20110323Fuentes Reb.pdf

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Dean J. Miler (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Banock Street
P.O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
joe~mcdevitt-miler.com
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2011 fMf? 23 PP1 3= 30
Mitchell F. Brecher (Admitted Pro Hac Vice)
Debra McGuire Mercer
GREENBERG TRAURIG, LLP
2101 L Street, NW, Suite 1000
Washington, D.C. 20037
Tel: [phone]
Fax: [phone]
brecherm~gt1aw.com
mercerdm~gtlaw.com
Attorneys for TracFone Wireless, Inc.
COpy
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF TRACFONE WIRELESS, INC. FOR
DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARER.
) CASE NO. TFW-T-09-01
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
REBUTTAL TESTIMONY OF JOSE FUENTES
1 Q.WHT IS YOUR NAME AND OCCUPATION?
2 A.My name is Jose Fuentes. I have been Director of Governent Relations for
3 TracFone Wireless, Inc. ("TracFone") for the past two years. I am responsible for
4 facilitating TracFone's designation as an Eligible Telecommuncations Carer
5 ("ETC") by state utilty commssions and for implementing SafeLink Wireless~
6 Lifeline servce thoughout the United States. I am also the corporate
7 spokesperson for the SafeLink Wireless~ brand.
8 Q.WHAT IS THE PUROSE OF YOUR REBUTTAL TESTIMONY?
9 A.The rebuttal testimony I am providing today responds to the testimony and
10 exhbits fied by Grace Seaman, a Utilties Analyst employed by the Commission,
11 and by Danel L. Trampush, a consultat retaied by Idaho Telecom Allance
12 ("ITA") and CTC Telecom, Inc. ("CTC") fied with the Commission on March
13 18,2011.
14 Q.HAVE YOU PREVIOUSLY PROVIDED TESTIMONY IN THIS
15 COMMISSION'S PROCEEDING CONCERNING TRACFONE'S ETC
16 APPLICATION?
17 A.Yes. On Febru 25,2011, I provided direct wrtten testimony and exhibits to
18 the Commission. My direct testimony was :fled in support of TracFone's First
19 Amended ETC Application, :fled with the Commission on March 1,2010.
20 Q.HAVE YOU REVIEWED THE TESTIMONY OF MS. SEAMAN?
21 A.Yes.
22 Q.WHAT IS YOUR UNERSTANDING OF MS. SEAMAN'S TESTIMONY?
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Ms. Seaman testi:fes that Commission Sta believes that TracFone's ETC
Application does not meet Idaho's ETC requirements, and, therefore, the
Commission should not designate TracFone as an ETC.
WHAT REASONS DOES MS. SEAMN PROVIDE FOR COMMISSION
STAFF'S CONCLUSION THAT TRACFONE DOES NOT MEET IDAHO'S
ETC REQUIREMENTS?
Ms. Seaman asserts tht TracFone's ETC Application should be denied for three
reasons: (1) non-payment to the Idaho Telecommuncations Assistance Program
("ITSAP"); (2) non-payment of the 911 fee to the Idao Emergency Services fud
("911 Fund"); and (3) incomplete evidence to support that all rual wire centers
are fully served.
DID MS. SEAMN INICATE THAT THERE AR ANY OTHER REASONS
FOR THE COMMISSION TO DENY TRACFONE'S ETC APPLICATION?
No.
DO THE ISSUES RAISED BY MS. SEAMN WARRNT DENIL OF
TRACFONE'S ETC APPLICATION?
No. Whle TracFone appreciates Stas concerns, issues regarding whether
TracFone is required to pay certain state fees can be resolved by other means as I
wil describe in this rebuttl testimony. As it has done in other states, TracFone
wil remit all fees upon :fnal determation that such fees are applicable to it
pursuant to state law. In addition, Ms. Seaman's concerns about ru wie center
coverage is not relevant to whether TracFone should be designated as an ETC in
its service area in Idaho.
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HOW DOES TRACFONE PROPOSE TO ADDRESS STATE FEE ISSUES?
Based on Ms. Seaman's testimony, it appears that Commission Staff does not
agree with TracFone's conclusion based on its own examnation of the relevant
state law provisions that it is not obligated to contribute to the ITSAP fud nor to
the 911 Fund. Idaho is not the :frst state where attempts have been made to
subject TracFone to state fee requirements which TracFone concluded are not
applicable to it, or to delay approval of TracFone's ETC applications based on
disputes regarding such fees. Neither is it the only state where legitimate, good
faith, disagreements regarding applicabilty of certain fees and taxes have been
shown to exist between TracFone and others, including state commission stas.
In such states, TracFone has consistently worked cooperatively with legislators,
reguatory deparents, and other staeholders to resolve such disputes and has
been able to reach agreements for mechansms which would allow TracFone to be
designated as an ETC and to deliver its unique SafeLink Wireless~ Lifeline
service to low-income households while TracFone and other staeholders sought
resolution of the issues regarding fee applicabilty. As discussed below, TracFone
is committed to doing the same in Idaho.
If the Commission deems it necessar to determine whether TracFone and
other prepaid wireless providers are legally obligated to contrbute to the ITSAP
and 911 fuds, it should open a separate proceeding to address that issue.
TracFone faced a similar issue before the Maine Public Utilties Commission
("Maine PUC"). In the Maie PUC proceeding regarding TracFone's ETC
petition, the Maine PUC Staraised the issue of whether TracFone was obligated
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1 to make contributions to certain Maine fuds, including the Maie USF and
2 Maine Telecommuncations Education Access Fund ("MTEAF"). TracFone
3 asserted that it was not obligated to contrbute to those fuds because under
4 applicable laws, contrbutions were based on biled intrastate revenues, and
5 TracFone, as a provider of prepaid wireless services, does not bil its customers,
6 and therefore has no biled intrastate revenues withi the ambit of the applicable
7 statutes. In the order designating TracFone as an ETC, the Maie PUC noted that
8 its designation of TracFone as an ETC did not "absolve TracFone of any
9 obligations it may have to abide by the Commission's rues regarding
10 contrbutions to MUSF, MTEAF and payment of other regulatory fees." The
11 Maine PUC decided to "open an investigation in a separate docket into whether
12 TracFone is required to contrbute to MUSF and MTEAF, and whether TracFone
13 is in compliance with its obligations to pay other applicable reguatory fees." The
14 Maine PUC's Order designating TracFone as an ETC and the Maine PUC Notice
15 of Investigation are provided as Exhbit No. 7 and Exhbit No.8. The Maie PUC
16 subsequently closed the investigation and opened a rulemakng proceeding to
17 address the applicabilty of the subject fees to all prepaid providers, including
18 TracFone. The Maine PUC's Notice of Rule makng is provided as Exhbit No.9.
19 Like the Maine PUC, this Commission could open a separate docket to address
20 any statutory fee issues withi its jursdiction, rather than resolve those issues in
21 ths ETC proceeding. Because the Maine PUC wisely chose to resolve the fee
22 dispute issues in a proceeding separate from the ETC designation process, today
23 many low-income Maine households are able to enroll in SafeLink Wireless~ and
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receive free mobile telecommuncations service, while the Maie PUC and
afected stakeholders address the fee requirements.
Simlarly, when TracFone sought ETC designation in Arzona, issues were
raised regarding the applicabilty of cert Arzona fees to TracFone's prepaid
wireless services. On March 1, 2011, the Arzona Corporation Commission
designated TracFone as an ETC enabling it to provide Lifeline service to that
state's low-income households. However, that designation was subject to a
condition that TracFone send letters to each of the State of Arzona deparents
with jursdictional authority to enforce the fee requirements at issue. Speci:fcally,
TracFone was directed to solicit opinions from those deparments as to whether
the fees in question are applicable, and to submit copies of those letters and any
responses received to the Arzona Corporation Commssion as a compliance item
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in the TracFone ETC docket. A copy of the Arzona order is provided as Exhibit
No. 10.
The Maie and Arzona solutions serve as examples of ways in which the
Commission may address questions about the applicabilty of ITSAP and 911 fees
to TracFone without depriving Idaho's neediest households of an invaluable
wireless Lifeline service offering.
ARE THE ITSAP FEE AND 911 FEE WITHIN THIS COMMISSION'S
JURISDICTION?
TracFone understads that the ITSAP fee is withn the Commission's jurisdiction.
However, the 911 fee is subject to enforcement by the Idaho Emergency
Communcations Commssion, which is par of the Deparent of Administration.
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1 Q.IF THE COMMISSION DOES NOT HAVE JURISDICTION TO ENFORCE
2 THE 911 FEE, HOW SHOULD THAT ISSUE BE RESOLVED?
3 A.As noted above, TracFone recently faced a similar issue in Arizona. TracFone, as
4 a requirement of the Order designating it as an ETC, shall submit letters to the
5 state agencies with jursdiction to enforce the disputed fees (i.e., Arizona
6 Deparent of Administration, the Arizona Commission on the Deaf and Hard of
7 Hearng, and the Arzona Corporation Commission), seekig a determination as to
8 whether the fees, over which the agencies have jursdiction, are applicable to
9 TracFone's services as an ETC in Arzona. This Commssion, similarly could
10 require TracFone to submit a letter to the Idaho Emergency Communications
11 Commssion seeking a determination as to whether TracFone is obligated to
12 contribute to the 911 fud under curent law.
13 Q.IF THIS COMMISSION OR THE EMERGENCY COMMCATIONS
14 COMMISSION DETERMIND THAT TRACFONE IS SUBJECT TO THE
15 ITSAP AND 911 FEES, WOULD TRACFONE COMMENCE PAYMNT OF
16 THOSE FEES?
17 A.TracFone would commence payment of the ITSAP and 911 fees upon receiving a
18 :fnal determination that it is obligated to remit those fees.
19 Q.WHT IS MS. SEAMN'S CONCERN ABOUT TRACFONE PROVIDING
20 LIFELIN SERVICE IN ALL WIRE CENTERS?
21 A.In response to a production request from ITA and CTC, TracFone provided a list
22 of exchanges and ILEC rate centers in which it provides servce. Ms. Seaman is
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concerned that TracFone's servce area may not include entie ru wie centers,
and as such may raise the issue of creamskimming.
WHT IS TRACFONE'S RESPONSE TO THIS CONCERN?
First, I want to point out tht creamskig is not a relevant issue when a
wireless service provider seeks ETC designation solely for puroses of providing
Lifeline service. In 2008, when the FCC designated TracFone as an ETC in 11
States, it stated: "In addition, we need not perform a creamskig analysis
because TracFone is seeking to be eligible for Lifeline support only." A copy of
the FCC's Order is provided as Exhbit NO.1 1. Furermore, as I noted in my
direct testimony, the FCC developea the "cream skiming" analysis requirement
when it began to designate wieless ETCs who sought support from the high-cost
portion of the Universal Servce Fund to subsidize the costs of building alternative
networks which would compete with rual LECs. The FCC's concern was that
such facilties-based wireless ETCs would get high-cost support to build out
competing networks with those of the rual LECs but would actuly deploy
competing networks only in the most populous areas of the rual ILECs service
territories -- effectively using Universal Service Fund support to engage in
"creamskimming" in the ILECs' territories since the ILECs had to build out
thoughout their entire service areas, including the sparsely-populated portions of
their servce areas. Since TracFone provides service only where its underlying
vendors have wireless coverage, it will not, and canot, engage in creamskimmng
as that term has been used by the FCC. It is for that reason that the FCC
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1 concluded in 2008 that a creamskimming analysis is not necessar when
2 considering Lifeline-only ETC designation requests.
3 Second, requiring TracFone, or any wireless carier, to de:fne its servce
4 area in terms of ILEC wire centers is inappropriate. Wire centers are wie line
5 service area concepts; they have no relevance to wireless services. Whle
6 TracFone can clearly de:fne its service area in terms of Zip Codes and can provide
7 service area maps, it does not have access to information that would allow it to
8 identify whether it is serving a portion of an ILEC wire center.
9 Thid, while other state commissions considering TracFone's ETC
10 applications have required TracFone to describe its coverage area in terms of wire
11 centers or exchanges, no state commssion has conducted a creamskimming
12 analysis or required TracFone to perform such an analysis. Indeed, of the 36
13 states in which TracFone has been designated as an ETC, only the Kanas
14 Corporation Commission analyzed whether TracFone's coverage area included
15 parial wie centers and then designated TracFone only in those wie centers that
16 were fuly included withn TracFone's coverage area, based on Kansas
17 Corporation Commssion Staf s analysis of the coverage area information
18 TracF one provided and other data available to the Staf. All other state
19 commissions and the FCC that have designated TracFone as an ETC have de:fned
20 TracFone's service area as all areas withn the coverage areas of TracFone's
21 underlying carers or by using other coverage area information provided by
22 TracFone. For the reasons I just discussed, a creamskimming analysis is
23 unecessar and inappropriate.
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WHT IS TRACFONE'S RESPONSE TO MS. SEAMAN'S TESTIMONY
THAT DUPLICATE CLAIMS AR AN ISSUE?
Duplicate claims for Lifeline support occur when an individual receives Lifeline-
supported servce from more th one ETC. Ths is an issue thoughout the
industr and is not lited to TracFone's service. At ths time, ETCs only have
access to their own customer lists; ETCs have no access to other ETCs' customer
lists. Only a few states maintai and make available to ETCs databases of
enrolled Lifeline customers which can be used to determine whether an applicant
for Lifeline service is receiving Lifeline-supported service from another ETC.
Idaho is not one of those states. Moreover, under the FCC's rues and the rues of
most states, ETCs are requied to obta from applicants for Lifeline service self-
certi:fcations under penalty of perjur that the applicant is not receiving Lifeline
bene:fts from another ETC. All ETCs must rely on those self-certi:fcations in the
absence of accessible databases to confrm the accuracy of the customers' self-
certi:fcations. Therefore, neither TracFone nor any other ETC -- wireline or
wireless -- has access to information to enable it to determne whether a Lifeline
applicant is already receiving Lifeline-supported service from another ETC. The
FCC's curent rules do not provide any means for miniizing duplicate claims.
However, the FCC has recently commenced a ruemakg proceeding in which it
is considering changes to the FCC's rues governing Lifeline to prevent the waste
of fuds caused by duplicate clais. One option being considered by the FCC is
the development of a database of all Lifeline customers that would enable ETCs
to check whether a Lifeline applicant is already receiving Lifeline service from
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1 another ETC. See In the Matter of Lifeline and Link Up Reform and
2 Modernzation, et al., Notice of Proposed Rulemaking, WC Docket No. 11-42,
3 (released March 4,2011). The FCC's Lifeline proceeding has been commenced
4 in response to recommendations received from the Federal-State Joint Board on
5 Universal Service in November 2010. The Federal-State Joint Board received
6 comments from many interested stakeholders, includig state commissions, and
7 consumer groups, as well as many telecommunications companes and their
8 industr associations. TracFone was among the entities submitting comments to
9 that Joint Board. In FCC :flings with the Joint Board, TracFone advocated for
10 establishment of such as database as the most effcient and effective means to
11 minimize duplicate enrollment in Lifeline programs. TracFone continues to
12 believe that a national database is the best way to prevent duplicate claims. The
13 FCC's ruemaking notice ariculates a clear intent by that agency to promulgate
14 reforms to the Lifeline program to prevent waste, fraud, and abuse of Universal
15 Service Fund resources and to mandate that such reforms become minimum
16 requirements for states. Among those FCC proposals is the establishment of a
17 national database and suggested by the Joint Board and as supported by TracFone
18 and others. TracFone expects that the concerns about improper duplicate
19 enrollment described in Ms. Seaman's testimony will be addressed by the FCC.
20 Accordingly, TracFone encourages the Commission and other affected
21 stakeholders in Idaho to paricipate in that proceeding and share their views and
22 suggestions with the FCC, rather than deny the bene:fts of TracFone's Lifeline
23 service to low-income Idaho households while the FCC addresses those issues.
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WHT DOES TRACFONE DO TO PREVENT DUPLICATE CLAIMS?
TracFone, like all other ETCs, does not have access to information tht would
allow it to determine whether a Lifeline applicant or customer is receiving
Lifeline-supported service from another ETC. Therefore, at ths time, there is no
way for TracFone or any other ETC to ensure that an applicant or customer is not
receiving Lifeline bene:fts from another service provider. However, in
accordance with the FCC's 2005 Forbearance Order (the FCC order which
allowed TracFone to be designated as an ETC without providing service using its
own facilities), TracFone requires every Lifeline customer to verify on an anual
basis that the customer remains head of household and only receives Lifeline-
Supported servces from TracFone. That additiona veri:fcation requirement was
imposed by the FCC on ETCs like TracFone who are subject to forbearance. It is
not imposed on other ETCs. No Idaho ETC is required to verify anually that
every Lifeline customer receives Lifeline-supported service only from that ETC.
Thus, if designated as an ETC by the Commission, TracFone would be subject to
a more rigorous condition to prevent duplicate enrollments th any other Idao
ETC.
As Ms. Seaman notes in her testimony, TracFone petitioned the FCC to
modify ths requirement to allow it to request the required self-certi:fcation from a
statistically-valid sample of its Lifeline customers, rather than from all of its
Lifeline customers. However, the FCC's Wireline Competition Bureau denied
TracFone's petition. The Wireline Competition Bureau's stated reason for
denying TracFone's petition was tht the fact that TraFone's Lifeline service is
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provided for free increased may increase the risk of duplicate clais. A copy of
the Denial Order is provided as Exhbit No. 12.
HAVE YOU REVIEWED TH TESTIMONY OF MR. TRAUSH?
Yes.
WHT IS YOUR UNERSTANDING OF MR. TRPUSH'S TESTIMONY?
Mr. Trampush testi:fes that designation of TracFone as an ETC in areas served by
rual companies in Idaho is not in the public interest.
WHAT REASON DOES MR. TRAMPUSH PROVIDE FOR HIS
CONCLUSION THAT TRACFONE'S DESIGNATION AS AN ETC IN AREAS
SERVED BY RURA TELEPHONE COMPANIES IN IDAHO IS NOT IN THE
PUBLIC INTEREST?
Mr. Trampush cites several reasons for his conclusion, including his belief that
the public interest bene:fts claied by TracFone are not valid. Mr. Trampush also
asserts that TracFone's Lifeline offering does not provide any unque advantages
over the curent Lifeline plans available in Idaho.
DO YOU AGREE WITH MR. TRAPUSH'S CONCLUSION?
No. TracFone's SafeLink Wireless~ Lifeline service is a unique offering. It
differs sign:fcantly from the Lifeline services of any other Idaho ETC.
TracFone's Lifeline service will provide importt and invaluable public interest
bene:fts. Many of these bene:fts were described in TracFone's Amended ETC
Application and in my direct testimony and will not be repeated here. Sufce it to
say that TracFone was the :frst ETC in the nation to provide Lifeline customers
with free wireless handsets (paid for by TracFone with no support from the USF),
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free quatities of wireless all-distace aiime, and a full complement of importt
vertical featues, such as call waiting, caller ID, and voice mail -- featues which
other Idaho ETCs, including several of those who sponsored Mr. Trampush's
testimony, offer only at additional charges -- charges which are not subject to
Lifeline discounts. The perceived value of TracFone's Lifeline service is best
demonstrated by the fact that more than 3 milion low-income households are
curently enrolled in the program and enjoying its bene:fts in the more than 30
states where the service curently is available.
IN TRACFONE'S ETC APPLICATION, TRACFONE ASSERTS THAT ITS
LIFELINE SERVICE WILL PROVIDE LARGER CALLING ARAS IN
IDAHO. PLEASE EXPLAIN HOW IT EXPANDS LOCAL CALLING ARAS
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FOR IDAHO RESIDENTS?
TracFone, though its relationsl\ps with'AT&TMobilty, T-Mobile, and Verizon
Wireless, offers a coverage area that exceeds the coverage area of each of the four
wireless ETCs mentioned in Mr. Trampush's testimony, as well as the coverage
areas of each of the ILECs who are members of ITA. A TracFone customer in
Idaho can use airtime minutes to place and receive calls from all areas where its
underlying carers have coverage throughout the United States, without incurng
any roaming charges. Whle Mr. Trampush asserts without any factu support
that TracF one will not provide larger local calling areas, that is obviously
incorrect. As generally understood, a local calling area is the geographic area
withn which a telephone service customer may initiate calls without being
subject to additional charges. For wireline ETCs, the local calling area is the
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1 geographic covered by some -- or a portion of -- that carer's exchange facilties.
2 Calls within that area are not subject to additional charges; calls beyond that
3 speci:fed area are subject to additional charges. Thus, a call traversing a distance
4 of only a few miles will often be subject to toll charges simply because such calls
5 are beyond the ETC's limited local calling area. With TracFone's service, callers
6 may call anywhere within the United States and not incur additional charges.
7 Even roamng calls are not subject to additional charges. In short, unike Idaho's
8 other ETCs, and contrar to Mr. Trampush's testimony, the entire United States
9 (including, of course, the entire State of Idaho) will be the local callng area for
10 TracFone's Lifeline customers. Even Idaho's currently-designated wireless ETCs
11 have a more limited local callng area. For example, Silver Star Wireless charges
12 a higher rate for roaming (i.e., calls initiated outside that company's coverage
13 area). As stated on its website: "Roamg minutes will be charged at 50 cents per
14 minute. Roaming charges will apply to all calls originating outside of the Silver
15 Sta Wireless network (see map). Nationwide calling is on CDMA network with
16 Silver Sta Wireless preferred CDMA roamng parers." Silver Sta, by chaging
17 a 50 cent roaming rate for calls outside of its network, limits its customers' local
18 calling area. See Exhibit No. 13. CTC Telecom, itself an intervenor in ths
19 proceeding and a sponsor of Mr. Trampush's testimony, also has "home" airtime
20 rates and "roam" airtime rates. See Exhbit No. 14. Syrnga Wireless requires
21 customers to use at least 50 percent of their monthy aiime minutes on the
22 Syringa Wireless network. See Exhibit No. 15. TracFone offers its customers,
23 including its Lifeline customers, national calling. Thus, TracFone offers a
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sign:fcantly more expansive "local calling area" then that offered by the curent
wieless ETCs in Idao -- all of whom subject their customers, including their
Lifeline customers, to costly additional charges for calls intiated outside their
limited local calling areas.
DO THE CURNT IDAHO WILESS ETCS OFFER PLANS THAT ARE
COMPARALE TO THE LIFELINE PLAN PROPOSED BY TRACFONE?
No. Mr. Trampush claims that TracFone's Lifeline service is not unique because
wireless ETCs in Idaho offer pay-as-you-go plans with unimited local calling.
He states that Silver Star Wireless offers weekly and monthly pay-as-you-go
plans. Silver Star Wireless's least expensive monthy plan provides for "up to
250 miutes" for $25. See Exhbit No. 13. Under ths plan, local minutes are
charged at a rate of $0.25 per minute, while calls for which roaming is necessar
are charged at a rate of $0.50 per minute. Assumg that a Lifeline discount of
$13.50 is applied, Silver Sta Wireless's Lifeline customers would pay $11.50 per
month ($25.00 - $23.50 = $11.50). As compared with TracFone's SafeLink
Wireless~ most popular Lifeline option which provides 250 miutes at no charge,
a Silver Star Lifeline customer on the plan described above would pay $11.50 for
the additional 50 minutes above the free minutes that the customer could receive
at no charge under TracFone's plan. Those additional 50 minutes would requie
the Lifeline customer to pay $0.23 per miute -- assuming that all of those
minutes were local minutes with Silver Star's local calling area, and not subject
to roaming charges. Similarly, although Syringa Wireless offers unimited local
callng for $30.00 (which would cost $16.50 for a Lifeline customer), at least half
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1 of the calls must be on the Syrga Wireless Network or service will be
2 terminated. See Exhbit No. 15. Mr. Trampush refers to a $24.10 monthly plan
3 for CTC Wireless. However, the least expensive wireless plan I have found for
4 CTC Wireless is 300 minutes per month for $35.50 (which would cost $22.00 for
5 a Lifeline customer after application of the $13.50 discount fuded by the
6 Universal Service Fund). See Exhbit No. 14. Comparing that Lifeline plan with
7 that of TracFone, a CTC Wireless Lifeline customer would have to pay $22.00
8 per month to acquire 50 minutes more than TracFone would provide that
9 customer at no charge. The per minute price of those 50 additional minutes
10 (assumg that all those calls were local calls) would be $.0.44 -- a per minute
11 price substatially higher than the $0.10 per minute price which TracFone will
12 charge for additional minutes beyond the 250 free minutes. I simply do not
13 understad the basis for Mr. Trampush's conclusion that the public interest would
14 be served by charging low-income consumers $0.44 per minute for minutes which
15 TracFone would provide at no charge. I understad how that arangement would
16 be in CTC Wireless's interest, but I do not understand how it would serve the
17 public interest. Moreover, given this substantial disparty between the real costs
18 incured by TracFone's Lifeline customers and the real costs incured by those
19 other ETCs' Lifeline customers, I do not understad the basis for Mr. Trampush's
20 conclusion that TracFone's Lifeline program will not be different from those of
21 other Idaho ETCs. TracFone's Lifeline plan, which provides 250 minutes that can
22 be used anywhere in the United States for no charge whatsoever, plus a free
Fuentes, Di-Reb 16
TracFone Wireless, Inc.
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handset, provides unque advantages over each ofthe plans cited by Mr.
Trampush.
DO TRACFONE'S LIFELINE CUSTOMERS INCUR ANY COSTS
ASSOCIATED WITH THE HASET?
No. Mr. Trampush asserts that the Commssion needs to know the cost of the
handset to determe whether TracFone's customer's end up paying more for
Lifeline servce from TracFone than from an existing ETC. Ths assertion is
baseless. TracFone does not charge its Lifeline customers a single dime for the
handset either directly or in the form of other charges. TracFone's Lifeline
service is completely fre to quai:fed low-income households. Moreover,
TracFone offers a larger "loca" calling area th the curent Idaho wieless
ETCs, plus it does not charge for roamg. TracFone's Lifeline customers may
purchase additional airtime minutes, if they choose, at a rate of no more than
$0.10 per minute -- sign:fcantly lower than Silver Sta Wireless's local rate of
$0.25 per minute -- or CTC's rate of $0.44 per minute for the additional 50
miutes. There simply are no inated or other charges associated with
TracFone's decision to provide free hadsets to Lifeline customers. Lest there be
any doubt about whether TracFone's uses its Lifeline plan to force customers to
purchase additional service, no Lifeline customer is required to purchase
additional service and, in fact, very few do so. According to company data less
than 2 percent of Lifeline customers who choose the 250 minute plan purchase
any additional servce.
Fuentes, Di-Reb 17
TracFone Wireless, Inc.
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DOES TRACFONE EXPECT TO INCREASE THE LIFELIN
PARTICIPATION RATE IN IDAHO?
Yes. In several states in which TracFone has provided Lifeline service it has
increased the Lifeline paricipation rate by more than 100%. For example,
TracFone has provided Lifeline service in Florida, Virginia, and Tennessee since
late 2008 and in several other states since 2009. In October 2009, TracFone
analyzed the impact of the introduction of its Lifeline servce on enrollment in
several states. As of October 2009, TracFone had enrolled more than 2.5 millon
low-income households in its Lifeline program and had dramatically increased
Lifeline enrollment in the following states: Alabama - 162 percent; Florida - 300
percent; Georgia - 285 percent; Nort Carolina - 156 percent; Tennessee - 268
percent; and Virginia - 692 percent. Based on its history of sign:fcantly
increasing Lifeline enrollment from historically low levels in every state where it
offers Lifeline servce, TracFone is con:fdent that it will similarly increase
Lifeline enrollment among quali:fed low-income Idao households. Mr.
Trampush notes that the Universal Service Administrative Company ("USAC")
website shows that Idao's Lifeline paricipation rate for 2009 was between 20
and 50 percent (i.e., that in the "best case," more than one-half ofthe state's
Lifeline-eligible low-income households are not receiving Lifeline bene:fts) and
that the paricipation rate for several states in which TracFone offers Lifeline at
least one-half of Idaho's low-income households curently do not receive Lifeline
bene:fts does not indicate that TracFone will not materially increase the Lifeline
paricipation rate in Idaho as it has done in every other state where it offers
Fuentes, Di-Reb 18
TracFone Wireless, Inc.
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Lifeline service as an ETC. Firt, TracFone only commenced service in many
states in 2009, so any increase in paricipation rates would most likely occur in
2010. Second, the USAC data do not indicate where within the 20 to 50 percent
range lies Idaho's actu Lifeline enrollment. Nothing in his testimony provides
any basis for concluding that Idaho's curnt Lifeline paricipation rate is not
closer to twenty percent th to :fft percent of eligible households. Based on
TracFone's experience in other states, it anticipates that it will be able to
sign:fcantly increase the Lifeline paricipation rate in Idaho.
MR. TRAPUSH ASSERTS THT A LOW LIFELIN PARTICIPATION
RATE SIMLY MEANS THAT MANY PEOPLE ELIGIBLE FOR LIFELIN
AR DECIDING NOT TO TAK ADVANTAGE OF THE PROGRA. DO
YOU AGREE WITH THT ASSESSMENT?
No. TracFone believes, that a low Lifeline paricipation rate is the result of there
not being an attactive Lifeline service of which eligible people are aware.
TracFone has substantial experience in serving and marketing to low-income
customers and believes that it has developed a Lifeline product that will meet the
needs oflow-income Idahoans. TracFone has succeeded in enrollng large
numbers of quai:fed low-income households in Lifeline where other ETCs have
failed. It attbutes ths to two primar reasons. First, TracFone has aggressively
and creatively marketed its Lifeline service. It advertises in print and electronic
media likely to reach targeted low income households -- households who all too
often in the past were never made aware of the availabilty of Lifeline support
despite the requirement contaied at Section 214(e)(l)(B) of the federal
Fuentes, Di-Reb 19
TracFone Wireless, Inc.
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Communications Act and in the FCC's rues that ETCs advertise the availabilty
of Lifeline using media of general distrbution. Second, TracFone's Lifeline
service is free. Quali:fed customers receive telecommuncations service with no
:fnancial outlay whatsoever. To many low-income households, even the
discounted prices charged by ETCs after receipt of their Lifeline subsidies leave
the service priced beyond their means. Relatedly, there is no risk of a TracFone
Lifeline customer incurng biled charges for additional services which the
customer canot aford to pay and then having service terminated for non-
payment. These factors -- aggressive and creative marketing, and free service --
have enabled TracFone to increase sign:fcantly the number oflow-income
households enrolled in Lifeline programs.
DOES MR. TRAMPUSH ASSERT THAT THERE AR RISKS ASSOCIATED
WITH TRACFONE BEING DESIGNATED AS AN ETC?
Yes. Mr. Trampush states that because TracFone will only provide service where
its underlying carers have coverage and will not expand the existing networks,
there is a potential for creamskimming. As I testi:fed earlier, a creamskimming
analysis is unecessar and inappropriate when a wireless telecommunications
provider seeks designation as an ETC solely to provide Lifeline service. Mr.
Trampush also asserts that when a customer switches servce from an ILEC to
TracFone, that customer no longer contrbutes to the Universal Service Fund, and
therefore, there is an upward pressure on the fud. Mr. Trampush provides no
basis for this position and the statement is erroneous. TracFone contrbutes to the
Universal Service Fund based on its interstate telecommuncations servce
Fuentes, Di-Reb 20
TracFone Wireless, Inc.
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21 Q.
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revenues in the same maner as do all other providers of such service. It
completes and fies FCC Form 499 as required and remits the amounts invoiced to
it based on those reports.
DOES MR. TRUSH RASE ANY OTHER CONCERNS ABOUT
TRACFONE'S SERVICE?
Yes. Mr. Trampush asserts that TracFone has not demonstrated its abilty to stay
fuctional in an emergency and is not able to meet the CTIA Consumer Code for
wireless services. Neither of these accusations are correct. TracFone provides
servce in Idaho by resellng services of underlying wireless network carers,
including AT&T Mobilty, T-Mobile, and Verizon Wireless. Those network
operators have implemented state-of-the-ar network reliabilty standards and
TracFone and its customers bene:ft from their high stadards. Throughout its
more than twelve year of existence, TracFone's service reliabilty has compared
favorably with that of any facilties-based operator in the wieless
telecommuncations industr. TracFone curently provides wireless service
Idaho, and has done so for more than twelve years. Durng that period, it never
has failed to remai fuctional during an emergency. Moreover, the ETC
designting authorities in not less than 36 states have found that TracFone has
demonstrated its abilty to remain fuctional in an emergency, and so should this
Commssion.
WHT IS MR. TRAMPUSH'S CONCERN REGARING TRACFONE'S
COMPLIANCE WITH THE CTIA CONSUMR CODE?
Fuentes, Di-Reb 21
TracFone Wireless, Inc.
1 A.
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Mr. Trampush alleges that TracFone does not comply with the CTIA Consumer
Code because it does not offer a tral period or provide its customers a refud for
unused minutes. This assertion too is incorrect. The CTIA Consumer Code
provides the followig regarding tral periods: "When a customer initiates service
with a wireless carer, the customer wil be informed of and given a period of not
less than 14 days to tr out the service. The carer will not impose an early
termination fee if the customer cancels service withn this period, provided tht
the customer complies with applicable retu and/or exchange policies. Other
charges, including aiime usage, may stil apply." As I aleady testi:fed in my
direct testimony, customers may terminate their use of TracFone service at any
time without incurng any penalty or termination charge, therefore a 14 day tral
period is not necessar.
MR. TRAPUSH ASSERTS THAT THERE AR COMPLAITS ABOUT
TRACFONE'S CUSTOMER SERVICE ON THE INTERNT, INCLUDING
COMPLAINTS REGARING WAIT TIMES. WHAT IS TRACFONE'S
RESPONSE TO THESE ASSERTIONS?
Whle I am not aware of the speci:fcs of the complaits referenced in Mr.
Trampush's testimony, I do know that TracFone is highy commtted to providing
high quality customer service to all of its customers. TracFone has a process for
resolving complaits quickly and effectively. TracFone also continuously
monitors customer service and analyzes the quality of its customer service based
on several criteria and then makes changes to its customer service when
Fuentes, Di-Reb 22
TracFone Wireless, Inc.
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necessar. Finally, TracFone's wait ties compare favorably to the industr
average.
DO YOU AGREE WITH MR. TRAUSH THAT THE ONLY PUBLIC
INTEREST BENEFIT TO TRACFONE'S LIFELINE SERVICE IS THAT IT
WILL PROMOTE COMPETITION?
No. As I testi:fed earlier, TracFone's Lifeline service offers unque advantages
over the Lifeline plans offered by wireline and wireless ETCs in Idaho, including
those ETCs who have sponsored Mr. Trampush's testimony. Those advantages
include a more expansive, indeed, a nationwide, local calling area, importt
service featues at no additiona chage, and a free handset. No ETC curently
operating in Idao provides tht unque combintion of consumer bene:fts.
TracFone also anticipates that it will sign:fcantly increase the Lifeline
paricipation rate among low-income households in Idaho as it has done in every
other State where it offers Lifeline~ service as an ETC. Furhermore, there are no
risks associated with designting TracFone as an ETC. Whle TracFone's
entrance into the Lifeline service market will promote competition, that is not the
sole public interest bene:ft of its Lifeline service.
HOW WILL TRACFONE CERTIFY THE ELIGIBILITY OF LIFELIN
APPLICANTS IN IDAHO?
TracFone will certify the eligibilty ofits Lifeline in accordance with Idao law.
Pursuant to Section 56-903(1) of the Idaho Code, "the deparent of health and
welfare shall develop procedures for tag applications for assistance and for
determinig and certifyng program eligibilty." As noted on the ITSAP fact
Fuentes, Di-Reb 23
TracFone Wireless, Inc.
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sheet available on the Commission's website at
htt://ww.puc.idaho.gov/CONSUMER/TSAP.PDF, a person who is interested
in receiving Lifeline must apply at a Community Action Parership ("CAP")
of:fce or with an Idaho Deparent of Health and Welfare ("DHW") Regional
Offce. If the person is determined to be eligible, the person's information will be
forwarded to the person's chosen telephone company. Therefore, a CAP or
DHW, not TracFone, will verify eligibilty in Idaho. However, TracFone will
work with the CAPs and DHW to ensure that only eligible individuas are
accepted into the Lifeline program.
TRACFONE WAS RECENTLY AUDITED BY USAC. WHAT DID USAC
FIND?
USAC found that TracFone's Lifeline service, including the process it uses to
certify initial eligibilty and continued eligibilty for Lifeline service complied
with the FCC's rues.
WHT DO THE FCC RULES PROVIDE REGARING HOW ETCS MUST
CERTIFY THE INITIAL ELIGIBILITY OF LIFELINE APPLICANTS WHO
CLAIM THEIR ELIGIBILITY BASED ON PARTICIPATION IN A LOW-
INCOME PROGRA?
The FCC rues provide that such applicants must certfy under penalty of perjur
that they paricipate in a program that quai:fes them to receive Lifeline bene:fts.
As USAC found, TracFone complies with the FCC's rues concernng
certi:fcation of eligibilty. However, in Idao, and as permtted by the FCC's
Fuentes, Di-Reb 24
TracFone Wireless, Inc.
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rules, TracFone will comply with Idao's rules governng cert:fcation of
eligibilty.
IS THE FCC CONSIDERIG REVISING THE RULES GOVERNING THE
LIFELINE PROGRA?
Yes. As Mr. Trampush mentions, the FCC is concerned about waste, fraud and
abuse in the Lifeline program. One issue about which the FCC is paricularly
concerned is when an individua receives Lifeline service from more than one
ETC. This is known as "double dipping" "duplicate enrollment." As I explained
earlier, ETCs do not have access to ot1er ETCs' customers lists. Therefore, it is
diffcult, if not impossible, for any ETC to prevent duplicate enrollment. The
FCC has intiated a ruemakg proceedig to address ths issue, as well as other
issues related to the Lifeline program. The FCC also is actively considering
takng interim steps to prevent duplicate enrollment pending completion of the
FCC rulemaking proceeding. In recent weeks, TracFone has been an active
paricipant in meetings convened by the FCC to develop such an interim solution.
If such an interi solution is fmalized and adopted while ths proceeding is
pending, I will submit a supplement afdavit describing that solution and
attaching any FCC documents memorializing the solution.
WHILE THE FCC PROCEEDING IS PENDING, SHOULD THE
COMMISSION DEFER A DECISION IN THIS CASE?
No. Any new rues ultimately issued by the FCC in the rulemakg proceeding
will apply to all ETCs. In the meantime, TracFone, as well as all other ETCs, are
required to comply with the curent rues The FCC, fuly aware that carers are
Fuentes, Di-Reb 25
TracFone Wireless, Inc.
1
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7 Q.
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9 A.
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15 Q.
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19 A.
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23
continuing to request ETC designation at the FCC, as well as at state
commssions, has not required that any ETC proceedings be delayed or
suspended. Mr. Trampush's assertion that customers may be confused by
changes in the rules is unounded and provides no basis for delaying the curent
proceeding. Delaying the proceeding will only result in delaying the availabilty
ofTracFone's Lifeline service to eligible low-income Idahoans.
WHY HAS TRACFONE REFUSED TO PROVIDE INORMTION ABOUT
ITS COST STRUCTUR TO ITA AND CTC?
TracFone's costs and expenses are not relevant to any requirement for designation
as an ETC. So far as TracFone is aware, no other ETC has been required to
provide cost information as par of the ETC designation process in Idaho. In this
regard, I remind Mr. Trampush and others that Section 332(c) of the federal
Communcations Act prohibits states from reguating the rates of commercial
mobile radio service providers.
MR. TRAPUSH ASSERTS THAT THE COMMISSION SHOULD IMPOSE A
NUMBER OF CONDITIONS AN REPORTING REQUIREMENTS ON
TRACFONE IF IT IS.DESIGNATED AS AN ETC. WOULD TRACFONE
AGREE TO THOSE CONDITIONS?
Mr. Trampush proposes that TracFone should be requied to make a compliance
:fling for approval by the Commission. The :fling would include TracFone's
Lifeline rate plans, terms and conditions, proposed advertising languge, a
Lifeline application form for Idao, and a certi:fcation that TracFone will comply
with all applicable federal and state statutes and regulations. TracFone does not
Fuentes, Di-Reb 26
TracFone Wireless, Inc.
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19 Q.
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23
oppose these conditions, with two exceptions. First, Mr. Trampush proposes that
the advertsing languge should include inormation diecting customers to
contact the Commssion or an appropriate Idaho state agency for complaints
regarding any Lifeline service issue. The New Jersey Board of Public Utilities
("New Jersey Board") also required similar language in TracFone's advertising,
but has since asked TracFone to remove the reference to the New Jersey Board in
its advertising. According to the New Jersey Board Staf, they were receiving
numerous calls regarding varous Lifeline service issues that had no relation to
complaits, and that respondig to these inquies was straining that Board's
resources. TracFone has no objection to including such languge in its Idaho
advertising if the Commission deems it appropriate. However, TracFone cautions
the Commssion that the inclusion of language in advertising materials directing
customers to contact the Commssion may result in the Commission receiving
numerous calls and burdenig Commission resources. Second, TracFone clar:fes
that it would be willng to certify compliance with all applicable laws governing
state fees, once those laws are determined to be applicable to TracFone either in a
separate proceeding or though a :fnal determnation made by the appropriate
state agency.
WOULD TRACFONE AGREE TO THE REPORTING REQUIREMENTS
PROPOSED BY MR. TRAMPUSH?
Mr. Trampush proposes several reporting requirements, including that TracFone
fie any futue changes to its rates, terms and conditions, at least 10 days prior to
the effective date of the changes, provide information on its terms, rates, and
Fuentes, Di-Reb 27
TracFone Wireless, Inc.
1
2
3
4
5
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7
8
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10 Q.
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12 A.
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18 Q.
19 A.
20
21
22
conditions in the welcome packet sent to Lifeline customers, and post its rates,
terms, and conditions on its website. TracFone would agree to ths requirement.
Mr. Trampush also proposes tht TracFone apply a non-usage policy in Idaho
whereby TracFone would be required to deactivate a Lifeline customer who ha
no usage for 60 consecutive days. TracFone has a non-usage policy in place in all
states in which it offers Lifeline servce and will also follow that policy in Idao.
Incidentaly, the FCC has proposed in its Lifeline rulemakng proceeding that all
ETCs be required to implement a 60 day non-usage policy, based on TracFone's
curent non-usage policy.
ARE THERE ANY OTHER REPORTING REQUIRMENTS PROPOSED BY
MR. TRAMPUSH?
Mr. Trampush also states that TracFone should be required to provide quaerly
reports on the number of Lifeline customers enrolled each month in each of the
plans and the number of customers deactivated and the reason for the
deactivation. TracFone would not oppose this requirement. Although, like the
non-usage policy, the bene:fts of that proposed reporting requirement are such
that all ETCs should be subject to it.
DOES MR. TRAUSH PROPOSE ANY OTHER REQUIRMENTS?
Mr. Trampush asks that TracFone be requied to comply with Commssion Stas
requests for information. TracFone will comply with requests from the
Commssion Staf, but will seek appropriate protections for con:fdential
information. TracFone will also work with DHW and the CAPs to verify the
Fuentes, Di-Reb 28
TracFone Wireless, Inc.
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3 Q.
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6 A.
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14 A.
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20 Q.
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eligibilty of all Lifeline applicants and will advise the Commission of the
veri:fcation procedures agreed upon.
WOULD TRACFONE BE WILLING TO FILE WITH THE COMMISSION ITS
CUSTOMER RECORDS AN A REPORT ON CUSTOMER COMPLAINTS
ON AN ANAL BASIS?
TracFone would agree to fie customer records so long as they receive
confdential treatment. TracFone would need to work with Commission Staf to
agree upon a format and scope of the records to be fied. TracFone would also
agree to fie an anual report on customer complaints fied with TracFone, the
Commssion and the FCC.
WOULD TRACFONE BE WILING TO PROVIDE A COPY OF ITS
ANAL LIFELINE VERIFICATION SURVEY RESULTS THAT IT FILES
WITH USAC EACH YEAR?
Yes. Indeed, there is merit to many of Mr. Trapush's reporting requirement
proposals. Since that inormation would be invaluable to the Commission's
efforts to effectively monitor the performance of TracFone as an ETC as well as
the operation of the Lifeline program in Idao, I respectfuly suggest that those
reporting requirements be made applicable to all ETCs providing Lifeline service
in Idaho.
SHOULD THE COMMISSION BE ABLE TO REVOKE TRACFONE'S ETC
DESIGNATION IF TRCFONE FAILS TO COMPLY WITH ANY OF THE
CONDITIONS OR REPORTING REQUIREMENT PROPOSED BY MR.
TRAPUSH?
Fuentes, Di-Reb 29
TracFone Wireless, Inc.
1 A.TracFone understads that the Commission has the right to revoke an ETC
2 designation for violation of applicable legal requirements. However, TracFone,
3 like any other ETC, should provided with notice and aforded an opportty to
4 be heard and present evidence as to why its designation should not be revoked in
5 the event that the Commission determines that revocation may be necessar.
6 Q.IS THERE ANYTHING ELSE YOU WOULD LIKE TO ADD TO YOUR
7 TESTIMONY?
8 A.Based on my testimony above, I would like to reiterate that TracFone meets all
9 legal requirements for designation as an ETC and that designation of TracFone as
10 an ETC for the limited purose of providing Lifeline servce to low-income Idaho
11 households will serve the public interest. Accordingly, the Idaho Public Utilties
12 Commssion should unconditionally and promptly grant TracFone's ETC
13 Application so that TracFone may commence providing its SafeLink Wireless~
14 service to low-income Idaho households at the earliest possible time. TracFone
15 looks forward to soon bringing this important Congressionally-mandated
16 telecommunications bene:ft to low-income Idao households as it already is doing
17 in 33 other States.
18 Q.DOES THIS CONCLUDE YOUR REBUTTAL TESTIMONY?
19 A.Yes, it does.
Fuentes, Di-Reb 30
TracFone Wireless, Inc.
CERTIFICATE OF SERVICE
I hereby certify that on the ~ay of March, 2011, I caused to be sered, via the
methodes) indicated below, tre and correct copies of the foregoing docuent, upon:
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise,ID 83720-0074
j j ewel1(fuc. state.id. us
Neil Price, Esq.
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise,ID 83720-0074
N eil.Price(fpuc.idaho. gov
Molly O'Lear, Esq.
Richardson & O'Lear, PLLC
P.O. Box 7218
Boise, ID 83707
mollyßYrichardsonandolear.com
Cynthia A. Melilo, Esq.
Givens Pursley LLP
601 N. Banock Street
P.O. Box 2720
Boise, iD 83701
camßYgivenspursley.com
Hand Delivered ~
U.S. Mail ~u
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Email ~u
Hand Delivered
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Hand Delivered
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BY:~~ilJ
MCDEVIIT ILLER LLP
Exhibit No. 7
Case No. TFW-T-09-01
J. Fuentes, TracFone Wireless, Inc.
STATE OF MAINE
PUBLIC UTILITIES COMMISSION
Docket No. 2009-263
TRACFONE WIRELESS, INC.
Request for Designation as an Eligible
Telecommunications Carrier
February 9, 2010
ORDER GRANTING ETC
STATUS AND OPENING
SEPARATE INVESTIGATION
REISHUS, Chairman; VAFIADES and CASHMAN, Commissioners
I. SUMMARY
In this Order we grant the Petition for Waiver of TracFone Wireless, Inc.
(TracFone) and designate TracFone as an Eligible Telecommunications Carrier (ETC)
pursuant to Section 214(e)(2) of the Telecommunications Act of 1996 (TeIAct), 47
U.S.C. § 214(e)(2), and 47 C.F.R. § 54.201 of the Federal Communications
Commission's (FCC) Rules for the limited purpose of providing Lifeline service in the
state of Maine. Furthermore, we open an investigation pursuant to 35-A § 1303(2) into
TracFone's obligation to pay fees into the Maine Universal Service Fund (MUSF) and
the Maine Telecommunications Education Access Fund (MTEAF), and whether
TracFone is in compliance with its obligations to pay other applicable regulatory fees.
II. BACKGROUND
On August 5, 2009, TracFone filed an Application for designation as an ETC for
the limited purpose of providing Lifeline service in Maine.1 TracFone Wireless, Inc.,
Request for Designation as an Eligible Telecommunications Carrier, Docket No. 2009-
263, Application of TracFone Wireless, Inc. for Designation as an Eligible
Telecommunications Carrier in the State of Maine for the Limited Purpose of Offering
Lifeline Service to Qualified Households (Aug. 5, 2009) (Application). TracFone
submitted a revised application on October 8,2009 that specifically addressed the
requirements of Chapter 206 of the Commission's Rules. TracFone Wireless, Inc.,
Request for Designation as an Eligible Telecommunications Carrier, Docket No. 2009-
263, First Amendment to Application of TracFone Wireless, Inc. for Designation as an
Eligible Telecommunications Carrier (Oct. 8, 2009) (Amended Application). TracFone is
a reseller of commercial mobile radio service (CMRS) and has been operating in Maine
for more than ten years. TracFone does not own or operate any facilities in Maine or
elsewhere; rather it operates a "virtual network" that relies on obtaining service from
other licensed operators of wireless networks. In Maine, TracFone provides service
throughout the state wherever wireless service is available through its arrangements
with various service providers.2
1 TracFone operates its Lifeline service under the trade name SafeLink Wireless.
2 TracFone initially plans to offer Lifeline service only in areas served by AT&T
Mobilty and T -Mobile.
ORDER GRANTING ETC STATUS. .. . 2 .Docket No. 2009-263
On September 18, 2009 the Presiding Officer issued a Procedural Order
requiring that any preliminarr comments on TracFone's Revised Application be filed no
later than October 13, 2009. TracFone Wireless, Inc., Request for Designation as an
Eligible Telecommunications Carrier, Docket No. 2009-263, Procedural Order (Sept. 18,
2009). The September 18, 2009 Procedural Order also scheduled a technical
conference for October 16, 2009.
On October 8, 2009, along with its Amended Application, TracFone filed a
petition for a waiver of certain requirements of Chapters 206 and 294 of the
Commission's Rules. TracFone Wireless, Inc., Request for Designation as an Eligible
Telecommunications Carrier, Docket No. 2009-263, Petition for Waiver (Oct. 8, 2009).
In its Petition for Waiver, TracFone requested that the Commission waive (1) the
requirement in Chapter 206, § 3(C) for submission of a substantive plan of the
investments to be made with federal support and a description of how those
expenditures will benefit consumers; (2) the requirement in Chapter 206, § 3(E) that
wireless applicants provide a map showing existing and planned locations of cell sites;
(3) the requirement in Chapter 206, § 3(F) that it provide information demonstrating that
it has the abiliy to remain functional in emergency situations; and (4) the requirement in
Chapter 206, § 3(G) that it comply with Chapter 294 of the Commission's Rules insofar
as relates to the requirement in Chapter 294 § 6 that TracFone inform its Lifeline
customers of program information and guidelines by maiL.
On October 16, 2009 a technical conference was held in this matter. The
technical conference was attended by representatives of TracFone, the OPA, TAM,
Kennebec Valley Community Action Program (KVCAP), and Maine Community Action
Association (MCA).4 At the technical conference, the Presiding Officer made the
following Oral Data Requests of TracFone: (1) Explain the basis for TracFone's decision
to set the number of free minutes provided to its Lifeline customers in Maine at 66; (2)
explain how TracFone will, if at all, collect E-911 fees from Lifeline customers; and (3)
explain how Lifeline customers would be charged for calls that originate from a cell site
located in Canada.
On October 26, 2009, Commission Staff instructed TracFone to respond to a
series of written data requests relating to TracFone's policies regarding payment of fees
to the Maine Universal Service Fund (MUSF), the Maine Telecommunications
Education Access Fund (MTEAF), the federal Universal Service Fund (USF), and to
report its Maine intrastate revenue for the period from the 4th quarter of 2007 through
the 3rd quarter of 2009.5 TracFone Wireless, Inc., Request for Designation as an
3 The Commission received preliminary comments from the Office of the Public
Advocate (OPA) and the Telephone Association of Maine (TAM).
4 The OPA, KVCAP, and MCA each requested, and were granted, intervenor
status in this matter.
5 There were a total of five questions in Examinets Data Request No.1, each
with several sub-parts.
ORDER GRANTING ETC STATUS... .3.Docket No. 2009.263
Eligible Telecommunications Carrier, Docket No. 2009-263, Examiner's Data Request
NO.1 (Oct. 26, 2009). TracFone was required to respond to Examiner's Data Request
NO.1 by November 9,2009.
On October 28, 2009 TracFone responded by letter to the oral data requests
made at the October 16, 2009 technical conference. TracFone Wireless, Inc., Request
for Designation as an Eligible Telecommunications Carrier, Docket No. 2009-263,
Response to 3 Questions (Oct. 28, 2009). In response to Question 1, while not
providing details about how it arrived at the number of minutes to be provided to its
Lifeline customers, TracFone stated that it had revisited the number of free minutes to
be provided to Lifeline customers and increased the number to 68 from 66, and that
those minutes would roll over from month to month provided that customers remained
enrolled in the program. In response to Question 2 TracFone stated that, based on its
interpretation of Maine law, it would not be required to remit E-911 fees from its Lifeline
customers because, as Lifeline is a free service, there are no charges from which to
collect such fees. In response to Question 3, TracFone stated that it would not permit
Lifeline customers to originate calls from a Canadian cell site.
On November 9, 2009 TracFone responded to Questions 1, 2, 4, and 5 of
Examiner's Data Request NO.1 and filed a motion for a protective order regarding its
answer to Question 3. TracFone Wireless, Inc., Request for Designation as an Eligible
Telecommunications Carrier, Docket No. 2009-263, Response (Nov. 9, 2009). In
response to Questions 1 and 2, TracFone stated that under its interpretation of the
Commission's Rules, it was not required to pay into MUSF and MTEAF, respectively,
because as a pre-paid reseller it does not have any "billed" revenue. In response to
Question 3, TracFone stated that it regarded its Maine intrastate revenue figures as
competitively sensitive information, and refused to disclose the information in the
absence of a protective order.6 In response to Question 4, TracFone stated that it does
pay federal USF and, accordingly, has a means of distinguishing between interstate and
intrastate revenues. TracFone refused to answer Question 5 regarding whether it pays
USF or similar fees to any authorities in other states on the ground that the question
was irrelevant to whether TracFone should be designated as an ETC in Maine.
On January 11, 2010, the Presiding Offcer issued a Procedural Order asking for
comment on TracFone's responses to Questions 1 and 2 of Examiner's Data Request
NO.1 and whether and to what extent TracFone's failure to pay into MUSF and MTEAF
should factor into determining whether the Commission should grant TracFone's
request for ETC status. TracFone Wireless, Inc., Request for Designation as an Eligible
6 On November 25,2009 the Presiding Offcer granted TracFone's motion,
TracFone Wireless, Inc., Request for Designation as an Eligible Telecommunications
Carrier, Docket No. 2009-263, Protective Order (Nov. 25, 2009), and on December 4,
2009 TracFone filed its confidential answer to Question 3. TracFone Wireless, Inc.,
Request for Designation as an Eligible Telecommunications Carrier, Docket No. 2009-
263, Confidential Response to Examiner's Data Request No 1 (Dec. 4, 2009).
ORDER GRANTING ETC STATUS. .. . 4 .Docket No. 2009.263
Telecommunications Carrier, Docket No. 2009-263, Procedural Order (Jan. 11, 2010).
Intervenors and Interested Persons were given until February 1, 2010 to respond.
By February 1, 2010 the Commission had received comments from Maine
Governor John Baldacci, the Emmanuel Homeless Shelter, the OPA, Maine State
Representative Kenneth Fletcher, the AARP, Maine State Senator Barry Hobbins, the
Maine Association of Retirees, Maine State Representative Stacey Allen Fitts, Maine
State Representative Richard Blanchard, Maine Senate Majority Leader Philip Bartlett,
Maine House Majority Leader John Piotti, MCA, Maine State Senator John Nutting,
State Representative Jon Hinck, and KVCAP. The commenters were unanimous in
their belief that the Commission should treat TracFone's failure to pay MUSF and
MTEAF fees and its application for ETC status as two separate issues. All commenters
urged the Commission to approve TracFone's application as expeditiously as possible.
II. LEGAL STANDARDS
The TelAct provides for the continuing support of universal service goals by
making federal USF available to carriers which are designated as ETCs. Section
214(e)(2) of the TelAct gives state commissions the primary responsibility for
designating carriers as ETCs. See also Federal-State Joint Board on Universal Service;
Promoting Deployment and Subscribership in Unserved and underserved Areas,
Including Tribal and Insular Areas, CC Docket No. 96-45, Twelfth Report and Order,
Memorandum Opinion and Order, and Further Notice of Rulemaking, 15 FCC Red
12208,12255,11 93 (2000) (Twelfth Report and Order). To be designated as an ETC, a
carrier must offer all nine of the services supported by the universal service fund to all
customers within the ETC's service area and advertise the availabilty of those services
throughout the service area?
In furtherance of its role in designating ETCs, Chapter 206, Section 3 of the
Commission's Rules require that ETC applicants provide the following information: (1) a
description of the services for which ETC designation is sought and a statement that the
provider wil offer the services for which support is sought throughout that service area;
(2) a statement that the provider will provide service on a timely basis to customers
within the service area; (3) a plan of the investments to be made with federal support
and how those investments wil benefit customers; (4) a statement that the provider wil
advertise, throughout its service area, the availability of the services for which support is
sought; (5) maps depicting the existing and planned locations of cell sites; (6)
7 The FCC has defined the services that are to be supported by the federal
universal service support mechanisms to include: (1) voice grade access to the public
switched telephone network (PSTN); (2) local usage; (3) Dual Tone Multifrequency
(DTMF) signaling or its functional equivalent; (4) single-party service or its functional
equivalent; (5) access to emergency services, including 911 and enhanced 911; (6)
access to operator services; (7) access to interexchange services; (8) access to
directory assistance; and (9) toll limitation for qualifying low-income customers. 47
C.F.R. § 54.101(a).
ORDER GRANTING ETC STATUS. .. . 5 .Docket No. 2009.263
information demonstrating the provider's abiliy to remain functional in an emergency;
(7) a certification that the provider will comply with Chapters 290 and 294 of the
Commission's Rules; (8) that the provider offers a local usage plan comparable to the
one offered by the ILEC in the proposes service area; (9) a statement that the provider
will provide equal access to long distance carriers; and (10) any additional information
that the Commission may require.
The Commission will approve an application for designation as an ETC if the
petition meets the requirements of Chapter 206, the carrier's designation as an ETC
advances some or all of the purposes of universal service in 47 U.S.C. § 254, and the
ETC designation is in the public interest. After ETC status is granted, the carrier must
file an annual report in accordance with Chapter 206, § 6 of the Commission's Rules.
II. DISCUSSION
A. INITIAL APPLICATION
In its Application, TracFone describes in detail how it meets the federal
requirements for designation as an ETC in Maine. As an initial matter, TracFone
recognizes that federal law requires ETCs to offer services, at least in part, over their
own faciliies, and that the FCC's Rules prohibit state commissions from designating as
an ETC a carrier that offers exclusively resale services. However, TracFone states that
in 2005 the FCC granted TracFone ''forbearance from the facilties requirement for ETC
designation for Lifeline support only." See Petition of TracFone Wireless, Inc. for
Forbearance from 47 U.S.C. § 214(e)(1)(A) and 47 C.F.R. § 54.201(i), 20 FCC Rcd
15095 (Sept. 8, 2005) (TracFone Forbearance Order) at 1; Application at 4-5. Based on
this order of forbearance, TracFone asserts that this Commission has jurisdiction to
designate TracFone as an ETC under 47 U.S.C § 214(e)(2).
Next, TracFone's Application describes in detail how TracFone provides,
or will provide, all of the functionalities required by FCC Rules.
1. TracFone states that it will provide "voice grade" access to the PSTN,
meaning that Lifeline customers will have the abiliy to make and receive
telephone calls at frequencies between 500 and 4,000 hertz.
2. TracFone states that Lifeline customers wil have the ability to make and
receive local calls wherever TracFone provides service, and that local usage
is included in its proposed callng plan.
3. TracFone states that all telephone handsets that it provides to its Lifeline
customers are DTMF capable.
ORDER GRANTING ETC STATUS. .. - 6 -Docket No. 2009-263
4. TracFone states that it provides all Lifeline customers with single-party
access for the duration of every call; indeed, TracFone does not provide
"party line" service to any of its customers.
5. TracFone states that it will fully comply with FCC requirement regarding E-
911, and "has implemented and will continue to implement (E-911) services. .
. when such services are made available by the carriers from whom TracFone
purchases services."
6. TracFone states that Lifeline customers wil have access to operator services.
7. TracFone states that Lifeline customers will have access to interexchange
services to complete toll calls, and that there is no additional charge for
Lifeline customers for long distance callng.
8. TracFone states that Lifeline customers will have access to directory
assistance provided by its vendors.
9. TracFone states that there is no need for it to offer toll-limitation to Lifeline
customers because, as TracFone's service is entirely pre-paid, it is not
possible for a Lifeline customer to incur extra charges (or any charges for that
matter) for toll calling.
Further, TracFone's Application states that TracFone will comply with all
other federal requirements including providing service to Lifeline customers in its service
area within a reasonable period of time, compliance with the service quality standards
set by the Wireless Association Consumer Code for Wireless, advertising the availabilty
of its Lifeline service within its service area, and compliance with federal certification of
eligibility and verification of continued eligibility requirements.
Additionally, TracFone contends that certification of TracFone as an ETC
in Maine would serve the public interest. TracFone points to what it believes are
important benefis of its service to low-income Mainers. Among those benefits is the
advantage of having a mobile phone as opposed to a land line phone with regard to
persons seeking employment. TracFone argues that a mobile phone wil allow
prospective employees to respond immediately to potential employers and, once hires,
allow people to stay in contact with their employers better manage their schedules.
Perhaps most importantly, TracFone emphasizes that fact that its Lifeline service wil be
completely free to low-income customers. TracFone will provide Maine Lifeline
customers with a free handset and 68 minutes of airtime each month.8
8 Should Lifeline customers desire to purchase additional minutes beyond the
allotment of free minutes, they may do so at $0.20 per minute.
ORDER GRANTING ETC STATUS. .. . 7 -Docket No. 2009.263
8. AMENDED APPLICATION
As described in Part II above, under the Commission's Rules, ETC
Applicants are required to provide the Commission with certain information regarding
their plans for providing Lifeline service. TracFone, in its Amended Application, and in
accordance with the Commission's Rules, states the following:
1 . That its service area wil initially consist of all areas in Maine served by
AT&T Mobilty and T-Mobile. Additionally, TracFone plans to expand its
service are to include areas served by Verizon Wireless.9
2. That it is not required to comply with the requirement in Section 3(A)(2) of
Chapter 206 that it provide services, at least in part, over its own
faciliies. 10
3. That it will provide Lifeline service to all qualified customers on a timely
basis, with the only anticipated delay after ETC designation being the time
needed to implement procedures and internal systems to offer the Lifeline
program.11
4. That it should be exempt from the requirements in Section 3(C) that it file
a plan of investments to be made with initial federal support because it
contends that this requirement is intended to apply only "to carriers that
seek high-cost support to fund investments to their network," and, as a
pure reseller, TracFone does not own any networks or facilties.12
5. That it wil "aggressively advertise" its Lifeline service in a manner targeted
to reach qualified customers, including print and broadcast media.13
9 TracFone states that it anticipates expanding Lifeline service to Verizon
Wireless' service area in the second quarter of 2010.
10 TracFone relies on the TracFone Forbearance Order and 47 U.S.C. § 160(e)
as justification for its contention that it does not have to comply with Section 3(A)(2).
Title 47 U.S.C. § 160(e) states, in relevant part, that "a state commission may not
continue to apply or enforce any provision of (47 U.S.C. §§ 151-615bJ that the (FCC)
has determined to forbear from applying."
11 TracFone states that Section 3(8)(2) is not applicable because, as a pure
reseller, TracFone does not have the ability to make modifications to the facilties of its
underlying carriers.
12 TracFone also states that, with regard to the Lifeline support it will receive,
"one hundred percent of the support wil be flowed through to Lifeline customers in the
form of free usage."
13 TracFone also states that it will not be providing service supported by high-cost
universal support mechanisms nor wil it be providing Link-Up service, and, accordingly,
wil not be advertising such offerings.
ORDER GRANTING ETC STATUS. .. - 8 .Docket No. 2009-263
6. That it has requested, but not been granted access to the comprehensive
coverage maps of its underlying carriers as would comply with Section
3(E) of Chapter 206. Accordingly, TracFone has asked the Commission
to waive this requirement.
7. That, because TracFone is a pure reseller, and does not operate any
facilities, the requirement in Section 3(F) of Chapter 206 that it provide
information regarding its ability to remain operational in an emergency
does not apply.14
8. That it wil comply with Chapter 290 and the applicable portions of Chapter
294 of the Commission's Rules.15 Further, TracFone certifies that it wil
comply with the consumer standards set forth in CIT A - The Wireless
Association (CIT A) Consumer Code for Wireless Service and in the
Commission's Rules to the extent those standards apply to resellers of
prepaid services.
9. That it wil provide a local usage plan to all Lifeline customers that it
believes is comparable with that of Incumbent Local Exchange Carriers
(ILEC).16
10. That it certifies that it may be required to provide equal access to long
distance carriers in the event that no other ETC is providing equal access
within the service area.
14 TracFone states that it relies on the "state-of-the-art network reliabilty
standards" of its underlying carriers.
15 Section 3(G)(1) requires that applicants comply with Chapters 290 and 294 of
the Commission's Rules. Section 6 of Chapter 294 requires Lifeline carriers to provide
written notification the Lifeline program and the program's guidelines to each of their
customers at least once per year by maiL. TracFone has applied for a waiver of this
requirement based on the fact that, as a pre-paid wireless reseller, TracFone does not
send bils to its customers nor does it communicate with them by maiL.
16 TracFone states that under relevant FCC orders, local calling plans do not
have to be identical to those of an ILEC, as long as it is comparable. See Federal-State
Joint Board on Universal Service, Report and Order, 20 FCC Rcd 6371, 6385, ~ 33
(2005); In the Matter of Federal-State Joint Board on Universal Service: TracFone
Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carrier in the
State of New York et al., 23 FCC Red 6206 (2008) (TracFone ETC Order).
ORDER GRANTING ETC STATUS. .. . 9 .Docket No. 2009.263
iv. DECISION
A. PETITION FOR WAIVER
TracFone states that we should waive the provisions of Chapter 206, §§
3(C), (E), and (F) and Chapter 294, § 6 of the Commission's Rules because these
provisions pertain only to facilities-based wireless carriers, and it is unable to comply
based on its inability to comply with the rules as a result of its status as a non facilties-
based reseller of wireless services.
We agree that the basic purpose of Chapter 206 (Le., ensuring that Maine
consumers are provided with access to services funded through federal USF support)
would not be significantly advanced by applying requirements to a non facilities-based
carrier like TracFone which seeks ETC designation solely for the purpose of offering
resold services for Lifeline customers, as opposed to one that seeks USF funds to
accomplish infrastructure buildout goals. Indeed, in this instance, denying TracFone's
application for ETC status based on its inability to comply with the specific rules at issue
here would not be in the best interest of Maine's consumers. Further when we balance
the interests involved in considering such a waiver, we find that the value of the service
that TracFone desires to provide, combined with the limited nature of the waiver
TracFone seeks, outweighs the Commission's otherwise significant interest in fully
enforcing not just the letter, but also the spirit and intent of its Rules.
Accordingly, we grant TracFone's Petition for ,Waiver, and waive the
provisions of Chapter 206, §§ 3(C), (E), and (F) and Chapter 294, § 6 of the
Commission's Rules as described in its Petition, for the limited purpose of granting
TracFone ETC status to enable it to provide Lifeline service in Maine.
B. ETC DESIGNATION
Although we are troubled by TracFone's apparent failure to pay fees for
MUSF and MTEAF, we agree with the unanimous sentiment of the commenters to this
proceeding that the issue of whether TracFone should have ETC status for the purpose
of providing Lifeline service to Maine's consumers should be separate from the issue of
TracFone's failure to pay into MUSF and MTEAF.
Accordingly, we find that TracFone's application for designation as an
ETC for the limited purpose of providing Lifeline service meets the requirements of
Chapter 206 of the Commission's Rules, wil advance some or all of the purposes of
universal service found in 47 U.S.C. § 254, and the designation is in the public interest.
Accordingly, we grant TracFone's application.
ORDER GRANTING ETC STATUS. .. . 10 .Docket No. 2009.263
C. INVESTIGATION INTO COMPLIANCE WITH REGULATORY FEE
OBLIGATIONS
The designation of TracFone as an ETC for the purpose of providing
Lifeline service does not absolve TracFone of any obligations it may have to abide by
the Commission's Rules regarding contributions to MUSF, MTEAF and payment of
other regulatory fees. Accordingly, we open an investigation in a separate docket into
whether TracFone is required to contribute to MUSF and MTEAF, and whether
TracFone is in compliance with its obligations to pay other applicable regulatory fees.
V. CONCLUSION
We grant TracFone's Petition for Waiver designate it as an ETC for the limited
purpose of providing Lifeline service in the state of Maine. Additionally, we open an
investigation into whether TracFone is required to contribute to MUSF and MTEAF, and
whether TracFone is in compliance with its obligations to pay other applicable regulatory
fees.
In light of the foregoing it is,
ORDERED
1. that the Petition for Waiver submitted on October 8, 2009 by TracFone
Wireless, Inc. requesting waiver of Chapter 206, §§ 3(C), (E) and (F) and
Chapter 294, § 6 of the Commission's Rules is GRANTED for the limited
purpose of TracFone's designation as an ETC to provide Lifeline service in
Maine;
2. that the Application of TracFone Wireless, Inc. for Designation as an Eligible
Telecommunications Carrier in the State of Maine for the Limited Purpose of
Offering Lifeline Service to Qualified Households submitted on August 5,
2009 as amended by the First Amendment to Application of TracFone
Wireless, Inc. for Designation as an Eligible Telecommunications Carrier
submitted on October 8, 2009 by TracFone Wireless, Inc. is APPROVED;
3. that TracFone Wireless, Inc is DESIGNATED as an Eligible
Telecommunications Carrier pursuant to 47 U.S.C. § 214(e)(2), 47 C.F.R. §
54.201, and 65-407 CMR 206 for the limited purpose of providing Lifeline
service in the state of Maine;
4. that, pursuant to 35-A M.R.S.A. § 1303(2), an INVESTIGATION be opened,
in Docket No. 2010-47, into whether TracFone is required to contribute to the
Maine Universal Servce Fund and the Maine Telecommunications Education
Access Fund, and whether TracFone is in compliance with its obligations to
pay other applicable regulatory fees.
ORDER GRANTING ETC STATUS. .. . 11 .Docket No. 2009-263
Dated at Hallowell, Maine, this 9th day of February, 2010.
BY ORDER OF THE COMMISSION
Karen Geraghty
Administrative Director
COMMISSIONERS VOTING FOR:Reishus
Vafiades
Cashman
ORDER GRANTING ETC STATUS. .. . 12 .Docket No. 2009.263
NOTICE OF RIGHTS TO REVIEW OR APPEAL
5 M.R.S.A. § 9061 requires the Public Utiliies Commission to give each party to
an adjudicatory proceeding written notice of the party's rights to review or appeal of its
decision made at the conclusion of the adjudicatory proceeding. The methods of review
or appeal of PUC decisions at the conclusion of an adjudicatory proceeding are as
follows:
1. Reconsideration of the Commission's Order may be requested under
Section 1004 of the Commission's Rules of Practice and Procedure (65-407
C.M.R.11 0) within 20 days of the date of the Order by filing a petition with the
Commission stating the grounds upon which reconsideration is sought.
2. Appeal of a final decision of the Commission may be taken to the Law
Court by filing, within 21 days of the date of the Order, a Notice of Appeal with
the Administrative Director of the Commission, pursuant to 35-A M.R.S.A. §
1320( 1 )-(4) and the Maine Rules of Appellate Procedure.
3. Additional court review of constitutional issues or issues involving the
justness or reasonableness of rates may be had by the filing of an appeal with
the Law Court, pursuant to 35-A M.R.S.A. § 1320(5).
Note: The attachment of this Notice to a document does not indicate the Commission's
view that the particular document may be subject to review or appeaL. Similarly,
the failure of the Commission to attach a copy of this Notice to a document does
not indicate the Commission's view that the document is not subject to review or
appeaL.
Exhibit No. 8
Case No. TFW-T-09-01
J. Fuentes, TracFone Wireless, Inc.
STATE OF MAINE
PUBLIC UTILITIES COMMISSION
Docket No. 2010-47
February 11,2010
TRACFONE WIRELESS CORPORATION
Notice of Investigation for failure to Make
Required Payments to the Maine Universal
Service and the Maine
Telecommunications Education Access
Funds
NOTICE OF INVESTIGATION;
OPPORTUNITY TO
PARTICIPATE; OPPORTUNITY
FOR COMMENT
I. SUMMARY
This Notice of Investigation provides notice of the investigation opened by the
Commission in its Order in Docket No. 2009-263 into whether TracFone Wireless, Inc.
(TracFone) is required under Commission Rules to contribute to the Maine Universal
Service Fund (MUSF) and the Maine Telecommunications Education Access Fund
(MTEAF). This investigation will take place in the above-captioned docket.
II. BACKGROUND
In the course of processing TracFone's request to be designated as an Eligible
Telecommunications Carrier (ETC), the Commission became aware that TracFone has
not filed reports with, or made payment to, the MUSF and MTEAF. See TracFone
Wireless, Inc., Request for Designation as an Eligible Telecommunications Carrier,
Docket No. 2009-263 (ETC Proceeding); Order Granting ETC Status and Opening
Separate Investigation (Feb. 9, 2010) (ETC Order).
Pursuant to 35-A M.R.S.A. § 7104, the Commission may require "providers of
intrastate telecommunications services to contribute to a state universal service fund to
support programs consistent with the goals of applicable provisions of this Title and the
federal Telecommunications Act of 1996." 35-A M.R.S.A. § 7104(3). Section 7104(3)
defines "providers of intrastate telecommunications services" to "include providers of
radio paging service and mobile telecommunications services" (emphasis added). Id.
The statute requires the Commission to adopt rules to implement "this section."
The MUSF is governed by Chapter 288 of the Commission's Rules. The purpose
of the MUSF is to ensure that telecommunications services are available to consumers
throughout Maine at affordable rates that are comparable to those available in urban
areas, by providing support for high cost rural service. Chapter 288 states that "(a)1I
interexchange carriers, Local Exchange Carriers (LECs), mobile telecommunications
carriers and radio paging providers that provide intrastate telecommunications in Maine
must contribute to the Maine Universal Service Fund if the carrier had revenues of
$12,500 or more during the most recently completed quarter" (emphasis added). It
further states that "(a) carrier that must contribute to the Fund shall report the amount of
its billed revenue and its uncollectible factor quarterly on forms provided by the Fund
Administrator."
Notice of Investigation. . .- 2-Docket No. 2010-47
The MTEAF is governed by 35-A M.R.S.A. § 7104-8(2) and Chapter 285 of the
Commission's Rules. MTEAF funds are used to provide discounts to qualifying schools
and libraries to assist them in paying the costs of acquiring and using advanced
telecommunications technologies. The statute states that the Commission shall "require
all telecommunications carriers offering telecommunications services in the State ... to
contribute to the fund" (emphasis added). The Rule defines a "Contributing
Telecommunications Carrier" as "any telecommunications carrier that had intrastate
retail revenues for telecommunications services in Maine of $12,500 or more during the
most recently completed quarter, including all interexchange carriers (IXCs), local
exchange carriers (LECs), (and) mobile telecommunications carriers" (emphasis added).
Such carriers are also required to make quarterly reports to MTEAF containing the
amount of intrastate revenue generated in Maine. Chapter 285, §§ 1 (A), 2(A).
According to the records of the MUSF and MTEAF Administrator and of this
Commission, TracFone has never made any payments to the MUSF or the MTEAF and
has not filed any quarterly reports, despite repeated delinquency notices from the
MUSF-MTEAF Administrator advising TracFone of its obligations.
Pursuant to TracFone's request, the Commission recently designated TracFone
an ETC for the limited purpose of providing Lifeline service in the State of Maine, an
endeavor it will accomplish through subsidization obtained from the federal universal
service fund. See ETC Order. On October 26,2009, in the ETC proceeding, the
Presiding Offcer issued a Data Request that asked TracFone why it had failed to make
any payments or filngs pursuant to Chapters 285 and 288. Docket No. 2009-263,
Examiner's Data Request NO.1 (Oct. 26, 2009) at 2. On November 9, 2009, TracFone
responded:
TracFone, as a prepaid wireless carrier, does not bill its
customers for services. Therefore, TracFone is not required
by Chapter 288 to contribute to the MUSF. Section 4(C)
further provides that "(a) carrier that must contribute to the
Fund shall report the amount of its biled revenue and its
uncollectible factor quarterly on forms provided by the Fund
Administrator. . . . TracFone is not required to contribute to
the MUSF, and as such, is not subject to the MUSF reporting
requirements.
Docket No. 2009-263, Response to Examiner's Data Request NO.1 (Nov. 9, 2009) at 1-
2 (emphasis added by TracFone).
TracFone provided essentially the same response about its failure to make
payments or reports to the MTEAF.
On January 11, 2010, the Presiding Officer in the ETC Proceeding issued a
Procedural Order asking for comment on TracFone's above responses, and whether the
Notice of Investigation. . ..3-Docket No. 2010.47
Commission should consider TracFone's failure to pay regulatory fees as a factor in its
decision regarding the granting of ETC status. The Commission received several
comments from advocacy groups, state legislators, and the Governor of Maine. The
commenters were unanimous in their view that the issues of ETC status and regulatory
fee compliance should be treated separately.
While the issues outlined above may not be connected to the question of whether
TracFone should be allowed to provide Lifeline service in Maine, they do nonetheless
raise important questions regarding fundamental fairness between TracFone and its
competitors and TracFone's willngness to comply with Maine's regulatory framework.
II. NOTICE OF INVESTIGATION
In the Order dated February 9, 2010 in Docket No. 2009-263, the Commission
initiated an investigation pursuant to 35-A M.R.S.A. § 1303(2) into the following issues:
1. Whether TracFone is required under Commission Rules to contribute to
MUSF;
2. Whether TracFone is required under Commission Rules to contribute to
MTEAF; and
3. Whether TracFone is currently in compliance with its obligations to pay other
regulatory fees and contribute to other regulatory funds.
This Notice of Investigation opens the above captioned docket for the purpose of
conducting that investigation.
IV. OPPORTUNITY TO PARTICIPATE1
As the entity most directly affected by this Investigation, TracFone is hereby
made a party to this proceeding. Any other person or entity who wishes to participate in
this proceeding as a party must file a Petition to Intervene with the Commission's
Administrative Director, Maine Public Utilities Commission, State House Station 18,
Augusta, Maine 04333 by Friday, February 26,2010. Copies of the petition should
also be sent to:
Mitchell F. Brecher
Greenberg Traurig, LLP
2101 L Street, NW
Suite 1000
Washington, DC 20037
brecherm~gtlaw.com
Debra McGuire Mercer
Greenberg Traurig, LLP
2101 L Street, NW
Suite 1000
Washington, DC 20037
mercerdm~gtlaw.com
1 This Notice of Investigation was sent to the members of the service lists for
Docket Nos. 2009-40 and 2009-263, as well as representatives of FairPoint and U.S.
Cellular.
Notice of Investigation . . .- 4-Docket No. 2010-47
Petitions to Intervene must be in writing and must state the name and the docket
number of this proceeding and the manner in which you are affected by the proceeding.
Please include the name of the Intervenor, the address, phone and fax numbers, and an
e-mail address. All Petitions to Intervene must also include a short and plain
statement of nature and extent of the participation sought and a statement of the
nature of the evidence and argument that is intended to be presented. Pursuant to
Commission Rules, the Hearing Examiner may require consolidation of intervenors for
purposes of discovery, presentation of evidence, and argument.
Persons interested in only receiving copies of the Commission's orders and
notices of public hearings may request to be added to the Commission's mailng list as
an Interested Person. All such requests should be directed to the Commission's
Administrative Director, Maine Public Utilties Commission, State House Station 18,
Augusta, Maine 04333. Please include the name and address of the Interested Person
as well as an e-mail address, if available.
v. OPPORTUNITY TO COMMENT
The Commission provides an opportunity for parties that have filed Petitions to
Intervene in this matter to file comments in response to TracFone's argument that it is
not required to pay MUSF and MTEAF fees on any of the services that it resells in
Maine or file reports regarding the same, notwithstanding the language (quoted above)
of Chapter 288, § 4(C) and Chapter 285, § 1 (A). TracFone may also file comments in
support of its position.
All comments must be filed with the Commission, in Docket No. 2010-47, no later
than Wednesday, March 10,2010.
Dated at Hallowell, Maine, this 11 th day of February 2010
Jordan McColman
Hearing Examiner
Exhibit No. 9
Case No. TFW-T-09-01
J. Fuentes, TracFone Wireless, Inc.
STATE OF MAINE
PUBLIC UTILITIES COMMISSION
Docket No. 2010-340
October 26, 2010
MAINE PUBLIC UTILITIES COMMISSION
Amendments to Chapter 285 and 288 of
the Commission's Rules
NOTICE OF RULEMAKING
CASHMAN, Chairman; VAFIADES and LITTELL, Commissioners
I. SUMMARY
By this notice we initiate a rulemaking in Docket No. 2010-340 to amend
Chapters 285 and 288 of the Commission's Rules (Chapter 285 or Chapter 288) to
clarify that all telecommunications carriers are subject to the same required
contributions to the Maine Telecommunications Education Access Fund (MTEAF) and
Maine Universal Service Fund (MUSF). We also conclude our investigation in Docket
No. 2010-47.
II. BACKGROUND
On February 9, 2010, the Commission issued its Order in Docket No. 2009-263
designating TracFone Wireless, Inc., (TracFone)1 as an Eligible Telecommunications
Carrier (ETC) for the limited purpose of providing lifeline service to low-income
customers in Maine. During the course of processing TracFone's ETC application, the
Commission became aware that TracFone had not filed reports with, or made payments
to, the MUSF and MTEAF.
During the proceeding in Docket No. 2009-263, the Presiding Officer issued a
Data Request that asked TracFone why it had failed to make any MTEAF or MUSF
payments or filings pursuant to Chapters 285 and 288. TracFone responded:
TracFone, as a prepaid wireless carrier, does not bill its
customers for services. Therefore, TracFone is not required
by Chapter 288 to contribute to the MUSF. Section 4(C)
further provides that "(aJ carrier that must contribute to the
Fund shall report the amount of its biled revenue and its
1 TracFone is a provider of pre-paid cellular telephone handsets and a reseller of
other carriers' cellular telephone service for use on the handsets it sells. TracFone
typically sells its handsets through retail outlets such as Wal-Mart, Target, and
convenience stores, but does sell some handsets directly to the public via its website.
TracFone handsets typically come pre-loaded with a specific amount of minutes of
service, and additional minutes can be purchased at retail outlets, from TracFone's
website, or from the handsets themselves.
Notice of Rulemaking .2.Docket No. 2010.340
uncollectible factor quarterly on forms provided by the Fund
Administrator. . . . TracFone is not required to contribute to
the MUSF, and as such, is not subject to the MUSF reporting
requirements.
TracFone provided essentially the same response about its failure to make
payments or reports to the MTEAF.
Essentially, TracFone's argument was that Chapters 285 and 288 base the
contributions that carriers must make on a carrier's "intrastate retail revenue."
TracFone's argument rests primarily on the language of the reporting requirement in
Chapter 288, Section 4(C) and Chapter 285, Section 2(A). The purpose of the "billed-
less-uncollectible" reporting requirement is to ensure that carriers will be assessed on
the basis of their actual received intrastate revenues. The uncollectible portion of the
reporting requirement has no applicability to prepaid service. Chapter 288, Section 4(C)
also states that "assessments apply to all intrastate retail revenues derived from
telecommunications services provided in Maine." Chapter 285, Section 2(A) contains
similar language. Nevertheless, Chapters 285 and 288 define "intrastate retail revenue"
as
revenue that a carrier bils for intrastate telecommunications
services sold to end-user customers for use by those
customers, less the carrier's factor for uncollectibles.
Intrastate retail revenue does not include revenue received
from sales of services to other carriers for resale by those
carriers; revenue from access services sold to other carriers;
interconnection revenue received from other carriers,
including from the sale of unbundled network elements; and
revenue derived from surcharges for the MUSF, MTEAF,
911 and similar funding requirements.
Chapter 285, § 1 (8); Chapter 288, § 2(G). Thus, TracFone argued, because "intrastate
retail revenue" is based on revenue that a carrier "bills," and TracFone, as a pre-paid
wireless carrier, does not "bill" its customers, TracFone is not subject to the contribution
requirements of Chapters 285 and 288.
In our February 9, 2010 Order granting ETC status to TracFone, we also ordered
the initiation of an investigation into TracFone's claim that it is exempt from the
contribution requirements of Chapter 285 and 288. The investigation was assigned
Docket No. 2010-47, and the Hearing Examiner issued a Notice of Investigation on
February 11, 2010.
The Telephone Association of Maine (TAM) and the Maine Office of the Public
Advocate (OPA) intervened in the proceeding and submitted written comments on
TracFone's exemption argument. A Conference of Counsel was held on May 11, 2010
with Commission Staff and representatives from TracFone, TAM, and the OPA.
Notice of Rulemaking - 3-Docket No. 2010-340
TAM and the OPA both argued, in their comments and at the Conference of
Counsel, that TracFone's argument was merely semantic, and that the clear intention of
both the Statutes and the Rules is that all telecommunications carriers in Maine with
intrastate retail revenue, regardless of the means of collecting that revenue, are subject
to Chapters 285 and 288 and, accordingly, are required to contribute to MTEAF and
MUSF. TAM and the OPA pointed to the statutes underlying the rule as support for
their position. The statutes make no mention ofthe method of collection of intrastate
retail revenue, other than to require explicit identification on customer bils of
contributions by the carrier or any surcharge imposed on customers. See 35-A
M.R.S.A. §§ 7104 and 7104-8. Furthermore, neither Section 7104 nor 7104-8 contain
any suggestion that revenues subject to assessment should be limited to "billed"
revenues.2
II. CONCLUSION OF INVESTIGATION IN 2010-47
During the course of the investigation, it became clear that the issue of non-
payment of MTEAF and MUSF contributions was likely not limited to TracFone, but that
most, if not all, pre-paid wireless carriers operating in Maine could use TracFone's
argument to avoid making MUSF and MTEAF contributions. It also became clear that,
should our investigation result in a finding that TracFone is subject to Chapters 285 and
288, we would likely proceed to initiate similar investigations regarding other pre-paid
telecommunications carriers. Ultimately, it became apparent that the most effcient
method of addressing the issue of whether or not pre-paid telecommunications
providers must pay into MTEAF and MUSF was to propose amendments to Chapters
285 and 288 to expressly include pre-paid intrastate revenues as subject to the
reporting and assessment requirements of the Rules, whether or not a carrier renders a
"bilL." During such a rulemaking proceeding, TracFone and any other pre-paid
telecommunications carriers operating in Maine would have an opportunity to fully
present their views on the proposals contained in this Notice of Rulemaking.
Accordingly, we close our investigation in Docket No. 2010-47 and initiate a
separate rulemaking proceeding in this docket to consider amendments to Chapters
285 and 288 regarding pre-paid telecommunications carriers.
2 The only reference in Title 35-A M.R.S.A § 7104 (MUSF) to bils is the
requirement in subsection 3(E) stating that the Commission must "require explicit
identification on customer bills of contributions to any state universal service fund
established pursuant to this section," a requirement set forth in Chapter 288, § 5(A).
Section 7104-8 (MTEAF) requires only that the Commission "require explicit
identification on customer bills of any charge imposed under this section. That
requirement is contained in Chapter 285, § 3(C).
Notice of Rulemaking .4.Docket No. 2010.340
iv. LEGAL AUTHORITY
A. MUSF
Title 35-A M.R.S.A. § 7104(1) mandates that this Commission "require
telephone utilities to participate in statewide outreach programs designed to increase
the number of low-income telephone customers on the network through increased
participation in any universal service program approved by the commission.,,3 The
Legislature has required that the Commission adopt rules to implement its mandate and
given the Commission the authority to "require providers of intrastate
telecommunications services to contribute to a state universal service fund to support
programs consistent with the goals of applicable provisions of (Title 35-A) and the
federal Telecommunications Act of 1996, Public Law 104-104,11 Stat. 56.,,4 35-A
M.R.S.A. § 7104(3). The mandates of Section 7104 do not draw any distinction
between pre-paid and post-paid (Le., "billed") service providers.
8. MTEAF
Pursuant to the authority granted in 35-A M.R.S.A. §§ 7104 and 7104-8,
the Commission may establish a telecommunications education access fund and
"require a telecommunications carriers offering telecommunications in (Maine) and any
other entities identified pursuant to subsection 8 (of § 7104-8)5 to contribute to the
3 "Telephone utility is defined as "every person, its lessees, trustees, receivers or
trustees appointed by any court that provides telephone service for compensation" in
Maine. 35-A M.R.S.A. § 102(19). A "person" is defined as including "a corporation,
partnership, limited partnership, limited liability company, limited liability partnership,
association, trust, estate, (or) any other legal entity or natural person." Id. § 102(11).
"Telephone service" is defined as "the offering of a service that transmits
communications by telephone, whether the communications are accmplished with or
without the use of wires."
4 "Providers of intrastate telecommunications services" is defined to include
providers of radio paging service and mobile telecommunications services." 35-A
M.R.S.A. § 7104(3).
5 The "other entities" identified by 35-A M.R.S.A. § 7104-8 include, but are not
limited to, cable television companies, internet service providers, and any other entity to
the extent the entity offers services that "provide a method of delivering 2-way
interactive communications services comparable to those offered by
telecommunications carriers." 35-A M.R.S.A. § 7104-8(8). Subsection 8 also states
that "(t)he commission shall periodically examine the services provided and entities
assessed a fee under this section. The purpose of the review is to ensure that the fees
assessed under this section are competitively neutral." Id.
Notice of Rulemaking - 5-Docket No. 2010-340
fund."e Just as in Section 7104, the mandates of Section 7104-B do not draw any
distinction between pre-paid and post-paid service providers.
V. DISCUSSION OF PROPOSED RULE AMENDMENTS
The modifications discussed below will make clear that pre-paid
telecommunications providers will be treated in the same matter as other
telecommunications providers for the purpose of contributions to MTEAF and MUSF.
Specifically, pre-paid mobile telecommunications providers will be required to contribute
to MTEAF and MUSF using the same method of calculating contributions as other
mobile telecommunications carriers.
A. Chapter 285 (MTEAF)
1 . Section 1: Definitions
We propose to amend the definition of "Intrastate Retail Revenue"
in Section 1 (B) of the Rule to make clear that such revenue is all revenue that a carrier
receives from intrastate telecommunications services sold to end user customers for
use by those customers, while allowing carriers that have uncollectible revenues to
deduct their uncollectible factors.
2. Section 2: Assessment
We propose to amend Section 2(A) of the Rule to clarify that the
assessment applies to all intrastate retail revenue regardless of the method of
collection.
We propose to amend Section 2(C)(1) of the Rule to clarify that the
assessment of those charges or rates of an IXC that apply on an unseparated basis to
both intrastate and interstate service provided in Maine, is applicable regardless of a
carrier's method of revenue collection.
e Section 7104-B defines "Telecommunications carrier" and "telecommunications
service" as having the same meaning as set forth in 47 U.S.C. § 153. 35-A M.R.S.A. §
7104-B(1)(C). Title 47 U.S.C. § 153 defines "telecommunications carriet' as "any
provider of telecommunications services, except that such term does not include
aggregators of telecommunications serviæs (as defined in section 226 of (Title 47)),"
and "telecommunications service" as "the offering of telecommunications for a fee
directly to the public or to such classes of users as to be effectively available directly to
the public, regardless of the facilties used." 47 U.S.C § 153(44), (46).
"Telecommunications" is defined as "the transmission, between or among points
specified by the user, of information of the user's choosing, without change in the form
or content of the information as sent and reæived." ¡d. § 153(43).
Notice of Rulemaking - 6-Docket No. 2010-340
We propose to amend Section 2(E)(1) of the Rule to clarify that
assessments apply to the intrastate portion of those retail charges or rates of a mobile
telecommunications provider, including a paging provider, that apply on an unseparated
basis to both intrastate and interstate service provided in Maine, regardless of a
carrier's method of revenue collection.
3. Section 3: Recovery of Contributions from Retail Customers
We propose to amend Section 3(A) of the Rule to clarify that a
carrier's contribution to the fund may be recovered from customers through a surcharge
without regard to a carrier's revenue collection method.
We propose to amend Section 3(B) of the Rule to clarify that its
surcharge application provisions apply to all carriers that use any of the interstate-
intrastate allocation methods described in Section 2 of the Rule, without regard to a
carrier's revenue collection method.
We propose to amend Section 3(C) of the Rule to clarify that any
surcharge collected from customers to recover MTEAF fees be identified on customer
bills only if the carrier provides a bill (including electronic bills) to the customer.
We also propose to amend Sections 2(C)(1), 2(C)(3), 2(0)(2),
2(0)(3), 2(E)(1), 2(E)(3), 2(F) and 5 to replace "Director of Finance" with "Director of
Telephone and Water Utilty Industries."
B. Chapter 288 (MUSF)
1. Section 1: Definitions
We propose to amend the definition of "Intrastate Retail Revenue"
in Section 2(G) of the Rule to make clear the such revenue is all revenue that a carrier
from intrastate telecommunications services sold to end user customers for use by
those customers, while allowing carriers that have uncollectible revenues to deduct their
uncollectible factor.
2. Section 4: The Fund
We propose to amend Section 4(C) of the Rule to clarify that a
carrier must report the total amount of all revenue received, regardless of whether the
carrier sends a bil to customers, and that carriers with uncollectible revenues also shall
report their uncollectible factor.
We propose to amend Section 4(0)(1) of the Rule to clarify that the
assessment applies to the intrastate portion of those retail charges or rates of an IXC
that apply on an unseparated basis to both intrastate and interstate service provided in
Maine, regardless of a carriets method of revenue collection.
Notice of Rulemaking -7 -Docket No. 2010-340
We propose to amend Section 4(F)(1) of the Rule to clarify that the
assessments shall apply to the intrastate portion of those retail charges or rates of a
mobile telecommunications provider (including a paging provider) that apply on an
unseparated basis to both intrastate and interstate service provided in Maine,
regardless of a carrier's method of revenue collection.
We propose to amend Section 4(G) of the Rule to clarify that the
quarterly contribution that each carrier must contribute to MUSF is equal to all of that
carrier's intrastate retail revenue, regardless of whether the carrier sends a bill to
customers, and that carriers that have uncollectible revenues shall deduct their
uncollectible factor.
We propose to amend Section 4(1) of the Rule to clarify that a
carrier must report on a quarterly basis all intrastate revenues, regardless of whether
the carrier sends a bil to customers, and that carriers that have uncollectible revenues
shall also report their uncollectible factor.
3. Section 5: Identification and recovery of Contributions by
Contributing Carriers
We propose to amend Section 5(A) of the Rule to clarify that
contributions that a carrier makes to the MUSF must be identified on customer bills only
if the carrier provides a bill or other statement of charges (written or electronic) to the
customer.
We propose to amend Section 5(8)(2) of the Rule to clarify that the
surcharge applies to all intrastate retail telecommunications services provided to a retail
customer, or any designated subset of those services, but shall not apply to surcharges
for Enhanced 911, for the Maine Telecommunications Education Access Fund, or for
similar funds that are not part of a carrier's retail service offerings, regardless of a
carrier's method of revenue collection.
We propose to amend Section 5(8)(3) of the Rule to clarify that its
surcharge application provisions apply to all carriers that use any of the interstate-
intrastate allocation methods described in Section 4 of the Rule, without regard to a
carrier's revenue collection method.
We propose to amend Section 5(8)(4) to clarify that any surcharge
collected from customers to recover MUSF fees be identified on customer bills only if
the carrier provides a bil to the customer.
We also propose to amend Sections 3(8)(3)(a), 4(8), 4(0)(1),
4(0)(3), 4(E)(2), 4(E)(3), 4(F)(1), 4(F)(3), 4(J) and 6 to replace "Director of Finance" with
"Director of Telephone and Water Utility Industries."
Notice of Rulemaking - 8-Docket No. 2010-340
Vi. PROCEDURES FOR RULEMAKING
This rulemaking wil be conducted according to the procedures set forth in 5
M.R.S.A. §§ 8051-8058. A public hearing on this matter is scheduled on this matter for
1 :00 p.m., Tuesday, November 30, 2010 in the Worster Room at the Commission, 101
Second Street, Hallowell, Maine 04347. Written comments on the proposed rule may
be filed with the Administrative Director no later than Friday, December 17, 2010.
Please refer to the Docket Number of this proceeding, Docket No. 2010-340, when
submitting comments. In accordance with 5 M.R.S.A. § 8057-A(1), the fiscal impact of
the proposed Rule is expected to be minimaL. The Commission invites all interested
parties to comment on the fiscal impact and all other implications of the proposed rule.
VII. ORDERING PARAGRAPHS
Accordingly, we
ORDER
1. That our investigation in Docket No. 2010-47 is closed; and
2. That the Administrative Director send notice of this rulemaking to:
a. All persons who have filed with the Commission within the past
year a written request for notice of rulemakings;
b. All telephone utilties in the State;
c. The Secretary of State for publication in accordance with 5
M.R.S.A. § 8053(5); and
d. The Executive Director of the Legislative Council, 115 State House
Station, Augusta, Maine 04333-0115 (20 copies).
Dated at Hallowell, Maine, this 26th day of October 2010.
BY ORDER OF THE COMMISSION
Karen Geraghty
Administrative Director
COMMISSIONERS VOTING FOR:Cashman
Vafiades
Littell
Exhibit No. 10
Case No. TFW-T-09-01
J. Fuentes, TracFone Wireless, Inc.
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t!!Hjrirr~ g~f¡1~.~¡t: ì1 ~~~,ibi l! r IbM!IIIIIIIIIII110000123119COMMISSONERS
GARY PIERCE. Chainnan
BOB STUMP
SANDRA O. KENNEDY
PAUL NEWAN
BRENDA BURNS
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ARIZONA CORPORATION COMMISSION RECEIVED
2rq "'~D i r; ~ '0' i. n. ..:; ì '..-,.; ¡ ,-I Jl. \ ll. 14 ì
DATE:FEBRUARY 15,2011
T-20664A-09-0148
,- i \;,) CO:'._~ ~ .,
U G C :,( Ere :J : ~ i. . ~
DOCKET NO.:
TO ALL PARTIES:
Enclosed please fmd the recommendation of Admnistrative Law Judge Yvette B.
Kiney. The recommendation has been fied in the form of an Order on:
TRCFONE WIRLESS, INC.
(ELIGffLE TELECOMMUNCATIONS CARRR)
Pursuat to A.A.C. R14-3-110(B), you may file exceptions to the recommendation of
the Administrative Law Judge by filing an original and theen (13) copies of the exceptions
with the Commission's Docket Control at the address listed below by 4:00 p.m. on or before:
FEBRUARY 24, 2011
The enclosed is NOT an order of the Commission, but a recommendation of the
Administrative Law Judge to the Commissioners. Consideration of ths matter has tentatively
been scheduled for the Commssion's Open Meeting to be held on:
MARCH 1,2011 and MARCH 2, 2011
For more information, you may contat Docket Control at [phone] or the
Hearing Division at [phone]. For information about the Open Meeting, contact the
Executive Director's Offce at [phone].
Artzona Corporation Commission
DOr-Kr-TED,"- ,." . V '" ,__ , . _ '"
FED " r 2011.LJ 1 d . i
r- OOCKErEa BY~ IL.____.__-.J______~
EXECUTVE DIRCTOR
1200 WEST WASHINGTON STREET; PHOENIX ARIZONA 857-297 /40 WEST CONGRESS STREET; TUCSON, ARIZONA 85701.1347
WW.azCC.gov
This document is available in alternative formats by contacting Shaylin Bernal, ADA Coordinator, voice
phone number 602-542-3931, E-mail SABernai~azcc.gov
r--
1 BEFORE THE ARIZONA CORPORATION COMMISSION
2 COMMISSIONERS
3 GARY PIERCE - Chairman
BOB STUMP 4 SANDRA D. KENNDY
PAUL NEWM 5 BRENDA BURNS
6 IN THE MATTER OF THE APPLICATION
7 OF TRACFONE WIRELESS, INC. FOR
DESIGNATION AS AN ELIGIBLE
8 TELECOMMUNICA nONS CARER FOR
THE LIMTED PURPOSE OF OFFERING
9 LIFELINE AND LIN UP SERVICES TO
UALIFIED HOUSEHOLDS IN ARIONA.
10
11
Open Meeting
March 1 and 2, 2011
12
Phoenix, Arizona
13 BY THE COMMSSION:
DOCKET NO. T-20664A-09-0148
DECISION NO.
ORDER
14 ******' ****
15 Having considered the entire record herein and being fully advised in the premises, the
16 Commssion finds, concludes, and orders that:
17 FINDINGS OF FACT
18 I. Procedural History
19 1.On March 24, 2009, TracFone Wireless, Inc. ("TracFone") fied with the Arizona
20 Corporation Commission ("Commission") an application for designation as an Eligible
21 Telecommuncations Carer ("ETC") for the limited purpose of offering Lifeline and Link Up
22 services in Arizona.
23
24 ETC.
25
26
27
2.On July 27, 2009, TracFone fied a First Amendment to Petitionfor Designation as an
3.
4.
5.
On Augut 7,2009, TracFone :fled a Revised First Amendment to its application.
On October 28,2009, TracFone filed a Second Amendment to its application.
On December 18, 2009, the Arizona Local Exchange Cariers Association
28 ("ALECA") fied a Motion to Intervene.
S:\ YKinsey\Telecom\Order\090 148,doc 1
DOCKET NO. T-20664A-09-0148
1 6. On Februar 8, 2010, TracFone filed a response to ALECA's Motion to Intervene,
2 stating that TracFone did not object to ALECA's intervention and that its proposed services are not
3 the same as those offered by ALECA member companes.
4 7. By Procedural Order issued on Februar 19, 2010, the Commission's Utilties
5 Division ("Staff') was directed to fie a response to ALECA's Motion to Intervene.
6 8. On March 1,2010, Staf fied a response to ALECA's Motion to Intervene, stating that
7 Staff had no objections to the intervention.
8 9. On March 16, 2010, by Procedural Order, ALECA's Motion to Intervene was granted.
9 10. On April 7, 2010, pursuant to Arizona Supreme Cour Rule 38(a), Krstine K.
10 Campbell, an attorney with Greenberg Taurig, LLP, fied with the Commission a Motion and Consent
11 of Local Counsel for Pro Hac Vice Admission of Mitchell Brecher on behalf of TracFone Wireless,
12 Inc.
13 11. On April 15,2010, by Procedural Order, Mitchell Brecher was admitted pro hac vice
14 in this matter with Kristine K. Campell as the designated member for the Arizona State Bar with
15 whom communications may be made and papers may be served.
16 12. On April 29, 2010, Staf issued a Staff Report, reco:mending approval of TracFone's
17 application with conditions.
18 13. On May 10, 2010, by Procedural Order, a procedural conference was scheduled for
19 May 20, 2010.
20 14. On May 20, 2010, a procedural conference was held as scheduled. TracFone,
21 Intervenor ALECA, and Staff appeared though counseL. Durng the procedural conference,
22 procedural deadlines were discussed; other Commission Decisions regarding TracFone's proposed
23 services were discussed; the paries were directed to make a joint :fling updating the Commission on
24 the settlement of any of the issues raised in ths proceeding; and tentative dates for a status conference
25 were discussed.
26 15. On May 25, 2010, by Procedural Order, a status conference was scheduled to
27 commence on July 1,2010.
28 16. On June 17, 2010, TracFone :fled a Notice of Mailing Application and Procedural
2 DECISION NO.
DOCKET NO. T-20664A-09-0148
Order to Rural Incumbent Local Exchange Carers.
2 17.On June 21, 2010, Staff filed a request to vacate the July 1, 2010, status conference
3 ("Request"). The Request stated the paries were in the process of trying to resolve the disputed
4 issues and that all the paries were in an agreement that more time was needed.
5 18.On June 25, 2010, by Procedural Order, Stafs request to vacate the July 1, 2010,
6 status conference was granted and the paries were ordered to make a joint filing within 30 days
7 updating the Commission on the resolution of any disputed issues.
8 19.On July 26, 2010, the paries filed a joint status report stating that signi:fcant progress
9 had been made towards narowing the disputed issues, but that additional time, until August 16, 2010,
10 was needed.
11 20.On August 3, 2010, by Procedural Order" the paries were granted additional time to
12 until Augut 31, 2010, to file their joint status report.
13 21.On September 3,2010, the paries fied a Supplemental Joint Status Report ("Report")
14 outlining the issues the paries were able to resolve.
15 22.On December 6, 2010, by Procedural Order, a pre-hearing conference was scheduled
16 for December 22,2010.
17 23.On December 22, 2010, the pre-hearing conference was held as scheduled. Sta,
18 TracFone, and ALECA appeared though counsel. During the pre-heaing conference, TracFone
19 stated that the paries and Staff are in agreement on the substantive issues raised in this matter and
20 requested that no hearg be held, and that an Order be submitted to the Commission. After some
21 clarifying comments, Sta and ALECA concurred that this matter could proceed without a hearg as
22 the issues in dispute had been settled.
23 II.
24
Background
24.TracFone is a telecommuncations corporation, incorporated under the laws of
25 Delaware, with its principal place of business in Miami, Florida. i TracFone is a reseller of
26 commercial mobile radio service ("CMRS"), and provides services using a "virtual network.,,2
27
28 i TracFone application at 2.2Id.
3 DECISION NO.
DOCKET NO. T-20664A-09-0148
According to TracFone's application, it has consistently provided CMRS services throughout Arizona
2 and the United States for the past ten years though wireless carers like AT&T Wireless, T-Mobile,
3 and Verizon Wireless.3
4 25.TracFone is seeking ETC designation solely to provide Lifeline4 and Link Ups
5 services to quali:fed low-income Arzona households. TracFone wil be eligible to receive fuds from
6 the federal Universal Service Fund ("USF") for its Lifeline servces only (see discussion below on
7 TracFone's limited ETC designation), but is not eligible to receive federal USF support for high-costs
8 services such as Link Up, toll limitation, or Lifeline to Tribal Lands.6 TracFone seeks to provide
9 service within areas served by other non-rural and rual incumbent local exchange cariers
10 ("ILECs,,).7
11 26.TracFone states that it wil provide Lifeline service in all areas in Arizona served by
12 AT&T Mobility, T-Mobile, and Verizon Wireless.s TracFone's Lifeline customers in Arizona wil
13 receive 68 minutes of use each month at no charge, unused minutes wil roll over from month to
14 month, and all Link Up customers will receive handsets at no charge.9
15 27.Subsequent to filing the above application, TracFone filed a Notice of Expanded
16 Lifeline Offering. The Notice states TracFone will offer expanded SafeLink Wireless~ Lifeline
17 service for existing and new customers.IO Under the expanded service, TracFone wil offer Lifeline
18 customers in all states and Arzona the option to select from thee monthly plan. 1 1 The plans are:
19
20
21
22
a.250 free minutes each month, which do not caryover the next month if
unused, with texting available at a rate of one text per minute of airtime; or
b.125 free minutes each month, which carry over the following month if unused,
with texting available at a rate of one text per minute of airtime; or
68 free minutes each month, which carryover the following month if unused,c.
23 3 TracFone application at 2.
24 4 TracFone's Lifeline service wil offer low income customers wireless services and limited wireless usage at no charge.TracFone application at 3.
25 5 TracFone's Link Up service wil provide qualified customers with a free wireless telephone handset. TracFoneapplication at 3.6The FCC states that the Lifeline and Link Up progrs are designed to reduce the monthly cost of telecommunications
26 service and the cost of initial connection, respectively, for qualifying consumers. TracFone application at 2.
7 Application at Exhibit 11. .
27 8 TracFone's Second Amended Petition (dated October 28,2009) at i.9 TracFone's First Amended Petition (dated July 27, 2010) at 2.
28 10 TracFone's Notice of
Expanded Lifeline Offering fied August 13,2010.II Id.
4 DECISION NO.
DOCKET NO. T -20664A-09-0 148
1
2
with texting available at a rate of 3 texts per each minute of airtime, plus
International Long Distace calling to over 60 destinations. 12
TracFone states that its proposed Lifeline service in Arizona wil differ from other28.
3 ETC Lifeline programs because it wil offer low-income consumers the convenience and portabilty
4 of wireless services free of charge.13 TracFone also states that under its Link Up service plan,
5 customers will .receive a free wireless telephone handset, which wil allow Lifeline and Link Up
6 customers to initiate and receive calls from their wireless handset without incuring activation or
7 usage charges.14 TracFone believes its proposed services wil operate in accordance with the spirit of
8 universal service because its services can be accessed virtally nationwide and its rates are nationally
9 uniform. i 5
10 29.ALECA is comprised of small telephone companies and member-owned cooperatives
11 providing local exchange telecommunications services to customers in rual, high cost areas of
12 Arizona, and are considered "rual telephone companies" under the Telecommunications Act of 1996
13 ("1996 Act"). 16 ALECA states its members are Fort Mojave Telephone Company; Frontier
14 Communications Corporation; Gila River Telecommuncations, Inc.; Hopi Telecommuncations, Inc.;
15 Midvale Telephone Exchange, Inc.; San Carlos Apache Telecommunications Utility, Inc.; South
16 Central Communications; Table Top Telephone Company, Inc.; TDS; Tohono O'odham Utility
17 Authority; Valley Telephone Cooperative; and Zona Communications. 17
18 30.ALECA states that it is concerned that TracFone's proposed services in Arzona wil
19 be duplicative of the services already provided by its member companies and may cause the federal
20 USF to grow to the point where its members' compensation under the fund is endangered, and public
21 support may be undermned. is
22 31.TracFone assert that its proposed Lifeline services are not similar to the Lifeline
23 offerigs of ALECA member companies in that TracFone will offer wireless services at no charge to
24
25 12 TracFone's Notice of Expanded Lifeline Offering fied August 13,2010.13 TracFone application at 3.
14 Id.
26 15Id.
16 ALECA Motion to Intervene (dated December 18, 2009) at 1.
27 17 The Motion to Intervene states that Fort Mohave TelecommUnications, Gila River Telecommunications, HopiTelecommunications, San Carlos Apache Telecommunications, and Tohono O'odam Utilty Authority are tribal owned
28 telephone companies and are not subject to the ACe's jurisdiction. ALECA Motion to Intervene at 1.18 ALECA Motion to Intervene (dated December 18, 2009) at 2.
5 DECISION NO.
DOCKET NO. T-20664A-09-0148
1 customers and free E911 compliant handsets. 19 In contrast, ALECA member companies offer Lifeline
2 services using landlines.2o Regarding the growt of the federal USF, TracFone assert that it is
3 seeking Tier 1, Tier 2, and Tier 3 Lifeline support from the federal USF and that it is not eligible for
4 Tier 4 support which allows an ETC to receive an additional $25 per customer, per month for
5 residents of trbal communities.21 TracFone contends that because several of ALECA's member
6 companies are tribally owned it will not be competing for federal USF support with those companies
7 and therefore the fuds dispersed from the federal USF will not grow as a result ~f TracFone's
8 proposed services.22
9 32.Staf believes that TracFone's proposed service as a wireless ETC is consistent with
10 the FCC's requirement that unversal service support not unfairly advantage or disadvantage one
11 provider over another or one technology over another.23 Staff also contends that since TracFone is
12 not eligible for high cost support (Tier 4), TracFone's proposed services wil not affect any Lifeline
13 support for ALECA member companies serving trbal lands.24
14 33.Staffs conclusions are consistent with the FCC's Forbearance Order (discussed
15 below) which states that "if TracFone is able to obtain ETC designation for Lifeline-only services, we
16 do not expect this to signficantly burden the universal service fund and thus negatively affect
17 consumers through increased pass through charges of the carriers' contribution obligations.,,25
18 III. Requirements for Designation as an ETC
19 34.Pursuat to 47 U. S. C. § 214( e)( 1). of the 1996 Act, in order to qualify for designation
20 as an ETC a common carrier must meet the following requirements:
21 "A common carier designated as an eligible telecommunications carerunder paragraph (2) or (3) shall be eligible to receive universal service
22 support in accordance with Section 254 and shall thoughout the servicearea for which the designation is received - (A) offer the services that are
23 supported by Federal universal service support mechanisms under Section254(c ), either using its own facilties or a combination of its own facilities
24 and resale of another carer's services (including the services offered byanother eligible telecommuncations carier); and (B) advertise the
25
19 TracFone Response to ALECA's Motion to Intervene at i.
26 20 TracFone Response to ALECA Motion to Intervene at 2.
21 Id. at 2.
27 22Id.23 Staff Report at 10.24Id.
28 25 Staff Report at 11.
6 DECISION NO.
DOCKET NO. T-20664A-09-0148
1
2
availabilty of such services and the corresponding charges using media of
general distri buti on. "
TracFone acknowledges that Section 214(e)(l)(A) requires that a common carer35.
3 seeking designation as an ETC must "offer services, at least in par, over their own facilties and that
4 Federal Communication Commission Rules prohibits state commissions from designating as an ETC
5 a telecommunications carier that offers servces exclusively through the resale of another carer's
6 services. ,,26
7 36.TracFone attached to its application in this docket a Forbearance Order issued by the
8 Federal Communication Commission ("FCC") granting TracFone forbearance from the facilities-
9 based service requirement pursuat to Section 214(e)(l)(A) for its Lifeline support services only, and
10 subject to the following conditions?? The Forbearance Order requires TracFone to:
11
12
13
14
15
16
17
18
19
20
21
22
a.Provide its Lifeline customers with 911 and enhanced 911 ("E91 1") access
regardless of the activation status and availability of prepaid minutes;
Provide its Lifeline customers with E911-compliant handsets and replace, at no
additional charge to the customer, non-compliant handsets of existing
customers who obtain Lifeline supported services;
b.
c.Comply with conditions (a) and (b) as of the date it provides Lifeline services;
Obtai a certification from each Public Safety Answering Point ("PSAP")
where TracFone provides Lifeline service confirming that TracFone complies
with condition (a) or if within 90 days of TracFone's request a PSAP has not
responded, TracFone may self-certify that it meets the basic and E911
requirements;
d.
37.
Require its customers to self-certify at time of service activation and anually
thereafer that they are the head of the household and receive Lifeline
supported service only from TracFone; and
Establish safeguards to prevent its customers from receiving multiple TracFone
Lifeline subsidies at the same address.28
Under the Forbearance Order, TracFone is designated as a "limited ETC" because its
e.
f.
23 eligibilty applies to only Lifeline services, TracFone is not eligible to receive support for other
24 supported services under the low-income program, and it is not eligible to receive support for services
25 supported by the other universal service fund support mechanisms like high costs Link Up services. 29
26
26 TracFone application at 4.
27 27 Petition of TracFone Wireless, Inc. for Forbearance from 47 USC § 214(e)(l)(A) and 47 CFR § 54.201(í), 20 FCC Red
15095 (2005) ("TracFone Forbearance Order").
28 Id.
28 29 Id.
7 DECISION NO.
DOCKET NO. T-20664A-09-0148
iv. Staff Recommendations
2 In addition to the conditions set fort by the FCC, Sta recommends approval of38.
3 TracFone's application for designation as an ETC, subject to the following conditions:
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
a.TracFone shall evaluate providing Lifeline customers free access to Customer
Service from TracFone's handsets;
b.TracFone shall evaluate offenng a rate no more than $0.10 per minute for
additional minutes;
c.TracFone shall fie a taff with the Commission, setting forth the rates, terms,
and conditions for its Lifeline service within thirt (30) days of a Commission
Order in ths matter;
d.TracFone shall notify the Commission of any futue changes to its rates, terms
and/or conditions regarding its Lifeline offerings and file such charges in its
tariff and amend its tarff in compliance with A.R.S. § 40-367;
TracFone shå11 make available Lifeline services to qualifying low-income
applicants in its ETC service area no later than ninety (90) days after the
effective date of ths decision and concurently to notify the Utilties Division
Director, by makng a fiing in Docket Control, of the commencement for such
services;
e.
f.TracFone shall appnse the Commission of customer complaints that may arise
from its ETC servce offerings by making a :fling in Docket Control;
g.TracFone shall provide a regulatory contact to the Commission's Consumer
Services Division;
h.In the event that TracFone requests to relinquish its ETC status and no longer
provides Lifeline services, it must provide notice to both the Commission and
its customers. Such notices shall be in accordance with A.A.C. R14-2-1 107;
TracFone shall submit an anua report by April 15th of each year, beginning
April 15, 2011, tht contains its total number of Lifeline subscnbers, total
amount of Federal USF support received and an af:fdavit stating that Lifeline
discounts or the equivalent are equal to the amount of tota federal USF support
per line. The anual filing shall be submitted as a compliance item in ths
docket; and
1.
j.
39.
That TracFone submit a quarerly report detailng the total number of Lifeline
customers, the total number of customers removed from the customer base due
to 60-day inactivity, the number of customers removed from the customer base
due to anual veri:fcation, and the total number of customers who voluntarily
relinquished Lifeline service. The quarerly report should be submitted as a
compliance item in this docket on the 15th of the month following the end of
the quarer.
Staff believes its recommendation that TracFone provide a quarterly report of the
number of customers with periods of inactivity greater than sixty (60) days who have not cancelled
28
8 DECISION NO.
DOCKET NO. T-20664A-09-0148
1 service, are no longer eligible for Lifeline service, or who voluntarily deactivate service; will help to
2 monitor whether TracFone is continuing to receive the $10 per month, per hadset fee from the
3 Universal Service Admistrative Company after customers deactivate services.3o
4 v.
5
6
TracFone's Compliance with the Requirements for ETC Designation
A. Services Designated for Support
40.TracFone states it will offer the services set forth in 47 C.F.R. § 54.101(a) and
54.202(a), in order to receive federal USF support for its Lifeline service.31 These servces include:7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Voice Grade Access to the Public Switched Network: "Voice grade access" is
defined as a fuctionaity that enables a user of telecommuncations services to
transmit voice communications, including signaling the. network tht the caller
wishes to place a call, and to receive voice communications, including
receiving a signal indicating there is an incoming call. The bandwidth for
voice grade access should be at a minimum, 500 to 4,000 Hert;
Local usage: "Local usage" means an amount of minutes of use of exchange
service, prescribed by the Commission, provided free of charge to end users;
Dual Tone Multi-Frequency Signå.ing of its Functional Equivalent: "Dual
tone multi-frequency" ("DTMF") is a method of signaling tht faciltates the
transportation of signaling though the network, shortening call set-up time;
Single-Pary Service or its Functiona Equivalent: "Single-par service" is a
telecommuncations service that permits users to have exclusive use of a
wireline subscriber loop or access line for each call placed, or, in the case of
wireless telecommuncations cariers, which use spectr shared among users
to provide service, a dedicated message path for the length of a user's
paricular transmission;
Access to Emergency Servces: "Access to emergency services" includes
access to services, such as 911 and enhanced 911, provided by local
governents or other public safety organizations. 911 is defined as. a service
that permits a telecommunications user, by dialing the thee-digit code "911,"
to call emergency services through a Public Service Access Point ("PSAP")
operated by the local governent. "Enhanced 911" is de:fned as 911 service
tht includes the abilty to provide automatic numbering information ("ANI"),
which enables the PSAP to call back if the call is disconnected, and automatic
location information ("ALI"), which permits emergency service providers to
identify the geographic location of the of the calling pary. "Access to
emergency services" includes access to 911 and enhanced 911 servces to the
extent the local governent in an eligible carier's service area has
implemented 911 or enhanced 911 systems;
Access to Operator Services: "Access to operator services" is defined as
access to any automatic or live assistance to a consumer to arange for biling
or completion, or both, of a telephone call;
g. Access to Interexchange Service: "Access to interexchange service" is de:fned
a.
b.
c.
d.
e.
f.
30 Staff Report at 9.
28 31 TracFone's application at 9.
9 DECISION NO.
DOCKET NO. T-20664A-09-0148
1
2
3
4
5
6
as the use of the loop, as well as that portion of the switch that is paid for by
the end user, or the fuctional equivalent of these network elements in the case
of a wireless carer, necessar to access an interexchange carer's network;
h. Access to Directory Assistace: "Access to directory assistance" is defined as
access to a service that includes, but is not limited to, making available to
customers, upon request, information contaed in directory listings; and,
i. Toll Limitation for Qualifying Low-Income Consumers: "Toll limitation for
qualifying low-income consumers" is described in Subpar E32 ofthis par.
ALECA raised concerns over whether TracFone could adequately provide 911 service41.
7 to its LifeLine customers.J TracFone states that the FCC's Forbearance Order directs TracFone to
8 provide E911 compliant handsets to all its Lifeline customers and that TracFone has complied with
9 that directive in every jurisdiction where it provides Lifeline service, and that TracFone will also in
10 Arizona.34 Furter, TracFone states the Forbearance Order requires TracFone to obtan PSAP
11 certification that its Lifeline customers have access to 911 and E91 1 service; that TracFone can self-
12 certify that its customers have 911 and E911 service if TracFone obtains from its underlying cariers
13 documentation stating that those carers will treat 911 calls from TracFone customers in the same
14 maner as they treat their own retal customers; and that TracFone has already obtaned such
15 documentation from its underlying cariers.35
16 42. Based on the information provided by TracFone, TracFone and ALECA agree that
17 TracFone has the abilty to provide 911 and E91 i service.36
18 43.Based on TracFone's abilty to provide all of the support services and fuctionalities
19 required in the proposed ETC coverage area to all subscribers taking services under its Lifeline plan
20 through arangements with its underlying carers, Staff believes that TracFone meets the ETC
21 designation criteria.37
22 B.
23
Advertsing of Supported Services
44.Puuat to Section 214(e)(l)(A) of the 1996 Act and 47 C.F.R. § 54.201(d)(2)
24 TracFone states that it will advertise the availabilty of its Lifeline and Link Up services and the
25 32 "Toll limitation" denotes either toll blocking or toll control for eligible telecommunications cariers that are incapable
of providing both services. For eligible telecommunications that are capable of providing both services, "toll limitation"26 denotes both toll blocking and toll control. 47 C.F.R. § 54-400(d).33 Joint Supplemental Status Report filed September 3,2010 at 3.
27 34Id.35Id.
36 Id. at 4.
28 37 Staff Report at 5.
10 DECISION NO.
DOCKET NO. T-20664A-09-0148
1 associated charges using media of general distribution as well as using marketing and outreach efforts
2 (i.e., print and broadcast advertising) to ensure that eligible consumers are aware of the services it
3 offers.38 In addition, TracFone states it wil use its network of retal outlets to help promote the
4 availabilty of Lifeline and Link Up programs. 39
5 45.TracFone provided sample print, radio, and television ads for its proposed services and
6 charges for Staffs review. Based on the information provided, Staff concluded that TracFone will
7 advertise the availabilty of its supported services and corresponding charges using media of general
8 distrbution and therefore meets the ETC designation criteria.
9
10
C.
46.
ETC Requirements Pursuant to 47 C.F.R. § 54.202(a)(1)-(5)40
Pursuant to 47 C.F.R. § 54.202(a)(I) an "ETC applicant must demonstrate its
11 commitment and abilty to provide the supported services thoughout the designated service area by
12 providing services to all requesting customers within its designated servce area and by submitting a
13 formal network improvement plan that demonstrtes how universal service fuds wil be used to
14 improve coverage, signal strengt, or capacity that would not otherwse occur absent the receipt of
15 high cost support." .
16 47.In its application, TracFone states that it will provide services in the designated areas
17 within a reasonable time by resellng its service through its underlying facilties-based providers; its
18 providers are operational and are largely built out and service can commence upon Commission
19 approval; and that TracFone is ready to commence providing handsets to qualified customers under
20 its Link Up plan. 41
21 48.Based on the information provided by TracFone, Staff concluded that TracFone meets
22 the non-facilties based portion of the ETC criteria.
23 49.In accordance with 47 C.F.R. § 54.202(a)(2), an applicant for ETC designation must
24 demonstrate that "it has a reasonable amount of back-up power to ensure functionality without an
25 external power source, is able to reroute traffic around damaged facilties, and is capable of managing
26
38 TracFone application at 15.
27 39 TracFone states its retail vendors include Rent-a-Center, Dollar General Stores, Walgreen's, CVS, and Wal-Mar.
Tracfone application at 15.
28 40 Federa-State Joint Board on Universal Service, CC Docket No. 96-45.41TracFone application at 14.
11 DECISION NO.
DOCKET NO. T-20664A-09-0148
1 traffic spikes resulting from emergency situations."
2 50.Sta states that because of TracFone's use of underlying wireless, cariers who have
3 state-of-the-ar network reliabilty standards, TracFone's service reliabilty compares favorably with
4 that of any facilties-based operator in the wireless telecommuncations industr.42 Therefore, Staf
5 concludes that TracFone has demonstrated its abilty to remain functional in emergency situations and
6 therefore meets the ETC designation criteria.
43
7 51.TracFone states it will comply with the Cellular Telecommunications and Internet
8 Association's ("CITA") Consumer Code for Wireless Service to meet the ETC criteria that all ETC
9 applicants must demonstrate "a commitment to meeting consumer protection and service quaity
10 standards," pursuant to 47 C.F.R. § 54.202(a)(3).44 Furher, TracFone states it wil make its website
11 available to customers for review of TracFone's Privacy Policy.45
12 52.Based on the information provided by TracFone, Staff believes TracFone meets the
13 ETC designation criteria for consumer protection and serVice quality.46
14 53.Pursuant to 47 C.F.R. § 54.202(a)(4), an ETC applicant must "demonstrate that it
15 offers a local usage plan comparable to the one offered by the incumbent local exchange carrier
16' ("LEC") in the services areas for which it seeks designation."
17 54.TracFone states that it will provide customers with service capable of sending and
18 receiving local phone calls and that local usage is included in TracFone's calling plan wherever it
19 provides service.47 TracFone states that under FCC rules an ETC applicant's local usage plan should
20 be reviewed on a case-by-case basis to ensure that the ETC provider local usage plan is comparable to
21 other plans offered by ILECs in the area.48 Furer, TracFone states that although the FCC has not
22 adopted minimum local usage requirements, TracFone wil comply with any applicable minimum
23 local usage requirements adopted by the FCC.49
24
25 42 Staff
Report at 7.43Id.
44 TracFone application at 14.
26 45 Id.
46 TracFone application at 7.
27 47 TracFone application at 10.48 TracFone application citing Federal-State Joint Board on Universal Service, Report and Order, 20 FCC Rcd 6371,
8 6385,33 (2005).2 49 TracFone application at 32.
12 DECISION NO.
1
2 usage. 50
3
DOCKET NO. T-20664A-09-0148
55.Staff believes that TracFone meets the ETC designation criteria for minimum local
56.Applicants for the ETC designation are required under 47 C.F.R. § 54.202(a)(5) "to
4 provide equal access to long distce carers in the event that no other eligible telecommuncations
6
5 carier is providing equal access within the service area."
Staff states that TracFone received a waiver of ths requirement in its Forbearance57.
7 Order because the FCC concluded that TracFone is a pure reselIer.5J Staff therefore concludes that the
8 equa access requirement is not applicable to TracFone.52
9
10
D.
58.
ETC Requirements Pursuant to 47 C.F.R §§ 54.410 and 54.416
FCC Rules require ETC providers to comply with certi:fcation of eligibility and
11 verification qf continued eligibilty for Lifeline and Link Up paricipation. TracFone states it wil
12 comply with the FCC rules regarding certi:fcation and contiued eligibilty. 53
13 59.According to Staff, TracFone certi:fed that it will also comply with the FCC's
14 expanded eligibilty criteria, certification, veri:fcation, and recordkeeping requirements puruant to 47
15 § 54.410 which were adopted in Commission Decision No. 67941 (June 21, 2005).54
16 60.
18 designated ETC.
17 for the purpose of determining universal service obligations and support mechanisms for each
Pursuant to 47 U.S.C. § 214(e)(2) the Commission must establish a geogrphic area
19 61.TracFone initially sought designation as an ETC for the entire state of Arizona.55
20 ALECA objected to TracFone's proposed service on tribal lands because ALECA believed the
,21 services would be duplicative of services provided by its member companes. 56
22 62.
24
23 TracFone would not attempt to provide its SafeLink Wireless~ Lifeline service to eligible residents
Regarding TracFone's designated service area, the paries and Staf agreed that
25 50 Staff Report at 8. '
26 51 Staff Report citing Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Order, FCC 08-100 (reI.April 11, 2008), note 30.
52 Staff Report at 8.
27 53 TracFone application at 17.54 Sta Report at 9.
55 TracFone application at 17.
28 56 ALECA's Motion to Intervene and Joint Supplemental Status Report dated September 3, 2010.
13 DECISION NO.
DOCKET NO. T-20664A-09-0148
1 on tribal lands.57 TracFone states it wil implement the following procedures to comply wIth its
2 commitment not to serve tribal' residents:
3
4
5
6
7
a Exclusion by Zip Code: TracFone wil program its data base to deny
applications for SafeLink Wireless~ Lifeline servce to zip codes located
within trbal lands; and
Self-Certi:fcation of Non-Tribal Land Residency: TracFone wil include in its
Arizona Lifeline enrollment application a line for applicats to self-certify
under oenalty of perjury that they do not reside in Federally-Recognized Tribal
Lands:'s
With the above agreed upon procedures, the paries and Staf were able to resolve the
b.
63.
8 issue and ALECA has agreed to work with TracFone to identify zip codes located within Federally-
9 Recognized Tribal Lands for exclusion of service by TracFone.59
10 64.ALECA expressed concern that TracFone should be required to pay certain fees to
11 varous state agencies, including the ACC assessment, Residential Utilties Consumer Of:fce
12 ("RUCO") assessment, Arzona Emergency Telecommunications Services Revolving Fund (911
13 fees), the Arzona Telecommunications Relay Service Fund, and the Arizona USF fee, on behalf of
14 TracFone's customers.60 TracFone asserts that the current laws governng the above fees are not
15 applicable to prepaid wireless servces such as those proposed by TracFone in Arzona.6\ To resolve
16 the issue, TracFone recommends that it send letters to each of the agencies62 with jursdictional
17 authority seeking clarfication as to whether the fees, over which the agency has jurisdiction, apply to
18 TracFone.63 TracFone states that it wil fie as a compliance item in this docket, the letters sent to the
19 agencies as well as the agencies determinations' on the issue.64
20 65.TracFone, Staff, and ALECA stated that based on the above proposed procedures, the
21 paries and Sta agree to the mechanism to resolve the issue.65
22
23
24 57 Joint Supplemental Status Report at 2.
25 58 Joint Supplemental Status Report at 3.59Id. .
26 60 Joint Supplementa Status Report at 4.61Id.
62 TracFone states that those agencies include the Arizona Department of Administration; the Arizona Commission on the
27 Deaf and Hard of Hearing (Telecommunications Relay Service); and the Commission.63 Joint Supplemental Status Report at 4.
28 64 Id. at 5.65 Tr. at 4-9.
14 DECISION NO.
DOCKET NO. T.20664A-09-0148
1 VI.
2
Analysis
66.Pursuant to the 1996 Act66 the Commission must make a determination tht an
3 applicant's application for designation as an ETC is in the public interest. TracFone asserts that its
4 proposed services are in the public interest because it will serve consumers in non-rual and rual,
5 high cost areas where most competitive wireline cariers do not provide service. TracFone states that
6 its proposed services wil provide an alternative to existing telecommunications services available in
7 the ETC designated areas. TracFone states that the bene:fts of its proposed services include: wider
8 local callng areas; the convenience and securty of mobile service; customers' abilty to control the
9 cost of service; and the availabilty of E91 i services.67
10 67.Staf expressed concerns that TracFone has stated it wil deduct minutes from Lifeline
11 customers when they call TracFone's customer servce line.68 Staff states that TracFone's thee
12 underlying cariers are among the largest wireless providers in the country and that they do not
13 deduct minutes from customers when makng customer service calls.69 Staf recommends tht
14 TracFone evaluate providing Lifeline customers with free customer service calls.7o TracFone has
15 agred to evaluate whether deducting customer minutes for customer service calls is appropriate.71
16 68. Sta also expressed concerns regarding the limited amount of free minutes (68
17 minutes per month)72 and the additional cost per minute TracFone's plan provides.73 Sta states that
18 in other junsdictions TracFone has offered a $0.10 per additional minute option and Staff requests
19 that TracFone extend the same rate to Arizona low-income households. 74
20 69.Sta believes TracFone meets the overall criteria for designation as an ETC. Staf
21 recommends that the Commission grant TracFone's application for designation as ETC pursuat to
22 47 U.S.C. § 214(e)(2).
23
24 6647 U.S.C. § 214(e)(2).67 TracFone application at 19.
25 68 Staff Report at II.69 Id.
70 Id.
26 71 Tr. at 10.12 Subsequent to the Staff Report, TracFone fied a Notice of Expanded Lifeline Offering, which gives customers thee
27 options to choose from for Lifeline services. Under the thee plans, customers wil be able to choose from a plan with the
minimum 68 free minutes up to 250 free minutes. See discussion in section II of this Decision.
28 73 Staff Report at iI.74 Id.
15 DECISION NO.
DOCKET NO. T-20664A-09-0148
1 70. Based on the information that TracFone will provide wireless phone service to non-
2 rual and rual, low-income customers, located in high cost areas in Arizona, which includes free 911
3 and E911 services, we :fnd that TracFone's proposed service in Arizona is in the public interest.
4 Therefore, we will adopt Staffs recommendations regardig TracFone's application for designation
5 as an ETC.
6 CONCLUSIONS OF LAW
7 1. TracFone is a telecommuncations corporation as defii;ed in AR.S. § 40-201(26), and
8 is a "telecommunications carier" as de:fned in 47 U.S.C. § 153(44). TracFone is also a reseller of
9 Commercial Mobile Radio Service provider as defined in 47 U.S.C. 153 (27) and AA.C. RI4-2-
10 1201.
11 2. The Commission has jursdiction over the subject matter of this Application.
12 3. Under 47 U.s.C. § 214(e)(l), a common carier that is designated as an Eligible
13 Telecommunications Carer must, throughout its service area, offer the services that are supported by
14 Federal universal service support mechansms either using its own facilities or a combination of its
15 own facilities and resale of another carrier's services. The carer must also advertise the availabilty
16 of such services and the rates for the services using media of general distribution.
17 4. Under 47 U.S.C. § 214(e)(2), the Commission must establish the geographic area for
18 the purose of determinig universal service obligations and support mechansms. TracFone's
19 application, as amended, applies to the service area covered by its underlying cariers AT&T
20 Mobilty, T-Mobile, and Verizon Wireless, with the exception of Federally-Recognized Tribal Lands
21 located within the state of Arzona.
22 5. Under C.F.R. § 54.405 and 47 C.F.R. § 54-411, as par of its obligations as an Eligible
23 Telecommunications Carier, the carier is required to make available Lifeline and Link Up services
24 to qualifying low-income customers.
25 6. TracFone meets the requirements contained in 47 U.S.C. § 214 and C.F.R. § 54.201 et
26 seq. to be designated as an Eligible Telecommunications Carrier.
27 7. Stafs :fndings and recommendations, which are set forth herein, are reasonable and
28 should be adopted.
16 DECISION NO.
.
DOCKET NO. T-20664A-09-01481 ORDER
2 IT IS THEREFORE ORDERED that the TlacFone Wireless, Inc.'s application for
3 Designation as an Eligible Telecommunications Carier under 47 U.S.C. § 214(e)(2) is hereby
4 granted, conditioned upon compliance with the following Orderig Paragraphs.
5 IT IS FURTHER ORDERED that TracFone Wireless, Inc. shall make available Lifeline and
6 Link Up services to qualifying low-income applicants in its new ETC area no later than 90 days afer
7 the effective date of ths Decision.
8 IT is FURTHER ORDERED that TracFone Wireless, Inc. shall comply with all Federal
9 Communcation Commission rules and Stas conditions as set fort in Finding of Fact No. 38.
10 IT is FURTHER ORDERED that TracFone Wireless, Inc., shall, withn 30 days of the
11 effective date of this Decision as a compliance item in this docket, file a document identifying zip
12 codes located within Federally-Recognized Tribal Lads for which TracFone Wireless, Inc., wil not
13 be providing service in Arizona.
14 IT is FURTHER ORDERED that TracFone Wireless, Inc., shall, within 30 days of the
15 effective date of ths Decision as a compliance item in ths docket, fie a list of all (rual and non-rual
16 local exchange carier) zip codes TracFone wil be serving in Arizona for Stafs review and
17 acceptace.
18 IT is FURTHER ORDERED that TracFone Wireless, Inc., shall, within 30 days of the
19 effective date of this Decision as a compliance item in this docket, fie an affidavit stating that it has
20 submitted letters (as well as attach to its filing such letters) to the Arizona Deparent of
21 Administration; the Arizona Commission on the Deaf and Hard of Hearing (Telecommunications
22 Relay Service); and the Arizona Corporation Commission, seeking a determination as to whether the
23 fees, over which the agencies have jurisdiction, apply to TracFone Wireless, Inc.'s services as an
24 Eligible Telecommuncations Carer in Arizona.
25
26
27
28
17 DECISION NO.
DOCKET NO. T-20664A-09-0148
1 IT IS FURTHER ORDERED that TracFone Wireless, Inc., shall, within 10 days of receipt,
2 fie as a compliance item in this docket any response(s) or determinations by the above agencies of
3 the applicable and/or non applicable fees to be paid by TracFone Wireless, Inc.
4 IT is FURTHER ORDERED that TracFone Wireless, Inc.'s designation as an Eligible
5 Telephone Carer shall include a service area covered by its underlying cariers AT&T Mobilty, T-
6 Mobile, and Verizon Wireless, with the exception of Federally-Recognized Tribal Lands located
7 within the state of Arizona.
8 IT IS FURTHER ORDERED that ths Decision shall become effective immediately.
9 BY ORDER OF THE ARZONA CORPORATION COMMISSION.
10
11
12 CHAIRAN
13
14 COMMISSIONER
15
16
17
18
19
20
21
22
23
24 DISSENT
25
26 DISSENT
YBK:db
27
28
COMMISSIONER
COMMISSIONER COMMISSIONER
IN WITNESS WHEREOF, I, ERNEST G. JOHNSON,
Executive Director of the Arizona Corporation Commission,
have hereunto set my hand and caused the offcial seal of the
Commission to be affxed at the Capitol, in the City of Phoenix,this day of , 201 1.
ERNST G. JOHNSON
EXECUTIVE DIRECTOR
18 DECISION NO.
n.
1 SERVICE LIST FOR:
2 DOCKET NO.:
3
TRACFONE WIRELESS, INC.
T-20664A-09-0148
Mitchell F. Brecher
4 Debra McGuire Mercer
GREENBERG TRAURIG, LLP5 2101 L Street, NW
Washigton, D.C. 20037
6 Attorneys for TracFone Wireless, Inc.
7 Kristine K. Campbell
GREENBERG TRAURG, LLP
8 2375 East Camelback Road, Suite 700
Phoenix, AZ 85016
9 Attorneys for TracFone Wireless, Inc.
10 Craig A. Marks
CRAIG A. MARKS, PLC11 10645 North Tatu Blvd., Suite 200-676
Phoenix, AZ 8502812 Attorney for ALECA
13 Jance Alward, Chief Counsel
Legal Division14 ARZONA CORPORATION COMMISSION
15 1200 West Washington StreetPhoenix, AZ 85007
16 Steven M. Olea Director
Utilities Division17 ARIZONA CORPORATION COMMISSION
1200 West Washington Street
18 Phoenix, AZ 85007
19
20
21
22
23
24
25
26
27
28
19 DECISION NO.
Exhibit No. 11
Case No. TFW-T-09-01
J. Fuentes, TracFone Wireless, Inc.
Federal Communications Commission FCC 08-100
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
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Petition for Designation as an Eligible )
Telecommunications Carier in the State of Florida )
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Federal-State Joint Board on Universal Service
TracFone Wireless, Inc.
Petition for Designation as an Eligible
Telecommunications Carrier in the State of New
York
Petition for Designation as an Eligible
Telecommunications Carier in the
Commonwealth of Virginia
Petition for Designation as an Eligible
Telecommunications Carrer in the State of
Connecticut
Petition for Designation as an Eligible
Telecommunications Carier in the
Commonwealth of Massachusett
Petition for Designation as an Eligible
Telecommunications Carrier in the State of
Alabama
Petition for Designation as an Eligible
Telecommunications Carer in the State of North
Carolina
Petition for Designation as an Eligible
Telecommunications Carrier in the State of
Tennessee
Petition for Designation as an Eligible
Telecommunications Carrer in the State of
Delaware for the Limited Purpose of Offering
Lifeline Service to Qualified Households
Petition for Designation as an Eligible
Telecommunications Carrier in the State of New
Hampshire for the Limited Purpose of Offering
Lifeline Service to Qualified Households
Petition for Designation as an Eligible
Telecommunications Carier in the
Commonwealth of Pennsylvania for the Limited
CC Docket No. 96-45
Federal Communications Commission FCC 08-100
Purose of Offering Lifeline Service to Qualified )Households )
)
Petition for Designation as an Eligible )
Telecommunications Carier in the Distrct of )
Columbia for the Limited Purpose of Offering )
Lifeline Service to Qualified Households )
ORDER
Adopted: April 9, 2008 Released: April 11, 2008
By the Commssion: Commissioners Copps, Adelstein and Tate issuing separate statements.
I. INTRODUCTION
1. In this Order, we conditionally grant the petitions of TracFone Wireless, Inc. (TracFone)
to be designated as an eligible telecommunications carrer (ETC), eligible only to receive universal
service Lifeline support, in its licensed service areas in New York, Virginia, Connecticut, Massachusetts,
Alabama, North Carolina, Tennessee, Delaware, New Hampshire, Pennsylvania, and the District of
Columbia, pursuant to section 214(e)(6) of the Communications Act of 1934, as amended (the Act).! Due
i TracFone Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carrer in the State of New
York, CC Docket No. 96-45 (fied June 8, 2004) (New York Petition); TracFone Wireless, Inc. Petition for
Designation as an Eligible Telecommunications Carrer in the Commonwealth of Virginia, CC Docket No. 96-45
(filed July 21,2004) (Virginia Petition); TracFone Wireless, Inc. Petition for Designation as an Eligible
Telecommunications Carrer in the State of Connecticut, CC Docket No. 96-45 (fied Nov. 9, 2004) (Connecticut
Petition); TracFone Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carer in the
Commonwealth of Massachusetts, CC Docket No. 96-45 (filed Nov. 9, 2004) (Massachusetts Petition); TracFone
Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carier in the State of Alabama, CC
Docket No. 96-45 (filed Nov. 9,2004) (Alabama Petition); TracFone Wireless, Inc. Petition for Designation as an
Eligible Telecommunications Carrier in the State of North Carolina, CC Docket No. 96-45 (filed Nov. 9, 2004)
(North Carolina Petition); TracFone Wireless, Inc. Petition for Designation as an Eligible Telecommunications
Carrer in the State of Tennessee, CC Docket No. 96-45 (filed Nov. 9, 2004) (Tennessee Petition); TracFone
Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carrer in the State of Delaware for the
Limited Purose of Offering Lifeline Service to Qualified Households, CC Docket No. 96-45 (fied Nov. 28, 2007)
(Delaware Petition); TracFone Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carrier in
the State of New Hampshire for the Limited Purpose of Offering Lifeline Service to Qualified Households, CC
Docket No. 96-45 (fied Nov. 28, 2007) (New Hampshire Petition); TracFone Wireless, Inc. Petition for Designation
as an Eligible Telecommunications Carrier in the Commonwealth of Pennsylvania for the Limited Purose of
Offering Lifeline Service to Qualified Households, CC Docket No. 96-45 (fied Dec. 11,2007) (Pennsylvania
Petition); TracFone Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carrier in the District
of Columbia for the Limited Purpose of Offering Lifeline Service to Qualified Households, CC Docket No. 96-45
(filed Jan. 18,2008) (District of Columbia Petition). TracFone filed an erratu to its New York Petition correcting,
from four to five, the number of underlying cariers it uses to serve subscribers in that state. Erratu to TracFone
Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carrier in the State of New York, CC
Docket No. 96-45 (fied June 14,2004). TracFone later amended its request for ETC designation in New York and
Virginia to limit its eligibility for federal universal service support to the Lifeline program only. Amendment to
TracFone Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carrer in the State of New
York, CC Docket No. 96-45, 2 (fied Aug. 16,2004); Amendment to TracFone Wireless, Inc. Petition for
Designation as an Eligible Telecommunications Carrer in the Commonwealth of Virginia, CC Docket No. 96-45,2
(fied Aug. 16,2004). TracFone's petitions for ETC designation in the remaining states, other than Florida, as
discussed below, were limited to eligibility for Lifeline support as originally fied. TracFone does not seek
eligibility for high-cost support.
2
Federal Communications Commission FCC 08-100
to the Florida Public Service Commission's asserton of jurisdiction over wireless ETC designations, we
dismiss without prejudice TracFone's petition for designation as an eligible telecommunications carrier in
Florida.2 On September 8, 2005, the Commission conditionally granted TracFone's petition for
forbearance from the facilties requirement of section 214( e)(1). 3 As discussed below, we now conclude
that TracF one has satisfied the remaining eligibility requirements of section 214( e)( 1) and the
Commssion's rules to be designated as an ETC eligible only for Lifeline support (limited ETC).4 We
also approve TracFone's plan for complying with the conditions imposed in the Forbearance Order.5
II. BACKGROUND
A. The Act
2. Section 254( e) of the Act provides that "only an eligible telecommunications carer
designated under section 214(e) shall be eligible to receive specific Federal universal service support.,,6
Pursuant to section 214( e)(1), a common carier designated as an ETC must offer and advertise the
services supported by the federal universal service mechanisms thoughout the designated service area.7
3. Section 214(e)(2) of the Act gives state commissions the primary responsibility for
performing ETC designations.8 Section 214(e)(6) directs the Commission, upon request, to designate as
an ETC "a common carer providing telephone exchange service and exchange access that is not subject
to the jurisdiction of a State commssion.,,9 Under section 214(e)(6), the Commission may, with respect
to an area served by a rural telephone company, and shall, in all other cases, designate more than one
common carrier as an ETC for a designated service area, consistent with the public interest, convenience,
and necessity, so long as the requesting carer meets the requirements of section 214(e)(1). io Before
2 TracFone Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carer in the State of Florida,
CC Docket No. 96-45 (filed July 21,2004) (Florida Petition). TracFone later amended its request for ETC
designation in Florida to limit its eligibilty for federal universal service support to the Lifeline program only.
Amendment to TracFone Wireless, Inc. Petition for Designation as an Eligible Telecommunications Carier in the
State of Florida, CC Docket No. 96-45,2 (filed Aug. 16,2004); see para. 10 infra (discussing jurisdiction of the
Florida Public Service Commission).
3 Petition ofTracFone Wireless, Inc.for Forbearancefrom 47 U.S.c. § 214(e)(I)(A) and47 C.F.R. § 54.201(i), CC
Docket No. 96-45, Order, 20 FCC Rcd 15095 (2005) (Forbearance Order). Under section 214(e)(l)(A) of the Act,
an ETC must offer service using its own facilities or a combination of its own facilities and resale of another
carer's service. 47 U.S.c. § 214(e)(l)(A).
4 Lifeline is the universal service low-income program that provides discounts to qualified low-income consumers
on their monthly telephone bils. See 47 C.F.R. §§ 54.401-54.409.
5 Petition of TracFone Wireless, Inc. for Forbearance from 47 U.S.c. § 214(e)(l)(A) and 47 C.F.R. § 54.201(i), CC
Docket No. 96-45, Compliance Plan (fied Oct. 11,2005) (TracFone Compliance Plan); Petition of TracFone
Wireless, Inc. for Forbearance from 47 U.S.C. § 214(e)(l)(A) and 47 C.F.R. § 54.201(i), CC Docket No. 96-45,
Errtum to Compliance Plan (filed Oct. 17,2005) (Erratum to Compliance Plan) (correcting its characterization of
Florida to identify it as a state with state-imposed certification and verification requirements for Lifeline eligibility).
647 U.S.c. § 254(e).
747 U.S.C. § 214(e)(l); see also 47 C.F.R. § 54.201(d).
847 U.S.C. § 214(e)(2); see Promoting Deployment and Subscribership in Unserved Areas, Including Tribal and
Insular Areas, CC Docket No. 96-45, Twelft Report and Order, Memorandum Opinion and Order, and Further
Notice of Proposed Rulemaking, 15 FCC Rcd 12208, 12255, para. 93 (2000) (Twelfh Report and Order).
947 U.S.C. § 214(e)(6).
10 ld.
3
Federal Communications Commission FCC 08-tOO
designating an additional ETC for an area served by a rural telephone company, the Commission must
determine that the designation is in the public interest. i I
B. Commission Requirements for ETC Designation
4. An ETC petition must contain the following: (1) a certification and brief statement of
supporting facts demonstrating that the petitioner is not subject to the jursdiction of a state commission;
(2) a certification that the petitioner offers or intends to offer all services designated for support by the
Commission pursuant to section 254(c) of the Act; (3) a certification that the petitioner offers or intends
to offer the supported services "either using its own facilities or a combination of its own facilities and
resale of another carrer's services;" (4) a description of how the petitioner "advertise(s) the availability of
the (supported) services and the charges therefore using media of general distrbution;" and (5) if the
petitioner meets the definition ofa "rural telephone company" under section 3(37) of the Act, the identity
of its study area, or, if the petitioner is not a "rual telephone company," a detailed descriltion of the
geographic service area for which it requests an ETC designation from the Commission. i
5. In the ETC Designation Order, the Commission adopted additional requirements for ETC
designation proceedings in which the Commission acts pursuant to section 214(e)(6) of the Act.13
Specifically, consistent with the recommendation of the Federal-State Joint Board on Universal Service,
the Commssion found that an ETC applicant must demonstrate: (1) a commitment and abilty to provide
services, including providing service to all customers within its proposed service area; (2) how it wil
remain functional in emergency situations; (3) that it wil satisfy consumer protection and servce quality
standards; (4) that it offers local usage comparable to that offered by the incumbent LEC; and (5) an
understanding that it may be required to provide equal access if all other ETCs in the designated service
area relinquish their designations pursuant to section 214(e)(4) of the Act.
14 These additional
requirements are mandatory for all ETCs designated by the Commission.15 ETCs already designated by
the Commssion or ETC applicants that submitted applications prior to the effective date of the ETC
Designation Order must make such showings in their annual certification filings. 16
ii Id.
12 See Procedures
for FCC Designation of Eligible Telecommunications Carriers Pursuant to Section 2I4(e)(6) of
the Communications Act, CC Docket No. 96-45, Public Notice, 12 FCC Rcd 22947,22948 (1997) (Section 2I4(e)(6)
Public Notice).
13 See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 20 FCC Rcd 6371
(2005) (ETC Designation Order); see also Virginia Cellular, LLC Petition for Designation as an EligibleTelecommunications Carrier for the Commonwealth of Virginia, CC Docket No. 96-45, Memorandum Opinion and
Order, 19 FCC Rcd 1563,1564,1565,1575-76,1584-85, paras. 1,4,27,28,46 (2004) (Virginia Cellular Order);
Highland Cellular, Inc. Petition for Designation as an Eligible Telecommunications Carrier for the Commonwealth
of Virginia, CC Docket No. 96-45, Memorandum Opinion and Order, 19 FCC Rcd 6422, 6438, paras. 1,33 (2004)
(Highland Cellular Order).
14 See ETC Designation Order, 20 FCC Rcd at 6380, para. 20 (citing Federal-State Joint Board on Universal
Service, CC Docket No. 96-45, Recommended Decision, 19 FCC Rcd 4259, para. 5 (Fed-State 11. Bd. 2004)).
1547 C.F.R. § 54.202(a). Because TracFone is a pure reseUer eligible for Lifeline support only, we do not require
TracFone to demonstrate that it satisfies the network build-out and improvement requirements or to provide a
certification that it acknowledges that the Commission may require it to provide equal access to long distance
carers in the event that no other eligible telecommunications carrier is providing equal access within the service
area.
1647 C.F.R. §§ 54.202(b); 54.209.
4
Federal Communications Commission FCC 08-100
6. In addition, prior to designating an ETC pursuant to section 214(e)(6) of the Act, the
Commission determines whether such designation is in the public interest.17 In the ETC Designation
Order, the Commission adopted one set of criteria for evaluating the public interest for ETC designations
for both rual and non-rural areas.18 Specifically, in determining the public interest, the benefits of
increased consumer choice and the unique advantages and disadvantages of the applicant's service
offering are considered.19 As the Commission noted in the ETC Designation Order, however, the same
factors may be analyzed differently or may warrant a different outcome depending on the specifics of the
proposed service area and whether it is rual or non-rual.20
C. TracFone's Petitions
7. TracFone is a non-facilties-based commercial mobile radio service (CMRS) provider
that offers prepaid wireless telecommunications services.21 On June 8, 2004, TracFone filed a petition
seeking forbearance from section 214(e)(1) of the Act, which requires that an ETC be facilties-based, at
least in part.22 Begining on that date, TracFone fied with the Commission petitions seekig designation
as an ETC only for the purose of being eligible to receive universal service Lifeline support in its
licensed service areas in New York, Virginia, Florida, Connecticut, Massachusetts, Alabama, North
Carolina, Tennessee, Delaware, New Hampshire, Pennsylvania, and the Distrct of Columbia?3
8. In the Forbearance Order, the Commission conditionally granted TracFone's request for
forbearance from the facilties-based requirements of section 214(e)(1)(A) of the Act and section
54.201 (i) of its rules for the purpose of considering TracFone's petitions for limited ETC designation.24
The Forbearance Order required that TracFone file a compliance plan with the Commssion explaining
how TracFone wil implement the conditions imposed by the Forbearance Order.25 TracFone filed its
compliance plan on October 11, 2005.16
1747 U.S.C. § 214(e)(6); 47 C.F.R. § 54.202(c). See also ETC Designation Order, 20 FCC Rcd at 6388-96, paras.
40-57; Virginia Cellular Order, 19 FCC Rcd at 1575, para. 27; Highland Cellular Order, 19 FCC Rcd at 6431-32,
para. 21. The Commission places the burden on the ETC applicant to demonstrate that the public interest is served.
ETC Designation Order, 20 FCC Rcd at 6390, para. 44.
18 ETC Designation Order, 20 FCC Rcd at 6389-90, paras. 42-43.
1947 C.F.R. § 54.202(c).
20 ETC Designation Order, 20 FCC Rcd at 6390, para. 43. In analyzing the public interest factors in this instance,
there is no rural/non-rul distinction because Lifeline support, unike high-cost support, is not detennined based on
whether the service area is rual or non-rul. See 47 C.F.R. § 54.403.
21 See. e.g., Massachusetts Petition at 2,3.
2247 U.S.c. § 214(e)(l).
23 See supra notes 1 and 2.
24 Forbearance Order, 20 FCC Rcd at 15098-99, para 6. Additionally, on its own motion, the Commission forbore
from section 54.201(d)(l) of its rules, which mirrors section 214(e) of the Act, requiring that ETCs be facilities-
based, at least in part. ¡d. at 15098, n.23.
25 ¡d. at 15105, para. 25.
26 See generally TracFone Compliance Plan; Errtum to Compliance Plan.
5
Federal Communications Commission FCC 08-100
III. DISCUSSION
A. Commission Authority to Perform the ETC Designation
9. TracFone has demonstrated that, except for the Florida Public Service Commission, the
relevant state commissions lack authority to perform the requested limited ETC designations, and the
Commission has authority to consider TracFone's petitions under section 214(e)(6) of the Act. Each
petition includes an affrmative statement from the relevant state commission providing that ETC
designation should be sought from the Cominission.27 Accordingly, we find the relevant state
commissions lack jursdiction to designate TracFone as an ETC and that this Commission therefore has
authority to perform the requested limited ETC designations under section 214( e)( 6)?8
10. In April of this year, the Florida Public Service Commission found that, due to a change
in Florida state law, it "now hars) jurisdiction to consider CMRS applications for ETC designation.,,29 In
light of this development, and because section 214(e )(2) of the Act gives state commissions the primary
responsibilty for performing ETC designations, we dismiss without prejudice the petition fied by
TracFone seeking designation as an ETC in Florida. TracFone may re-fie its petition with the Florida
Public Service Commission. Should the Florida Public Service Commission consider granting a petition
by TracFone for designation as a limited ETC in Florida, we would encourage it to require TracFone to
adhere to the compliance plan we approve herein.
B. Analysis of the Eligibilty Requirements
11. Offerig the Services Designated for Support. TracFone has demonstrated, through the
required .certifications and related fiings, that it now offers or wil offer upon designation as a limited
ETC the services supported by the Lifeline program.30
12. Offering the Supported Services Using a Carrer's Own Facilities. The Commission
previously granted TracFone forbearance from the facilties requirement for pUlloses of this limited ETC
designation, permitting TracFone to offer the supported services via resale only. i
13. Advertising the Supported Services. TracFone has demonstrated that it satisfies the
requirement of section 214( e)(1 )(B) to advertise the availability of the supported servces and the related
charges "using media of general distribution.,,32 TracFone has also stated that, in compliance with the
27 E.g., New York Petìtion at 4 and Exhibit 2.
2847 U.S.c. § 214(e)(6).
29 Petition of Alltel Communications, Inc.for Designation as Eligible Telecommunications Carrier (ETC) in Certain
Rural Telephone Company Study Areas Located Partially in Alltel's Licensed Area andfor Redefinition of those
Study Areas, PSC-07-0288-PAA-TP, Notice of Proposed Agency Action Order Finding Authority to Consider
Applications By CMRS Providers For ETC Designation, 2007 WL 1029436 (Fla. P.S.c. Apr. 3, 2007). The April
order was a proposed agency action, which was made final by a consumating order on June 7, 2007. See Petition
of Alltel Communications, Inc. for Designation as Eligible Telecommunications Carrier (ETC) in Certain Rural
Telephone Company Study Areas Located Partially in Allel's Licensed Area and for Redefiniton of those Study
Areas, PSC-07-0481A-CO-TP, Amendatory Order, 2007 WL 1774614 (Fla. P.S.c. June 7, 2007).
3047 C.F.R. §§ 54.410(a), 54.l01(a)(l)-(a)(9); see, e.g., New York Petition at 5-'8. In paricular, we disagree wìth
commenters who argued that TracFone cannot offer toll limitation service. See, e.g., TracFone Wireless, Inc.
Petition for Designation as an Eligible Telecommunications Carier in the State of New York, CC Docket No. 96-
45, Comments ofTDS Telecommunications Corp., at 9-11 (filed July 26, 2004). We find that the prepaid natue of
TracFone's service offering works as an effective toll control. See infra para. 15.
31 Forbearance Order, 20 FCC Rcd at 15098, para. 6.
3247 U.S.c. § 214(e)(I)(B); see, e.g., New York Petition at 8.
6
Federal Communications Commission FCC 08-100
Commission's Lifeline rules, it wil advertise the availabil~ of Lifeline service in a manner reasonably
designed to reach those likely to qualify for those services.3
14. Additional Eligibility Requirements. TracFone either satisfies the applicable eligibility
requirements set fort in the ETC Designation Order, described above,34 or must make such showings in
its first annual report under section 54.209 of the Commission's rules.35
C. Public Interest Analysis
15. We find that TracFone's universal service Lifeline offering wil provide a variety of
benefits to Lifeline-eligible consumers including increased consumer choice,36 high-quality service
offerings,37 and mobilty.38 In addition, the prepaid feature, which essentially functions as a toll control
featue, may be an attactive alternative to Lifeline-eligible consumers who are concerned about usage
charges or long-term contracts. The Pennsylvania Office of Consumer Advocate and the National
Emergency Numbers Association Keystone Chapter assert, however, that TracFone is not complying with
Pennsylvania's Public Safety Emergency Telephone Act (the Pennsylvania Act), which requires that
wireless providers collect a wireless E911 surcharge and remit the money to Pennsylvania's Wireless E-
911 Emergency Fund.39 The National Emergency Numbers Association (NENA) further asserts that
TracFone's actions in Pennsylvania reflect "patterns of behavior" evidenced "in several other states.'.40
TracFone's reply asserts, inter alia, that the allegations set forth in the NENA Keystone/PAOCA Joint
Comments are not relevant to TracFone's qualifications to be designated as an ETC and are a question of
3347 C.F.R. § 54.405(b); see, e.g., Petitions for Designation as an Eligible Telecommunications Carer in the State
of Connecticut and the Commonwealth of Massachusetts, CC Docket No. 96-45, Reply Comments ofTracFone
Wireless, Inc., at 10 (fied Dec. 29, 2004).
34 See supra para. 5.
35 ETC Designation Order, 20 FCC Rcd at 6380, par. 20; 47 C.F.R. §§ 54.202(a), 54.209. For example, TracFone
has committed to provide high-quality service, as demonstrated by committing to comply with the Consumer Code
for Wireless Service of the Cellular Telecommunications Industr Association (CTTA), and to serve the designated
areas within a reasonable time. See, e.g., New York Petition at 13-14. Because TracFone is a pure reseller, eligible
for universal service Lifeline support only, we do not require it to demonstrate that it satisfies the network build-out
and improvement requirements, or to provide a certification that it acknowledges that the Commission may require it
to provide equal access to long distance carrers in the event that no other eligible telecommunications carer is
providing equal access within the service area.
36 For example, TracFone's universal service offering wil provide benefits to customers in situations where they do
not have access to a wireline telephone. See, e.g., New York Petition at 12, 14.
37 For example, TracFone committed that it wil comply with the Consumer Code for Wireless Service of the CTIA.
See, e.g., New York Petition at 13.
38 See e.g., New York Petition at 10-14. As noted in the PSC Alabama Order, the mobility of telecommunications
assists conSUmers in rural areas who often must drive significant distances to places of employment, stores, schools,
and other locations. Public Service Cellular, Inc. Petiton for Designation as an Eligible Telecommunications
Carrier in the States of Georgia and Alabama, CC Docket No. 96-45, Order, 20 FCC Rcd 6854, 6861, para. 25
(Wireline Compo Bur. 2005) (PSC Alabama Order). Moreover, the availability of a wireless universal service
offering also provides access to emergency services that can mitigate the unique risks of geographic isolation
associated with living in rural communities. Id.
39 TracFone Wireless, Inc. Petition for Designation as an Eligible Telecommuncations Carrer in the
Commonwealth of Pennsylvania, Joint Comments of the Pennsylvania Offce of Consumer Advocate and the
National Emergency Numbers Association, Key~tone Chapter, CC Docket No. 96-45, 5-6 (fied Feb. 8, 2008)
(NENA Keystone/PAOCA Joint Comments).
40 See Letter from James R. Hobson, Counsel for the National Emergency Numbers Association, to Marlene H.
Dortch, Secretary, FCC, CC Docket No. 96-45, 1-3 (fied Apr. 3, 2007) (NNA Apr. 3,2008 Ex Parte Letter).
7
Federal Communications Commission FCC 08-100
state law, not commission regulation.41 TracFone fuher denies that it is in violation of the Pennsylvania
Act, and asserts that the larger question of state 911 funding requirements is more appropriately addressed
"at the national leveL. ,,42
16. We disagree with TracFone and find compliance with 91 llE911 requirements relevant to
the public interest in this instance. In the Forbearance Order, the Commission expressly conditioned its
grant of forbearance from the facilities requirement of section 214(e) of the Act on TracFone's
compliance with E91 1 requirements applicable to wireless resellers.43 The Commission adopted these
conditions because of the unique circumstances presented by TracFone's petitions for limited ETC
designation for Lifeline support.44 The Commission further required TracFone to submit a plan outlining
measures to implement the conditions imposed in the Forbearance Order, and stated the Commission
would consider the plan in deciding whether to grant TracFone's petitions for limited ETC designation.45
Given these circumstances, and in light of the concerns raised by NENA and the Pennsylvania Office of
Consumer Advocate, we condition TracFone's designation as an ETC eligible for Lifeline support in each
state on TracFone's certification that it is in full compliance with any applicable 91 11E91 1 obligations,
including obligations relating to the provision, and support, of91 1 and E91 1 service.46 Subject to this
condition, we fmd, on balance, that the advantages of designating TracFone as a limited ETC in the
designated service areas outweigh any potential disadvantages.47
D. Designated Service Areas
17. Based on the foregoing, we hereby designate TracFone as a limited ETC, eligible only for
Lifeline support, in its licensed service areas in New York, Virginia, Connecticut, Massachusetts,
Alabama, North Carolina, Tennessee, Delaware, New Hampshire, Pennsylvania, and the Distrct of
Columbia.48 In designating TracFone as a limited ETC, we clarify that TracFone's designated service
areas do not encompass federally-recognized tribally-owned lands.49
41 Petition for Designation as an Eligible Telecommunications Carrier in the Commonwealth of Pennsylvania, Reply
Comments ofTracFone Wireless, Inc., CC Docket No. 96-45,2-5 (filed Feb. 25, 2008).
42Id at 5-9.
43 See Forbearance Order, 20 FCC Rcd at 15102, para 16; infra at paras. 20-22.
44 See Forbearance Order, 20 FCC Rcd at 15102, para 16. The Commssion noted that TracFone's Lifeline-
supported service may well be the customers' only means of accessing emergency personneL. Id Given the
potential gravity of the harm if TracFone's Lifeline customers canot obtain access to emergency services, the
Commission adopted the conditions to protect Lifeline customers. Id
45Id at 15105, para. 25.
46 See NENA Keystone/PAOCA Joint Comments; NENA Apr. 3, 2008 Ex Parte Letter.
47 The Commission has aleady found that any effect on the universal service fund would be minimal, limited to the
Lifeline program, and outweighed by the benefit of increasing eligible paricipation in the Lifeline program.
Forbearance Order, 20 FCC Rcd 15103-04, para. 17. In addition, we need not perform a creamskimming analysis
because TracFone is seeking to be eligible for Lifeline support only.
48 Under this limited ETC designation, TracFone wil not be eligible for support for Link Up or toll-limitation
service under the low-income program, nor wil it be eligible for high-cost support, or for schools and libraries and
rural health care support as an ETC. Non-ETCs, however, may participate in certain aspects of the schools and
librares or rual health care programs. See Forbearance Order, 20 FCC Rcd at 15097, para. 3 & n.12.
49 TracFone expressly states that it does not request ETC designation for tribal lands. Petitions for Designation as an
Eligible Telecommunications Carrier in the States of Alabama, North Carolina, and Tennessee, CC Docket No. 96-
45, Reply Comments of TracFone Wireless, Inc., at n.22 (fied Feb. 2, 2005).
8
Federal Communications Commission FCC 08-100
E. Regulatory Oversight and Compliance Plan
18. Under section 254(e) of the Act, TracFone is required to use the specific universal service
support it receives "only for the provision, maintenance, and upgrading of facilities and services for
which the support is intended.,,50 An ETC receiving Lifeline support uses that support as intended when
it reduces the price of its telecommunications services by the amount of the support for the eligible
consumer.51 Lifeline assistance shall be made available to qualifying low-income consumers as soon as
the universal service fud Administrator certifies that TracFone's Lifeline service offering satisfies the
criteria in our rules and complies with the conditions imposed under the Forbearance Order.52 In
addition, TracFone must report certain information to the Commission and the Universal Service
Administrative Company (USAC) pursuant to section 54.209 of the Commission's rules.53
19. We find that reliance on TracFone's commitments to meet these requirements is
reasonable and consistent with the public interest and the Act and the Fifth Circuit decision in Texas
Offce o/Public Utilty Counsel v. FCC.54 These requirements wil furter the Commssion's goal of
ensuring that TracFone satisfies its obligation under section 214(e) of the Act to provide the services
supported by the Lifeline program throughout its designated service areas.
20. In addition, we note that, in the Forbearance Order, the Commssion imposed additional
requirements on TracFone, and ordered that TracFone fie a compliance plan detailng how it will adhere
to these requirements. The additional requirements obligate TracFone to implement certain 911 and E911
requirements and to establish certain administrative procedures to safeguard against waste, fraud, and
abuse in the Lifeline program.
21. Specifically, the Commission conditioned forbearance from the facilities requirement for
limited ETC designation upon TracFone: (a) providing its Lifeline customers with 911 and enhanced 91 1
(E91 1) access regardless of activation status and availabilty of prepaid minutes; (b) providing its Lifeline
customers with E911-compliant handsets and replacing, at no additional charge to the customer, non-
compliant handsets of existing customers who obtain Lifeline-supported service; (c) complying with
conditions (a) and (b) as of the date it provides Lifeline service; (d) obtaining a certification from each
Public Safety Answering Point (PSAP) where TracFone provides Lifeline service confirming that
TracFone complies with condition (a); (e) requiring its customers to self-certify at time of service
5047 U.S.C. § 254(e). Because TracFone is not eligible to receive high-cost support, we do not require it to provide
high-cost certifications under §§ 54.313 and 54.314 of our rules. See 47 C.F.R. §§ 54.313, 54.3 14.
51 See Forbearance Order, 20 FCC Rcd at 15105-06, para. 26.
52 See 47 C.F.R. §54.401(d). As noted above, we find that TracFone's service offering meets the criteria for service
and functionality contained in our rules. See supra par. 11 & n.29. We also approve TracFone's compliance plan,
finding that it is adequate to implement the conditions of the Forbearance Order. See infra para. 21.
53 See 47 C.F.R. § 54.209(a) (specifyng the information to be included in the annual reports submitted by ETCs);
ETC Designation Order, 20 FCC Rcd at 6400-6402, paras. 68-69; see also Virginia Cellular Order, 19 FCC Rcd at
1584, para. 46 & n.l40 (anticipating that annual submissions wil encompass only the ETC's designated service
areas). As noted above, as a pure reseller eligible for Lifeline support only, we do not require TracFone to report on
network build-out and improvements or to certify that it acknowledges that the Commission may require it to
provide equal access to long distace carers in the event that no other eligible telecommuncations carier is
providing equal access within the service area. See supra note 15.
54 In TOPUC, the Fift Circuit held that that nothing in section 214(e)(2) of the Act prohibits states from imposing
additional eligibility conditions on ETCs as part of their designation process. See Texas Offce of Public Utilty
Counsel v. FCC, 183 F.3d 393, 417-18 (5th Cir. 1999) (TOPUC). Consistent with this holding, we find that nothing
in section 214(e)(6) prohibits the Commission from imposing additional conditions on ETCs when such
designations fall under our jursdiction.
9
Federal Communications Commission FCC 08-100
activation and annually thereafter that they are the head of household and receive Lifeline-supported
service only from TracFone; and (f) establishing safeguards to prevent its customers from receiving
multiple TracFone Lifeline subsidies at the same address.55
22. The Commission carefully crafted the condítions of the Forbearance Order to meet
important regulatory goals. We decline, therefore, to modifY these conditions as requested by TracFone
in granting the ETC designation requests at issue herein.56 Consequently, TracFone must obtain the
required certification from each PSAP where it wil provide Lifeline service.57 Moreover, TracFone must
continue to provide access to "basic and enhanced 911 service" as described in section 20. 18(m) of our
rules.58 Finally, TracFone must "distribute its Lifeline service directly to its Lifeline customers.,,59
23. After careful review of the compliance plan and the record, we find the compliance plan
adequate to implement the original and unmodified conditions of the Forbearance Order.60 We,
therefore, approve the compliance plan as discussed in this Order.
55 Forbearance Order, 20 FCC Rcd at 15098-99, para. 6.
56 In its compliance plan, TracFone requests two modifications to the public safety conditions. First, TracFone
requests that, in lieu of obtaining certification from each PSAP confinning access to 91 1 and E9 I I, that it be
permitted to rely on the underlying carrier's curent quarerly E91 1 report filed with the Commission together with a
certification from TracFone that its Lifeline customers in the relevant market wil be served only by such carrier(s).
TracFone Compliance Plan at 7-10. Second, TracFone requests that it be allowed to offer Lifeline service where
either 911 or E911 service is available. ¡d. at 11-14. Furher, TracFone states in its applications that it wil
implement, upon designation as an ETC, the Lifeline certification and verification procedures set forth in an ex parte
presentation dated July 13,2005. See, e.g., Delaware Petition at 12; District of Columbia Petition at 12-13; Letterfrom Mitchell F. Brecher, Counsel for TracFone, to Marlene H. Dortch, Secreta, FCC, WC Docket 96-45, Attach.
(July 13, 2005). TracFone does not explicitly note, however, that the procedures set fort in that document were
rejected, in par, in the Forbearance Order. See Forbearance Order, 20 FCC Rcd at 15104, para. 19; Distrct of
Columbia Public Service Commission Reply Comments, CC Docket No. 96-45, at 4-5 (filed Mar. 13, 2008)
(District of Columbia Reply). Out of an abundance of caution, we treat this omission as a request for modification
ofthe conditions of the Forbearance Order.
57 See Forbearance Order, 20 FCC Rcd at 15102, para. 16. We believe this requirement is sufficient to address the
Distrct of Columbia Public Service Commission's concern that the District of Columbia Offce of Unified
Communications be notified that TracFone is providing Lifeline service in the District of Columbia. See Distrct of
Columbia Reply at 4.
5847 U.S.c. § 20.l8(m) (emphasis added). We also note that CMRS providers are required to "transmit all wireless
9 I 1 calls without respect to their call validation process. . . ." See 47 C.F.R. § 20.1 8(b). This rule addresses the
concerns of the District of Columbia Public Service Commission regarding the 91 1 capabilty of TracFone handsets
"regardless of activation status or minute availability." See Distrct of Columbia Reply at 3; Revision of the
Commission's Rules to Ensure Compatibilty with Enhanced 911 Emergency Callng Systems, CC Docket No. 94-
102, RM-8143, Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 18676, 18691-99,
paras. 29-46 (1996).
59 Forbearance Order, 20 FCC Rcd at 15104, para. 19.
60 In particular, we disagree with US
Telecom, who questions whether TracFone wil receive 12 months of Lifeline
support if a subscriber who chooses the annual prepaid plan uses all of the initial minutes in the first month or if a
subscriber under the "NETlO" plan redeems fewer.than 12 monthly coupons. See Petition of TracFone Wireless,
Inc. for Forbearance from 47 U.S.c. § 214(e)(l)(A) and 47 C.F.R. § 54.20 I (i), CC Docket No. 96-45, Comments ofthe United States Telecom Association, at 3,4 (fied Nov. 28, 2005) (USTelecom Compliance Plan Comments). We
find that TracFone's plans for seeking reimburement are consistent with our Lifeline rules and procedurs. Petition
of TracFone Wireless, Inc. for Forbearance from 47 U.S.C. § 214(e)(l)(A) and 47 C.F.R. § 54.20 I (i), CC Docket
No. 96-45, Reply Comments of TracFone Wireless, Inc., at 6, 7 (fied Dec. 12,2005). Moreover, despite comments
to the contrary, we are satisfied that TracFone wil pass though all Lifeline support as required by our rules. See
USTelecom Compliance Plan Comments at 1 -2. Finally, we find that we do not need to clarfY how Lifeline support
(continued.... )
10
Federal Communications Commission FCC 08-100
24. Finally, we note that the Commission may institute an inquiry on its own motion to
examine any ETC's records and documentation to ensure that the universal service support an ETC
receives is being used for the purose for which it was intended.61 TracFone wil be required to provide
such records and documentation to the Commission and USAC upon request. If TracFone fails to fulfill
the requirements of the Act, our rules, the terms of this Order, or the conditions imposed under the
Forbearance Order after it begins receiving universal service Lifeline support, the Commission may
revoke its limited ETC designation.62 The Commission may also assess forfeitures for violations of its
rules and orders.63
iv. ANTI-DRUG ABUSE ACT CERTIFICATION
25. Under section 5301 of the Anti-Drug Abuse Act of 1988, no applicant is eligible for any
new, modified, or renewed instrent of authorization from the Commission, including authorizations
issued under section 2 i 4 of the Act, unless the applicant certifies that neither it, nor any party to its
application, is subject to a denial offederal benefits, including Commission benefits.64 TracFone has
provided a certification consistent with the requirements of the Anti-Drug Abuse Act of 1988.65 We find
that TracFone has satisfied the requirements of the Anti-Drug Abuse Act of 1988, as codified in sections
1.200 i - i .2003 of the Commission's rules.66
V. ORDERING CLAUSES
26. Accordingly, IT is ORDERED that, puruant to the authority contained in section
214(e)(6) of the Communications Act, 47 U.S.C. § 214(e)(6), TracFone Wireless, Inc. is DESIGNATED
AN ELIGIBLE TELECOMMUCATIONS CARRER eligible only for Lifeline support in its licensed
(...continued from previous page)
wil be calculated and distrbuted because we are confident that USAC is capable of handling any administrtive
issues presented by TracFone's Lifeline offering. See Forbearance Order, 20 FCC Rcd at 15104, para. 20 (stating
that the ETC designation order would address how Lifeline support will be calculated and distributed if the prepaid
nature of the offering requires such clarification). The Forbearance Order also addressed the issue of double
recovery, noting that, although the Commission has in the past declined to extend ETC status to pure resellers due to
concerns about double recovery of universal service support, TracFone's CMRS wholesale providers are not subject
to section 251(c)(4) wholesale obligations and so the resold services presumably do not reflect a reduction in price
due to Lifeline support. See id. at 15100-01, para. 12. We, therefore, dismiss comments to the contrary. See, e.g.,
Comments ofVerizon, Federal-State Joint Board on Universal Service, TracFone Wireless Inc., Petition for
Designation as an Eligible Telecommunications Carer in the State of New York, Petition for Forbearance from
Application of Section 214, CC Docket No. 96-45 at 9 (fied July 26,2004).
6147 U.S.C. §§ 220,403.
62 See Federal-State Joint Board on Universal Service, Western Wireless Corporation Petition for Preemption of an
Order of the South Dakota Public Utilties Commission, CC Docket No. 96-45, Declaratory Ruling, 15 FCC Rcd
15168, 15174, para. 15 (2000); 47 U.S.c. § 254( e); see also Forbearance Order, 20 FCC Rcd at i 5099, para. 6,
n.25.
63 See 47 U.S.c. § 503(b).
64 21 U.S.C. § 862; 47 C.F.R. § I.2002(a)-(b). Section 1.2002(b) provides that a "par to the application" shall
include: "( 1) If the applicant is an individual, that individual; (2) If the applicant is a corporation or unncorporated
association, all offcers, directors, or persons holding 5% or more of the outstanding stock or shares (voting and/or
nonvoting) ofthe petitioner; and (3) If the application is a parnership, all non-limited parners and any limited
parters holding a 5% or more interest in the partnership." 47 C. F. R. § 1.2002(b). See Section 214(e)(6) Public
Notice, 12 FCC Rcd at 22949.
65 See e.g., New York Petition at Exhibit 1.
6647 C.F.R. §§ 1.2001-2003.
11
Federal Communications Commission FCC 08-100
service areas in New York, Virginia, Connecticut, Massachusetts, North Carolina, Alabama, Tennessee,
Delaware, New Hampshire, Pennsylvania, and the District of Columbia to the extent described in this
Order and subject to the conditions set fort herein.
27. IT is FURTHER ORDERED that, pursuant to the authority contained in section
214(e)(6) of the Communications Act, 47 U.S.C. § 214(e)(6), TracFone Wireless, Inco's petition for
eligible telecommunications carrier designation in the state of Florida is DISMISSED WITHOUT
PREJUDICE to the extent described herein.
28. IT is FURTHER ORDERED that TracFone Wireless, Inc. WILL SUBMIT additional
information pursuant to section 54.209 of the Commission's rules, 47 C.F.R. § 54.209, no later than
October 1, 2008, as part of its annual reportng requirements.
29. IT is FURTHER ORDERED that, pursuant to section 1.03 of the Commission's rules,
47 C.F.R. § 1.03, this Order SHALL BE effective upon release.
FEDERAL COMMUICATIONS COMMISSION
Marlene H. Dortch
Secretary
12
Federal Communications Commission FCC 08-100
STATEMENT OF
COMMISSIONER MICHAEL J. COPPS
Re: Federal-State Joint Board on Universal Service; TracFone Wireless, Inc.; Petitions for
Designation as an Eligible Telecommunications Carrier in the States of New York, Florida,
Virginia, Connecticut, Massachusetts, Alabama, North Carolina, Tennessee, Delaware, New
Hampshire, Pennsylvania and the District of Columbia for the Limited Purpose of Offering
Lifeline Service to Qualifed Households, CC Docket No. 96-45, Order.
For quite some time the public debate has centered on whether and how the Universal Service
system's high-cost fund should support wireless CETCs. While an important policy discussion for sure,
sometimes we lose sight of the fact that there is an entire segment of consumers who would lack a phone
at all and would easily become disconnected from society were it not for the support of the Lifeline
program. I am very pleased that today the Commission takes a moment to focus on making it easier for
low-income consumers to receive wireless phone service. The Petitioner is now eligible for Lifeline
support to provide wireless phone service in ten states and the Distrct of Columbia. To some who own
multiple phones of every size and shape, such a decision may seem inconsequential; but to the many
working poor in this country phone service remains essential to staying connected with family,
employers, and the communities in which they live. A wireless option wil only make it easier for these
consumers to stay connected. The Order recognizes both the importance of providing consumers with a
wireless option and at the same time ensures that consumers have essential emergency services available
to them. For these reasons, I am pleased to approve this item.
13
Federal Communications Commission FCC 08-100
STATEMENT OF
COMMISSIONER JONATHAN S. ADELSTEIN
Re: Federal-State Joint Board on Universal Service; TracF one Wireless, Inc.; Petitions for
Designation as an Eligible Telecommunications Carrier in the States of New York, Florida,
Virginia, Connecticut, Massachusetts, Alabama, North Carolina, Tennessee, Delaware, New
Hampshire, Pennsylvania and the District of Columbia for the Limited Purpose of Offering
Lifeline Service to Qualifed Households, CC Docket No. 96-45, Order.
For most of us, living without telephone service is almost unimaginable. It is a link to our jobs,
to commerce, to healthcare and emergency services, not to mention friends and family. For that reason,
Congress and the Commission have long recognized the importnce of ensuring that consumers have
affordable access to telecommunications services. We have succeeded through Federal universal service
programs, including Lifeline and Link Up, in achieving extraordinarily high levels of telephone
penetration in the U.S. Despite that progress, milions of consumers lack even the most basic
connectivity. For many of these consumers, the cost of maintaining telephone servce is prohibitively
expensive, keeping even the most basic connections out of reach. This is particularly so for low-income
consumers, who are much less likely to have access to telephone service.
Our Lifeline program forms the backbone of our efforts to reach low income consumers.
Through this Order, the Commission takes a modest step to expand the options available for low income
consumers. By designating a provider that actively targets low-income consumers for Lifeline support,
this Order should expand choice for these consumers. This is particularly important, given the
Commission's estimate that only about one third of households eligible for Lifeline support actully
subscribe to the program. Greater competition for low-income customers should lead to better service
offerings, lower costs, and, most importantly, greater paricipation.
I would like to thank the staff of the Wireline Competition Bureau for their hard work to address
these petitions and the proposed compliance plan. Given the unique circumstances of designating a
prepaid provider as eligible to receive universal service support, it is importt that the Commission
carefully monitor its implementation and I look forward to working with both the Bureau and my
colleagues should any questions arse.
14
Federal Communications Commission FCC 08-100
STATEMENT OF
COMMISSIONER DEBORAH TAYLOR TATE
Re: Federal-State Joint Board on Universal Service; TracFone Wireless, Inc.; Petitions for
Designation as an Eligible Telecommunications Carrier in the States of New York, Florida,
Virginia, Connecticut, Massachusetts, Alabama, North Carolina, Tennessee, Delaware, New
Hampshire, Pennsylvania and the District of Columbia for the Limited Purpose of Offering
Lifeline Service to Qualifed Households, CC Docket No. 96-45, Order.
Just as we improved utilization of the separate rual health care mechanism of the universal
service program with our recent Rural Health Care Pilot Program, we now tae action to enhance the
Lifeline Program. The Lifeline program is a key component of the national universal service goal set out
by Congress to ensure that consumers in all comers of the nation - no matter their economic status - have
access to telecommunications services. Since its inception, Lifeline has provided support for millons of
low-income consumers.
In our decision we grant a very narow and limited Eligible Telecommunications Carrier (ETC)
designation to TracFone's Lifeline program which provides eligible consumers increased choice and
mobilty, especially citizens in rural areas who often must drive significant distances for employment,
education and healthcare. In addition the prepaid featue may be an attractive alternative to Lifeline-
eligible consumers who are concerned about usage charges or long-term contracts.
Significantly, under this limited ETC designation, TracFone wil not be eligible for support for
Link Up or toll-limitation service under the low-income program, nor wil it be eligible for high-cost
support, or for schools and libraries and rual health care support. In addition, we impose additional
requirements on TracFone that obligate it to implement certain 91 1 and E911 requirements, including
administrative procedures to safeguard against waste, fraud, and abuse.
15
Exhibit No. 12
Case No. TFW-T-09-01
J. Fuentes, TracFone Wireless, Inc.
Federal Communications Commission DA 11-54
Before the
Federal Communications Commission
Washington, DC 20554
In the Matter of )
)
)
)
)
)
)
CC Docket No. 96-45TracFone Wireless, Inc.
Petition for Modification of Condition Imposed
On TracFone upon Designation as an Eligible
Telecommunications Carrer
ORDER
Adopted: January 11, 2011 Released: January 11, 2011
By the Chief, Wireline Competition Bureau:
I. INTRODUCTION
1. In this order, we deny a petition for waiver fied by TracFone Wireless, Inc. (TracFone)
seeking to modify the compliance plan condition that it require each of its Lifeline customers to self-
certify annually that they are the head of their household and receive Lifeline-supported service only from
TracFone.i TracFone requests that it instead be allowed to contact only a statistically-valid sample of its
customers to comply with this condition? We find that TracFone has not demonstrated good cause and
that a waiver is not in the public interest.
II. BACKGROUND
2. TracFone is a pre-paid wireless provider curently offering Lifeline service to low-income
consumers. In 2005, the Commission conditionally granted a petition for forbearance filed by TracFone
allowing TracFone to seek designation as a limited eligible telecommunications carrier (ETC) for the
purpose of providing only universal service Lifeline service.3 Specifically, TracFone sought forbearance
from the statutory requirement that a carrer provide services "either using its own facilities or a
combination of its own facilities and resale of another carer's services" to be considered an ETC.4 As a
i Petition for Modification of Annual Verification Condition, CC Docket No. 96-45 (fied Apr. 27, 2009) (TracFone
Petition); see also Supplement to Petition for Modification of Annual Verification Condition, CC Docket No. 96-45
(filed Jun. 1,2009) (TracFone Supplement). On June 5, 2009, the Commission released a Public Notice seeking
comment on TracFone's petition. Comment Sought on TracFone Requestfor Modifcation Condition Adopted in
Commission Order Granting TracFone Forbearancefrom Eligible Telecommunications Carrier Requirements, CC
Docket No. 96-45, Public Notice, 24 FCC Rcd 7694 (2009).
2 See TracFone Petition at 3; see also 47 C.F.R. § 54.4lO(c)(2).
3 See Federal-State Joint Board on Universal Service, Petition ofTracFone Wireless. Inc. for Forbearance from 47
u.s.c. § 214(e)(I)(A) and 47 C.F.R. § 54.20I(i), CC Docket No. 96-45, Order, 20 FCC Red 15095, 15098, para. 6
(2005) (Forbearance Order).
447 U.S.c. § 214(e)(l)(A). See TracFone Wireless, Inc. Petition for Forbearance, CC Docket No. 96-45 (fied June
8,2004).
Federal Communications Commission DA 11-54
condition of the grant offorbearance, among other requirements, the Commission ordered TracFone to
require each of its Lifeline customers to self-certify at the time of service activation and annually
thereafter that the customer is the head of household and receives Lifeline-supported service only from
TracFone.5 The Commission imposed this condition because of concerns with customers receiving
duplicate Lifeline support.6 The Commission also required that TracFone file a compliance plan
explaining how TracFone would implement the conditions imposed.7 TracFone subsequently fied its
compliance plan.8 In 2008, the Commission issued an order designating TracFone as a Lifeline-only ETC
in certain states and re-affirmng the Forbearance Order condition explained above.9
3. A year after the ETC Designation Order, TracFone filed the instant petition for a waiver.io
TracFone requests that instead of annually confirming each of its Lifeline customer's status as the head of
household and a recipient of Lifeline-supported service only from TracFone, TracFone be allowed to
survey a statistically-valid sample of its customers. ii TracFone argues that the condition is overly
burdensome and without justification as compared to the anual Lifeline eligibility verification
requirements imposed on all ETCs operating in federal default states. i2 TracFone fuher argues that its
methods for contacting its Lifeline customers for this condition could force it to de-enroll a large
percentage of those customers due to poor response rates. i 3
III. DISCUSSION
4. We conclude that TracFone has not demonstrated good cause to justify a modification of
the Forbearance Order condition and that waiver of the condition is not in the public interest. The
Commission may waive any provision of its rules for good cause shown.14 Good cause may be shown
through particular facts that make strict compliance inconsistent with the public interest. is In addition, the
Commission may take into account considerations of hardship, equity, or more effective implementation
S Forbearance Order, 20 FCC Rcd at 15103, para. 18.
6 !d.
7 Forbearance Order, 20 FCC Rcd at 15098-99, para. 6.
8 TracFone Wireless, Inc. Compliance Plan, CC Docket No. 96-45 (filed Oct. 11,2005).
9 Federal-State Joint Board on Universal Service, TracFone Wireless, Inc. Petition for Designation as an Eligible
Telecommunications Carrier in the State of New York, et aI., CC Docket No. 96-45, Order, 23 FCC Rcd 6206,6214-
15, para. 21 (2008) (ETC Designation Order).
io See supra note 1.
ii TracFone Petition at 3.
12 TracFone Petition at 3-4. See 47 C.F.R. §§ 54.409, 54.410. ETCs operating in federal default states (those states
without their own Lifeline programs) are required to implement procedures to verify anually the continued
eligibility of a statistically-valid random sample of their Lifeline consumers and provide results of that sample to
USAC. 47 C.F.R. § 54.4IO(c)(2). However, the Commission's rules require ETCs in states that have their own
Lifeline programs to comply with state verification procedures. 47 C.F.R. § 54.41 O( c)( 1).
13 TracFone Supplement at 3. See also Letter from Mitchell F. Brecher, Counsel for TracFone, to Marlene H.
Dortch, FCC, CC Docket 96-45, fied July 31,2009 (TracFone Letter) (arguing the ineffectiveness of using direct
mail in fulfillment of the Forbearance Order condition).
1447 C.F.R § 1..
i5 Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (Northeast Cellular).
2
Federal Communications Commission DA 11-54
of overall policy on an individual basis.16 In sum, waiver is appropriate if special circumstances warrant a
deviation from the general rule, and such deviation would better serve the public interest than strct
adherence to the general rule.17
5. We find that TracFone has failed to demonstrate that modification of the condition would
be in the public interest. TracFone contends that the condition, which requires it to contact annually each
of its Lifeline customers, is overly burdensome and not justified, paricularly compared to a requirement
the Commssion imposed on ETCs that permits them to conduct anual verification of Lifeline
consumers' eligibility using only statistically valid customer samples.18 While the verification
requirement serves an important fuction in ensuring Lifeline customers maintain their eligibility, the
Commission has recognized that the Forbearance Order condition imposed on TracFone and similarly
situated ETCs is essential to protecting the program from waste. 19 TracFone and other similarly-situated
ETCs typically provide their Lifeline-supported service for free and do not invoice their Lifeline
consumers. We believe this may increase the risk for more duplicate claims for Lifeline-supported
service than is likely with traditional ETCs which bil their customers monthly. First, some enrolled low-
income consumers of pre-paid wireless service may not understand that their service is supported by the
Lifeline program because, lacking a monthly bil, they do not see a Lifeline discount noted on a bilL.
Second, some consumers may understad that TracFone and similarly-situated carriers are offering
Lifeline-supported service, but these consumers may still sign up for a second Lifeline-supported phone
through a pre-paid wireless carier because of the free nature of the service. In fact, as noted above, the
Commission imposed additional requirements on carers such as TracFone because of concerns with
double recovery of Lifeline support by consumers.20 TracFone is obligated "to establish certin
administrative procedures to safeguard against waste, frud, and abuse.,,21 TracFone's specific duty to
survey annually each of its Lifeline customers as to whether TracFone is the sole Lifeline provider to the
customer's household helps prevent duplication of Lifeline service and is intended to guard against waste
in the program. Granting this petition would result in TracFone contacting far fewer customers to
determine if they are receiving duplicate Lifeline support. By contacting each of its Lifeline customers
annually, TracFone wil have to monitor and, if necessary, de-enroll many more ineligible consumers than
it would though contacting a statistically-valid sample of its Lifeline customers.
6. We also find that TracFone has not shown good cause justifying a modification of its
annual verification condition. TracFone has not presented in its petition, supplement, or subsequent letter
any new or special circumstances that warrant a waiver. TracFone instead argues that the condition is
overly burdensome, and it should be permitted to contact only a subset of its customers to comply with
this obligation.22 Notably, TracFone did not claim any change in its circumstances from the time the
16 WAIT Radio v. FCC, 418 F.2d 1153, 1157 (D.C. Cir. 1969).
17 Northeast Cellular, 897 F.2d at 1166; accord NetworklP, LLC v. FCC, 548 F.3d 116, 127 (D.C. Cir. 2008).
18 TracFone Petition at 4. Section 54.4IO(c)(2) of the Commission's rules requires all ETCs in federal default states,
including TracFone, to verify the continued eligibility of a statistically-valid sample of their Lifeline customers. See
47 C.F.R. § 54.4IO(c)(2). See supra note 12
19 See, e.g., Petition
for Designation as an Eligible Telecommunications Carrier in the States of New York, North
Carolina, Pennsylvania, Tennessee and Virginia, CC Docket No. 96-45, Order, 24 FCC Rcd 13413 (2009) (Virgin
Mobile, as a prepaid wireless reseller, is also subject to the condition for which TracFone seeks a waiver).
20 See e.g., Forbearance Order, 20 FCC Rcd at 15103, para. 18; see also ETC Designation Order, 23 FCC Rcd at
6214-6215, para. 21.
21 See ETC Designation Order at 6214, para. 20.
22 TracFone Petition at 3.
3
Federal Communications Commission DA 11-54
Commission granted it forbearance and designated it as an ETC that would support its claim that the
continued imposition of this condition creates a new burden on the company. Commenters expressed
unanimous opposition to TracFone's petition, arguing, among other things, that TracFone has failed to
show its need for a waiver for just this reason.23 As Sprit Nextel Corporation points out, TracFone's
petition argues only that the "use of a statistically valid sample would be more convenient for
TracFone.,,24 Among other reasons, we conclude that TracFone's failure to support its petition with new
facts warrants a denial of its petition.
7. Further, we are not sympathetic to TracFone's argument that continued imposition of this
condition wil cause it to de-enroll a large percentage of its Lifeline subscribers because of poor response
rates from its customers.25 We believe that the possibilty of de-enrollng a large percentage of non-
responsive consumers, even those that may be eligible, is outweighed by the significant protections
afforded to the program by continued imposition of the Forbearance Order condition on TracFone-
namely, that such a condition wil protect the program against waste, fraud, and abuse. We note that in
the event that eligible TracFone Lifeline consumers are de-enrolled due to their lack of a response, these
customers are free to sign up with TracFone again if they are able to prove their eligibilty and otherwse
meet all program requirements.
8. In conclusion, TracFone has not demonstrated good cause to justifY a modification of this
condition or that waiver of the condition is in the public interest. Given TracFone's consent to the
obligation at hand, our ongoing responsibilty to protect against waste, fraud, and abuse in the program,
and the dearth of new facts presented by TracFone to justifY modification of the condition, we deny
TracFone's petition to modifY the compliance plan condition that it require each of its Lifeline customers
to annually self-certifY that they are the head of their household and receive Lifeline-supported service
only from TracFone.
IV. ORDERIG CLAUSES
9 . ACCORDINGLY, IT is ORDERED, pursuant to the authority contained in sections 1-4
and 254 of the Communications Act of 1934, as amended, 47 U.S.c. §§ 151-154 and 254, and sections
0.91 and 1.3 of the Commission's rules, 47 C.F.R. §§ 0.91 and 1.3, that the petition for modification fied
by TracFone Wireless, Inc. is DENIED.
10. IT is FURTHER ORDERED that, pursuant to section 408 of the Communications Act of
1934, as amended, 47 U.S.C. § 408, this Order SHALL BE EFFECTIVE upon release.
23 Sprint Comments at 3; NASUCA Reply Comments at 4; see also Pa PUC Comments and Reply Comments.
24 Sprint Comments at 3.
25 TracFone Supplement at 3; see also TracFone Letter.
4
Federal Communications Commission DA 11-54
FEDERAL COMMUNICATIONS COMMISSION
Sharon Gilett
Chief
Wireline Competition Bureau
5
Federal Communications Commission DA 11-54
APPENDIX
List of Commenters
Commenter
Pennsylvania Public Utility Commission
Public Service Commission of the District of Columbia
Sprint Nextel, Corp.
Abbreviation
PaPUC
DCPSC
Sprit
Reply Commenter
National Association of State Utilty Consumer Advocates
Pennsylvania Public Utility Commission
TracFone Wireless, Inc.
Abbreviation
NASUCA
PaPUC
TracFone
6
Exhibit No. 13
Case No. TFW-T-09-01
J. Fuentes, TracFone Wireless, Inc.
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