20170824Tacfone Wireless FCC Biennial Report.pdf

TRACF@NE"Legal Department
Stephen Athanson, Senior Attomey - Regulatory
9700 NW ll2th Avenue lMiami, FL 33178
E-Mail : [e-mail], inc.
August 24,2017
VIA OVERNIGHT MAIL
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington St.
Boise, ID 83720
Re: TracFone Wireless, Inc. - FCC Biennial Audit G I n- T- t -? -o I
Dear Ms. Jewell:
In accordance with the Federal Communications Commission's Public Notice issued in
WC Docket No. l1-42 on April 2,2014 (DA l4-450), TracFone Wireless, Inc. submits its
Lifeline Biennial Audit Report for the year ended December 31,2015.
Sincerely,
Stephen Athanson
Regulatory Counsel
Enc
LIT.ELINE BIPUNIAL AUDIT RSPORT
TracFone Wireless, Inc.
Year Ended December 31,2015
With Report of Independent Certified Public Accountants
Ernst & Young Global Limited
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Report of Independent Certified Public Accountants on
Applying Agreed-Upon Procedures
To the Managements of TracFone Wireless, Inc. (TracFone), the Universal
Service Administrative Company (USAC), and the Federal
Communications Commission (FCC or Commission):
We have performed the procedures enumerated in Attachment A, which were agreed to by the Federal
Communications Commission Wireline Competition Bureau (FCC),Office of Managing Director (OMD), the
Universal Service Administration Company (USAC), and management of TracFone Wireless, Inc., an eligible
telecommunications carrier (TracFone) (collectively, Specified Users) in the Lifeline Biennial Audit Plan or as
otherwise directed by the Bureau, solely to assist you in evaluating TracFone's assertion with respect to
compliance with certain regulations and orders goveming the Low Income Support Mechanism (also known as
the Lifeline Program) of the Universal Service Fund, set forth in 47 C.F.R. Part 54, as well as other program
requirements, including any state-mandated Lifeline requirements (collectively, the Rules) detailed in the
Lifeline Biennial Audit Plan for the calendar year ended December 37,2075, and included in the accompanying
management report. TracFone is responsible for its compliance with the Lifeline Requirements. This agreed-
upon procedures engagement was conducted in accordance with attestation standards established by the
American Institute of Certified Public Accountants and Generally Accepted Government Auditing Standards
(GAGAS) issued by the Government Accountability Office (201 1 Revision). The sufficiency of these procedures
is solely the responsibility of those parties specified in this report. Consequently, we make no representation
regarding the sufficiency ofthe procedures described in Attachment A either for the purpose for which this report
has been requested or for any other purpose.
The procedures performed were those contained in FCC WC Docket No. 1l-42, Attachment 3 - Biennial Audit
Plan, Universal Service Fund- Lifeline Program, General Standard Procedures for Biennial Independent
Audits Required Under the Lifeline Reform Order, erratum released September 19,2014, or as directed by the
Wireline Competition Bureau of the FCC. Specific procedures and related results are enumerated in Attachment
A to this report. In compliance with the Lifeline Biennial Audit Plan, this report does not contain any personally
identifiable information or individually identifiable customer proprietary network information.
We were not engaged to, and did not conduct an examination, the objective of which would be the expression
of an opinion on TracFone Wireless, Inc.'s compliance with the Rules. Accordingly, we do not express such an
opinion. Had we performed additional procedures, other matters might have come to our attention that would
have been reported to you.
This report is intended solely for the information and use of the managements of TracFone Wireless, Inc., USAC,
and the FCC, and is not intended to be and should not be used by anyone other than these specified parties.
However, this report is a matter of public record and its distribution is not limited.
fin""rt *("^Vrt ?
July 28,2017
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Attachment A
Results of Agreed-Upon Procedures
The procedures shown in italics within this appendix are specifically listed in Section III -
FieldworkTesting Procedures in FCC WC DocketNo. 1 1-42, Attachment 3 - Biennial Audit Plan,
Universal Service Fund - Lifeline Program, General Standard Procedures for Biennial
Independent Audits Required Under the Lifeline Reform Order, eratum released September 19,
2014, (the GSPs). All references to "GSP Appendix A", "GSP Appendix B" and .'GSP Appendix
F" within the procedures refer to Appendix A, B, and F included with the GSPs.
OBJECTIVE I: Carrier Obligation to Offer Lifeline.
I-1 Procedure: Inquire of management and obtain caruier policies and procedures in
response to ltem 4 of GSP Appendix A (Requested Documents) for ffiring Lifeline service
to qualifying low-income consumers. Examine tlte carrier policies and procedures, and
compare management responses and caruier policies and procedure with the
Commission's Lifeline rules set forth in GSP Appendix F. Note any discrepancy between
the policies and procedures and the Commission's Lifeline rules.
We inquired of management and obtained copies of the written policies and procedures for
offering Lifeline service to qualifying low-income consumers and management's
responses to the background questionnaire defined in GSP Appendix B of the GSPs
(Background Questionnaire) and compared the TracFone Lifeline Policies to the FCC rules
defined in47 Code of Federal Register (C.F.R) Sections 54.405,54.407,554.470,54.416,
54.477, and 54.422 (collectively, the TracFone Lifeline Requirements).
Finding:
We observed no discrepancies.
I-Z Procedurez Inspect l0 examples of caruier marketing materials describing the Lifeline
service (i.e., print, audio, video and web materials used to describe or enroll in the Lifeline
service ffiring, including standard scripts used when enrolling new subscribers,
application and certificationforms), as provided inresponse to ltems 4,6 and 7 of GSP
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
Only eligible subscribers may enroll
Only one Lifeline discount is allowed per household; and
TracFone's nome or any brand nomes 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 missingfrom each example. In the event TracFone does not have l0
dffirent examples of marketing materials, it should submit as many as it uses to advertise
TracFone's Lifeline service plans.
ii i.
lV.
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I-3
We obtained 50 examples of carrier marketing materials describing the Lifeline service.
From the 50 examples, we randomly selected 10 examples and inspected each example for
required information items i. through v. listed in Objective I, Procedure 2 above.
Finding:
For the 10 examples, we observed the following:
. All ten examples included the required information in items i. through v.
Procedure: Inspect applicable policies and procedures regarding de-enrollmentfrom the
program, including when TracFone will de-enroll subscribers based on lack of eligibility,
duplicative support, non-usage, andfoilure to recertify, as further described below.
a. Inspect TracFone's policy and procedures for de-enrollment where TracFone 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. 554.409, as provided
in response to ltem 4 of GSP Appendix A. Note whether the policy and procedures
detail the processfor communications between the subscriber and TracFone regarding
de-enrollment, including, but not limited to: (1) notifying subsuibers of impending
termination of service; (2) allowing subscriber to demonstrate continued eligibility;
and (3) termination of service for failure to demonstrate eligibility. Identtfy any qreos
that are not in compliance with section 5a.a05@)(1) of the Commission's rules.
We inspected the TracFone Lifeline Policies obtained in Procedure I- 1, for policies and
procedures specific to de-enrollment where TracFone has information indicating that
the subscriber no longer meets the eligibility criteria for Lifeline service.
Finding:
We observed that the TracFone Lifeline Policies included, without discrepancies,
descriptions of the process for communications between the subscriber and TracFone
regarding de-enrollment, including (l ) notifying subscribers of impending termination
of service; (2) allowing subscriber to demonstrate continued eligibility; and
(3) termination of service for failure to demonstrate eligibility.
b. Inspect the carrier's policy and procedures for de-enrolling subscribers that are
receiving Lifeline servicefrom another Eligible Telecommunications Corrier (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 TracFone 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 5a.a05@(2) of the Commission's
rules.
We inspected the TracFone Lifeline Policies obtained in Procedure 1 related to de-
enrollment where subscriber is receiving Lifeline service from another ETC or where
more than one member of the subscriber's household is receiving Lifeline service.
aJ
Finding:
We observed that the TracFone Lifeline Policies state that they 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.
c. Inspect tlte 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 ltem 10 in GSP Appendix A, perform the following:
i. For subscribers listed as de-enrolled or scheduledfor de-enrollment, select a
sample of at least l0 accounts and request copies of the non-usage termination
notifications sent to the subscribers.
ii. Examine the non-usage termination notifications to verifu if the termination
notifications explain that the subsuiber has 30 days following the date of the
impending termination notification to use the Lifeline service. Note if any of the
non-usage terminationnotifications do not include this information, as required
by section 5a.a05@(3) of the Commission's rules.
iii. Attach a sample non-usage termination notification(s).
We inspected the TracFone Lifeline Policies obtained in Procedure I- 1, related
to de-enrolling subscribers for non-usage where a Lifeline subscriber fails to
use the Lifeline service for 60 consecutive days. For the subscribers listed as
de-enrolled, we selected a sample of l0 accounts and obtained copies of the
non-usage termination notifications sent to the subscribers. We examined these
notifications to determine whether the notifications explained that the
subscriber had 30 days remaining to recertify. We also included a sample of the
non-usage termination notification in our workpapers.
Finding:
We observed the following:
. The copies of the requested documents were obtained for 10 of the l0
subscribers selected. The documents included an explanation that the
subscriber had 30 days following the date of the notice of impending
de-enrollment letter to demonstrate continued eligibility or the carrier
would terminate the subscriber's Lifeline service.
d. Review the carrier's policy and procedures for de-enrolling a Lifeline subscriber that
does not respond to the cawier's attempts to obtain recertification, as part of the
annual eligibility recertffication process. For any subscribers identified in ltem f .i, j
and of GSP Appendix A, select a random sample of at least i0 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:
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i. Inspect the sampled notice of impending de-enrollment letters and any other
comtnunications 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.
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 billfrom the carrier).
iii. Attach a random sample of at least five examples of the impending de-
enrollment letters to this procedure, and attach other forms of communication
provided to the subscriber.
We inspected the TracFone Lifeline Policies obtained in Procedure I-1, related to 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.
We randomly selected 30 subscribers from the subscriber listings reported on FCC
Form 555 filed in January 2016 provided by TracFone, in response to GSP Appendix
A, Item 9.i - Subscribers who responded to direct contact to re-certify eligibility, GSP
Appendix A, Item 9. j. - Subscribers who responded to direct contact that they were no
longer eligible, and GSP Appendix A, Item 9.m. - Subscribers whose eligibility was
reviewed by a state administrator, USAC program management or via access to
eligibility data who were found to be ineligible. For the 30 selected subscribers, we
requested copies of the notice of impending de-enrollment letters and other
communications sent involving recertification. We did not perform procedures to
verify the completeness and accuracy of the subscriber listings provided to us.
Finding:
We observed the following:
o The copies of the requested documents were obtained for 30 of the 30 subscribers.
The documents included an explanation that the subscriber had 30 days following
the date of the notice of impending de-enrollment letter to demonstrate continued
eligibility or the carrier would terminate the subscriber's Lifeline service.
OBJECTIVE II: Consumer Qualification for Lifeline.
il-1 Procedurez Inquire of management andobtain caruier policies andproceduresfor limiting
Lifeline support to a single subsuiption per household as provided by the carrier in
response to ltem 4 of GSP 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 disuepancies between the
policies and procedures and the Commission's rule.
5
We inspected the TracFone Lifeline Policies obtained in Procedure I-1, related to the
Commission's rules, section 54.409(c) requiring that Lifeline support be limited to a single
subscription per household (One Per Household Rules).
Finding:
We compared the TracFone Lifeline Policies to the One Per Household Rules and observed
no discrepancies.
II-2 Procedure: Review procedures the carrier hos in place to ensure it has accurately
completed the FCC Form 497. ( the caruier does not have such procedures, inquire of
management to describe the processfor completing an 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 determiningwhich subscribers should be included monthly in the FCC
Form 497. Verfy the procedures include cutoffand billing cycle dates, and only those
subscribers active as of the start or end of the month
o That a corporate fficer signature is requiredfor the FCC Form 497
o That a verification process exists to perform on independent review; that is, the person
reviewing orvalidatingtheform's data is dffirentfrom the person completingtheform
o Provides the billing system name used to generate completion of the form and
o If applicable, describes the process for completing the Tribal Link Up portions of the
FCC Form 497
We inspected and compared the TracFone Lifeline Policies obtained in Procedure I-1, to
the procedures that TracFone has in place to complete Form 497.
Finding:
Our comparison observed no discrepancies with regards to the following items:
o The position title of the person responsible for obtainin g data for the FCC Form 497 .
o The process for determining which subscribers should be included monthly in the FCC
Form 497 and description of the cutoff and billing cycle dates used and whether
subscribers active as of the start or end of the month were reported.
Procedure:
We obtained the following Form 497 submissions for the randomly selected month of
August 2015 for the following states:
o Florida, New York, and Pennsylvania.
6
Finding:
We observed that the Form 497 submissions listed above:
Included the name and title of the corporate officer signing and approving the Form 497
submission.
a
. Included a corporate officer approving the Form 497, which was different from the
person completing the form and obtaining the data for the form.
. Did not report any information in the Tribal Link Up poftion of the Form 497 .
Procedure:
We inquired of management as to which billing systems are used to complete the Form 497
submissions.
Finding:
Management represented that TracFone's uses Customer Record Information System and
the Lifeline Tracking Tool to complete the Form 497 submissions. We did not perform
procedures to verify the completeness and accuracy of the subscriber listings provided to
us.
II-3 Procedure: Obtain the Subs*iber List in response to ltem lof GSP Appendix A and obtain
the carrier's FCC Form497(s)for each study area inthe selected statesfor 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.
TracFone delivered to EY the listing of states or territories where they are responsible for
Lifeline certification forms. EY sent USAC an email inquiring of the states that TracFone
received Lifeline support and USAC responded to EY on February 28, 2017, with the
listing of the states where TracFone provided Lifeline services along with the Lifeline
support amount during August 2015. From the listing of the states provided by USAC, we
selected Florida, New York and Pennsylvania for testing.
From the subscriber listings obtained, we calculated the total number of subscribers listed
by study area and compared this total to the total subscribers reported by TracFone in their
Form 497 submissions for Florida, New York, and Pennsylvania for August 2015. We did
not perform procedures to verify the completeness and accuracy of the subscriber listings
provided to us.
Finding:
No differences were observed.
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II-4 Procedure: 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.
Using computer-assisted data comparisons, we queried the subscriber listings obtained in
Procedure II-3 above for duplicate addresses with different subscribers.
Finding:
There were a total of 129,085 subscribers with the same physical address in the states of
Florida, New York, and Pennsylvania. For further details refer to procedure II-5 below.
II-5 Procedure: From the list completed in I-i above, randomly select up to 30 subsuibers
from the list and requestfrom TracFone copies of the one-per-household certificationform
for each of the selected subscribers. Verfy that the selected subscribers are certffied 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 ffictive date of the one-per-
household requirement, at least one subscriber at each address is required to complete a
one -pe r -hous e ho I d w orkshe et. I
From the duplicate subscribers listing completed in Procedure II-4 above, we randomly
selected 30 subscribers. For each ofthe 30 selected subscribers, we queried the subscriber
listings obtained in Procedure II-3 above for the duplicate subscriber with the address.
Upon identifying the duplicate subscriber, we compared the start date of Lifeline service
for the duplicate subscriber to the selected subscriber's Lifeline service start date.
Finding:
From this comparison, we observed the following:
o Seven of the 30 selected subscribers began Lifeline service priorto the corresponding
duplicate subscriber. These 7 subscribers were the first subscribers to register and begin
service at their given addresses. As such, we replaced these selections with a subscriber
in the same physical address that began their service after the date of the first subscriber
identified (the procedures performed are listed below).
. Twenty-three of the 30 selected subscribers began Lifeline service after the
corresponding duplicate subscriber. These 23 subscribers began service and listed a
home address that had already been listed by previous subscribers. The following
procedures were performed:
For the subscribers that began Lifeline service after the corresponding duplicate subscriber,
we requested from TracFone copies of the one-per-household certification form for each
selected subscriber. For these subscribers, we observed that the one-per-household
certification form included the subscriber's certification to only receiving one Lifeline-
supported service in his/her household using the one-per household worksheet.
I The Commission requires that TracFone collects 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 Recorded ar 6691,
6895-96, para.78, App. C.
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I
I
OBJECTIVE III: Subscriber Eligibility Determination and Certification.
III-I Procedurez 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 ltem 4 of GSP Appendix A. Examine the policies and
procedures. Compare management responses and carrier policies and procedures with the
Commission's Lifeline rules set forth in sectton 54.410 (Appendix F). Note any
discrepancies between the policies and procedures and the Commission's rule.
a. Inspect TracFone's policies and look for evidence as to whether it includes a policy
that TracFone 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 TracFone's policies and lookfor evidence as to whether it includes a policy or
procedure that TracFone mustfully verify the eligibility of each low-income consumer
prior to providing Ldeline service to that consumer, and that TracFone 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.
We inspected and compared the TracFone Lifeline Policies obtained in Procedure I-1, to
the Commission's ruies, section 54.410 regarding Lifeline subscriber eligibility
determination and certifi cation.
Finding:
We observed no discrepancies.
III-2 Procedurez Examine TracFone's policies and procedures for training employees and
agents for ensuring that TracFone'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
TracFone's policies for ensuring employees and agents are trained on the use and
interactionwith 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 TracFone's employees.
We inspected and compared the TracFone Lifeline policies and procedures obtained in
Procedure I-1 related to training employees and agents to ensure that TracFone's Lifeline
subscribers are eligible to receive Lifeline services.
Finding:
We observed no discrepancies.
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III-3 Procedurez Randomly select at least 100 subscribersfrom the Subsuiber List;for thefirst
50 of the sampled subscribers, the auditor will perform the test described below, for each
of the subscriber's certification and recertification forms.2 After performing the tests
described below for the first 50 sampled subscriber, if the eruor rate is higher than 5o%, the
auditor should apply the same procedure to the remaining 50 subscribers in the sample
and record the results.
a. Exqmine the subscriber certification and recertification forms, ,f any, to verify the
forms contain the following information:
i. Lifeline is afederal benefit and that willfully makingfalse statements to obtain
the benefit can result in.fines, imprisonment, de-enrollment or being barued
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 benefitsfrom multiple providers
v. Violation of the one-per-household limitation constitutes a violation oJ 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:
l. 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 dffirent from the subscrtber's
residential address
5. The subs*iber's date of birth
6. The last four digits of the subscriber's Social Security number, or the
subscriber's Tribal identffication number, if the subscriber is a member of
a Tribal nation and does not have a Social Security number
2 In the event the auditor chooses a sampled subscriber that enrolled in the program prior to June I , 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 forthat year.
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v111
lx.
7 . If the subsuiber is seeking to qualifu for Lifeline under the program-based
criteria, as set forth in I 54.409, the name of the qualifying assistance
program from which the subscriber, his or her dependents, or his or her
household receives benefits
8. If the subsuiber 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.
Require each prospective subscriber to certify, under penalty of perjury, that:
1. The subscriber meets the income-based or program-based eligibility
criteriafor receiving Lifeline, provided in $ 54.409
2. The subsuiber will notifu TracFone within j0 days iffor 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
3. If the subsuiber is seeking to qualifufor 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 TracFone within 30 doys
5. The subscriber's householdwill 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 certificationform is true and
correct to the best of his or her knowledge
7. The subscriber acknowledges that providingfalse orfraudulent information
to receive Lifeline benefits is punishable by law
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 foilure 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 S 5a.a05@@)
Compare TracFone's subscriber eligibility criteria on the certification and
recertificationforms to the federal eligibility uiteria listed in per 47 C.F.R. I
54.409. Note any disuepancies. Note: TracFone may list the eligibility criteria
in its entirety or may allow the subscriber to note only his/her qualifying
criterion on the form.
Vertfu the subsuiber completed all the required elements as tdentified in
Objective III - 3 a. obove, including signature and initialing/checkbox
requirements contained in the certifi cation and recertifi c atio n forms.
x.
1i
xl
xl1.
Examine the subscriber's initial certification form to verify the initial
certificationform 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.
If applicable, verify subscribers who received Tribal Lifeline support are
certified to reside on Tribal lands.
From the Subscriber List obtained in Procedure II-3, we randomly selected 100
subscribers. For the first 50 of the 100 randomly selected subscribers, we
obtained the subscribers' certification forms or recertification forms and
performed the following procedures.
We obtained copies ofthe subscriber certification and recertification forms used
by TracFone during the Engagement Period. We compared the information
included on the forms to the information listed in Procedure III-3.a.i. through
Ill-3.a.viii. and that the forms either included the list of federal subscriber
eligibility requirements per 47 C.F.R. $ 54.409 or allowed the subscriber to list
his/her qualifying criteria on the form.
Finding:
We observed no discrepancies.
We compared the responses provided by the selected subscribers on the
certification or recertification forms to all the information listed in procedures
i. through viii. and that the forms included the subscriber's signature and
selection of their eligibility criteria.
Finding:
We observed no discrepancies.
We compared the date of the subscriber's initial certification form and
compared it to the Lifeline service start date provided in the Subscriber Listing.
Finding:
For the 50 selected subscribers, we observed the following:
o For 50 of the 50 selected subscribers, the Lifeline service start date followed
the date of their initial certification form.
TracFone does not provide service to any Tribal Lifeline subscribers. As such,
there were no Tribal Lifeline Subscribers to select for testing. No fuither
procedures were performed.
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b. Review the list of the data source or documentation TracFone reviewed to confirm the
subscriber's eligibility. Verfy the recorded data sources are eligible data sources per
47 C.F.R. S 54.410, such as (l) income or program eligibility databases, (2) income or
program eligibility documentation, or (3) confirmationfrom a state administrator.
For the 50 selected subscribers, we compared the data sources used by TracFone to
confirm the subscriber's eligibility that was recorded on the subscribers' certification
or recertification forms to the eligible data sources per 47 C.F.R. $ 54.410.
Finding:
We observed no exceptions.
OBJECTIVE IV: Annual Certifications and Recordkeeping by Eligible Telecommunications
Carriers.
IV-l Procedure: 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 ltem l2of GSP
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 disuepancies between the policies and
procedures and the Commission's rules.
We inspected TracFone Lifeline Policies obtained in Procedure I-1, regarding TracFone's
annual certifications required under sections 54.416 and 54.422 of the Commission's rules
and compared management's responses and carrier policies and procedures with the
Commission's Lifeline rules.
Finding:
We observed no discrepancies.
IY -2 Procedure z Examine TracFone 's FCC Form 5 5 5 that was filed the January following the
audit period.3 Verifu the carrier made all of the following certifications. An fficer of
TracFone must certify that s/he understands the Commission's Lifeline rules and
requirements and that the caruier:
a. Has policies and procedures in place to ensure that its Lifeline subscribers are eligible
to receive Lifeline service;
b. Is in compliance with all federal Lifeline certification procedures; and
c. In instances where TracFone confirms consumer eligibility by relying on income or
eligibility databases, as defined in 47 C.F.R. S 54.410(b)(1)(i)(A) or (c)(l)(i)(A), the
representative must attest annually as to what specific data sources TracFone used to
confirm eligibility.
3 For the first biennial audit, the auditor would examine the Form 555 filed January 2016, which represents the
subscribers recertified during calendar year 2075.
13
Pursuant to the sampling selection criteria in Procedure trV-5 below, we selected and
obtained the FCC Form 555 filings submitted in January 2016 for TracFone for the Florida,
New York, and Pennsylvania study areas. We read the three FCC Form 555s and observed
that they included an officer's certification that he understands the Commission's Lifeline
rules and requirements.
Finding:
We observed no discrepancies.
IV-3 Procedure: Examine TracFone's organizational chart provided in response to ltem 5 of
GSP Appendix A. Verufu that the certtfying fficer on the FCC Form 555 rs an fficer per
the organizational chart or other publicly available documents.
We obtained the organizational charts provided by TracFone and compared the names of
the persons certifying the three FCC Form 555 filings obtained in ProcedurelY-2 above to
the organizational charts, and observed that the three FCC Form 555 filings were certified
by officers ofTracFone.
Finding:
We noted no discrepancies.
IV-4 Procedurez 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 J55 /s completed by
the carrier at the state level (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.
We obtained the Form 497 filings for February 2015 for TracFone for Florida, New York,
and Pennsylvania. Using these Forms 497 filings and the three Forms 555 filings obtained
in Procedure 2 above, we compared Form 555 Item A Q.{umber of Subscribers Claimed on
February FCC Form 497 of current Form 555 calendar year) to the total number of
subscribers reported on the Form 497 (the sum of subscribers reported in line 8, non-tribal
subscribers and line 9, tribal subscribers). There was only one study area for each of the
states selected for testing.
Finding:
No differences were observed.
IV-5 Procedure: For the month of February, the auditor shall: (i) randomly select one of the
three states or territories where TracFone 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 TracFone is responsiblefor the annual recertffication
process (Recertification Sample). In the event TracFone did not receive Lifeline support in
at least three states or territories, the auditor shall select all of the states or teruitories
where TracFone received Lifeline support during the audit period. Using the
Recertification Sample, the auditor shall review TracFone's recertification results of the
individual subscribers reported on the FCC Form 5 5 5 filed the January following the audit
periodfor those three randomly selected states, as provided in ltem 9 of GSP Appendix A.
14
IV-6
TY-7
Verrfu that the data reported on the FCC Form 555 for those states agree with the detailed
r e c er t ifi c atio n r e sult s.
We obtained a listing of the three states where TracFone each received the largest amount
of Lifeline support from USAC during February 2015. For TracFone, those three states
were Florida, Georgia, and New York. From the listing of the states and territories where
TracFone gets Lifeline support, we removed Texas and Oregon, as these states administer
the Lifeline certification and recertification process. EY selected states Florida, New York,
and Pennsylvania for testing. We confirmed our state selections with USAC in
February 2017.
Using the three Form 555 filings obtained in Procedure IY-Z and the list of subscribers
provided by the Company in response to GCP Appendix A, Item 9 (A9 Population), we
compared Form 555 Item A Q.{umber of Subscribers Claimed on February FCC Form(s)
497 of current Form 555 calendar year) to the total number of subscribers in the ,A9
Population.
Finding:
No differences were observed for TracFone for Florida, New York and Pennsylvania.
Procedurez If the non-usage rule applies to TracFone, the auditor shall (i) randomly select
three months during the audit period; (ii) randomly select one of the three stotes or
territories where TracFone received the largest amount of Lifeline support; (iii) randomly
select two additional stqtes or territories where TracFone receives Lifeline support; and
(iv) review TracFone'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 ltem 10 of GSP Appendix A Q,{on-Usage Sample). In the event
TracFone did not receive Lifeline support in at least three states or territories, the auditor
shall select all of the states or territories where TracFone 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.
We reviewed TracFone's detailed non-usage results of the individual subscribers reported
on the FCC Form 555, as provided in Item i0 of GSP Appendix A, for the randomly
selected months of Florida, New York and Pennsylvania.
Finding:
No exceptions were observed.
Procedure: Review the carrier's annual TracFone certffication, as provided in ltem 13 of
GSP Appendix A. Vertfu that TracFone reported all the information and made all the
certifications required by 47 C.F.R. $5a.a22@)(b).
Along with the Form 555 filings obtained in Procedurc Iy-2 above, we obtained the
following FCC Form 481- Carier Annual Reporting, Data Collection Form submissions
in response to Item 13 of GSP Appendix A:
. Study area code 219003, FCC Form 481
15
I
IV-8
o Study area code 159016, FCC Form 481
o Study area code l790ll, FCC Form 481
We read the FCC Form 481 submissions listed above to determine that they included the
following information required by 47 C.F.R. $5a.a22@).
. Company name
o Holding company name
. Operating companies and affiliates
. Branding ("doing-business-as company" or brand designations)
o Study area code
. Website link to 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.
Finding:
No exceptions were observed.
We read the FCC Form 481 submissions listed above to determine that they included the
following information required by 47 C.F.R. $5a.a22$)(l):
o Study area code 219003, FCC Form 481, Study area code 1590i6, FCC Form 481, and
Study area code 179011, FCC Form 481 each indicated that they had no outages to
report in the prior calendar year.
We read the FCC Form 481 submissions listed above to determine that they included the
following information required by 47 C.F.R. 554.422(b)(2).
o The number of complaints per 1,000 connections in the prior calendar year
o Certification of compliance with the applicable service quality standards and consumer
protection rules
o Certification that the carrier is able to function in an emergency situation as set forth in
$sa.202(a)(2)
Finding:
No exceptions were observed.
Procedure: Review ony supporting schedules related to the caruier's annual TracFone
certificotion, as provided in ltem 13 of GSP Appendix A. Verify that the data reported on
the annual TracFone certification agrees with the supporting schedules.
No supporting schedules related to the TracFone annual TracFone certifications were
provided in Item 13 of GSP Appendix A.
t6
For the TracFone annual certification, the only attachment or supporting schedule provided
in item 13 of GSP Appendix A was the required outage attachment discussed in Procedure
IV-7 above. No further procedures were performed on this schedule, as it did not contain
information otherwise included in the Form 481 submission.
IV-9 Procedure: 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 ltem 4 of GSP Appendix A. Examine the policies and
procedures. Compare the management responses and carrier policies with record-keeping
rules set forth in 47 C.F.R. f 54.417. Note any discrepancies between the policies and
procedures and the Commission's rule.
We inspected and compared the TracFone Lifeline Policies obtained in Procedure I-1,
regarding TracFone's maintenance of records required under sections 54.417 of the
Commission's rules.
Finding:
We observed no discrepancies.
t7
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