20130110Comments.pdf

DONALD L. HOWELL, II
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
P0 BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3366
101J*NI0 P141 2:13
IDAHO PU.LJC JTILT2S COMMISSIO N
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
BUDGET PREPAY, INC. DBA BUDGET ) CASE NO. BPP-T-12-01
MOBILE FOR DESIGNATION AS AN )
ELIGIBLE TELECOMMUNICATIONS )
CARRIER PURSUANT 47 U.S.C. § 214(e)(2). ) COMMENTS OF THE
) COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission, by and through its Attorney of
Record, Donald L. Howell II, Deputy Attorney General, submits the following comments.
BACKGROUND
On July 19, 2012, Budget PrePay dba Budget Mobile (Budget or Company) filed an
Application requesting designation as a wireless "eligible telecommunications carrier" (ETC)
throughout the State of Idaho "for the limited purposes of receiving support from the federal
Universal Service Fund (USF) to provide prepaid wireless service under its Low-Income section
for Lifeline Assistance ("Lifeline")." Application at 2. The Lifeline program is intended to
provide telecommunications service to eligible low-income customers by using USF revenues to
make such services more affordable. Idaho participates in the residential Lifeline program
pursuant to Idaho Code § 56-901. See Order No. 21713.
STAFF COMMENTS 1 JANUARY 10, 2013
The Application
Budget is a Louisiana corporation authorized to conduct business within Idaho. Budget
states that it "currently derives the majority of its revenue from selling low-cost prepaid
telephone services on a nationwide basis to thousands of customers and employs approximately
340 people nationally." Application at 8. Budget is a competitive local exchange carrier that
provides basic local exchange services and long-distance services in 42 states. Id. at 2. Budget
asserts that it meets all of the requirements of Section 21 4(e)( 1) of the federal
Telecommunications Act to be designated as an ETC.' Id. at 5. More specifically, Budget
asserts it is able to provide the support services required for ETC designation, including access to
the public switch telephone network, local calling services, access to emergency services, as well
as access to operator services and directory assistance.2
Budget's Lifeline Service Offerings
Budget intends to initially offer qualifying Lifeline customers a choice of two prepaid
calling plans. The first plan is a "talk & text" wireless plan that provides 4,000 minutes of
combined local/toll voice services and texting for $25. Each text will count as one voice minute.
The second plan is offered at no cost to the customer but limited to 250 minutes of local/toll
usage. Under the second plan customers may purchase additional minutes of usage. Application
at 16-17. Budget also proposes to offer its eligible Lifeline customers toll blocking and toll
control services. While such toll limitation services do not need to be offered for Lifeline
services, these services allow Budget's customers to protect against unexpectedly larger bills. Id.
at 6.
If approved for ETC designation, Budget intends to offer services through the resale of
another carrier's facilities.3 In addition, it intends to advertise the availability of its services and
related charges using media of general distribution. Id. at 7.
Budget's proposed ETC service area for Idaho is comprised of wire centers for both non-
rural and rural incumbent local exchange carriers ("ILECs"). More specifically, Budget
'47 U.S.C. § 214(3).
2 In December 2011, the FCC amended the list of required services for ETC designation by removing dual tone
signaling, single-party service, and access to operator services, interexchange services, and directory assistance. In
the Matter of Lifeline and Link Up Reform and Modernization, Report and Order and Further Notice of Proposed
Rulemaking ("the Order"), 27 F.C.C. Rcd. 6656 at ¶ 365 (Feb. 6, 2012).
Budget's underlying wireless providers are Sprint and Verizon Wireless. Application at 13.
STAFF COMMENTS 2 JANUARY 10, 2013
proposes to provide ETC services in the CenturyLink and Frontier service areas, as well as in the
wire centers of several rural ILECs. Id. Exh. 2.
Budget asserts that its ETC designation will be in the public interest. In particular,
Budget believes that providing "discounted wireless service in both rural and urban areas is
consistent with the public interest." Id. at 20. Budget's Lifeline plans will be provided to
eligible telecommunications customers "without the requisite credit check, deposit, service
activation fees, minimum service periods and contract requirements of the more traditional
wireless service providers." Id. at 21. Budget also commits to complying with any applicable
Lifeline eligibility requirements developed by the Federal Communications Commission
("FCC"), this Commission, or the Idaho Legislature. Id. at 24-25. Consequently, Budget
requests that the Commission designate it as a wireless ETC throughout Idaho for the purpose of
receiving federal USF support for Lifeline only services. Budget also requests that the
Commission "either find inapplicable or waive [reporting] requirements related solely to high-
cost funding, including initial and annual provision of a network improvement plan, provision of
related progress reports, and [usage] certification. . . of high-cost funds." Id. at 25-26.
The Federal Lifeline and Link Up Reform and Modernization Order
On February 6, 2012, the FCC released a Report and Order ("the Order") to
comprehensively reform the low-income program of the federal USF. The Order substantially
strengthens protection against waste, fraud, and abuse; improves program administration and
accountability; improves enrollment and consumer disclosures; initiates modernization of the
program for broadband; and constrains the growth of the program in order to reduce the burden
on all who contribute to the USF.4 The Order also establishes specific requirements for ETCs to
obtain customer certifications to prevent duplication of lifeline benefits.
To conform to the Order, Budget outlines how it will guard against potential fraudulent
use of Lifeline service by establishing procedures for "one-per-household rule," deactivation for
non-usage, obtaining proof of documentation to determine eligibility by access to an electronic
4 See Lifeline and Link Up Reform and Modernization eta!, WC Dkt No. 11-42 et al., Report and Order and Further
Notice of Proposed Rulemaking, FCC 12-11 at 1361-38, Appendix A (Feb. 6, 2012).
STAFF COMMENTS 3 JANUARY 10, 2013
database, certification forms with penalty for perjury language, and distribution of Lifeline
services directly to its Lifeline customers. Id. at 23-24.
Budget's Compliance Plan
The FCC approves compliance plans pursuant to the Order as a condition of obtaining
forbearance from the facilities requirement of the Communications Act of 1934, as amended, for
the provision of Lifeline service.5 In the Order, the FCC found that "a grant of blanket
forbearance of the facilities requirement, subject to certain public safety and compliance
obligations, is appropriate for carriers seeking to provide Lifeline-only service."6 Therefore, the
FCC conditionally granted forbearance from the Act's facilities requirement to all
telecommunications carriers seeking Lifeline-only ETC designation, subject to the following
conditions: (1) compliance with certain 911 and enhanced 911 (E91 1) public safety
requirements; and (2) Bureau approval of a compliance plan providing specific information
regarding the carrier and its service offerings and outlining the measures the carrier will take to
implement the obligation contained in the Order. Thus, Budget's compliance plan was reviewed
and approved by the FCC on May 25, 2012.8
STAFF ANALYSIS
Staff has reviewed Budget's Application along with the Company's FCC-approved
Compliance Plan. Staff has conducted an analysis of the Company's fulfillment of the federal
Telecommunications Act of the 1996, the Lifeline and Link Up Reform and Modernization Order
and of Commission Order No. 29841. In addition, Staff has reviewed Budget's request for ETC
designation in the 136 non-rural and rural wire centers identified in Exhibit 2 of the Application.
Public Interest Considerations
When applying the public interest test in an Application for ETC designation, Staff
believes there are two primary considerations that merit discussion.
Id. at 13 79-3 80 (Feb. 6, 2012).
6 FCC Public Notice DA 12-828, WC Docket Nos. 09-197 and 11-42 at 1-2 (May 25, 2012).
The FCC's Wireline Competition Bureau.
8 See supra n. 2 at 2.
STAFF COMMENTS 4 JANUARY 10, 2013
1.Contribution to Idaho Programs. As in the more recent TracFone (pre-paid wireless
service provider) ETC Application, the Commission considered the carrier's contribution to the
Idaho Telephone Service Assistance Program ("ITSAP") fund and to the Idaho Emergency
Communications Act ("IECA") fund and determined that it was in the public interest to require
an ETC to contribute to these funds. See Order No. 32301 at 9. Budget states that it will
contribute to the ITSAP and the IECA funds. Id. at 22. The Company does not have current
customers in Idaho and, as a result, does not yet remit any ITSAP or IECA fees. See Response to
Production Request No. 3. Staff, therefore, believes Budget meets this public interest test.
2.Cream Skimming analysis. The Commission weighs whether the potential benefits of
ETC designation outweigh the potential harms. One consideration is the Applicant's
commitment to provide universal service throughout the rural areas or, if not, whether the
potential for "cream skimming" exists.
Budget believes that providing discounted wireless service in both rural and urban areas
is consistent with the public interest, convenience, and necessity. The Company supports this
position by stating, that it will "provide consumers with increased competitive choice through the
offering of a unique service at rates that are just, reasonable and affordable," and "this will
further federal legislative goals of ensuring that all Idahoans have access to affordable basic
telephone service." Id. at 20.
As in the Virgin Mobile ETC Application, Staff believes that the Company's exclusion of
high-cost support in its Application makes this cream skimming analysis moot, as well as the
rural versus non-rural service area considerations. See Order No. 32645 at 3. Staff, however,
believes that Budget's ETC designation should not include the entire state, but instead the
Company's ETC designation should be limited to those exchanges listed in its Exhibit 2.
Network Improvement Plan
In the Idaho ETC Designation Order, the two-year network improvement and progress
report is required of all ETCs receiving high-cost support. See Order No. 29841 at 18.
However, as with the Cricket Communications, Inc.'s ETC Application, the Commission
determined that a two-year network improvement plan was not applicable to Lifeline-only ETCs
and granted Cricket's ETC designation. See Order No. 32501.
In its Order, the FCC amended section 54.202 to clarify that a common carrier seeking
designation as a Lifeline-only ETC is not required to submit a five-year network improvement
STAFF COMMENTS 5 JANUARY 10, 2013
plan as part of its application for designation as an ETC. In the USE/ICC Transformation Order
and FNPRM, the FCC included a new requirement in section 54.202, requiring a common carrier
seeking to be designated as an ETC by the Commission to submit a five-year plan describing its
proposed network improvements and upgrades. However, as Lifeline-only ETCs are not
receiving funds to improve or extend its networks, the FCC stated that it "saw little purpose in
requiring such plans as part of the ETC designation process."9 Budget's Application seeks only
low-income USF support as a limited ETC designation. Thus, the requirement to provide a
network improvement plan does not apply to this Application. Therefore, Staff believes Budget
is exempt from Idaho's two-year network improvement plan requirement as well.
Ability to Remain Functional in Emergencies
Budget states that it has the ability to remain functional in emergency situations in
accordance with the Idaho ETC Order and section 54.202(a)(2) of the FCC's Rules. 47 C.F.R. §
54.202(a)(2). Budget discloses that: 1) it designed its geographically located switching
infrastructure in an effort to eliminate a single isolated power incident from affecting traffic on
its network; 2) all facilities are equipped with both AC and DC battery backup as well as
generators; 3) all critical equipment is supplied with two separate power sources; 4) its network
is maintained with multiple primary and redundant paths; and 5) the voice network switching
infrastructure is designed to advance to the next termination carrier in route should a failure
occur. In addition, Budget maintains 24X7X365 support agreements on all key systems. Budget
will also rely on the Company's underlying wireless carriers' access to Cell Site On-Wheels and
Satellite On-Light-Trucks. Application at 11-13. Staff believes Budget satisfies this
requirement.
Other ETC Designation Requirements
Additional requirements for ETC designation are detailed in Appendix 1 of Order No.
29841 and are discussed in more detail below.
1. Common Carrier Status. Budget is a common carrier as defined in U.S.C. Title 47.
Id. at 5
9 See Lifeline and Link up Reform and Modernization et al, WC Dkt No. 1142, et al., Report and Order and Further
Notice of Proposed Rulemaking, FCC 12-11 at 1386.
STAFF COMMENTS 6 JANUARY 10, 2013
2.Provide the Universal Services. Budget will provide each of the supported services
identified in Section 54.101 of C.F.R. Title 47, as amended by the FCC on December 23, 2011
and February 6, 2012, throughout its designated service area. Id. at 6.
3.Advertising. Budget will advertise the availability and rates for its services described
in the Application through media of general distribution. Id. at 7.
4.The Commitment and Ability to Provide Supported Services. Consistent with the
requirements of 47 C.F.R. § 54.201(d)(1), Budget states that it is able to offer all of the services
and functionalities supported by the federal USF throughout its designated service area. Budget
also notes that the FCC has provided a blanket forbearance authorizing the Company to provide
Lifeline services without use of its "own facilities" so long as it meets E91 I access requirements
and, therefore, satisfies the requirements of Section 214(e)(1)(A) of U.S.C. Title 47 and 47
C.F.R. 54.201 (d). Id. at 9.
5.A commitment to Consumer Protection and Service. Budget states it has complied
with the Cellular Telecommunications and Internet Association's (CTIA) Consumer Code for
Wireless Service. "Through the use of resold services and its own facilities, Budget will be able
to provide the same quality and reliability as that currently provided by the [underlying
carriers]." Id. at 14.
6.Description of the Local Usage Plan. Budget states that it will offer two prepaid
wireless service plans as well as a Tribal Lifeline offering. These plans include a combination of
local and domestic long distance calling and texting as described earlier under Budget's Lifeline
Service Offering. Id. at 16-17.
7.Tribal Notification. The Company will provide Tribal notifications. The applicable
tribal areas include those of the Nez Perce Tribe, the Shoshone-Bannock Tribe, and the Coeur
d'Alene Tribe. Id. at 18
Staff believes Budget meets the aforementioned ETC designation requirements where
applicable for a Lifeline-only ETC designation.
STAFF RECOMMENDATION
Staff has reviewed the Application of Budget PrePay, Inc. dba Budget Mobile for
designation as a Lifeline-only ETC. Staff believes that the Application demonstrates the
Company's commitment to fulfill the obligations of an ETC in Idaho. The Company will
provide all universal services supported by the federal USF throughout its service territory; it has
STAFF COMMENTS 7 JANUARY 10, 2013
addressed all of the public interest questions that accompany an ETC Application; the
Company's compliance plan has been approved by the FCC; and Budget will provide multiple
pricing plans which will increase customer choice for low-income service in Idaho. Budget also
states it will contribute to the ITSAP and IECA.
Staff believes Budget's Application for designation as an ETC is in the public interest
and should be approved for those wire centers listed in Exhibit 2.
Respectfully submitted this day of January 2013.
oQI, II
Deputy Attorney General
Technical Staff: Grace Seaman
i:umisc/comments/bppt12. Idhgs comments
STAFF COMMENTS 8 JANUARY 10, 2013
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