20110819Petition for Reconsideration.pdf

McDevitt & Miller LLP
Lawyers
RECEIVED
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420 W. Bannock Street
P.O. Box 2564-83701 201 l AUG 19 PH 2: 45
Boise, Idaho 83702
August 19, 2011
Via Hand Delivery
Jean Jewell, Secretar
Idaho Public Utities Commssion
472 W. Washigton St.
Boise, Idaho 83720
Re: TFW- T -09-01
Dear Ms. Jewell:
Enclosed for fig in the above matter, please fid an orial and seven r) copies ofTracfone
Wireless, Inco's Petition for Reconsideration.
Kidly retu a fie stamped copy to me.
Very Truy Yours,
McDevitt & Mier ILPC'LDean J. Mier
DJM/hh
Encl.
Chas. F. McDevitt
Dean J. (Joe) Miler
ORIGINAL
Dean J. Miler (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Banock Street
P.O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
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RE"'C \\ír: n~ \",,; t_ ',\~ .." ,.
inn ~\jG \ 9 P~l 2.: 45
Mitchell F. Brecher (admitted pro hac vice-DCB No. 210781)
Debra McGuire Mercer
GREENBERG TRAURIG, LLP
2101 L Street, NW
Suite 1000
Washington, DC 2003 7
Tel: [phone]
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mercerdm~gtlaw . com
Attorneys for TracFone Wireless, Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE AMENDED )
APPLICATION OF TRACFONE ) CASE NO. TFW-T-09-01
WIRELESS, INC. FOR DESIGNATION AS- )
AN ELIGIBLE TELECOMMUNICATIONS ) PETITION FOR RECONSIDERATION OFCARRIER ) APPLICANT TRACFONE WIRELESS,
) INC.
TracFone Wireless, Inc. ("TracFone"), pursuant to Idaho Code, § 61-626 and IDAPA
31.01.01.331, fies ths Petition for Reconsideration in which it respectfully asks the Idaho Public
Utilities Commission ("Commission") to reconsider Order No. 32301 dated July 29, 2011
("Order"), As will be explained in this reconsideration petition, reconsideration of the Order is
compelled because the Order misapplies applicable law; is not supported by the record; and
because the result therein would not serve the public interest.
,; l , t
INTRODUCTION
TracFone has applied to the Commission for designation as an Eligible
Telecommunications Carer ("ETC"). The Commission has been empowered by Congress to
designate ETCs pursuant to Section 214(e)(2) of the Communcations Act of 1934, as amended
by the Telecommunications Act of 1996.1 In the Order, the Commission denied the Application
of TracFone for designation as an ETC. The Commission concludes in the Order that TracFone
has failed to meet the requirements for ETC designation codified at 47 U.S.C. § 214(e)(1) and
that TracFone's failure to remit certain fees conflicts with the public interest and provides cause
to deny TracFone's ETC Application. The Commission also states that it wil not grant ETC
status to TracFone until TracFone assents to ''voluntarly'' pay the fees at issue.2 As explained in
this petition, the Commission's legal conclusion that Idaho law requires TracFone to pay certain
fees is based upon a misapplication of the relevant statutes. Also, the Commission has provided
no factual basis for its wholly unsupported conclusion that TracFone has not met all
requirements for ETC designation codified at 47 U.S.c. § 214(e)(1). Furermore, the
Commission's reliance on an unsupported and conclusory statement by another state governent
agency and on unelated judicial proceedings from other states involving other states' laws is
misplaced. Accordingly, TracFone asks the Commission to grant reconsideration and to issue an
order designating TracFone as an ETC for the limited purose of providing Lifeline service to
low-income Idaho households. TracFone requests reconsideration by wrtten briefs, and if
desired by the Commission, oral arguent.
147 U.S.C. § 214(e)(2).
2 Order, at 9.
TracFone's Petition for Reconsideration 2
On October 29, 2009, TracFone applied to the Commission for designation as an ETC
solely for the purose of providing Lifeline service to eligible low-income consumers in Idaho.
As stated in its Application, TracFone wil only seek funds from the low-income portion of the
federal Universal Service Fund ("USF"). TracFone wil not seek any fuds from the high cost
portion of the federal USF. Nor will TracFone seek funds from any state fud, including the
Idaho Telecommunications Service Assistance Program ("ITSAP") fund.3
On Februar 5, 2010, the Commission issued an Order denying TracFone's initially-filed
ETC Application without prejudice. TracFone filed an Amended ETC Application on March 1,
2010. CTC Telecom Inc. dba Snake River PCS ("CTC") -- itself an ETC -- and the Idaho
Telecom Alliance ("IT A") on behalf of its ETC members, each filed very untimely motions to
intervene in this proceeding nearly eleven weeks after the filing of TracFone's amended
Application. Notwithstanding the untimeliness of those interention motions and the absence of
any good cause showing as to why either intervenor was unable to move to intervene in a timely
maner, the Commission granted both intervention motions.
3 TracFone acknowledges that the Commission speaks through its orders, not though news
releases anouncing those orders. However, the Commission's August 1, 2011 news release
anouncing its decision in this proceeding ("Commission Denies ETC Designation to Pre-paid
Wireless Service") contains no fewer than four material factual misstatements. First, it states
that ETC designation "would have qualified TracFone to receive money from federal and state
low-income assistance programs." In fact, TracFone has not sought and would not accept a
single dime from any state low-income program. Its Lifeline program is fuded only though the
federal USF. Second, the news release states that the ETC denial is "due primarly to TracFone's
refusal to contrbute to a combined federal and state program called Lifeline. . ." Contrar to
that statement, TracFone has never contested the applicability to it of the obligation to contrbute
to the federal USF and has complied fully with its obligation to contribute to that fud. Third,
the news release says falsely that TracFone Lifeline customers would receive "up to 67 minutes
of free time." The record in this proceeding reflects the fact that TracFone Lifeline customers
would receive 250 free minutes of monthy airtime -- minutes which can be used to call from
anywhere to anywhere in the United States. Fourth, the news release states that for use beyond
67 minutes (actually 250 minutes), "customers would purchase a pre-paid card at 20 cents per
minute." That too is incorrect. As explained durng the proceeding, additional airtime minutes
would be available to Lifeline customers at a rate not to exceed ten cents per minute.
TracFone's Petition for Reconsideration 3
On March 31, 2011, the Commission convened a technical hearing regarding TracFone's
ETC Application. After the hearng, the Commission directed the pares to submit legal briefs
on whether TracFone is legally obligated to remit two fees: (1) the 911 fee pursuant to the Idaho
Emergency Communications Act ("IECA") and (2) an ITSAP surcharge.
The Commission holds in the Order that the ITSAP surcharge, which is mandated by
statute to be stated on end user bilings, is applicable to TracFone, notwithstanding the
incontroverible and undisputed fact that TracFone does not have end user bilings. The
Commission also holds that the 911 fee, which is required by statute to be collected on a monthly
basis from customers, is applicable to TracFone, despite the equally incontrovertible and
undisputed fact that TracFone does not provide its serice on a monthly basis.4 The
Commission's legal conclusion regarding the applicability of the 911 fee is based solely on a
letter from the Idaho Emergency Communications Commission ("IECC") which sets forth
without citation to any authority or any legal analysis the view of the IECC that TracFone is
required to remit the 911 fee.s In addition, the Commission relies on TracFone's proceedings in
other states to justify its denial of TracFone's ETC Application. The Commission concludes that
TracFone's refusal to remit the 911 fee and ITSAP surcharge "conflct(s) with the public interest
and provides sufficient cause to deny TracFone's App1ication.,,6 The Commission further states
that that it "wil not grant ETC status to TracFone until the Company, at a minimum, assents to
the payment of IECA and ITSAP fees.,,7 TracFone respectfully disagrees with these
conclusions, believes them to be wrong as a matter of law, and does not believe that they justify
4 Order, at 6.
S Id. at 6-7.
6 Id. at 9.
7 Id.
TracFone's Petition for Reconsideration 4
denial of TracFone's ETC Application and the resulting unavailability of TracFone's wireless
Lifeline service to thousands of low-income Lifeline-eligible Idaho households -- most of whom
are not currently receiving Lifeline-supported service.
ARGUMENT
I. There Is No Basis for the Commission's Unexplained Conclusion That TracFone
Does Not Meet the ETC Designation Requirements of 47 U.S.c. § 214(e)(1).
At page 4 of the Order, the Commission states that it finds that TracFone "has failed to
meet the minimum requirements for ETC designation outlined in 47 U.S.C. § 214(e)(1) . . . ."
Absent from the Order is any identification of what minimum requirements for ETC designation
outlined in 47 U.S.c. § 214(e)(1) TracFone has failed to meet. Neither does the Order offer any
explanation as to why TracFone does not meet any Section 214(e)(1) ETC designation
requirement. Nor does the Order cite to any record evidence which it relies upon in support of
its finding that TracFone does not meet the minimum requirements for ETC designation
contained in 47 U.S.C. § 214(e)(1).
Section 214(e)(1) of the Communications Act (47 U.S.c. § 214(e)(1)) states as follows:
(e) PROVISION OF UNIVERSAL SERVICE
(1) ELIGIBLE TELECOMMUICATIONS CARRIERS. A common
carrer designated as an eligible telecommunications carer under
paragraph (2), (3) or (6) shall be eligible to receive universal service
support in accordance with section 254 and shall, thoughout the service
area for which the designation is received --
(A) offer the services that are supported by Federal universal
service support mechanisms under section 254( c), either using its
own facilities or a combination of its own facilities and resale of
another carer's services (including the services offered by another
eligible telecommunications carer; and
(B) advertise the availability of such services and the charges
therefor using media of general distrbution.
TracFone's Petition for Reconsideration 5
Pursuant to 47 U.S.C. § 214(e)(1), minimum requirements to be an ETC are only: i) be
eligible to receive universal serice support in accordance with Section 254 of the
Communications Act; ii) provide service supported by the USF using a carrer's own facilities or
a combination of its own facilities and resale of other carers' services; and iii) advertise the
availability of such services using media of general distribution. Nowhere does the Order
identify which of these three Section 214(e)(1) minimum requirements TracFone has failed to
meet. Moreover, the factual record demonstrates unequivocally that TracFone does indeed meet
the requirements of 47 U.S.C. § 214(e)(1). The statutory requirement of Section 214(e)(1)(A)
that an ETC provide service at least in par using its own facilities was satisfied by the Federal
Communications Commission's 2005 order exercising its statutory obligation to forbear from
application or enforcement of that requirement with respect to TracFone.8 Pursuant to 47 U.S.c.
§ 160(e), "(a) State commission may not apply or enforce any provision of this Act that the
(F edera1 Communcations) Commission has determined to forbear from enforcing under
subsection (a)." The statutory requirement of 47 U.S.C. § 214(e)(1)(B) was satisfied by
TracFone's ample showing that it aggressively and creatively advertises the availability of its
Lifeline service -- a fact that was not questioned by Staff or by either intervenor.
The Commission is required to "explain the reasoning employed to reach its conclusions
in order to ensure that the (Commission) has applied relevant criteria prescribed by statute or its
own regulations and thus has not acted arbitrarly or capriciously.,,9 The Commission fails to
provide any explanation to support its finding that TracFone does not meet the minimum
8 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 (2005).
9 Rosebud Enterprises, Inc. v. Idaho Pub. Uti!. Comm'n, 128 Idaho 609, 618, 917 P.2d 766,775
(1996) (citing Washington Water Power v. Idaho Pub. Uti!. Comm'n, 101 Idaho 567, 575, 617
P.2d 1242, 1250 (1980)).
TracFone's Petition for Reconsideration 6
requirements for ETC designation outlined in 47 U.S.c. § 214(e)(1).10 Accordingly, its
unexplained conclusion that TracFone has failed to meet any of the requirements of 47 U.S.c. §
214( e)(1) is legally erroneous and warants reconsideration of the Order.
II. TracFone Is Not Required to Collect and Remit the ITSAP Surcharge.
The Commission purorts to rely on the "plain and unambiguous" language of Idaho
Code § 56-904 for its conclusion that TracFone is required to remit the IT SAP surcharge.
11
However, a review of all of the language in Section 56-904 leads inexorably to the conclusion
that TracFone is not obligated to remit the ITSAP surcharge. The Commission must "give effect
to every word, clause and sentence of a statute.,,12 Moreover, the Commission may not constre
a statute in a maner that deprives a provision of a statute of its meaning.
13
Section 56-904(1) establishes a "uniform statewide monthly surcharge on each end user's
business, residential and wireless access service." Thus, end users, not providers of
telecommunications services, are responsible to paying the ITSAP surcharge. Section 56-904(1)
fuher mandates that the "surcharge shall be explicitly stated on end user bilings." Section 56-
904(3), which sets forth the carer's responsibilities, states: "All carers of telecommunications
services shall remit the assistance surcharge revenues to the fud administrator designated by
the commission on a monthly basis, unless less frequent remittances are authorized by order of
the public utilities commission." (emphasis added) As stated by the statute, carers are only
10 The Commission's unexplained conclusion that TracFone does not meet the requirements of
47 U.S.C. § 214(e)(1) is especially remarkable in light of the fact that the ETC designating
authorities of 38 other states have concluded that TracFone does meet the requirements of 47
U.S.C. § 214(e)(1).
11 Order, at 6.
12 George W. Watkins Family v. Messenger, 118 Idaho 537, 540, 797 P.2d 1385, 1388 (1990)
(citing University of Utah Hosp. Medical Center v. Bethke, 101 Idaho 245, 611 P.2d 1030
(1980)).
13 Id. (citing Belt v. Belt, 106 Idaho 426,679 P.2d 1144 (Ct. App. 1984)).
TracFone's Petition for Reconsideration 7
required to remit surcharge revenues, which are revenues received from end users through the
bilg process. TracFone, because it does not offer post-paid or biled services, has no biling
process as contemplated by Section 56-904(1), and therefore, has no means to impose upon or
collect from its end users the ITSAP surcharge. As such, TracFone is not obligated by Section
56-904 to remit funds that it has not collected, and that it, in fact, has no billing mechanism to
collect, as expressly contemplated by the statute.
The Commission's asserion that TracFone may not escape a duty to remit the ITSAP
surcharge because it chooses not to bil customers is not supported by the statute. Section 56-
904 only requires a carer to remit the surcharges it has collected; it does not require a carer to
alter its business model or its charging mechanism to develop a means to bil and collect the
surcharges. It is possible that the Legislatue may not have contemplated that some carrers do
not issue bils to their customers. Indeed, the Commission, when implementing Section 56-904,
recognzed that "it may require some time for biling changes to be made" so that companies can
comply with the requirement that the IT SAP surcharge "be explicitly stated on end user
bilings." 14 The Commission directed companies to "keep Staff informed of the time required to
change biling statements to explicitly state the ITSAP surcharge."IS While the Legislatue and
the Commission may have assumed that all telecommunications carers issue biling statements,
the fact that this assumption was not correct does not change the explicit and unambiguous
language of the statute. The Commission must apply the law as enacted by the Legislatue, not
as it might prefer the law to have been enacted. The law as enacted contains no requirement that
telecommunications carers collect ITSAP surcharges though any mechanism other than
14 In the Matter of Implementing Amendments to the Idaho Telecommunications Service
Assistance Program, Case No. GNR- T -98-6, Order No. 27608 (June 30, 1998).
is Id.
TracFone's Petition for Reconsideration 8
explicitly stated surcharges on end user biling statements. Pursuant to the statute as enacted,
there is no ITSAP collection or payment obligation on non-biled services. The Legislature, not
the Commission, has the authority to amend the law it has enacted if it wishes to subject non-
biled services to ITSAP fees.
The Commission also notes that Section 56-904(3) provides the Commission with
discretion to allow carers of telecommunications services to remit ITSAP surcharge revenues
on a basis that is less frequent than monthly, but that TracFone has not sought Commission
authorization for less frequent remittance.
16 In accordance with Section 56-904(3), the
Commission has made a determination that quarerly remittances would be allowed.17 However,
the timing of the remittances for those carers who collect their charges through end user
bilings does not change the fact that TracFone, as a carer that does not issue biling statements
and has no end user bilings, is not obligated to make any remittances of the ITSAP surcharge.
III. TracFone Is Not Required to Collect and Remit the 911 Fee.
A. Section 31-4804(2) of the Idaho Code Does Not Obligate TracFone to Collect
and Remit the 911 Fee.
The 911 fee remittance requirement, codified at Section 31-4804(2) of the Idaho Code,
provides:
The fee shall be imposed on and collected from purchasers of access lines or
interconnected VoIP service lines with a service address or place of primary use
within the county or 911 service area on a monthly basis by all
telecommuncations providers of such services. The fee may be listed as a
separate item on customers' monthly bils.
16 Order, at 6.
17 In the Matter of Implementing Amendments to the Idaho Telecommunications Serice
Assistance Program, Case No. GNR-T-98-6, Order No. 27806 (June 1998) ("the ITSAP
administrator may arange for quarerly remittances with individual carers.").
TracFone's Petition for Reconsideration 9
(emphasis added) The Commission holds in the Order that because TracFone falls within the
definition of "telecommunications provider" and does not fall within the statute's exemption for
prepaid calling cards in Section 31-4813, TracFone is obligated to remit the 911 fee. While
TracFone does not dispute that it is a telecommuncations provider, that fact alone does not
establish a legal obligation for TracFone to remit the 911 fee. As explained above, the
Commission must "give effect to every word, clause and sentence of a statute.,,18 Pursuant to
Section 31-4804(2), the 911 fee is imposed on and collected from: 1) purchasers of access lines
or interconnected VoIP lines; 2) with a service address or place of primar use within the county
or 911 service area; and 3) on a monthly basis, by all telecommunications providers of such
services. Although TracFone's service is provided to purchasers within a county or 911 service
area in Idaho, TracFone does not provide its service to all customers on a monthly basis. Rather,
TracFone's customers purchase quantities of service on an as-needed basis, either by purchasing
prepaid airtime cards at retail establishments or online through TracFone's Internet website
(ww.tracfone.com). Some TracFone customers make multiple airtime purchases in a month;
others may go several months or longer without making airtime purchases. Given that TracFone
does not provide its service on a monthly basis and that it has no means to collect the 911 fee on
a monthly basis, it is not obligated to impose or collect the 911 fee nor is it obligated to remit the
fee from its own resources.
As noted above regarding the IT SAP surcharge, it is possible that the Legislature may not
have contemplated that some telecommunications providers do not provide service on a monthly
basis to their customers when it enacted the law establishing the 911 fee. However, the fact the
Legislatue may not have fully understood the business practices of telecommunications carers
18 George W. Watkins Family, 118 Idaho at 540, 797 P.2d at 1388.
TracFone's Petition for Reconsideration 10
or that some camers may have established or modified business practices subsequent to
enactment of the legislation does not empower the Commission to usur the Legislatue's
authority to alter the language in Section 31-4804. Any changes to Section 31-4804 must be
accomplished through the Legislature, not by a Commission order. The Commission must apply
the language in the statute, which undeniably provides that the 911 fee is only imposed on and
collected from purchasers of service that is provided on a monthly basis.
B. The Commission May Not Rely on a Letter from the IECC to Support Its
Conclusion that TracFone Is Required to Remit the 911 Fee.
The Commission relies on a letter from the IECC to support its finding that TracFone is
required to make contrbutions to the 911 fund. The letter the Commission references is a May
21, 2010 letter from Garett Nancolas, Chair, IECC, filed in this proceeding as a public
comment. Notably, the IECC, although opposing TracFone's ETC application, did not intervene
in the proceeding. Therefore, the IECC's only statement in the record of the proceeding is its
unexplained assertion that TracFone's "failure to (collect the 911 fee) is in violation ofthe Idaho
Emergency Communcations Act, Idaho Code § 31-4801 et seq.,,19 The IECC provides no
explanation for its conclusion other than that TracFone provides wireless service in Idaho. Since
the IECC did not paricipate as an intervenor in this proceeding, there was no opportity for
TracFone to learn the basis for the IECC's position or to cross-examine the IECC during the
19 Letter from G. Nancolas, IECC, to Commission, filed May 24, 2010. Indeed, Mr. Nanco1as'
letter not only offers a legal conclusion without an explanation, it is internally inconsistent. In
the same sentence of the same paragraph, Mr. Nanco1as states that the IECC has not made a
determination about whether TracFone is not responsible for collecting the 911 fee, and then
reverses itself by stating that it is the IECC's belief that "TracFone should be paying the required
fees under Idaho Code § 31-4804 as they provide wireless service in Idaho." Curously, Mr.
Nanco1as also alleges that TracFone's failure to collect the 911 fees is an "unfair business
practice." The IECC has cited to no provisions of Idaho law, nor is TracFone aware of any
provisions of Idaho law, which authorize the IECC to enforce any state laws governing unfair
business practices.
TracFone's Petition for Reconsideration 11
hearng. As such, the letter is hearsay and merely constitutes the unexplained and unsupported
opinion of the IECC.
Notwithstanding the hearsay nature of the IECC letter, the Commission appears to accord
the IECC's position significant weight. In particular, the Commission states: "inasmuch as the
IECC letter represents a clear statement from an agency that the Company agrees is vested with
the authority by the Idaho Legislatue to levy (a 911 fee) TracFone is required to make
appropriate contrbutions, in accordance with statute to the Fund.,,20 The letter states the IECC's
position on whether TracFone should be collecting the 911 fee and whether the Commission
should grant TracFone's ETC Application. The Commission's reliance on the IECC letter to
support a legal conclusion as to the 911 fee's applicability is especially troubling since it appears
that the letter was procured by the Commission staff. According minutes of the IECC's May 6,
2010 meeting (obtained by TracFone pursuant to a Public Records Act request), Grace Seaman, a
Commission employee, attended that meeting and encouraged the filing of that 1etter.21
The letter does not, however, cite to any legal authority or provide any reasoning for the
IECC's conclusion. Furermore, the letter does not indicate that the IECC has made any
attempt to enforce the statute against TracFone. Therefore, while the IECC can state its opinion
20 Order, at 7.
21 Those meeting minutes state at page 6: "Ms Seaman commented that her purpose for
addressing the ECC is to let the Commission know that it is too late to intervene in this case, but
it is not too late for the Commission to submit comments, if they so wish, on this case. The
comment deadline is May 24, but that could change." Ms. Seaman also testified in this
proceeding on behalf of Commission staff. In her testimony, Ms. Seaman opposes designation
of TracFone as an ETC, in part, on the basis that it does not collect and remit 911 fees. Her
testimony regarding the applicability of the 911 fee law to TracFone references the IECC letter--
the very letter she solicited durng the May 6,2010 IECC meeting. Direct Testimony of Grace
Seaman, at 11-12.
TracFone's Petition for Reconsideration 12
to the Commission that TracFone should collect and remit the 911 fee, the IECC has done
nothing to directly notify TracFone that it must do SO.22
Moreover, the IECC's position that TracFone is required to collect and remit the 911 fee
is contradicted by its own previous statements regarding whether the 911 fee is applicable to
prepaid wireless services such as those provided by TracFone. In 2008, the Florida Deparent
of Management Services E911 Board issued a report which included the results of a surey of
each state's E911 Coordinator, including Idaho's E911 Coordinator. In response to the question
of whether an E911 fee was assessed on prepaid wireless, the IECC -- Idaho's E911 Coordinator
-- responded that an E911 fee was not assessed on prepaid wireless services?3 Similarly, a 2006
report by the Maine Public Utilities Commission ("PUC"), Emergency Services Communication
Bureau, indicates that in Idaho, providers of prepaid wireless services are not required to collect
911 fees according to IECC?4 That information also was provided by the IECC.
Finally, the IECC's position on the applicability of the 911 fee to prepaid wireless
services, as expressed in its unsupported and conclusory May 21, 2010 public comment in this
proceeding, contradicts the IECC's position, as discussed durng a February 2010 meeting of the
IECC. TracFone provided details of those minutes in its post-hearng brief, and attached a copy
22 According to the May 6, 2010 IECC meeting minutes, Commissioner Smith suggested that the
IECC seek an opinion from the Attorney General's offce as to the applicability ofthe 911 fee to
prepaid wireless services. Apparently, seeking legal advice was deemed unnecessar as the
IECC provided the Commission its own legal opinion, albeit one without any explanation,
analysis or citation to any legal authority, and developed without advice from the Attorney
General.
23 E911 Prepaid Wireless Fee Collection and E911 Fee Exemptions: A Feasibility Analysis,
Florida Deparment of Management Services E911 Board, E911 Prepaid and Fee Exemption
Study, at 31 (December 31, 2008) (relevant excerpts attached as Exhibit 1).
24 Report by the Maine Public Utilities Commission, Emergency Services Communication
Bureau to the Utilities and Energy Committee on Collection of Fees on Prepaid Wireless
Telephone Services, Attachment 4 (Februar 6,2006) (relevant excerts attached as Exhibit 2).
TracFone's Petition for Reconsideration 13
of those minutes to its brief. The February 2010 minutes reveal that the IECC believed that
further legislation would be necessar to collect the 911 fee on prepaid wireless services.25 The
IECC acknowledges the existence of the Februar 2010 minutes in its l\ay 21, 2010 public
comment, but asserts that it has not made a deterination that the 911 fee is not applicable to
prepaid wireless services. As explained above, the IECC also did not provide any basis for its
changed position that the 911 fee is applicable to prepaid wireless services?6
In short, in 2006, the IECC told the Maine PUC that the Idaho 911 fee was not applicable
to prepaid wireless services. In 2008, the IECC notified the Florida Deparent of Management
Services E911 Board that the Idaho 911 fee was not applicable to prepaid wireless services. The
IECC's Februar 2010 meeting minutes indicate its belief that legislation would be needed to
extend the Idaho 911 fee to prepaid wireless services. Then, suddenly and without explanation,
in May 2010, the IECC reversed four years of contrar conclusions and told the Commission that
it believed that the 911 fee was applicable to prepaid wireless services (and that failure to pay the
fees -- irrespective of any ability to collect through a biling process -- constituted an ''ufair
business practice").
The IECC's sudden and abrupt change of opinion on the applicability/non-applicability
of the 911 fee law to prepaid wireless services during the three month period between Februar
2010 and May 2010 is unexplained and unexplainable. The Commission improperly relies on
the IECC's unsupported and unexplained change of opinion by the IECC in concluding that
TracFone is in violation ofthe Idaho Code, as a basis for denying TracFone's ETC Application.
iv. The Commission's Reliance on Proceedings in Other States as a Basis to Justify
Denial of TracFone's ETC Application Is Misplaced.
25 See TracFone Wireless, Inc.'s Post Hearing Brief, fied May 23,2010, at 3-4.
26 See id.
TracFone's Petition for Reconsideration 14
The Commission's Order refers to and relies upon decisions by courts in Washington,
Kentucky, Indiana,27 and Nebraska that have rejected TracFone's arguent that it is not required
to pay a 911 fee if the relevant statute requires collection of the 911 fee through biling
customers. The Commission further asserts that TracFone's refusal to contrbute to ITSAP and
911 fuds is not due to an inability to assess how much it owes to the fuds, but due to a "policy
to vigorously contest the applicability and payment of these fees.,,28 TracFone's decision to
exercise its right to challenge the applicability of certain fees in other states provides no basis for
denying TracFone's ETC Application in Idaho for several reasons. First, states' laws regarding
the collection and remittance of fees differ from each other. The maner in which a state cour
interrets that state's laws is only relevant to this proceeding if the other state's laws contain the
same legal requirements. The Commission does not assert that the laws of the listed states have
the same requirements as the Idaho statutes governng the ITSAP surcharge and 911 fee.
Therefore, there is no lawful basis for the Commission's reliance on other states' cour decisions
involving other states' laws as a basis for its conclusions regarding Idaho laws reached in this
proceeding.
29
27 No trbunal in Indiana ever has concluded that the state's 911 fee law is applicable to
TracFone. Absent from the Order is any citation to any such holding by any Indiana trbunaL.
28 Order, at 7.
29 The Commission's reliance on TracFone Wireless, Inc. v. Washington Deparent of
Revenue, 242 P.3d 810 (Wash. 2010) is especially misplaced. In that case, the primar issue
before the Washington Supreme Cour was whether imposition of that state's 911 excise tax
violated a statutory requirement of uniformity in taxation. No comparable issue was before the
Commission in this proceeding. Significantly, that case reached the Washington Supreme Court
following a collection proceeding conducted by the Washington Departent of Revenue. The
applicability of the state's 911 fee law was not adjudicated in the entirely unelated ETC
designation proceeding before the Washington Utilities and Transportation Commission. Once
the applicability of the Washington statute was conclusively determined (by a 5-4 vote),
TracFone is in compliance with that law, consistent with its policy to comply with all states'
laws once their applicability has been determined.
TracFone's Petition for Reconsideration 15
Second, the Commission overlooks the highly significant fact that TracFone's
disagreement with the relevant authorities in those other states about the applicability of a 911
fee or TracFone's exercise of its right to challenge a fee's applicability in a court oflaw has not
caused any of those other state commissions to do what the Commission has done in the Order --
deny TracFone's application for designation as an ETC. TracFone has been designated as an
ETC by the state commissions in Washington, Kentucky, and Indiana.3o Each of those state
commissions concluded that designation of TracFone as an ETC would serve the public interest
and provide benefits to the state's low-income consumers despite the existence of disputes and
litigation regarding the applicability of statutory fees. As a result, low-income households in
Washington and Kentucky are enjoying the convenience and security of wireless Lifeline-
supported service through enrollment in TracFone's SafeLink Wireless~ Lifeline service, and
low-income households in Indiana wil soon have that serice available to them. Similarly, this
Commission should grant TracFone's ETC Application so that low-income consumers in Idaho
can receive the benefits of TracFone's SafeLink Wireless~ Lifeline service. The Commission
could address its concerns regarding those fees by resolving its disagreement with TracFone
about the applicability of the IT SAP surcharge in a separate proceeding and leaving to the IECC
the responsibility to determine whether the law governing the 911 fee is applicable to TracFone
and, if so, to take appropriate steps to enforce that law; and if not, then to seek enactment of
legislation which would resolve the question of the fee's applicability to prepaid services.
Third, the Commission's assertion that TracFone's refusal to pay fees is based on a
policy of contesting the applicability of fees, rather than an inability to calculate the amount of
30 TracFone does not have an ETC application pending before the Nebraska Public Service
Commission. As noted in footnote 27, no Indiana cour has determined that either the Indiana's
911 fee law is applicable to TracFone or that TracFone is in violation of that state's 911 fee law.
TracFone's Petition for Reconsideration 16
fees owed, misstates the issue in this proceeding. The Order appears to base its conclusions
regarding the applicability of the fee statutes to TracFone on an asserted statement by TracFone
that it is able to calculate fee amounts. As stated in the Order, "(t)o wit, TracFone witness Jose
Fuentes conceded at the technical hearing that the Company has the ability to track the usage rate
of its customers and calculate the amount of tax due without any problem with uniformity.,,31 In
fact, contrar to that statement, Mr. Fuentes made no such concession. Mr. Fuentes, at the
direction of Staff counsel, was merely reading into the record a quotation from Exhibit 103 -- a
decision of the Supreme Court of Washington. Moreover, the fact that TracFone could calculate
the amount of the ITSAP surcharge or 911 fee it would collect from its customers if it was a
postpaid provider has no bearng on whether TracFone is legally obligated to collect and remit
those fees pursuant to the applicable statute. If a telecommunications carrer is not required by
law to collect and remit a fee, then it canot be required to pay that fee from its own resources,
irrespective of whether it can calculate the amount which would be owed if the fee were
applicable. TracFone's decision to exercise its constitutional right to challenge the applicability
of fee laws in other states in the cours of those states is wholly irrelevant to the question before
the Commission -- whether designation of TracFone as an ETC for the limited purpose of
providing Lifeline service to low-income Idaho households wil serve the public interest.
v. The Commission's Holding That It Wil Not Grant ETC Status to TracFone unti
TracFone Assents to the Payment of the IT SAP Surcharge and 911 Fee Denies
TracFone Its Legal Right to Receive a Legal Determiation on the Applicabilty of
the Fees.
The Commission finds that "(a)n agreement to voluntarly contrbute applicable fees to
the aforementioned IECA and ITSAP Funds should be viewed as a minimum requirement for
31 Order at 7.
TracFone's Petition for Reconsideration 17
any telecommunications carrer seeking designation as an ETC in Idaho.,,32 The Commission
then concludes that it wil not grant ETC status to TracFone until it assents to payment of the
ITSAP surcharge and 911 fee.33 The Commission's insistence that TracFone voluntarily make
contributions to the ITSAP and 911 Funds, denies TracFone its legal right to receive a legal
determination on the applicability of the fees.
TracFone has the right to challenge the applicability of any state fee in accordance with
the relevant state's legal procedures. State agencies charged with enforcing statutes imposing
fees on telecommunications carers may bring appropriate enforcement actions against any
company that they believe is not complying with an applicable legal requirement to collect and
remit such fees. In Idaho, the Commission is responsible for enforcing the IT SAP surcharge.
However, the Commission has never attempted to enforce the ITSAP surcharge statute against
TracFone. It has never conducted an investigation, convened an enforcement proceeding or
ordered TracFone to pay the surcharge. Indeed, prior to issuance of the Order in this proceeding,
TracFone had no basis to conclude that the Commission even believed the ITSAP fee to be
applicable to it. Apparently, the Commission itself is not certain that the surcharge is applicable.
The Commission states in the Order that TracF one must voluntarily agree to pay the ITSAP
surcharge if it wants to receive ETC status. That such payments would be voluntar recognizes
that there is no legal obligation to pay.
The IECC, the state agency responsible for enforcing the 911 fee, also has not
challenged TracFone's refusal to collect and remit the 911 fee and has never attempted to
commence an enforcement action against TracFone. Thus, the Commission has no legal basis
for requiring TracFone to voluntarly pay the 911 fee as a condition for receiving ETC status. At
32 Order, at 9.
33 Id.
TracFone's Petition for Reconsideration 18
this time, there has been no determination by this Commission, the IECC, or a state cour, that
TracFone is legally required to commence collecting and remitting the ITSAP surcharge and 911
fee. Therefore, the Commission may not lawfully rely on TracFone's non-payment of those fees
to deny the ETC Application.
VI. The Commission's Refusal to Designate TracFone as an ETC for the Limited
Purpose of Providing Lifeline Service to Low-Income Idaho Households Wil
Disserve the Public Interest.
As noted in the preceding sections of this petition for reconsideration, the Commission's
determinations that TracFone is required by applicable law to collect and remit ITSAP charges
and 911 fees and that its refusal to do so warants denial of its ETC application are legally
erroneous. Those legal errors by themselves are sufficient to warrant reconsideration of the
Order. However, there is a more important reason for the Commission to grant reconsideration
and to designate TracFone as an ETC: designation of TracFone as a Lifeline-only ETC wil
serve the public interest.
To date, TracFone has been designated as an ETC in 38 states. It provides SafeLink
WirelesscI Lifeline service in most of those states. TracFone's Lifeline customers receive at no
charge full-featued E911-comp1iant wireless handsets (paid for by TracFone, not by the USF),
250 minutes of free wireless airtime each month they remain enrolled in the program, nationwide
callng, and such important vertical featues as call waiting, caller ID, and voice maiL. The
record established in this proceeding is undisputed. No ETC curently offering Lifeline service
TracFone's Petition for Reconsideration 19
in Idaho offers anything comparable. No Idaho ETC offers nationwide callng, vertical featues
at no additional charge, free handsets and 250 minutes of free monthy usage.34
Based upon public information, most low-income Idaho households who qualify for
Lifeline support are not receiving it. According to Federal Communications Commission data,
in 2002, Idaho's Lifeline paricipation rate among low-income Lifeline-eligible households was
only 22.1 percent.35 Although that percentage is low, the situation has actually gotten worse.
According to the Universal Service Administrative Company, in 2010, Idaho's Lifeline
paricipation rate among eligible low-income households was less than 20 percent.36 With about
3.8 milion low-income households currently enrolled in its Lifeline program nationwide,
TracFone has materially increased Lifeline participation in those states where its Lifeline service
is available. There can be little question that the availability to low-income Idaho households
(including the more than eighty percent of which are not receiving Lifeline benefits today) of a
free wireless Lifeline program like TracFone's SafeLink Wireless(j wil increase enrollment of
low-income Idahoans in the federal Lifeline program -- a program which is supported by all
Idaho consumers through their contrbutions to the federal USF.
CONCLUSION
As explained above, the asserted bases for denying TracFone's ETC Application are not
supported by law or fact. TracFone has signficantly raised the level of Lifeline participation in
34 Several of the intervenors in this proceeding are ETCs (CTC and members of the Idaho
Telecom Allance). Although those intervenors stridently opposed TracFone's ETC application,
not one of them offers a wireless Lifeline plan which includes nationwide callng, free phones
and vertical featues. Thus, their opposition is an understandable response to a potential
competitive theat to their limited Lifeline business, but that opposition is not very responsible.
35 Lifeline and Link-Up (Report and Order and Further Notice of Proposed Rulemaking), 19
FCC Rcd 8302 (2004), at Appendix K - Section 1: Baseline Information Table 1.A. Baseline
Lifeline Subscription Information (Year 2002).
36 http/ww.universa1service.org/_res/ documents/li/pdf/li -paricipation-rate- map- 201 O/pdf.
TracFone's Petition for Reconsideration 20
every state where the service is available. Most importantly, the entire benefit is fuded by the
federal USF and by TracFone and not by any state or any state's rate payers, tax payers or by any
state's universal service fud. TracFone is anious to bring this important federally-fuded
program to Idaho and to the State's low-income households -- more than eighty percent of whom
are not curently receiving Lifeline assistance. For the foregoing reasons, TracFone respectfully
requests the Commission to grant reconsideration of its Order, and promptly approve TracFone's
amended ETC Application, and that it be designated as an ETC in Idaho.
Respectfully submitted,
~4\m-Cea~T 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
Mitchell F. Brecher (admitted pro hac vice)
Debra McGuire Mercer
GREENBERG TRAURIG, LLP
2101 L Street, NW, Suite 1000
Washington, DC 20037
Tel: [phone]
Fax: [phone]
brecherm~gtlaw.com
mercerdm~gt1aw.com
Attorneys for TracFone Wireless, Inc.
August 19,2011
TracFone's Petition for Reconsideration 21
CERTIFICATE OF SERVICE
I hereby certify that on the \C\~ay of August, 2011, I caused to be served, via the
method(s) indicated below, true and correct copies of the foregoing document, upon:
Jean Jewell, Secretar
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise,ID 83720-0074
j j ewel1(ilpuc.state.id. us
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Neil Price, Esq.
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise,ID 83720-0074
N ei1.PriceCipuc.idaho. gov
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Molly O'Lear, Esq.
Richardson & O'Lear, PLLC
P.O. Box 7218
Boise, ID 83707
molly(richardsonando1ear.com
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Cyntha A. Melilo, Esq.
Givens Pursley LLP
601 N. Banock Street
P.O. Box 2720
Boise, ID 83701
camCigivenspursley.com
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
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BY:*~~"
McDEVTI & ILLER LLP
TracFone's Petition for Reconsideration 22