20100301Petition for Reconsideration.pdf

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Debra McGuire Mercer
Tel [phone]
Fax [phone]
mercerdml§gtlaw.com
Februar 26, 2010
VIA OVERNIGHT DELIVERY
Jean Jewell
Commission Secreta
Idaho Public Utilties Commission
472 West Washington
Boise, Idaho 83702
Re: In the Matter of the Application of TracFone Wireless Inc. for Designation as an
Eligible Telecommunications Carrier, Case No. TFW-T-09-01
Dear Ms. Jewell:
Enclosed please find an original and seven (7) copies of a Petition for Reconsideration
and a First Amended Application of TracFone Wireless, Inc. for Designation as an Eligible
Telecommunications Carier. An additional copy of each document is included to be date-
staped and retued in the enclosed envelope. Please contact me if you have any questions
about this submission.
Sincerely,~~~
Debra McGuire Mercer
Counsel for TracFone Wireless, Inc.
Enclosures
cc: Grace Seaman
GREENBERG TRAURIG, LLP . ATIORNEYS AT LAW. WWWGTLAWCOM
2101 L Street, NW. . Suite 1000 . Washington, D.C. 20037 . Tel 202.331.100 . Fax 202.331.101
Mitchell F. Brecher
Debra McGuire Mercer
GREENBERG TRAURIG, LLP
2101 L Street, NW
Suite 1000
Washington, D.C. 20037
brecherm(Ðgtlaw.com
mercerdm(Ðgtlaw.com
Telephone: [phone]
Facsimile: [phone]
RECrEi
2010 t~AR -I AM 9: 26
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF TRACFONE WIRELESS, INC. FOR
DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARRER
)
) CASE NO. TFW-T-09-01
)
) PETITION FOR RECONSIDERATION OF
) APPLICANT TRACFONE WIRELESS,
) INC.
TracFone Wireless, Inc. ("TracFone"), pursuant to Idaho Code, § 61-626 and IDAPA
31.01.01.331, files this Petition for Reconsideration in which it respectfully asks the Idaho Public
Utilties Commission ("Commission") to reconsider Order No. 30996 dated Februar 5, 2010
("Order"). In the Order, the Commission denied the Application of TracFone for designation as
an Eligible Telecommunications Carrier ("ETC") without prejudice. The Order concludes that
TracFone does not meet the legal standard for designation as an ETC and that TracFone was
required to obtain a certificate of authority from the Idaho Offce of the Secretary of State
("Secretay of State"). The Order also relies on factual errors regarding the Lifeline service
being provided in Idaho by wireless ETCs. As will be explained in this petition, TracFone
disagrees with certain legal conclusions set forth in the Order. It also provides herein
information which contradicts the Order's conclusion regarding other ETCs' services.
Accordingly, TracFone asks the Commission to grant reconsideration and issue an order on
reconsideration granting TracFone's ETC Application.l In accordance with IDAP A
31.01.01.331.03, TracFone requests reconsideration by an evidentiary hearing.
INTRODUCTION
On October 29, 2009, TracFone applied to the Commission for designation as an ETC
solely for the purose of providing Lifeline service to eligible low-income consumers in Idaho.
As stated in its Application, TracFone wil only seek fuds from the low-income portion of the
federal Universal Service Fund ("USF"). TracFone wil not seek any funds from the high cost
portion of the federal USF.i On Januar 15, 2010, Commission Staff submitted a decision
memorandum recommending that the Commission deny TracFone's ETC Application. Neither
TracFone nor its counsel received a copy of the Staffs decision memorandum prior to issuance
of the Order. TracFone recognizes that there is no Commission requirement that it be served
with the decision memorandum. However, if TracFone had been made aware of the Staffs
concerns it could have worked with Staff to resolve them and thereby conserved Commission
resources related to this matter.
The Order states that TracFone failed to meet the statutory requirements for ETC
designation as set forth in 47 U.S.C. § 214(e)(1) and Commission Order No. 29841, but does not
identify which particular requirements TracFone has failed to meet. Order, at 2. The Order also
1 Simultaneously with the filing of this petition for reconsideration, TracFone is submitting an
amended application for designation as an ETC. That amended application addresses and cures
any defects with the previous application which have been noted by the Commission. The
Commission may wish to consider the amended application rather than the legal issues raised in
the reconsideration petition. TracFone is fiing both documents in an effort to expedite
resolution of its request for designation as an ETC so that it may commence offering its SafeLink
Wireless(R Lifeline service to low-income Idaho households at the earliest possible time.
2 The Order, at page 1, states that TracFone "wil not seek funds from the federal Universal
Service Fund." As explained above, TracFone wil only seek fuds from the low-income portion
of the federal USF.
TracFone's Petition for Reconsideration 2
concludes that designation of TracFone as an ETC would not be in the public interest because
TracFone's failure to maintain a certificate of authority to conduct business in Idaho indicates a
lack of commitment to consumer service. Id. Finally, the Order finds that designating TracFone
as an ETC would not provide any additional benefit to low-income consumers in Idaho because
there are already several wireless ETCs providing the same service TracFone proposes to offer.
Id. TracFone respectfully disagrees with these conclusions and does not believe that they justify
denial of TracFone's ETC Application.
ARGUMENT
I. TracFone Meets the Requirements in 47 U.S.C. § 214(e)(1) for Designation as an
ETC.
Section 214( e )(2) of the Communications Act provides that a State commission "shall. . .
upon request designate a common carier that meets the requirements of paragraph 1 (of Section
214(e)) as an eligible telecommunications carier for a service area designated by the State
commission." 47 U.S.C. §214(e)(2). Section 214(e)(1) has two requirements: (A) the ETC
must offer the services that are supported by Federal universal service support mechanisms either
using its own facilities or a combination of its own facilties and resale of another carier's
services; and (B) the ETC must advertise the availability of such services and the charges
therefor using media of general distribution. The Commission also lists a third requirement for
designation as an ETC: the telecommunications provider must be a "common carrier" as defined
in 47 U.S.C. § 153(1)). Order, at 2 (citing Order No. 29841, at 2). The Commission states in the
Order that "(a)fter a thorough review of TracFone's ETC request and Staffs recommendation,
the Commission finds that TracFone has failed to meet the statutory requirements of for ETC
designation as set fort in 47 U.S.C. § 214(e)(1) and Commission Order Nò. 20841." Order, at
2. Nowhere does the Order provide any explanation as to the basis on which the Commission
TracFone's Petition for Reconsideration 3
has concluded that TracFone failed to meet either the statutory requirements of 47 U.S.C. §
214( e)(1) or the requirement ariculated at Commission Order No. 20841. As explained in the
following paragraphs, TracFone meets each of those requirements.
First, TracFone is a common carier as that term is defined in the Communications Act.
A "common carier" is "any person engaged as a common carrier for hire, in interstate or foreign
communication by wire or radio or in interstate or foreign radio transmission of energy." 47
U.S.C. § 153(10). TracFone is a carier that offers its services for hire in interstate
communication by radio. Indeed, TracFone has been authorized by the Federal Communications
Commission ("FCC") as a common carier pursuant to Section 214 of the Communications Act
of 1934, as amended (47 U.S.C. § 214).3 Nothing in the Order or the Staffs decision
memorandum indicates that TracFone is not a common carier as that term is defined in the
Communications Act.
Second, as explained in detail in the ETC Application, TracFone recognizes that as a
reseller it does not use any of its own facilties to offer its services. However, the FCC exercised
its statutory authority granted to it by Congress at Section 10 of the Communications Act (47
U.S.c. § 160), to forbear from application of the facilties requirement to TracFone.
Specifically, the FCC granted TracFone's request that it forbear from application or enforcement
of Section 214(e)(1)(A) of the Communications Act (47 U.S.C. § 214(e)(1)(A)) and Sections
54.201(d)(1) and 54.201(i) ofthe FCC's Rules (47 C.F.R. §§ 54.201(d)(1) and 54.201(i)). Those
provisions require an ETC to offer services, at least in par, using its own facilties.4 Section
3 TracFone is required to remit to the FCC and does remit FCC Form 499 (Telecommunications
Reporting Worksheet). All telecommunications common carers providing interstate
telecommunications service are required to submit FCC Form 499 reports.
4 Petition of TracFone Wireless, Inc. for Forbearance from 47 USC § 214(e)(l)CA) and 47 CFR §
54.20 1 (i), 20 FCC Rcd 15095 (2005) ("FCC Forbearance Order").
TracFone's Petition for Reconsideration 4
10(e) of the Communications Act (47 U.S.C. § 160(e)) provides that a State commission may not
enforce any provision of the Communications Act (which includes Section 214(e)(1)(A)) that the
FCC has decided to forbear from applying pursuant to Section 10(a). Therefore, state
commissions are required to act in accordance with FCC forbearance decisions, including the
FCC Forbearance Order. Accordingly, as a result of the FCC Forbearance Order, TracFone is in
compliance with 47 U.S.C. § 214(e)(l)(A).
Third, Section 214(e)(1)(B) requires that ETCs advertise the availability of their services
supported by the USF, including Lifeline service, using media of general distribution. TracFone
described in its ETC Application how it would advertise the availabilty of its Lifeline service
using media of general distribution and included examples of such advertisements. See ETC
Application, at 14-15 and Exhibit 7. TracFone's amended ETC application being fied
simultaneously with this petition for reconsideration contains the same detailed description of
TracFone's advertising at pages 16-17 and Exhibit 9. TracFone has been designated as an ETC
in 24 jurisdictions and is curently providing Lifeline service to nearly three milion qualified
low-income households in 21 jurisdictions. No state commission that has designated TracFone
as an ETC has concluded that the quality and quantity of TracFone's advertising of its Lifeline
service does not comply with the requirement of 47 U.S.c. § 214(e)(1)(B). Moreover, the fact
that TracFone has enrolled so many new Lifeline customers in those states demonstrates that its
advertising has been effective and that its advertising is reaching the low-income households
who are intended to benefit from the Lifeline program. TracFone fully expects that its
advertising wil produce similar results in Idaho.
For the reasons described in the preceding paragraphs, the Order's conclusion that
TracFone does not meet the requirements of 47 U.S.C. § 214(e)(1) and Commission Order No.
TracFone's Petition for Reconsideration 5
29841 is not supported by any facts identified in the Order and is incorrect as a matter of law.
For that reason, TracFone respectfully asks that the Commission reconsider that conclusion and
conclude that TracFone meets the requirements of 47 U.S.C. 214(e)(1).
II. Designation of TracFone as an ETC Would Be in the Public Interest.
The Order concludes that granting TracFone's ETC Application would not be in the
public interest because: (1) TracFone's failure to make certain filings with the Secretar of State
and (2) TracFone's Lifeline service would not provide any additional benefit to low-income
wireless subscribers in Idaho or provide significant competition because there are currently
several wireless ETCs in Idaho. Order, at 3.
As stated in the Order, at the time TracFone filed its ETC Application, it did not have a
certificate of authority from the Secretar of State to tranact business in Idaho. TracFone
initially applied for a certificate of authority with the Secretary of State in 1997 when it
commenced providing wireless service in Idaho. However, upon fuher review of the applicable
law, TracFone determined that it was not "transacting business" in Idaho within the meaning of
that term under applicable Idaho law. Specifically, Idaho Code, § 10-1-1501 provides that a
foreign corporation may not transact business in Idaho until it receives a certificate of authority
from the secretar of state. Section 10-1-1501 (2) of the Idaho Code lists several activities that
do not constitute transacting business. The following excluded activities from that statutory list
are applicable to TracFone; (e) sellng through independent contractors (TracFone does not have
any retail locations in Idaho; it sells its service through independent third-pary vendors); (f)
soliciting or procuring orders, where the orders require acceptance outside this state before
becoming binding contracts and where the contracts do not involve any local performance other
than delivery or installation (all orders for service are accepted by TracFone outside of Idaho);
TracFone's Petition for Reconsideration 6
and (k) transacting business in interstate commerce (TracFone's customers may purchase service
over the Internet and all handsets and accessories are delivered via interstate commerce).
Therefore, TracFone is not transacting business in Idaho under the state law.
However, when TracFone. decided to apply to state commissions for ETC status in
several states, it concluded that designation as an ETC and provision of Lifeline service in the
states would constitute transacting business in those states. For that reason, it elected to register
as a foreign corporation in all states where it sought ETC designation. At the time of the fiing
of its ETC Application TracFone had not yet completed the registration process in Idaho.
TracFone has subsequently obtained a certificate of authority from the Secretary of State.
Simultaeously with filing this Petition, TracFone is filing an amended ETC Application to
address deficiencies identified in the Order. A copy of TracFone's certificate of authority from
the Secretar of State and a copy of its certificate of good standing are attached to its amended
application. Consistent with maintaining a certificate of authority, TracFone wil comply with
all applicable reporting requirements. Given that TracFone now has a certificate of authority and
is in good standing with the Secretary of State, TracFone's prior failure to comply with filing
requirements -- requirements that were not applicable to TracFone prior to seeking ETC
designation -- does not warant a finding that designation of TracFone as an ETC for the limited
purose of providing Lifeline service to low-income Idaho households would not serve the
public interest.
The Order further holds that TracFone's failure to comply with Secretary of State filing
requirements is "strong evidence that TracFone maintains a rather limited and tangential
commitment to consumer service in the state if Idaho." The fact that TracFone did not make
annual filings with the Secretary of State that TracFone concluded were not applicable to it at the
TracFone's Petition for Reconsideration 7
time has no bearing on TracFone's commitment to consumer service. As stated in its ETC
Application, TracFone has demonstrated its commitment to high service quality by committing
to comply with the CTIA - The Wireless Association(R Consumer Code for Wireless Service.
ETC Application, at 14. Indeed, Commission Order No. 29841 states:
Given the general agreement among the commenters, the Commission adopts the
FCC's proposed guidelines regarding customer protection and service.
Recognizing that there may be different standards applicable to the ETC applicant
based on best practices in the industry and the technology involved, the
Commission wil require that all wireless applicants for ETC designation agree to
comply with the CTIA Code.
Order No. 29841, at 11.
Thus, pursuat to Order No. 29841, the Commission may consider carriers' service
commitments such as TracFone's commitment to comply with the CTIA Code. An ETC's
commitment to consumer service is not measured by whether it made certain filings with the
Secretary of State, but rather by how it devotes resources to serving consumers and by stated
commitments to comply with generally-recognized industry standards, including the CTIA Code
-- a code which has been recognized both by the Commission and by the FCC as being an
appropriate service quality commitment standard for wireless service providers.
As explained in Order No. 29841, "in determining whether ETC designation is in the
public interest, this Commission shall consider the benefits of increased consumer choice, and
the unique advantages and disadvantages of the applicant's service offering." Order No. 29841,
at 16. TracFone respectfully disagrees with the Order's conclusion that designating TracFone as
an ETC "would not provide any additional benefit to low-income wireless subscribers in Idaho
or provide significant competition within the proposed service area, as several wireless ETCs are
curently providing the same wireless Lifeline service TracFone proposes to offer." Order, at 3.
TracFone's Petition for Reconsideration 8
The assertion that several wireless ETCs are providing the same Lifeline service as
TracFone is not supported by recent data published by the Universal Service Administrative
Company ("USAC"), the administrator of the federal USF. USAC tracks ETCs in every state
and maintains data on the amounts of Lifeline support received by each ETC. A review of
USAC's data reveals that while there are several wireless ETCs in Idaho, only one of them
actually provides Lifeline service to low-income Idaho households.
The Staffs decision memorandum indicates that the following wireless ETCs provide
service in Idaho: Inland Cellular, Syringa Wireless (includes ClearTalk), CTC Telecom dba
Snake River PCS, Alltel (now Verizon Wireless), and Edge Wireless (AT&T Mobilty).
USAC's most recent report to the FCC indicates that of the companies listed, only ClearTalk and
Syringa Wireless (which are now one company owned by Syringa Wireless) are receiving any
Lifeline support. See USAC FCC Filngs, Second Quarer Appendices - 2010, LI05 - Anual
Low Income Amounts by State and Company through 3Q2009, excerpt attached as Exhibit 1.
Some of the wireless ETCs are relying on their ETC status solely to receive high cost support,
i.e., Edge Wireless and Inland Cellular. See USAC FCC Filngs, Second Quarer 2010
Appendices - 2010, HCOIA - High Cost Support Projected by State by Study Area - 2Q201O,
excerpt attached as Exhibit 2.
The existence of one other wireless ETC providing Lifeline service anywhere in Idaho
provides no meaningful competitive choice to Idaho consumers. While the other wireless
providers listed by the Staff may be ETCs, they are not receiving any Lifeline support, and as
such are not providing Lifeline service to any low-income Idaho consumers. Moreover, the one
TracFone's Petition for Reconsideration 9
wireless ETC that has Lifeline customers only serves approximately 1,600 Lifeline customers.
5
TracFone's experience in other states indicates that its SafeLink Wireless(R Lifeline
service is an attractive alternative to many low-income consumers. As stated above, TracFone
provides nearly three milion households with Lifeline service in 21 jurisdictions. The existence
of only one wireless ETC that has an insignificant number of Lifeline customers does not support
a conclusion that there would be no additional benefit to low-income Idaho consumers if
TracFone were to be designated as an ETC. Indeed, especially given Idaho's low statewide
Lifeline participation rate of only 22.1 percent of eligible low-income households, TracFone's
Lifeline service would be an attractive option to the nearly eighty percent of low-income Idaho
households which are eligible to paricipate in Lifeline, but are not doing so.
Finally, TracFone notes that the one wireless ETC in Idaho which is offering Lifeline
service is not "providing the same wireless Lifeline service TracFone proposes to offer." Order,
at 3. TracFone's Lifeline service is unique in that it wil be free to qualified subscribers and wil
include a free E911-compliant wireless handset. The Lifeline programs offered by other ETCs in
Idaho provide participating consumers with discounts below carriers' standard rates. However,
enrolled Lifeline customers stil must pay the ETC's discounted charges, as well as purchase
telephone equipment necessary to use those discounted services. TracFone's free SafeLink
Wireless(R service in Idaho wil include 67 minutes of airtime each month (with unused minutes
caried over to the following months so long as the customers remain enrolled in the program)
and vertical features like call waiting, voice mail, and caller ID at no additional charge. Those
5 Syringa Wireless and ClearTalk received a total of $193,116 in Lifeline support in 2008.
Assuming that the amount was spread evenly throughout the year and that the maximum Lifeline
support amount of $10.00 per customer per month was received, the companies had 1,609
customers (193,116 divided by 12, and then taking that quotient and dividing it by 10 equals
1,609).
TracFone's Petition for Reconsideration 10
minutes may be used for calls to or from anywhere in the United States -- local or long distance,
intrastate or interstate. They may also be used for calls to more than 100 international
destinations, and there are no roaming charges, which enables TracFone's Lifeline customers to
use the service anywhere. Also, TracFone Lifeline customers wil always have access to 911,
irrespective of their activation status or whether they have remaining airtime minutes. Access to
911 is an important public safety benefit. Mobile access to 911 is an especially importnt public
safety benefit since many emergency situations necessitating calls to 911 occur away from one's
home. In addition, TracFone has no activation charge. Given Idaho's low Lifeline participation
rate, the existence of only one wireless ETC that has any Lifeline customers, and the unique
benefits of TracFone's SafeLink Wireless(R Lifeline service, the public interest would be served
by the Commission's designation of TracFone as an ETC for the purpose of providing Lifeline
service.
CONCLUSION
As explained above, the asserted bases for denying TracFone's ETC Application are not
supported by law or fact. TracFone has significantly raised the level of Lifeline paricipation in
every state where the service is available. Most importantly, the entire benefit is funded by the
federal USF and by TracFone and not by any state or any state's rate payers, tax payers or by any
state's universal service fund. TracFone is anxious to bring this important federally-fuded
program to Idaho and to the State's low-income households. For the foregoing reasons,
TracFone respectfully requests the Commission to grant reconsideration of its Order, and
promptly approve TracFone's amended ETC Application, and that it be designated as an ETC in
Idaho.
TracFone's Petition for Reconsideration 11
Februar 26, 2010
TracFone's Petition for Reconsideration 12
Respectfully submitted,
TRACFONE WIRELESS, INC.~
Mitchell . Brecher
Debra McGuire Mercer
GREENBERG TRAURIG, LLP
2101 L Street, NW
Suite 1000
Washington, D.C. 20037
Telephone: [phone]
Facsimile: [phone]
brecherm(Ðgtlaw.com
mercerdm(Ðgtlaw.com
Counsel for TracFone Wireless, Inc.
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have this 26th day of February 2010, served the forgoing
Petition for Reconsideration of Applicant TracFone Wireless, Inc. upon the following by sending
a copy thereof via electronic mail to:
Grace Seaman
Utilties Analyst
Idaho Public Utilties Commission
472 W Washington
Boise, ID 83702
grace.seaman(Ðpuc.idaho.gov
rJ-kRm~Lee
TracFone's Petition for Reconsideration 13