20120316Reply Comments.pdf

McDevitt & Miller LLP
Lawyers
[phone]
[phone] (Fax)
420 W. Bannock Street
P.O. Box 2564-83701
Boise, Idaho 83702
RECE'VED
LOL2 MAR r 6 PM 2=OSas. F. McDevitt
Dean J. (Joe) Miler
March 16,2012
Via Hand Delivery
Jean Jewell, Secreta
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 (7) copies of Tracfone
Wireless, Inc.'s Reply Comments in Support of the Stipultion and Motion of Tracfone Wireless,
Inc., and the Idaho Public Utities Commssion Staff.
Kidly retu a fie stamped copy to me.
Very Truy Yours,
McDevitt & Mier UP
~1U~Dean J. Mier
DJM/hh
End.
ORIGINAL
DeanJ. Miller (ISB No. 1968) RECEIVED
Chas. F. McDevitt (ISB No. 835)
McDEVITT & MILLERLLP lOli MAR' 6 PH 2: 06
420 West Banock Street
P.o. Box 2564-83701
Boise, il 83702
Tel: [phone]
Fax: [phone]
joecæcdevitt-miller.com
chascæcdevitt-miler.com
Mitchell F. Brecher (admitted pro hac vice-DCB No. 210781)
Debra McGuire Mercer
GREENBERG TRAURIG, LLP
2101 L Street, NW
Suite 1000
Washington, DC 20037
Tel: [phone]
Fax: [phone]
brecherm~gtlaw.com
mercerdm~gtiaw.com
Attorneys for TracFone Wireless, Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF TRACFONE WIRELESS, INC. FOR
DESIGNATION AS AN ELIGIBLE
TELECOMMUICATIONS CARER.
) CASE NO. TFW-T-09-01
)
) TRACFONE WIRELESS INC'S
) REPLY COMMENTS IN
) SUPPORT OF THE
) STIPULATION AND MOTION
) OF TRACFONE WIRELESS,
) INC. AND THE IDAHO PUBLIC
) UTILITIES COMMISSION
) STAFF
)
TracFone Wireless, Inc. ("TracFone"), files its reply comments in support of the
Stipulation and Motion fied by TracFone and Staf of the Idaho Public Utilties Commssion
("Staff') on Februar 8, 2012. In the Stipulation and Motion, TracFone and Staf advised the
¥i .
.,~j j ",
.'.'"..."\ l'
-. t.. ~ i
!'..' I
Commission that they had reached a settlement agreement regarding TracFone's application for
designation as an Eligible Telecommuncations Carer ("ETC"). The terms of the settlement
agreement, set fort in the Stipulation and Motion, represent a just, fai and reasonable
compromise of the disputed issues between TracFone and the Staf. Moreover, the settlement
agreement is lawf and serves the public interest. TracFone's reply comments address
objections to the Stipulation fied by the Idaho Telecom Allance ("ITA") and CTC Telecom,
Inc. dba CTC Wireless ("CTC") (collectively, "Intervenors") as well as those of the Idaho
Emergency Communcations Commission ("IECC"), the Idaho Sheriffs Association ("ISA") and
the Idaho Association of Counties ("lAC") ("Governent Commenters"). Neither the
Intervenors nor the Governent Commenters raise any valid arguents as to why the
Commission should not accept and approve the Stipulation as filed and promptly designate
TracFone as an ETC. As explained in these comments, the Intervenors improperly discount the
Commission's authority to settle disputes, attempt to introduce irelevant information regarding
TracFone's investors, and overlook the public interest in providing low-income Idaho consumers
with a valuable service. The Governent Commenters' allegations regarding the applicable law
governg 911 fees are not correct. Moreover, questions regarding the applicabilty of the 911
fee law should be resolved by a tribunal of competent jurisdiction as provided for in the
Stipulation, not by the Commission.
INTRODUCTION
Throughout this proceeding, the primar dispute focused on whether TracFone is
responsible for the payment of fees requied by the Idaho Telecommuncations Service
Assistace Program Act ("ITSAP"), Idao Code § 56-901, et seq., and the Idao Emergency
Communications Act ("IECA"), Idaho Code § 31-4801, et seq. As stated in the Stipulation, in a
TracFone's Reply Comments 2
Final Order on Reconsideration, the Commission reaffired its previous determation in Order
No. 32301 that TracFone is responsible for payment of the ITSAP and IECA fees and that
TracFone's non-payment of those fees warted denial of TracFone's ETC application. On
October 28,2011, TracFone fied a Notice of Appeal with the Supreme Cour of Idaho alleging
that the Commission erred by denying TracFone's ETC application due to non-payment of the
ITSAP and IECA fees. That appeal remains pending.
The Stipulation resolves the dispute about whether TracFone is obligated to pay the
ITSAP and IECA fees and requies the Commssion to designate TracFone as an ETC. In the
Stipulation, TracFone agrees to remit the ITSAP fee retroactive to Janua 1, 2011 and to fie a
stipulation of dismissal of its appeal curently pending at the Supreme Cour of Idao upon the
Commission's designation of TracFone as an ETC. TracFone also commits to fie a complait
for declaratory judgment in the District Cour of the Four Judicial District to determine
whether the IECA fee is applicable to prepaid wireless service in Idaho. If the Distrct Cour
determines that TracFone's prepaid wireless service is subject to the IECA fee, then TracFone
will remit the IECA fee retroactive to Janua 1, 2011. Thus, pursuat to the Stipulation, the
ITSAP fee will be paid from Janua 1, 2011 going forward and a method for determing the
applicabilty of the IECA fee to TracFone will be established. Moreover, the Stipulation will
enable TracFone to bring to low-income Idaho consumers for the first time a free wieless
Lifeline service with a multiplicity of featues and with no domestic calling restrctions or
limitations. The availabilty of such a servce is an invaluable public interest benefit.
TracFone's Reply Comments 3
I. The Commission Has Authority to Accept the Stipulation Because It Is a Lawful
Settlement of the Disputed Issues.
Intervenors incorrectly contend that the Stipulation contravenes Idaho statutes and the
Commission's prior orders in this proceeding. These assertions are incorrect for several reasons.
First, Intervenors overlook the Commission's broad authority to sette disputes. Section 61-501
of the Idaho Code provides:
INESTMENT OF AUTHORITY. The public utilties commission is hereby
vested with power and jursdiction to supervise and reguate every public utilty in
the state and to do all things necessar to car out the spirit and intent of the
provisions of this act.
(emphasis added). Settling a dispute with a carer and resolving a contested ETC designation
proceeding is certinly within the Commission's authority to do all thgs necessar to car out
the spirit and intent of the provisions of the Idao Code that it is required to enforce.
In addition to this broad grant of authority, settlements of matters on appeal are
specifically authorized by the Commssion's procedural rules. See IPUCRP 352-356.
Settlement of Appeal from the Commission. It is not unusual for the Commission to exercise its
settlement authority. See, e.g., In Re Cedar Creek Wind, LLC, Case No. PAC-E-I1-01 et al.,
Reconsideration Order on Remand, Order No. 32419 (December 21, 2011); ) see also In Re
Hoku Materials, Inc., Case No. IPC-E-12-02, Order No. 32486 (March 15, 2012) (accepting a
proposed settlement stipulation as a "reasonable compromise of the positions held by the
Paries"). In Cedar Creek Wind the Commission approved a settlement on appeal upon finding
inter alia that a settlement would avoid uncertinty and conserve resources (both time and
money) and avoid continuing litigation, all of which are reasons for approval of ths settlement.
To the extent Intervenors are arguig the Commission lacks authority to approve a settlement of
TracFone's Reply Comments 4
disputed issues, the argument is supported neither by statute, Commssion rule nor recent
precedent.
Intervenors improperly mischaracterize the Stipulation's statement that payment of the
ITSAP fee and of the IECA fee (if determined by the Distrct Cour or another trbunal to be
applicable to TracFone) as a "waiver" of past due ITSAP and IECA fees. The Commission, ifit
approves the Stipulation, would not be "waiving" any fees. TracFone has not requested such a
waiver nor has Commission Staf suggested that the Commission waive any fees. Rather, the
Stipulation settles a dispute regarding TracFone's obligation to remit the ITSAP and IECA fees
by requirig TracFone to pay the ITSAP fee and to initiate a legal proceeding before a tribunal of
competent jursdiction to adjudicate the applicabilty of the IECA fee. The fact that the
Stipulation commits TracF one to pay the IT SAP fee and the IECA fee (if the Cour fmds it to be
applicable to TracFone) retroactive to Janua 1, 2011, notwthstading its previously-asserted
legal position that the fees are not applicable to it, contradicts Intervenors' assertion that any
applicable fees are being waived or that TracFone has even requested a waiver.
Intervenors assert that the Commission does not have discretion to settle issues regarding
the payment of the ITSAP fee because Section 56-904 requires the Commssion to determine and
impose a uniform surcharge on telecommuncations cariers' end users. Intervenors' position is
based on a false premise - namely that there has been a fial legal determination that the ITSAP
fee is applicable to TracFone. Whle payment of the ITSAP fee is mandatory for those that fall
with the scope of Section 56-904, it is not mandatory for those that are not subject to that
statute's requirements. In Idaho, the Commission is responsible for enforcing the ITSAP
surcharge. However, prior to ths proceeding, the Commission had never attempted to enforce
the ITSAP surcharge statute against TracFone by conducting an investigation, convening an
TracFone's Reply Comments 5
enforcement proceeding, or otherwse ordering TracFone to pay the surcharge. Indeed, prior to
issuace of Order No. 32301, TracFone had no basis to conclude tht the Commssion even
believed the ITSAP fee to be applicable to it. In ths proceeding, the Commission determined
that the ITSAP fee is applicable to TracFone. However, TracFone has the right to challenge the
applicabilty of any state fee in accordance with the state's legal procedures. TracFone has
lawfly exercised its right by filing a n'ttice of appeal with the Idaho Supreme Cour. Therefore,
there has been no fial determination that TracFone is obligated to remit the ITSAP fee today or
at any time during which TracFone has provided wireless service in Idaho. TracFone has not
conceded that Section 56-904 obligates it to remit the ITSAP fee. In short, the applicability of
the ITSAP fee to TracFone's non-biled, prepaid service remains in dispute. However, in the
interest of resolving that dispute with the Commission, TracFone has voluntarily agreed to remit
the ITSAP fee retroactive to Januar 1,2011 as par ofthe Stipulation.
Intervenors also assert that the Stipulation is inconsistent with the Commission's orders
which held that the fees are applicable and with Commission Stas statements in previous
filings.
1 Intervenors disregard the purose of a settlement, which is to resolve disputed issues
though compromise. Indeed, the Stipulation is also inconsistent with TracFone's position
thoughout this proceeding that it is not obligated to remit the ITSAP and IECA fees. The fact
1 Intervenors' reference to ITSAP being created to maximize federal Lifeline and Link-Up
contrbutions to Idaho's low-income consumers is no longer a relevant consideration. See
Intervenors' Comments, at 8. In a recent Federal Communcations Commssion ("FCC") order,
the FCC eliminated Link Up support and eliminated the tiered system of Lifeline support
whereby the amount of Lifeline support provided by the federal Universal Service Fund ("USF")
was determined in par by the amount of Lifeline support provided by a state. See Lifline and
Link Up Reform and Modernization et al., WC Docket No. 11-42 et al., Report and Order and
Furher Notice of Proposed Rulemakng, FCC 12-11 (reI. Feb. 6, 2012). The FCC's amended
rues establish $9.25 as an interim unform amount of Lifeline support. 47 C.F.R. § 54.403(a)(l).
Therefore, ITSAP's provision of additional Lifeline support to ETCs in Idaho wil no longer
impact the amount of Lifeline support provided by the federal USF.
TracFone's Reply Comments 6
that the Stipulation sets fort a position that differs from the paries' prior positions in ths
proceeding has no bearing on whether the Commission should accept the Stipulation.
Furermore, the Stipulation is fully consistent with the Commission's Final Order on
Reconsideration which states: "Absent the Company's assent to remit the applicable fees, or
seek an offcial ruing from the IECC, or another tribunal with relevant jurisdiction, as to
whether the fees applied, the designation of TracFone as an ETC in Idaho would not be the
public interest."i In the Stipulation, TracFone has assented to remit the ITSAP fee and has
agreed to seek a declaratory judgment from a District Cour (a trbun with relevant jursdiction)
regarding the applicabilty of the IECA fee. The Stipulation is consistent with the Commission's
Final Order on Reconsideration and is a lawfl exercise of the Commssion's authority to settle
disputes.
II. The Stipulation Is Just, Fair and Reasonable and Is in the Public Interest.
The Stipulation represents a just, fair, and reasonable compromise between the
Commission and TracFone. The Stipulation obligates TracFone to pay the ITSAP fee retroactive
to Janua 1, 2011 which benefits Idaho's telecommuncations assistance program by bringig
additional fuds to that important program. In addition, the Stipulation will benefit Idaho
tapayers and rate payers by enabling the state to avoid the litigation costs associated with the
pending appeal of the Commission's orders in this proceeding. By voluntarly dismissing its
appeal as par of the Stipulation, TracFone will forfeit its right to challenge the applicabilty of
the IT SAP fee.
i Order No. 32358, at 11-12.
TracFone's Reply Comments 7
The Stipulation's resolution of the dispute regarding IECA fees is also just, fair and
reasonable. The terms of the Stipulation enable TracFone to obtain a legal determnation from
the Distrct Cour regarding the applicabilty of the IECA fee to prepaid wireless services, such
as those provided by TracFone and other wireless carers. Moreover, the public interest is
protected because, in the event that the Distrct Cour finds that the IECA fee is applicable,
TracFone will be required to remit said fees retroactive to Janua 1,2011. Intervenors raise no
public interest justification for delaying TracFone's designation as an ETC while waiting for the
District Cour to issue its ruing. Finally, the Stipulation allows low-income Idaho households to
gain the benefit of having the option of choosing to receive Lifeline service from another
competitive provider.
The Intervenors raIse irelevant and baseless concerns about the fairness of the
Stipulation. Intervenors' claim that TracFone should remit ITSAP and IECA fees for the twelve
years that it has provided service in Idaho is not valid. Until this proceeding there has been no
determation by this Commssion (nor any other indication from this Commission or from a
state governental deparent or cour) that either the ITSAP fee or the IECA fee is applicable
to TracFone. Similarly, the IECC, the state agency responsible for enforcing the IECA fee, also
has not challenged TracFone's non-payment of the IECA fee and has never attempted to
commence an enforcement action against TracFone. At ths time, there has been no
determnation by this Commission, the IECC, or a state cour of competent jursdiction, that
TracFone is legally required to commence collecting and remitting either ITSAP or IECA fees.
Rather, the Commission has only determined that TracFone's failure to remit the ITSAP and
IECA fees require it to find that designating TracFone as an ETC is not in the public interest.
Therefore, there is no basis for TracFone to voluntarly remit ITSAP and IECA fees going back
TracFone's Reply Comments 8
twelve years. TracFone's agreement to remit the ITSAP fee (and the IECA fee if it is later
determined by the Distrct Cour that the fee is applicable) to Janua 1, 2011 is a just, fai and
reasonable compromise, especially given that the relevant agencies have made no effort to
enforce those fee requirements against TracFone (or any provider of prepaid wieless services)
prior to ths proceeding.
Intervenors' snide and condescending reference to TracFone's "foreign investors" as
being the beneficiares of TracFone's non-payment of fees has no place in public interest
advocacy before the Commission, is blatatly defamatory and prejudicial, and is entitled to no
consideration by the Commission? Neither the nationality of TracFone's investors, nor the
ficial performance of those investors, has any bearng on whether the ITSAP or IECA fees
are applicable to TracFone as a matter of law or on whether designation of TracFone as an ETC
is in the public interest. TracFone also objects to Intervenors' filing of documents, specifically
the exhibits attached to their Comments that are not par of the record in ths proceeding.
TracFone respectfuly requests that the Commission stre Intervenors' exhibits and references to
those exhibits contaned in their Comments since they are not included within the proceeding's
evidentiar record.
Intervenors' request for the Commission to re-open the ETC proceeding to receive
additional evidence should be denied. Intervenors' clai that the economic impact of
TracFone's non-payment of "statutorily-mandated fees" needs to be examed ignores the very
dispute that is being settled by the Stipulation and the curent lack of a final legal determination
of whether the ITSAP and IECA fees are "statutorily-mandated" or applicable to TracFone, As
explaied above, given the fact there has been no determination by ths Commssion, the IECC,
3 Intervenors' Comments, at 13.
TracFone's Reply Comments 9
or a state cour, that TracFone is legally required to commence collecting and remitting the
ITSAP and IECA fees, there is no basis for requiring TracFone to remit such fees for the past
twelve years. Moreover, there is no justification for re-opening the proceeding whose record was
closed many months ago to receive evidence regarding the amount TracFone would have paid
during a time that it was not legally obligated to remit ITSAP and IECA fees nor was it aware
that the Commssion or IECC believed that TracFone was so obligated.
Finally, neither the comments ofIECC, ISA, nor lAC warant rejection of the Stipulation.
Whle TracFone is respectful of the opinions of those agencies and adres the importt work
that they do on behalf of the residents of Idaho, their assertions that TracFone is "in violation of
Idaho law,,4 are unsupported, unsupportble and legally erroneous. As described above, no such
final legal determinations have been made by any Idaho tribunal. Moreover, TracFone is
troubled by the unexplained change in position taken by the IECC. As TracFone has described
in prior filings, until it filed informal comments on TracFone's ETC application in March 2010,
the IECC never had asserted that Idaho's 911 fee statute was applicable to prepaid wireless
services. Indeed, it had previously indicated the opposite -- that under curent law, 911 fees were
not applicable to prepaid services and that legislative change would be needed to extend their
applicability to prepaid services. Neither the ICA nor the lAC has previously paricipated in any
phase of ths proceeding and never before has opined on the applicabilty of 911 fees under Idaho
law to TracFone or to providers of prepaid wireless services in general.
More importtly, these legal issues need not be resolved here. As the Commission has
acknowledged, the Commission does not admster the IECC fee program. Nor is the
Commssion the governental entity empowered to enforce the 911 fee law or to determine its
4 IECC Comments, at 1.
TracFone's Reply Comments 10
applicabilty. Those are judicial questions which is why the Stipulation submitted by TracFone
and Staff will have those questions addressed -- as they should be -- by a cour of competent
jurisdiction. IECC, lAS, and ICA will have every opportty to paricipate in that judicial
proceeding and to present their legal arguents to the cour.
Designation of TracFone as a Lifeline-only ETC as provided for in the Stipulation will
serve the public interest. To date, TracFone has been designated as an ETC in 38 states. It
provides SafeLink Wireless(\ Lifeline servce in most of those states. TracFone's Lifeline
customers receive at no charge full-featued E911-compliant wireless handsets (paid for by
TracFone, not by the USF), 250 minutes of free wireless aiime each month they remain
emolled in the program, nationwide callng, no roamg charges, and such importt vertical
featues as call waiting, caller ID, and voice maiL. The record established in ths proceeding is
undisputed. No ETC curently offering Lifeline service in Idao, including Intervenors, offers
Lifeline programs which are Ín any maner comparable to TracFone's SafeLink Wireless(\
Lifeline program. No Idao ETC offers nationwide calling, vertical featues at no additional
charge, free handsets and 250 minutes of free monthly usage.
5
5 Several of the Intervenors are ETCs (CTC and members of the Idaho Telecom Allance).
Although Intervenors continue to oppose TracFone's designation as an ETC, not one of them
offers a wireless Lifeline plan which includes nationwide calling, free phones and vertical
featues. Moreover, those companes limit their Lifeline calling programs to calls with limited
local calling areas. Thus, their opposition is an understandable response to a potential
competitive theat to their limited Lifeline programs. Whle their continuing opposition to
TracFone's ETC designation may serve their private commercial interests, their efforts to
deprive low-income Idaho consumers of the benefits of competitive choice in Lifeline services
most certnly will not serve the public interest. Their opposition does not wart rejection of
the Stipulation.
TracFone's Reply Comments 11
Based upon public information, most low-income Idaho households who quaify for
Lifeline support are not receiving it. According to the Universal Service Administrative
Company, in 2010, Idao's Lifeline paricipation rate among eligible low-income households
was less than 20 percent.6 With about 3.8 milion low-income households curently enrolled in
its Lifeline program nationwide, TracFone has materially increased Lifeline paricipation in
those states where its SafeLink WirelessiI Lifeline service is available. There can be little
question that the availabilty 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 WirelessiI will increase enrollment of low-income Idahoans in the
federal Lifeline program -- a program which is supported by all Idao consumers though their
contrbutions to the federal USF.
CONCLUSION
As explained above, the Stipulation is a lawfl and reasonable resolution of the paries'
dispute concernng the applicabilty of ITSAP and IECA fees to TracFone. Moreover, the
Commission's approval of the Stipulation and designation of TracFone as an ETC subject to the
conditions and commtments set fort in the Stipulation will serve the public interest. For the
foregoing reasons, TracFone respectfully requests the Commission approve the Stipulation so
that TracFone may be promptly designated as an ETC in Idaho and commence providing its
Lifeline service to low-income households in Idaho.
6 htt/ww. unversalservice.org/ _res/documents/li/pdf/li-paricipation-rate-map-20 1 O/pdf.
TracFone's Reply Comments 12
March 16,2012
TracFone's Reply Comments
Respectfuly submitted,
~\il ~,
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
Mitchell F. Brecher (admitted pro hac vice)
Debra McGuire Mercer
GREENBERG TRAURG, LLP
2101 L Street, NW, Suite 1000
Washington, DC 20037
Tel: [phone]
Fax: [phone]
brecherm~gtlaw.com
mercerdm~gtlaw.com
Attorneys for TracFone Wireless, Inc.
13
CERTIFICATE OF SERVICE
I hereby certify that on the ~ay of March, 2012, I caused to be served, via the
methodes) indicated below, tre and correct copies of the foregoing document, upon:
Jean Jewell, Secreta
Idaho Public Utilties Commssion
472 West Washington Street
P.O. Box 83720
Boise,ID 83720-0074
jjewell~puc.state.id. us
Neil Price, Esq.
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise,ID 83720-0074
Neil.Price(iuc.idaho. gov
Molly O'Lear, Esq.
Richardson & O'Lear, PLLC
P.O. Box 7218
Boise, ID 83707
molly~richardsonandolear.com
Cynthia A. Melilo, Esq.
Cynthia A. Melilo, PLCC
8385 W. Emerald Street
Boise, ID 83704
cam~camidaholaw.com
Idaho Sheriffs Association
Att: Vaugh Kileen
1087 W. River Street., Ste 100
Boise, Idaho 83702
Idaho Association of Counties
Att: Danel G. Chadwick
700 Washington
P.O. Box 1623
Boise, Idaho 83701
TracFone's Reply Comments
Hand Delivered ~
U.S. Mail :-i.
Fax :-i.
Fed. Express :-i.
Email :-i.
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
Hand Delivered
U.S. Mail
Fax
Fed. Express
Email
14
:-i.
:-i.
:-i.
:-i.~
:-i.
J(
:-i.
U~
:-i.~
:-i.
:-i.~
:-i.~i.
:-i.
:-i.
:-i.~
:-i.
:-i.
:-i.
Idaho Emergency Communication
Commission
Att: Garet Nancolas
Idaho Milita Division
4040 West Guard Street, Bldg 600
Boise, Idaho 83705
TracFone's Reply Comments
Hand Delivered ..l.
U.S. Mail .x
Fax ..l.
Fed. Express ..l.
Email ..l.
By:.r \!'~l. .
Me EVITT & MILLER LLP
15