to the best of his or her knowledge,
7. The subscriber acknowledges that providing false or fraudulent
information to receive Lifeline benefits is punishable by law; and
8. 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).
ix. Compare the ETC’s subscriber eligibility criteria on the certification forms to the
federal eligibility criteria listed in per 47 C.F.R. § 54.409. Note any
discrepancies.

Note:

The ETC may list the eligibility criteria in its entirety or
may allow the subscriber to note only his/her qualifying criterion on the form.
x. Verify the subscriber completed all the required elements as identified in
Objective III – 3 a. above, including signature and initialing/checkbox
requirements contained in the certification form.
xi. Examine the subscriber’s initial certification form to verify the initial
certification form is dated prior to or on the same day as the Lifeline start date
per the Subscriber List. This procedure would not apply to subscribers enrolled
prior to June 2012.
xii. If applicable, verify subscribers who received Tribal Lifeline support certified to
residing on Tribal lands.
b. Review the list of the data source or documentation the ETC reviewed to confirm the
subscriber’s eligibility. Verify the recorded data sources are eligible data sources per 47
C.F.R. § 54.410, such as (1) income or program eligibility databases, (2) income or
program eligibility documentation, or (3) confirmation from a state administrator.
20

OBJECTIVE IV:

Annual Certifications and Recordkeeping by Eligible Telecommunications
Carriers. To determine if ETCs have made and submitted to the Universal Service Administrative
Company the required annual certifications, under penalty of perjury, relating to the Lifeline
program by an officer of the company and maintained recordkeeping requirements.

Standards

The Commission’s rules, set forth in 47 C.F.R. §§ 54.416, 54.422, require that an officer of the company
must certify that the ETC has policies and procedures in place to ensure that its Lifeline subscribers are
eligible to receive Lifeline services and ETC is in compliance with all federal Lifeline certification
procedures. ETCs must make this certification annually to USAC as part of the carrier's submission of
recertification data pursuant to the Commission’s rules.
The Commission also requires under its rules, set forth in 47 C.F.R. §§ 54.417, that it must maintain
records to document compliance with all Commission requirements and state requirements governing the
Lifeline program for the three full preceding calendar years and must maintain the documentation
required in § 54.410(d) and (f) for as long as the subscriber receives Lifeline service from that eligible
telecommunications carrier, and provide the documentation to the Commission or USAC upon request.

Procedures

1.
Inquire of management and obtain carrier policies and procedures for ensuring that the carrier has
made and submitted the annual certifications required under sections 54.416 and 54.422 of the
Commission’s rules, as provided in Item 12 of Appendix A. Examine the policies and procedures.
Compare management responses and carrier policies and procedures with the Commission’s
Lifeline rules set forth in sections 54.416 and 54.522 (Appendix F). Note any discrepancies
between the policies and procedures and the Commission’s rules.
2.
Examine the ETC’s FCC Form 555 that was filed the January following the audit period.27 Verify
the carrier made all of the following certifications. An officer of each ETC must certify that s/he
understands the Commission’s Lifeline rules and requirements and that the carrier:
a. Has policies and procedures in place to ensure that its Lifeline subscribers are eligible to
receive Lifeline services;
b. Is in compliance with all federal Lifeline certification procedures; and
c. In instances where an ETC confirms consumer eligibility by relying on income or
eligibility databases, as defined in 47 C.F.R. § 54.410(b)(1)(i)(A) or (c)(1)(i)(A), the
representative must attest annually as to what specific data sources the ETC used to
confirm eligibility.
3.
Examine the ETC’s organizational chart provided in response to Item 5 of Appendix A. Verify
that the certifying officer on the FCC Form 555 is an officer per the organizational chart or other
publicly available documents.
4.
Verify that the subscriber count per the FCC Form 555 agrees with the total subscriber count per
the February Form 497. Note: The FCC Form 555 is completed by the carrier at the state level

27 For the first biennial audit, the auditor would examine the Form 555 filed January 2014, which represents the
subscribers recertified during calendar year 2013.
21

(not the study area level). If the carrier has two study areas in one state, the carrier must combine
the results of both study areas and complete one Form 555 for that state.

5.
For the month of February, the auditor shall: (i) randomly select one of the three states or
territories where the ETC received the largest amount of Lifeline support and is responsible for the
annual recertification process; ; and (ii) randomly select two additional states or territories where
the ETC is responsible for the annual recertification process (Recertification Sample). In the event
the ETC did not receive Lifeline support in at least 3 states or territories, the auditor shall select all
of the states or territories where the ETC received Lifeline support during the audit period. Using
the Recertification Sample, the auditor shall review the ETC’s recertification results of the
individual subscribers reported on the FCC Form 555 filed the January following the audit period
for those three randomly selected states, as provided in Item 9 of Appendix A. Verify that the data
reported on the FCC Form 555 for those states agree with the detailed recertification results.
6.
If the non-usage rule applies to the ETC, the auditor shall (i) randomly select three months during
the audit period; (ii) randomly select one of the three states or territories where the ETC received
the largest amount of Lifeline support; (iii) randomly select two additional states or territories
where the ETC receives Lifeline support; and (iv) review the ETC’s detailed non-usage results of
the individual subscribers reported on the FCC Form 555 for those three randomly selected months
within the three selected states, as provided in Item 10 of Appendix A (Non-Usage Sample). In
the event the ETC did not receive Lifeline support in at least 3 states or territories, the auditor shall
select all of the states or territories where the ETC received Lifeline support during the audit
period. Verify that the data reported on the FCC Form 555 for the Non-Usage Sample agrees with
the detailed non-usage results.
7.
Review the carrier’s annual ETC certification, as provided in Item 13 of Appendix A. Verify that
the ETC reported all the information and made all the certifications required by 47 C.F.R. §
54.422(a)(b).
8.
Review any supporting schedules related to the carrier’s annual ETC certification, as provided in
Item 13 of Appendix A. Verify that the data reported on the annual ETC certification agrees with
the supporting schedules.
9.
Inquire of management and obtain carrier policies and procedures for maintaining records that
document compliance with the Lifeline program rules, as provided by the carrier in response to
Item 4 of Appendix A. Examine the policies and procedures. Compare the management
responses and carrier policies with recordkeeping rules set forth in 47 C.F.R. § 54.417. Note any
discrepancies between the policies and procedures and the Commission’s rule.
22

Appendix A

Requested Documentation

The documentation referenced herein must be provided by the ETC. Please ensure the provided
documentation is applicable and effective for the data reported on the FCC Form 497s that were
submitted for January 1 to December 31 (audit period) and the FCC Form 555 filed the January following
the audit period.

Instructions:

Please provide the requested documentation, or indicate if a requested item is not
applicable. If the ETC is unable to provide an item by the established due date, or are unclear about the
requirements for a specific item, please contact the auditor as soon as you are aware of any delays or
questions.
Please return the requested documentation on or before "[type Requested Date]" .

Request #

Requested Documentation

1.

Electronic

subscriber list of the subscribers claimed for the month of __________ 20xx for
the three states or territories selected by the auditor with the following data (Subscriber List):
a. Study area code
b. Subscriber first and last name;
c. Subscriber address (physical/service address);
d. Subscriber apartment, unit, or lot number (as applicable);
e. Subscriber city, state, and zip code;
f. Subscriber telephone number;
g. Subscriber date of birth;
h. Last four digits of the subscriber’s Social Security Number or tribal identification
number;
i. Service start date (i.e., when the subscriber first obtained service) if the subscriber
initiated service on or after June 2012.
j. Lifeline start date (i.e., when the subscriber first began receiving low-income
discounts) if the start date occurred on or after June 2012.
k. Lifeline disconnect date (if applicable)
l. Dollar value of low-income discounts provided.

Note:

The data should be formatted so that one subscriber represents one record (i.e., row).
Please use the suggested formatting in this template as a guide when preparing the Subscriber
List:
Subscriber Listing
Template.xlsx
2.
Completed Background Questionnaire.
3.
Completed Internal Control Questionnaire.
23

4.
Written policies and procedures (if any) describing processes related to the Lifeline Program,
including but not limited to the enrollment process (including any standard scripts used when
enrolling new subscribers), eligibility determinations, de-enrollment process, training for
employees/agents, limiting Lifeline service to a single household, document retention, etc. In
the event there are state-specific requirements that are more restrictive than the Commission’s
requirements described in Appendix F, please identify those state requirements and the
relevant sources of state law. In instances where an audited company purchases another ETC
that has different procedures and controls than the audited company, the audited company
should explain the differences when summarizing their processes related to the Lifeline
Program and estimated timing for integration between the two entities.
5.
"[type Beneficiary's Name]" ’s Organizational Chart, to include the owner/management of
"[type Beneficiary's Name]" and those individuals responsible for processing, reviewing, and
approving the FCC Form 497 and FCC Form 555 (may be separate organizational charts).
Please identify those individuals who are officers of the organization as listed in the article of
incorporation, articles of formation, or other similar legal document.
6.
Copies of 10 examples of marketing materials used to advertise the ETC’s Lifeline service
plans. In the event the ETC does not have 10 different examples of marketing materials, it
should submit as many as it uses to advertise the ETC’s Lifeline service plans.
7.
List of all websites used to advertise Lifeline service.
8.
List of all telephone numbers used as customer care for the Lifeline program and provide 50
recorded customer calls that address Lifeline service.
24

9.

Electronic

subscriber list of the subscribers that were recertified during the audit period and
reported on the FCC Form 555 due the January following the audit period for the three states
selected by the auditor for the month of February (Recertification Sample) with the following
data:
a. Subscriber first and last name;
b. Subscriber address (physical/service address);
c. Subscriber apartment, unit, or lot number (as applicable);
d. Subscriber city, state, and zip code;
e. Subscriber telephone number;
On the subscriber list, please identify each subscriber as follows:
f. Lines provided to wireline resellers (FCC Form 555 Column B);
g. Subscribers contacted directly to re-certify eligibility (FCC Form 555 Column C);
h. Subscribers who responded to direct contact to re-certify eligibility (FCC Form 555
Column D);
i. Subscribers who responded to direct contact that they are no longer eligible (FCC
Form 555 Column F);
j. Subscribers who de-enrolled prior to the direct contact to re-certify eligibility (FCC
Form 555 Column H);
k. Subscribers whose eligibility was reviewed by a state administrator or via access to
eligibility data (FCC Form 555 Column I);
l. Subscribers whose eligibility was reviewed by a state administrator or via access to
eligibility data who were found to be ineligible (FCC Form 555 Column J); and
m. Subscribers who de-enrolled prior to state administrator re-certification attempt or
review of eligibility data (FCC Form 555 Column L).

Note:

The data should be formatted so that one subscriber represents one record (i.e., row).
Please use the suggested formatting in this template as a guide when preparing the re-
certification results:
Re-certification
Results Template.xlsx
10.

Electronic

list of the subscribers reported as de-enrolled for non-usage during the audit period
on the FCC Form 555 due the January following the audit period for three states randomly
selected by the auditor within three randomly selected months (Non-usage Sample) with the
following data: [Applicable only to ETCs that do not assess/collect a monthly fee; review FCC
Form 555 data prior to including this request.]

a. Subscriber first and last name;
b. Subscriber address (physical/service address);
c. Subscriber apartment, unit, or lot number (as applicable);
d. Subscriber city, state, and zip code;
e. Subscriber telephone number; and
f. De-enrollment month for non-usage.

Note:

The data should be formatted so that one subscriber represents one record (i.e., row).
Please use the suggested formatting in this template as a guide when preparing the non-usage
results:
Non-Usage Results
Template.xlsx
25

11. A sample of de-enrollment letters and
communications that were sent to subscribers as described in Objective I,Fieldwork Testing
Procedures.
12. Written policies and procedures for ensuring that the ETC has made and submitted the annual
certifications required under sections 54.416 and 54.422 of the Commission’s rules.
13. Copy of the ETC’s annual ETC certification and report filed with the Commission as required
under sections 54.416 and 54.422.
14. FCC Form 497 for the months and states requested by the auditor for the sample.
After reviewing the above documentation, we may request additional items to assist us with this audit,
including documentation for a sample of individual subscribers. As always, your cooperation is
greatly appreciated.
26

Appendix B

Background Questionnaire

The information contained herein is to be provided by the ETC. Please ensure your responses are
applicable and effective for the data reported on the Form 497s submitted for January 1 to December 31
(audit period) for all study areas. If an answer varies depending upon the study area, please indicate the
applicable study area code beside each answer.

Instructions:

Please complete the questionnaire in its entirety. Any unanswered questions or vague
responses will result in additional follow-up questions, which may increase the burden. If a question is
unclear, please contact the auditor so that the auditor may provide a better understanding of the type of
information that is needed. If a question is not applicable to your environment, please indicate with
“N/A.”
Please return this questionnaire on or before "[type Requested Date]" .

A. Enrollment, Certification, and Activation

1. Who are the responsible parties for determining the eligibility of Lifeline subscribers (e.g.,
individuals in your company, or if more than ten individuals, the supervisor(s) within your
company, entities that serve as agents or third parties acting on behalf of your company, state
commission, third party administrators, other intermediary, etc.)? Please be as specific as
possible.
2. What type of training does your company offer to employees, agents and/or third parties acting on
behalf of the company regarding the process of ensuring only eligible consumers enroll in the
Lifeline program and how often is that training provided? Please provide documentary evidence
that the company offers training to its employees, agents, or third parties.
3. If the answer to #1 is “individuals in your company” or “supervisor(s) within your company,” for
each state in which your company receives Lifeline reimbursement during the audit period, what
method is used to determine subscribers’ eligibility (e.g., review of program eligibility and/or
income documentation, review of program eligibility and/or income databases, etc.)?
4. If the answer to #1 is “state commission, third party administrators, or other intermediary,” for
each state in which your company receives Lifeline reimbursement during the audit period, what
method does the state commission, third party administrators, or other intermediary use to
determine subscribers’ eligibility?
5. If the answer to #3 is “a review of program eligibility and/or income documentation,” for each
state in which your company receives Lifeline reimbursement during the audit period, please list
the types of documentation reviewed.
6. If the answer to #3 is “a review of program eligibility and/or income databases,” for each state in
which your company receives Lifeline reimbursement during the audit period, please list the
databases used.
7. What types of documentation and/or information are maintained as evidence of a subscriber’s
income- or program-based eligibility (e.g., certification forms, proof of income- or program-
27

based eligibility, etc.)? Please provide documentary evidence that such documentation and
information is collected.
8. When does a subscriber become eligible for inclusion in the monthly Form 497 claim (e.g., when
the certification form is received, when the Lifeline service is activated, etc.)?
9. After the subscriber receives his/her mobile device that can be used for Lifeline service, what
steps must the subscriber perform to activate the device/service? Please provide documentation
that states this procedure for the company or any written materials used to explain activation.
[Only applicable to Wireless ETCs.]
10. How is a customer informed of the usage requirement, if applicable? Please provide
documentary evidence that consumers are informed that there is a usage requirement.

B. Recertification

1. Who are the responsible parties for completing the Form 555 that is submitted to USAC? Please
be as specific as possible and provide documentary evidence, if available.
2. Who are the responsible parties for confirming the continued eligibility of Lifeline subscribers
(e.g., individuals in your company , or if more than ten individuals, the supervisor(s) within your
company, entities that serve as agents or third parties acting on behalf of your company, state
commission, third party administrators, other intermediary, etc.)? Please be as specific as
possible and provide documentary evidence, if available.
3. If the answer to #2 is “individuals in your company,” please list the supervisory individuals and
identify what method is used to confirm subscribers’ continued eligibility (e.g., direct contact,
review of program eligibility and/or income databases, etc.).
4. If the answer to #2 is “state commission, third party administrators, or other intermediary,” how
often and what method does the state commission, third party administrators, or other
intermediary use to confirm subscribers’ continued eligibility?
5. If the answer to #3 is “direct contact,” how are recertification requests provided to subscribers
(e.g., mailed re-certification forms, recorded phone calls, text messages, etc.)?
6. If the answer to #3 is ‘a review of program eligibility and/or income databases,’ please list the
databases used.

C. De-Enrollment

General
1. In what ways does your company become aware that a subscriber is no longer eligible to receive
Lifeline service (e.g., subscriber notification, state administrator notification, etc.)?
2. How is a subscriber notified that Lifeline service will be terminated when your company has a
reasonable basis to believe the subscriber is no longer eligible to receive Lifeline support? Please
provide documentary evidence that subscribers are notified of termination.
28

3. If a subscriber wants to notify the ETC that he/she wants to cancel service or that he/she is no
longer eligible for service, how does the subscriber make such notification? If it involves use of
telephone numbers and/or websites, please submit all such telephone numbers and websites of
how the subscriber contacts the ETC.
4. When is Lifeline service terminated for a subscriber who notifies the company that s/he is no
longer eligible for or wants to cancel service with the ETC?
5. When is Lifeline service terminated for subscribers who are identified by the state commission,
third party administrator, or other intermediary as no longer eligible for Lifeline support?
6. When is Lifeline service terminated for subscribers who fail to demonstrate continued eligibility?
Duplicative Support
7. After receiving notification from USAC management that a subscriber is receiving a duplicate
Lifeline-supported service, when is Lifeline service terminated for the applicable subscriber?
Please provide documentary evidence that those customers identified by USAC are de-enrolled
within your company’s procedural timeframe for de-enrollment.
Non-Usage
8. If your company does not assess and collect a monthly fee from Lifeline subscribers, how and
when is a subscriber notified that Lifeline service will be terminated if the Lifeline-supported
service is not used?
9. When is Lifeline support terminated for subscribers who fail to respond?
10. How does the company track non-usage, both at a subscriber-level and a company-wide level?
Please provide any documentary evidence that shows how the company tracks non-usage.
Failure to Recertify
11. If subscribers are contacted directly for recertification, how and when is a subscriber notified that
Lifeline service will be terminated if the subscriber does not respond to the recertification
attempt? Please provide documentary evidence of a termination notification.
12. When is Lifeline service terminated for subscribers who fail to respond?

D. Form 497

General
1. Who are the responsible parties for completing the Form 497 that is submitted to USAC? Please
be as specific as possible.
2. How does your company determine which subscribers should be included in the monthly Form
497 claim (e.g., all subscribers that received Lifeline Program service during the month, billing
cycle dates, only those subscribers active as of the start or end of the month, etc.)?
29

3. If a date range or cut-off date was used to determine which subscribers were included in filing the
Form 497, what was the date range or cut-off date? Please provide documentary evidence of this
cut-off date.
Duplicates
4. What is your company’s process to prevent a subscriber from obtaining a duplicate Lifeline
account? Please provide any documentary evidence that details your company’s process of
preventing duplicate consumers.
5. What is your company’s process to identify duplicate accounts and those subscribers who need to
complete the One-Per-Household Worksheet? Please provide any documentary evidence that
details your company’s process.
6. What is your company’s process to eliminate duplicate accounts? Please provide any
documentary evidence that details your company’s process of eliminating duplicate accounts.
7. What is your company’s process for making sure there are no duplicate accounts claimed on the
Form 497? Please provide any documentary evidence that details your company’s process.
Tribal Support
8. How was the Tribal Lifeline rate claimed on Form 497s during the audit period calculated?
[Applicable only if Tribal Lifeline support claimed and received.]

E. Regulatory and Compliance

1. Has your company been subject to any internal or external audits (including reviews, attestations,
or investigations) that include or relate to reimbursements received during the audit period?
[] Yes
[] No
2. If the answer to #1 is ‘yes,’ please list the type of audit performed, the period covered, and which
organization performed the audit. Please include financial statement, information system,
compliance, and internal control audits in the list.
3. Has your company complied with all the Commission’s rules and requirements for the Lifeline
Program?
[] Yes
[] No
4. If the answer to #3 is ‘no,’ please describe any areas of noncompliance.
5. Has your company been involved (directly or indirectly) with any investigation or legal
proceedings within five years before the audit period that could appear to have a direct or indirect
impact on the Lifeline Program support received or your process for complying with the
Commission’s rules and Lifeline Program requirements?
[] Yes
[] No
6. If the answer to #5 is ‘yes,’ please explain.
30

Appendix C

Internal Control Questionnaire

To be completed by the ETC. Please ensure your responses are applicable and effective as of the audit
period for all states in which the ETC receives Lifeline reimbursement during the audit period

Instructions:

Please complete the questionnaire in its entirety. Any unanswered questions or vague
responses will result in additional follow-up questions, which may reduce the efficiency of the audit. If a
question is unclear, please contact the auditor so that the auditor may provide a better understanding of
the type of information that is needed.

Please provide comments for any answers of No, Unsure, or
N/A.

Questions

Yes

No

Unsure Comments

or N/A

CONTROL ENVIRONMENT

1.
Does the person(s) reviewing and approving subscribers’
eligibility criteria possess the required knowledge, skills, and
abilities? Please provide documentary evidence of training
that such a person has received training and provide copies of
training materials on this subject.
2.
Does the person(s) calculating Lifeline Program discounts and
assigning Lifeline codes to subscribers’ accounts possess the
required knowledge, skills, and abilities? Please provide any
training materials on this subject that are given to the
appropriate person(s).
3.
Does the person(s) preparing, reviewing, and approving all
Lifeline filings possess the required knowledge, skills, and
training to perform the job adequately? Please provide
documentary evidence that such persons meet the above
standards.
4.
Has the company designated an individual responsible for
compliance? Does that individual have the necessary
authority, independence, and resources to ensure corporate
compliance? Is the financial compensation of that person
linked to compliance performance?
Does the company have procedures in place to limit access of
the NLAD to certain employees trained on the use of NLAD?
If so, please provide any documentation explaining these
procedures.
5.
Are deviations from acceptable practices and violations from
policies and procedures addressed in a timely manner and
disciplinary actions taken? Please provide any documentation
that explains what deviations are acceptable.
6.
Is there a code of conduct / code of ethics in place and does it
address receipt of federal universal service fund (USF)
support? Please provide documentary evidence.
31

Questions

Yes

No

Unsure Comments

or N/A
7.
Is management aware that they are responsible for identifying
and mitigating fraud risks, particularly as it relates to receipt
of USF support, including Lifeline reimbursements?

RISK ASSESSMENT

8.
Mechanisms exist to identify risks of faulty reporting caused
by such items as lack of current knowledge of, inconsistent
application of, or carelessness or disregard for standards and
reporting requirements of the Lifeline Program? Please
provide documentation regarding risk assessment training.
9.
Management identifies risk that underlying source data used
to compile data for the Lifeline filing process may not be
reliable?
10. Has the company performed a risk assessment to identify
significant compliance risks? Has the company established
controls to mitigate the identified significant compliance
risks?

CONTROL ACTIVITIES

11. Manual criteria checklists or automated processes are used in
making eligibility determinations and in ensuring compliance
with other Lifeline Program rules?
12. Supervisory review of Lifeline filings are performed to assure
accuracy and completeness of data and information included
prior to filing of Form 497?
13. A formal fraud policy exists, which defines fraud and
appropriate actions to be taken with respect to instances of
fraud. The policy is formally communicated to all employees?
14. A whistleblower program is in place and is periodically
reviewed to ensure it is designed and operating effectively?
15. A formal Information Security policy exists (to protect
sensitive subscriber data and to safeguard subscriber accounts
from the misapplication of Lifeline discounts)?
16. Segregation of duties exists between incompatible duties (e.g.,
the individual who compiles the Form 497 and Form 555 does
not approve the forms)?
17. Management has established procedures to prevent
i) Unauthorized access to; ii) Inadequate retention of; or iii)
Improper destruction of records?
18. Employees who violate state or federal laws/regulations,
Lifeline Program rules, and related requirements affecting the
organization will be subject to disciplinary actions?
32

Questions

Yes

No

Unsure Comments

or N/A

INFORMATION & COMMUNICATION

19. Processing of information is subject to edit checks?
20. Channels of communication exist for people to report
suspected improprieties?
21. Management has clearly communicated the behavior that is
expected?
22. Employees who report suspected improprieties are protected
from reprisal?

MONITORING

23. Periodic review of the internal controls in relation to
subscriber eligibility determination is conducted by
management? Please provide a timetable for review.
24. Periodic review of the internal controls in relation to the
Lifeline filing process is conducted by management? Please
provide a timetable for review.
25. Turnover in management or supervisory personnel is
monitored and the reasons for significant turnover are
evaluated?
26. Information Technology (IT) application controls and general
controls are periodically reviewed to ensure it is designed and
operating effectively?
27. Are violations of laws/regulations and Lifeline Program rules
and related requirements regularly identified, measured, and
reported to the board of directors, or other appropriate body
within the company?
33

Please also provide your responses to the following questions:

28. What systems are used to compile the number of subscribers reported on the Form 497 and Form
555?
29. What controls are in place to validate the accuracy of the Form 497 and Form 555 data produced by
the systems (e.g., edit checks)? How often are these controls tested? When was the most recent
test?
30. Who has access to these systems, including systems that are outsourced to third-party vendors?
What controls are in place to prevent unauthorized access?
31. Has the internal control environment at any third party vendors/outsourced service organization
been documented and tested by an independent third party for the relevant functions (e.g., SAS 70)?
32. Are system access and permissions (e.g., read, write, execute, etc.) periodically reviewed to ensure
personnel only have the systems permissions required by their job responsibilities?
33. Are critical data files periodically backed up and stored in a secure off-site location?
34. What systems and controls are used to exchange data with the NLAD? Include details that describe
how you limit individuals’ access to the NLAD.
35. Does your company have a documented IT business continuity and disaster recovery plan?
36. Where network connectivity is used, are appropriate controls (e.g., firewalls, intrusion detection,
vulnerability assessments, etc.) used to prevent unauthorized access?
37. Are you aware of instances where questionable transactions/activities were not properly and/or
adequately disclosed to senior management, the board of directors, the state commission, the
Commission, or USAC?
[] Yes
[] No
38. If the answer to #42 is ‘yes,’ please explain.
39. In your opinion, what areas or processes relating to the Lifeline filing process are most susceptible
to fraud?
40. Do you or did you have any suspicions or knowledge of fraudulent activity?
[] Yes
[] No
41. If the answer to #47 is ‘yes,’ please explain.
42. If the answer to #47 is ‘yes,’ did you report your suspicions or knowledge of fraudulent activity?
[] Yes
[] No
[] Not Applicable
43. If the answer to #49 is ‘no,’ please explain why you did not report your suspicions or knowledge of
fraudulent activity.
34

44. If the answer to #49 is ‘yes,’ please indicate to whom you reported the fraudulent activity.
45. If the answer to #49 is ‘yes,’ what was the outcome?
35

Appendix D

Requested Documentation:

FCC Form 555 & One-Per-Household Sample

Please ensure the provided documentation is applicable and effective for the data reported on the FCC
Form 497 submitted for audit period and the FCC Form 555 filed on the January following the audit
period.

Instructions:

Please provide the requested documentation for each of the subscribers in the Subscriber
Sample described in the Fieldwork Testing Procedures section, or indicate if a requested item is not
applicable. If you are unable to provide an item by the established due date, or are unclear about the
requirements for a specific item, please contact the auditor as soon as you are aware of any delays or
questions.
Please return the requested documentation on or before "[type Requested Date]" .

Request # Requested Documentation

1.
Recertification/termination notification templates related to the recertification
process reported on the FCC Form 555 filed on January following the audit
period for the random sample on the Subscriber List.
2.
Subscriber one-per-household form, if any, obtained for the following sample of
subscribers:
To be selected from subscribers identified as different individuals with the same
address in the one-per-household testing.

After reviewing the above documentation, we may request additional items to assist us with this audit.
As always, your cooperation is greatly appreciated.
36

Appendix E

Requested Documentation: Subscriber Sample

Please ensure the provided documentation is applicable and effective as of the audit period.

Instructions:

Please provide the requested documentation for each of the subscribers in the Subscriber
Sample described in the Fieldwork Testing Procedures section, or indicate if a requested item is not
applicable. If you are unable to provide an item by the established due date, or are unclear about the
requirements for a specific item, please contact the auditor as soon as you are aware of any delays or
questions.
Please return the requested documentation on or before "[type Requested Date]" .

Request # Requested Documentation

1.
Initial subscriber certification form obtained at subscriber enrollment and any
recertification forms.
2.
Subscriber recertification form, if any, obtained between
"[type Applicable Year]" and "[type Audit Period]" .
3.
A list of the data source the carrier reviewed to confirm the subscriber’s
eligibility.
After reviewing the above documentation, we may request additional items to assist us with this audit.
As always, your cooperation is greatly appreciated.
37

Appendix F

Compliance Requirements

The requirements that will be covered in the biennial audit are intended to achieve the purpose of the
biennial audit as defined and in 47 C.F.R. Sections 54.101, 54.401, 54.403, 54.405, 54.407, 54.409,
54.410, 54.416, 54.417, and 54.422 of the Commission’s rules and regulations. Below is a listing of those
requirements:

Definitions

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 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.
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.
(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.
38

(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 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; 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).
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
39

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.
(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.
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 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.
40

(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.
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. (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
41

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 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 § 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.
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.
42

(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:
(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 for 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 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.
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 meets additional eligibility criteria established by a state for its residents, provided
that such-state specific criteria are based solely on income or other factors directly related to income.
43

(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 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.
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. An eligible telecommunications
carrier may not provide a consumer with an activated device that it represents enables use of Lifeline-
supported service, nor may it activate service that it represents to be Lifeline service, unless and until it
has: (1) confirmed that the consumer is a qualifying low-income consumer pursuant to § 54.409, and (2)
completed the eligibility determination and certification required by this section and §§ 54.404-54.405,
and completed any other necessary enrollment steps.
(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”), 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 § 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.
44

(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.
(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 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 § 54.417, 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.
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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, when a prospective subscriber seeks to qualify for Lifeline
service using the program-based eligibility criteria provided in § 54.409, an 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;
(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;
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(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:
(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.
(iii) 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);
(iv) If the subscriber moves to a new address, he or she will provide that new address to
the eligible telecommunications carrier within 30 days;
(v) 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;
(vi) 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;
(vii) The information contained in the subscriber's certification form is true and correct to
the best of his or her knowledge,
(viii) The subscriber acknowledges that providing false or fraudulent information to
receive Lifeline benefits is punishable by law; and
(ix) 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.
47

(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.
(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 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.
54.416 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:
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(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)(i)(A) or (c)(1)(i)(A), the representative 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.
(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.
54.417 Recordkeeping requirements.
(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 (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 and 54.410.
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:
(1) 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
49

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; and
(2) 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 Web site outlining the terms and
conditions of such plans.
(b) In order to receive support under this subpart, a common carrier that is designated as an
eligible telecommunications carrier under section 214(e)(6) of the Act and does not receive support under
subpart D of this part 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
(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).
(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.
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