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WC Doket No. 11-42Lifeline and Link Up Refonn and
Moderizon
Federal-Sta Joint Bo on Univer Serice CC Doket No. 96-5
Lifeline an Lin Up WC Doket No. 03- 1 09
NOTICE OF PROPOSED RULMAG
Adopte: Mareh 3, ZOl1 Relea: Mareh 4, ZOl1
Initi Comment Date: April %1, 2011
Reply Comment Date on Sens IV, V (Subson A), vn (Subson B & D): May 10, ZOl1
Reply Comment Date on the Remaining Seons: May 25, 2011
By the Commission: Chainnan Genachowski and Commissioners Copps, McDowell, Clybur and Baker
issuing separte stments.
TABLE OF CONTNTS
Heaing Pargrh #
i. INTRODUCTION ..................................................................................................................................1
II. BACKGROUN..................................................................................................................................13
II. ESTABLISHIG PROGRA GOALS AN MEASURG PERFORMCE..............................28
N. IMDIATE REFORMS TO ELIMIATE WASTE, FRAUD, AN ABUSE................................46
A. Duplicate Claims............................................................................................................................47
1. Backgound..............................................................................................................................47
2. Discussion................................................................................................................................52
B. Pro Rata Reportng Requirents..................................................................................................65
C. Eliminating Reimburement for Toll Limitaon Service ..............................................................68
D. Customa Charges Eligible for Link Up ......................................................................................71
E. Customer Usae of Lifeline-Supported Service.............................................................................80
1. Backgund..............................................................................................................................80
2. Discussion................................................................................................................................82
F. DeEnrllment Procurs.............................................................................................................93
G. Audits.............................................................................................................................................95
V. CLARYIG CONSUMR ELIGffILIT RULES.......................................................................103
A. One-Per-Residence....................................................................................................................... 103
1. Bakground............................................................................................................................ 103
2. Discussion.............................................................................................................................. 106
Federa Commnnications Com.un FCC 11-3%
a. Defining "Residence" ..................................................................................................... 1 1 1
b. Application of the One-Per-Residenc Rule to Commercially Zoned Buildings ........... 117
c. Applicaon of the One-Per-Residence Rule in Triba Communities.............................. 1 19
d. Ensurng Access for Residents of Grup Living Qu .............................................. 121
B. Tribal Lifeline Eligibility ............................................................................................................. 126
VI. CONSTRING THE SIZE OF TH LOW-INCOME FU ...................................................... 142
VlI.IMROVING PROGRA ADMISTRTION ............................................................................. 150
A. Eligibilty Criteria for Lifeline and Link Up................................................................................ 152
B. Certfication and Verification of Consumer Eligibilty for Lifeline ............................................ 158
1. Backgrund............................................................................................................................ 160
2. Discussion.............................................................................................................................. 167
C. Coordinated Enrllment ............................................................................................................... 199
1. Backgrund............................................................................................................................ 199
2. Discussion..............................................................................................................................201
D. Databas.......................................................................................................................................205
1. Backgrund............................................................................................................................205
2. Discussion..............................................................................................................................208
E. Electrnic Signatue. .................................................................................................................... 223
VIII. CONSUMR OUTREACH & MARKTING ............................................................................ 226
IX. MODERNIZING THE LOW INCOME PROGRA TO ALIGN WITH CHANGES IN
TECIlOLOGY AN MARKT DYNAMCS ............................................................................... 239
A. The Curnt Lifeline Progr......................................................................................................239
1. Voice Services Eligible for Discounts...................................................................................239
2. Support Amounts for Voice Service......................................................................................245
a. Background .....................................................................................................................245
b. Discussion ....................................................................................................................... 248
3. Minimum Service Requients for Voice Seice.............................................................. 252
4. Support for Bundled Services................................................................................................255
B. The Trasition to Broadband .......................................................................................................266
1. Background............................................................................................................................266
2. Support for Broabad ..........................................................................................................275
3. Broadband Pilot.....................................................................................................................279
C. Eligible Telecommunications Carer Requirments ................................................................... 303
X. OTHR MA TIERS ...........................................................................................................................313
XI. PROCEDUR MATTRS ..............................................................................................................314
A. Paperwork Reduction Act Analysis .............................................................................................315
B. Initial Regulatory Flexibilty Analysis .........................................................................................316
C. Ex Parte Prsentations .................................................................................................................317
D. Comment Filing Procedurs.........................................................................................................318
XI.ORDERIG CLAUSES.....................................................................................................................324
APPENICES
APPENIX A -Proposed Rules
APPENIX B - Curnt Verification Methodology - Statistically Valid Sample
APPENIX C - Proposed Verification Methodology - Sample Size and Margin of Errr
APPENDIX D - List of Commenters
APPENDIX E - Initial Regulatory Flexibilty Analysis
2
Federa CommuDitions Comlln FCC 11-3%
L INODUCTON
1. Lifeline and Link Up ar a crtical pa of the Comisson's unve seic mision,
ensurg th we implement Congrs's dirve to ensur the availality of baic counicas
services to all Americas, including low-income consumers. i For mor th two de Lifeline and
Link Up (together, "Lifeline/Lin Up" or "te progr") have helpe te of milio of Amca
afor baic phone service, providing a "lifeline" for esstial daly counicaon as well as
emerencies. But rent tehnologica, maret, and relatory chage have put ining st on the
progr. Tody, we begin to comprehensively refonn and moderiz th Lifelin an Lin Up prgr.
Building on prosals frm the National Broband Pla 2 .as well as ret reons frm the
Feder-State Joint Boar on Univer Serice ("Joint Bo") and the Governent Acctailty
Offce (GAO),3 the refonns propose her will significantly bolst prte agst wa, frud and
abus; contrl the size of the prgr; strngten progr administon and actailit; improve
enrollment and outh effort; and supprt pilot projec that would asis the Comission in assing
strtegies to inre brobad adoption, while not increing overal pr siz.
2. Our effort is consistnt with the Commission's ongoing commitment to rexaine and
moderize all components ofUSF to increa acountabilty and effciency, while supprtg brobad
deployment and adoption. The Commission ha al made importt stdes in this ar: We have
moderniz our E-rate progr so schools and libres ca get fasr Internet connections and acss
21st centu leaing tools.4 We have prpose changes to our rual health car prog so patients at
ru clinics ca benefit from broband-eabled car such as remote consultations with speialist
anywhere in the countr.s And we have proposed a Mobilty Fund and a Connec America Fund to spur
the build out of broaband network, both mobile and fixed in aras of the countr that ar uneconomic
to serve.6
3. The Commission has not systematically re-exained Lifeline/Link Up since the pasage
l See Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (199) (199 Act); see also 47 U.S.C. §
254(b)(1), (3) (servces should be available at "affordable" raes and "consumers in all regions of the nation,
includig low-income consumer, . . . should have acess to telecommunicatons and infortion servces").
2 See FEDER COMMUNICATIONS COMMSSION, OMNmuS BROADBAN INTIATIVE, CONNECTG AMRICA: TH
NATIONAL BROADBAND PLA (20 i 0) (NATIONAL BROADBAN PLAN), available at
htt://hunfoss.fcc.gov/edocs public/atthmatchlC-296935A 1 .pdf.
3 Federal-State Joint Board on Universal Service, Lifeline and Link Up, CC Docket No. 96-5, WC Docket No. 03-
109, Recommended Deision, 25 FCC Rcd 15598 (Jt. Bd. 2010) (2010 Recommended Decision); U.S.
GoVERN ACCOUNABILITY OFFICE, REPORT TO CONGRESSIONAL REQUESTERS, GAO II - 1 I,
TELECOMMICATIONS: IMPROVE MAAGEME CAN ENHCE FCC DECISION MAG FOR TH UNIVERSAL
SERVICE FU LoW-INCOME PROGRA (2010) (2010 GAO RERT).
4 Schools and Libraries Universal Service Support Mechanism, A National Broadban Plan For Our Fute, CC
Docket No. 02-6, GN Doket No. 09-51, Six Report and Order, 25 FCC Rcd 18762 (2010) (E-rate Sixth Report
and Order).
S Rural Health Care Universal Service Support Mechanism, WC Doket No. 02-60, Notice of Prpod
Rulemaking, 25 FCC Rcd 9371 (2010) (Rural Health Care NPRM.
6 See Connect America Fund, WC Doket Nos. 10-90,07-135,05-337,03-109, GN Doket No. 09-51, CC Doet
Nos. 01-92, 96-45, Notice of Prsed Rulemakg and Furer Notice of Prpose Rulemaking, FCC 11-13, pa.
487 (reI. Feb. 9, 201 I) (USF/ICC Transforation NPRM; Universal Service Reform, Mobility Fun, WT Doket
No. 10-208, Notce of Prpose Rulemakg, 25 FCC Red 14716 (2010).
3
Federa Communications Commin FCC 11-32
of the 1996 Act.7 Dug this period consumers have increasingly tued to wirles seice, an
Lifeline/Link Up now provides may paicipats discounts on wireless phone service. In the last several
years, Lifeline!Link Up has grwn significatly, from an inflation-ajust $667 millon in 2008 to $ 1.3
bilion in 2010,9 with new pacipation by finns, such as pre-paid wireless providers, that focus on
serving low-income consumers. The time ha come to review the prgr holistically, addrss the risks
and challenges it now presents, and ensur tht it is on a finn fooing to effciently and effectively achieve
its statutory purse.
4. Accordingly, last year the Commission asked the Joint Bo to recommend refonns
focuse on eliminating waste, frud, and abuse; contrllng costs; and improving progr perfonnance
and accuntability.io In response, the Joint Board recommended th the Commission: (1) encourge
automatic enrollment as a best pratice for all stas; (2) adopt unifor minimum verification procedures
and sapling criteria that would apply to all ETCs in all states; (3) allow sts to utilize different and/or
additional verification procedures so long as these procedures ar at leat as effective in deteting waste,
frud, and abuse as the unifonn minimum require procedures; (4) reuire all ETCs in all staes to submit
the data results of their verification sapling to the Commission, the states, and the Universal Serice
Administrtive Company and make the results publicly available; and (5) adopt mandatory outrach
requirements for all ETCs that recive low-income support and maintain advisory guidelines for states
with respect to perfonning low-income outreah.ll We seek comment on the Joint Board's
recommendations here. The Wireline Competition Bureau has also taken a number of steps to combat
waste, frud, and abuse, including requiring one provider to contat annually all of its Lifeline subscribers
to ensure those customers ar only receiving one benefit per household12 and requiring another provider to
remove customers from its Lifeline roster if they do not use their phones for sixty days.13 And late last
7 In 200, the Commission established enhanced benefits for households on Tribal lands. 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, Twelft Report and Order, Memoradum Opinion and Order, and
Furer Notice of Proposed Rulemakng, 15 FCC Red 12208, 12231-32, pars. 42-43 (2000) (Tribal Order). In
2004, the Commission made a number of discete changes to the progr, including chaging eligibilty criteria for
qualifying households in certin states and adopting outreah guidelines for carers, but did not examine the overall
progr strctue. See Lifeline and Link-Up, WC Docket No. 03-109, Report and Order and Furher Notice of
Proposed Rulemaing, 19 FCC Red 8302 (200) (2004 Lifeline and Link Up Order/FNPRM.
8 See Universal Service Administrative Company, Quarrly Administrtive Filings for 2001, Second Qur (2Q),
Appendices at LI04 (filed Jan. 15,2001) (USAC 2Q 2001 FILING), available at htt://usac.orgabout/govemance/fcc-
fiings/2ool/quar2/default.aspx. Adjustments for inflation were calculated using the Bureau of Labor Statistics'
Consumer Price Index Inflation Calenda. See htt://ww.bls.gov/datainflationcalculator.htm (last visited Mar. 1,
2011).
9 This figue is based on USAC disburments in 2010, which may be adjusted by tre-ups. See UNIVERSAL
SERVICE ADMINISTRATIVE COMPANY, QUARTERLY ADMINISTRTIVE FILINGS FOR 201 1, SECOND QUARTER (2Q),
APPENDICES AT M04 (filed Jan. 31, 2011) (USAC 2Q 2011 FILING), available at
htt://ww .usac.orglabout/govemance/fcc- filings/20 11/guaer-2.aspx.
10 See Federal-State Joint Board on Universal Service, Lifeline and Link Up, CC Docket No. 96-45, WC Docket No.
03-109, Order, 25 FCC Rcd 5079, 5079, par. 1 (2010) (20lOJoint Board Referral Order).
11 2010 Recommended Decision, 25 FCC Red at 15599, par. 2.
12 Federal-State Joint Board on Universal Service; TracFone Wireless, Inc. Petiton for Designation as an Eligible
Telecommunications Carier in the State of New York et al., CC Docket No. 96-45, Order, 23 FCC Rcd 6206 (2008)
(TracFone ETC Designation Order).
13 Telecommunications Cariers Eligiblefor Universal Service Support; Virgin Mobile USA, L.P. Petitionsfor
Designation as an Eligible Telecommunications Carrier in the States of Alabama, Connecticut, District of
(continued.... )
4
Federa Communictiou COIis FCC 11-3
yea, the GAO issue a rert with remmendaons for progr refon,14 which al infon ou
proposas her.
5. This Notice of Prpose Rulemg (NRM puts for a se of prs to refon
and moderiz Lifeline/Link Up, including remmendations of th Joint Bo GAO, an the Nationl
Broband Pla.
6. We begin by proposing speific perfonnance gols for th pr and metrcs to
meaur it peonnce in advancing the universl service objecves esblish by Congrss. We thn
propose immediate steps to addrs waste, frud, and abuse and to bolstr mehaisms to dett and de
rule violations. In parcular, we propo to stgten our rules and imprve th incetives of progr
pacipats to ensur tht the progr does not prvide multiple, duplicaive discunts to the sae
residential adss. We als propose to eliminat reimburment for certin services, including initiaton
fees th may be inflate or selectively applied only to low-income households. To reuce wa by
ensuring tht the progr support only communications services tht consumer aclly use, we
propose to eliminate fuding for seices that go unuse for more than sixt days. We sek comment on
expading oversight, including though more extnsive audits. We also sek comment on a propol to
impose an anua funding cap on Lifeline/Lin Up, either tempoly-until implementation of the
refonns propose in this Notieer peanently.
7. This NPRM also addrsses the unique situtions facing residen on Tribal lands, who
historically have had phone penettion substatially below the national average. We propose to clarfy
eligibilty reuirments for low-income Tribal households, and to peit Tribal enrllment base on
paricipation in the Foo Distrbution Prgr on Indian Reservations.
8. This NPRM also seks comment on a number of proposals to strline and improve
overall progr adinistrtion. We ask whether the curent system-in which respnsibilty for
enrlling customers and ensurng their continued eligibilty is split among carers, state agencies, and
thir-par adinistrtorsprovides the right frework for prudent management of public resoures
and effective program administtion. We propose to reuir all sttes to utilze the sae basline
eligibilty reuirments that exist in our federal rules, which could stramline enrllment and facilitte
verification of ongoing eligibilty, and seek comment on allowing sttes to use eligibilty stadads that
supplement the minimum federal unifonn stdas. Consistent with the reommendation of the Joint
Boar, we propose unifonn national stda for the minimum verificaon of ongoing custmer
eligibilty to stay enrolled in Lifeline and sek comment on whether sttes should be peitted to impose
additional verification requirments beyond that federal stada. We also seek comment on a proposal
to use an automated infonnation management system to prevent duplicate claims for support, provide
real-time electrnic verification of consumer eligibilty, and provide a means of ongoing verification of
eligibilty
9. We also ask how the progr should be modernized in light of significant maretla
changes in the las fiftn yea. We seek to develop a rerd on what basic service the progr should
support and we seek comment on whether the currnt frework for determining reimburment levels
remais approprate in an envirnment when many service offerings ar not ra regulat.
10. We also prpose refonns to put Lifeline/Link Up on a more solid footing to achieve
Congress's goal of addrsing the 2 i st cetu challenge of helping low-income households adopt
(Continued frm previous page)
Columbia, Delaware, New Hampshire, we Docket No. 09-197, Order, DA 10-2433, at pa 24 (reI. Dec. 29, 2010)
(Virin Mobile 20/0 ETC Order)
14 See
2010 GAO REPORT at 3.
5
Federa COImunicatioDS Commision FCC 11-32
broadbad. Although access to affordable voice service remains vital to cosumer, is supportng basic
voice seice alone may no longer be adequate to meet the baic communications needs of low-income
Amercas. Broadbad is beming an essential communicaions platfon. Broadband ca help working
parents stay involved in their child's education, enroll in and complete a distce-leaing class to
improve professional skils, and complete everyday taks like paying bils and shopping for necessities.
Broadbad can help children in inner-city neighborhoos and remote rul towns access high-quality
online educational content tht might not otherwise be available to them. Broaband can help the
unemployed searh for jobs and apply for job postings, many of which ar simply not available offine.
11. But many low-income Americas cannot aford a home broadbad connection. Our 2010
Broadband Consumer Survey found tht while 93 percnt of housholds with incomes greater thn
$75,000 have broadband at home, only 40 percnt of adults with houshold incomes less than $20,00
have broadband at home.16 And consumers cite cost as a primar obstale to adoption. 1 7 This gap in
broadband adoption is significatly grr than the gap in telephone penetrtion rates.18 While Lifeline
and Link Up have significantly narwed the telephone subscribership gap beteen low-income
households and the national average, a new divide has emerged for broaband.
12. Consistnt with our sttutory obligation to ensure access to quality, afordable
communications, we sek comment on proposals to ensure Lifeline and Link Up meet the modern
communications needs oflow-income consumers. In paricular, we propose that eligible households be
pennitt to use Lifeline discounts on bundled voice and broadband service offerings. We also sek
comment on how best to design a broaband pilot progr that wil help infonn the Commission's
inquiry into meeting the 21 st century comunications nees of low-income consumers.
D. BACKGROUN
13. History. Universal service has ben a national objective since the Communications Act
of 1934, in which Congress stated its intention to "make available, so far as possible, to all the people of
the United States. . . a rapid, effcient, Nation-wide, and world-wide wire and raio communication
service with adequate facilities at reasnable charges.,,19 In 1996, Congress codified the Commission's
and the sttes' commitment to advancing the availability oftelecommunications services to all
is See Letter from Mitchell F. Brecher, Greenberg Traurg, to Marlene H. Dortch, Secreta, Federal
Communications Commission, WC Docket No. 03-109, Enclosur 2 (filed De. 7,2010) (TracFone Dec. 7,2010 Ex
Parte Letter) (providing statements of Catolic Charties USA and the Hispanic Federtion discussing the
importce of the Lifeline progr).
16 See John B. Horrgan, PhD, Broadband Adoption and Use in America 13, Exhibit 1 (Fed. Comm. Comm'n, OBI
Working Paper Series, Working Paper No. i, 20 10) (Broadband Adoption and Use in America), available at
htt://hunfoss.fcc.gov/edocs j)ublic/atthmatch/OC-296442A I .pdf.
17 Broadband Adoption and Use in America at 5; see also U.S. DEP'T OF COMMERCE, NAT'L TELECOMM. & INFO.
ADMIN., DIGITAL NATION: EXPANDING INTRNET USAGE 5 (201 I) (NTIA DIGITAL NATION), available at
htt://ww.ntia.doc.gov/reports/201 I/NTIA Internet Use Report Februar 201 l.pdf(presenting a more up-to-
date, but less detailed, analysis of the reasns why consumers have not adopted broadband at home and finding cost
to be the most important fator among Internet users who do not have broadband at home, but finding "don't
need/not interested" the leading reasn among consumers who do not use the Internet anywhere).
18 As of March 2009, 90010 oflow-income households subscrbed to telephone servce in their home, compared to a
national average of 96 percent. See Universal Service Monitoring Report, CC Doket No. 98-202, Prepared for the
Federal-State Joint Board on Universal Service in CC Docket No. %-5, Table 2-2 (2010) (2010 Universal Service
Monitoring Report), available at htt://ww.fcc.gov/Daily Releases/Daily Business/0 I O/db I 230/DOC-
303886A4.pdf; see infa par. 25-27 (trnds).
1947 U.S.C. § 151 (creatig the Federal Communications Commission).
6
Fedra CommunitiDS ComDU FCC 11-32
Amecas, and estlishe principles upn which th Commission shal ba policies for th pratio
and advanceent of universl service.20 Among other things, Congr ariculate naona goals th
service should be available at "affordble" rates and th "consuer in all regions of the nation,
including low-income consumers, . . . shld have acs to telecmmunicaions an inforation
seice. "21
14. Lifelin was originally implemented in 1985 to ensur th the incre in locl ra th
ocurr in the aftnn of the breup of AT&T would not put loc phon service out of reh for low-
income houolds. Supprt for low-income households ha long be a paersip beee th sts
and the fedl goverment, and the universal service prgr historily was adinist in
cooperaon with sta regulators through the ratemaking pros.22 Th pr orginally was deigned
to allow copaies to be made whole for foregone revenues assoia with discnts prvided to
eligible Lifeline/Link Up consumers. The prog was never intend to provide a profit for service
providers.
15. The progr was revise and expaded aftr pasae of th Telecmmunications Act of
199, bas on reommendations of the Joint Boar.23 Aftr the 1996 Act, all stte paricipa in the
progr and the level of federal Lifeline/Link Up supprt increa. Th Commission broaned
paricipaion to all Eligible Telecommunications Carers (ETCs), making the provision of Lifeline
service a condition of being an ETC?4 The progr is administed by the Universl Service
Administrtive Compay (USAC) under Comission diretion, although many key attbutes of the
progr stil are implemented at the stte leveL.
16. Funding is not provide diretly to the low-income consumers it benefits. Ra, ETCs
provide discunts to eligible households and reive reimburement frm the Universal Service Fun for
the provision of such discounts.25 Today, Lifeline provides discunts of up to $10 on monthly teleph
20 47 U.S.C. § 254().
21 See 47 U.S.C. § 254()(1),(3); see also 47 U.S.C. § 151.
22 In paicula, the Commission waived the federal subsber line charge - which enaled telephone compies to
incre local ras - in those stas which provided some level of mathing support. The Commission orginlly
estalished the Lifeline and Link Up programs puuat to its general authority under sections I, 4(i), 201, and 205
of the Communications Act of 1934. See Federal-State Joint Board on Universal Service, CC Doket No. 96-45,
Repo and Order, 12 FCC Rcd 8776, 8952-53, par. 329 (1997) (subsequent history omitted) (Universal Serice
First Report and Order).
23 See Universal Service First Report and Order, 12 FCC Red at 8952, par. 326-28. The Joint Board is cose
of FCC commissioners, state utilty commissioner, and a consumer advocte represntaive. See 47 U.S.C. §§
254(a)(I),410(c).
24 Seon 214(e)(2) of the Act gives state commissions the prar responsibilty for performing ETC designions.
47 U.S.C. § 214(e)(2); see Tribal Order, 15 FCC Red at 12255, pa. 93. Seion 214(e)(6) dirts the Commission
to, on reuest, designate as an ETC "a commn caer providing telephone exchange serice and exchange acess
that is not subjectto the jursdiction ofa State commission." 47 U.S.C. § 214(e)(6); see Tribal Order, 15 FCC Rcd
at 12255, pa. 92.
25 Carers file FCC Forms 497 to receive reimburment for providig Lifeline!Link Up support to eligible
subsbers. USAC, Low Income, Step 6: Submit Lifeline and Link Up Worksheet,
htt://usac.org/iltelecom/step06/default.aspx (last visited Mar. 1,201 I). ETCs may fie their Forms 497 on eithr a
monthly or qualy basis, and are reimbur by USAC on a monthly basis. Id; USAC, Low Income, Step 7:
Payment Press and Sta, htt://usac.org/iltelecom/step07/default.aspx (last visited Mar. 1,201 I).
7
Federa CommunieatioDS Commision FCC 11-32
chares,26 and Link Up provides a discount of up to $30 on the cost of commencing telepone seice for
qualifying low-income households.27 These amounts may be supplemente by additional funding
provided from state universl service funds in some stas. Discunts ar available for one telephone line,
either fixed (tyically wireline) or mobile (wireless), per eligible household.
i 7. Chaacteristics o/the Mar/rtplace. Much of the strcture of th curnt progr reflects
its origins, even though the communications maetla ha changed dratically in the last fiftn
yeas. When the progrm was first estalished, mobile phones did not exist as a consumer product, only
incumbent telephone companies provided local telephone service, and the progr was designed for
caiers whose rates were regulated. Tody, consumers have varous options for fixed or mobile voice
services, many of which ar not rate regulatd. Mobile phone service is vastly more prominent than even
a few yea ago-ore than 25 percent of adults in the general population live in households with only
wireless phones, while 40 percent of i 8-24 year olds have "cut the cord. ,,28 Furtennore, consumers
tody oftn purchas packages of services that allow them to call anywhere in the countr, with no
additional charge for long distace callng.
18. Bifcated Federal an State Responsibilities. The current federal-state strctue of the
progr presents challenges in managing the program's size and preventing waste, frd, and abuse.
Although Lifeline/Link Up is a federal progr, its adinistrtion vares significantly among the states
for such key questions as who is eligible for benefits, how eligible consumers are enrolled, what
certifications of eligibility are required, and how ongoing eligibilty is verified.
19. States that do not maintain their own low-income progrms are known as federal default
staes. Ther curently are ten default states (eight states and two terrtories).i9 The remaining states do
not follow all federal rules.
20. Discounts are available to households that qualify as "low-income," but there is no
unifonn national definition for that tenn. Instad, when the Commission implemented the 1996 Act, it
chose not to disturb the frework alrey in pla under which sttes with their own programs
detennined qualifications for Lifeline. States must bas eligibility criteria solely on income or factors
diretly related to income, but within that general rule states tae varing approaches.30 For instace, of
the twenty-two states that allow paricipation bas on income alone, some have established an income
threshold that is higher than the Commission's, which enables more low-income households to enroll,
26 As discussed infra, Lifeline support amounts var from sta to state, depending on varous factors affecting the
tiers of support established in section 54.403 of the Commission's rules. For eligible consumers living on trbal
lands, the monthly discount is up to $25. See infra Secion IX.A.2.
27 In addition, carers may be reimbured for their provision of Toll Limitation Service to eligible households,
which enables those consumers to obtain toll blocking or toll control at no cost. 47 C.F.R. § 54.403(c).
28 STEPHEN J. BLUMBERG AND JULIA V. LUKE, CENTERS FOR DISEASE CONTOL AND PREVETION, NATIONAL
CENTER FOR HEAL TH STATISTICS, WIRLESS SUBSTITUTION: EARLY RELEASE OF ESTIMATES FROM THE NATIONAL
HEALTH INTERVIEW SURVEY, JANUARY - JUNE 2010 2-3 (2010) (WIRLESS SUBSTITUTION SURVEY), available at
htt://ww.cdc.gov/nchsldatanhis/earlyrelease/wireless20 1 0 12.pdf.
29 The curnt federal default states are Delawa, Hawaii, Indiana, Iowa, Louisiana, New Hampshire, Nort Dakota,
South Dakota Amencan Samoa, and the Nortern Maran Islands. See Universal Service Administrtive Company
(USAC) website, Low Income, Frequently Asked Questions, htt://ww.universalservice.orgliltools/freguently-
asked-guestions/fag-lifeline-Iinkup-order.aspx#gl (last visited Mar. 1,201 I).
30 See 47 C.F.R. §§ 54.409 (consumer qualificaton for Lifeline), 54.4 I 0 (certification and venfication of consumer
qualification for Lifeline), 54.415 (consumer qualification for Lin Up), 54.416 (certfication of consumer
qualification for Link Up). States must base eligibilty cntena solely on income or factors directly related to
income. 47 C.F.R. §§ 54.409(a), 54.415(a).
8
Fedra CommunieatiDS Commis FCC 11-32
while othrs have established a lower thhold.31
21. The Commission's eligibilty criria encompas houslds at or below 135 pet of
the federal povert guidelines, and households tht paricipa in varou ince-ba public-assist
progrs, such as Medicaid, Food Staps, and Federal Public Housing Assistce.32 As shown below in
Cha i, a family of thr would be eligible to reive low-income benefits uner the Commission's roles
if total household income were less tha $25,016 per yea.
Chart i
~~:t!,~;~':.:'" ,
v:' ''''~''.,t '",. ~ .,
~' : .:'..:.:~;/~~
'1, ';:;:-:' ,... .
Perss in Family or Income
Houshold Thshold
1 $14,702
2 $19,859
3 $25,016
4 $30,173
22. Prtices also differ frm state to stte regading how the program is administred. In the
federal default sttes, and in many states tha have their own low-income progr, ETCs ar responsible
for procssing applications, certifying that applicants ar eligible for benefits, and verifying ongoing
eligibilty.34 In other stas, some or all ofthese functions may be perfonned by the state public utilty
commission, another state agency, or a third-par administrtor.35
23. Administrtive processes to mitigate wase, frud and abuse are also inconsistent. For
31 2010 GAO REPORT at 50.
3247 C.F.R. § 54.409(b). Ifa consumer's eligibilty is bad on income, the consumer must provide accetale
documentaon of income eligibilty including, among other things, the prior year's state, federal, or trbal ta retu
and a curent income statement from an employer. 47 C.F.R. §§ 54.410(a)(2), 54.416.
33 Annual Upde of
the U.S. Dep't. of Health and Human Servs. Povert Guidelines, 76 Fed. Reg. 3,367, 3,637-38
(Jan. 20, 20 I i).
34 See 47 C.F.R. §§, 54.409,54.410,54.415,54.416. In contrt, consumers seekig soial service benefits frm
other federal progrms such as the Low Income Home Energy Assistance Progrm (LIHEAP), Tempora
Assistace for Needy Familes (T ANF), or the Supplemental Nutrtion Assistace Progr (SNAP) tyically file an
application with a state social services offce, which then verifies the consumer's eligibilty for the progr. See,
e.g., Nevada Division of Welfare, Energy Assistace Progr - How to Apply,
htts:/ /dwss.nv .gov/index.php?option=com content&tak=iew&id= 120&Itemid=286 (last visited Mar. 1, 2011);
Virginia Depaent of Soial Services, Tempora Assistace for Needy Familes,
htt://ww.dss.virginia.govlbenefit/tanf/index.cgi(last visited Mar. 1,201 I); Orgon Dearent of Human
Services, SNAP Applicant and Recipient Informtion, htt://ww.oregon.gov/DHS/assistace/footamps/snap-
info.shtml#apply (last visited Mar. 1,2011).
35 As of a 200 surey conductd by the National Regulatory Research Institute, in twelve states the progr was
adinisted by the public utilty commission, in twelve states the progr was administered by another state
agency, in eight states the progr was adinistere by a thir par, and in six states the progr was adinistered
by the telecommunications carier. For instace, California, Oklahoma and Texas use a third par adinistror to
perfonn these fuctions. In Montaa, the Deparent of Public Health and Human Services certifies and verifies
eligibilty, while the public utilty commission sets the discount and approves taffraes for Lifeline servce.
NATIONAL REGULATORY RESEARCH INSTITUTE (NRR), STATE UNIVERSAL SERVICE FUNDING MECHAISMS:
RESULTS OF NRR's 2005-200 SURVEY 55, Table 34 (200) (NRR STUDY).
9
Federal Co..munications Co....ison FCC 11-32
instce, while twenty-two stas permit enrollment ba on income, not all reuir documentation of
income. Six states permit self-certification of income under penalty of peur. Fourt states conduct
radom audits of Lifeline reipients, while ten stas conduct audits of ETCs.36
24. Carers offering Lifeline services in the ten fedral default sts must verify annually
the continued eligibilty ofa statistically valid radom saple of their Lifeline subsribe.37 According
to GAO, seventeen of the oter states reuire verificatin of a sttistically valid saple of low-income
households, and thirtn have an online verification system that use dabaes from public assistace
progrs or income reports.38 Only feder default sts and a hadful of oter states reuire ETCs to
submit the results of anual verifications to USAC,39 providing the Commission with an incomplete
picture of whether there is waste, frud and abuse in the progr.
25. Trends. There is significant variation among the stas in the peentae of eligible
households paricipating in the progr, which may be due to state eligibility reuirements, the extent of
outrach, the process for enrollng customers, the number and ty of ETCs in the state, support levels,
and othr factors.4o In 2009, 8.6 milion eligible households paricipated in Lifeline nationwide, which
represented 33 percent of the 25.7 milion low-income households at the time.41 Char 2 below ilustrs
the varation in estimated participation rates among the staes.
362010 GAO REPORT at 51, Table 6.
3747 C.F.R. § 54.410(c)(2). In a Febru 2010 declartory ruling, the Commission found that when a state
commission mandates Lifeline support, but does not impose certification and verification requirements on certain
carrers within the state, the affected carrers must follow federal default certification and verification requirements.
Lifeline and Link Up; Petitionsfor Declaratory Ruling and Requestsfor Waiver by US Cellular Corporation, et al.,
WC Doket No. 03-109, Orer and Declartory Ruling, 25 FCC Rcd 1641, 1645, par. 9 (2010).
382010 GAO REPORT at 51.
39 Non-default states that require ETCs to submit their verificaon results to USAC include Alabama, Arsas,
Arzona, New York, North Carolina, Pennylvania, and West Viria.
40 See NATIONAL BROADBAND PLAN at 172 (citing Mark Burn et aI., Understanding Participation in Social
Programs: Why Don't Households Pick up the Lifeline?, 7 B.E. J. EcON. ANAL. & POL'Y 57 (2007), available at
htt://facultv.msb.edu/jtm4/Papers/BEJEAP.2007.pdf; Janice A. Hague et aI., Whose Call Is It? Targeting Universal
Service Programs to Low-Income Households' Telecommunications Preferences, 33 TELECOMM. POL'Y 129, 136-38
(2009), available at htt://wargton.ufl.edu/purc/purcdocs/papers0805 Hauge Whose Call Is.pdf.
41 See 2010 Universal Service Monitoring Report at Table 2.1; see also USAC 2009 Lifeline Paricipation Rate
Data htt://ww.usac.orgli/about/paricipation-rate-information.aspx (last visited Mar. 1,2011).
10
Federa Communietiu ComniB FCC 11-32
Clirt%
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'\-O-...ii....fJci.........eiro..LM,.....inol........1f..._..........--....ØfTi..._..Cl..........-..,
:!~~--~------_.__..__._._._------"Q ~
"%ce
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26. Telephone subscriberhip among low-income Americans has grown significantly since
1984. Eighty percent of low-income households had telephone service in 1984, compad to a national
average of 92 percnt at that time. The gap has narwed considerably since the inception of
Lifeline/Lin Up: As of Marh 2009, 90 percent oflow-income households subscribe to telephone
service in their home, compared to a national average of 96 peent. 42 Moreover, states with higher
dollar amounts of Lifeline support exhibite higher grwt in phone subscribership from 1997 to the
42 2010 Universal Service Monitoring Report at 2-2. The Commission's curt telephone subscption peneton
rate is bas on the Cenus Burau's Curnt Populaton Surey (CPS), which doe not spcifically brak-out
wirless, VoIP, or over-the-top voice options available to consumer. FEDERA COMMICATIONS COMMISSION,
WIRLIN COMPETITON BUREU, INDUSTRY ANALYSIS AN TECHNOLOGY DIVISION, TELEPHONE SUBSCRIERSHI
IN TH UNITD STATES 1 (2010) (WCB SUBSCRIERSHI REPORT). The speific questions ased in the CPS ar:
"Does ths house, aparent, or mobile home have telephone servce frm which you can both mae and reive
calls? Pleas inlude cell phones, regular phones, and any other ty of telephone." And, if the anwer to the fit
question is "no," this is followed up with, "Is there a telephone elsewhere on which people in this household can be
called?" If the answer to the firt question is ''yes,'' th household is counted as havig a telephone "in unit." If the
answer to either the fir or second question is ''yes,'' the houshold is counted as havig a telephone "available." Id
at 3.
11
Federa Communications Commision FCC 11-32
present. 43
27. The amount of support ha also grwn significatly. The progr provided $1.3 bilion
in support in 2010,44 compard to an inflation-adjust $221 millon in support to low-income housholds
in 1997.45 The initial growth in Lifeline/Link Up after the implementation of the 1996 Act was due in
large par to the expansion of the program to all fift states and the increasd level of support provided
compared to levels prior to the 1996 Act. 46 In 200, the Commission provided enhanced support to
households on Tribal lands.47 The progr continued to grow between 2001 and 200 due in par to
increases in the federal subscriber line chage, which detennines Lifeline support levels.48 Meanwhile,
over the year, wirless companies increingly sought ETC designations, providing additional options
for Lifeline service. In the last several yea, a number of pre-paid wireless providers have become
Lifeline-only ETCs,49 fiercely competing for the business of low-income consumers by marketing "free"
43 States that have provided a full or high level of Lifeline support for telephone serice for low-income consumers
experienced an averae growth in telephone penetrtion rates for low-income households of 4.6% from Marh 1997
to March 2009. The states are divided into thee groups: "Full or High Assistace" states providing at least S3.oo of
state support to get federal matching support of at least S i .50 per line per month; "Intermediate Assistace" stas
providing between SO.50 and S3.00 of stae support, and receiving between $0.25 and $1.0 federal matching
support per line per month; "Basic or Low Assistce" states providing less than S0.50 of state support, and
receiving less than $0.25 federl matching support per line per month. See 2010 Universal Service Monitoring
Report at 6-8. In contrt, durg the same time period states that provided a basic or low level of Lifeline support
experienced an average increase in telephone penetron ras of only 2.9%.
44 This figure is based on USAC estimates. See UNIVERSAL SERVICE ADMINISTRTIVE COMPANY, QUARTERLY
ADMINISTRTIVE FILINGS FOR 20 i i, SECOND QUARTER (2Q), APPENDICES AT M04 (fied Jan. 3 i, 20 i i) (USAC 2Q
20 i i FILING), available at htt://ww.usac.org/about/govemance/fcc-fiings/201 l/guaer-2.aspx.
45 See 2010 Universal Service Monitoring Report at Char 2-2. Adjustments for inflation were calculatd using the
Bureau of Labor Statistics' Consumer Prce Index Inflation Calenda. See
htt://ww.bls.gov/datainflationcalculator.htm (last visited Mar. 1,201 i).
46 Support levels grew from an inflation-adjusted $23 i milion in i 996 to $621 milion in 1998, the fit year after
implementation of section 254. See 2010 Universal Service Monitoring Report at Chart 2-2.
47 In 2010, $ 101 milion was provided to housholds on Tribal lands (estimated based on anualizing claims for the
fist 9 months of20lO). 2Q USAC filing appendix LI07 - Low Income Support Distrbuted by State in 2007 though
3Q20lO, available at: htt://ww.usc.org/about/govemance/fcc-
filings/20 1 1/02/LI07%20%20Low'1020Income%20Support%20Distrbuted%20by%20State%20in%202007%20and
%20though%203020 1 O.xls.
48 Support levels grew from an inflation-adjusted $819 milion in 2002 to $927 milion in 2004. See 2010 Universal
Service Monitoring Report at Char 2-2.
49 See, e.g., Petition ofTracFone Wireless, Inc. for Forbearancefrom 47 U.S.C. § 2J4(e)(I)(A) and 47 C.F.R. §
54.201(i), CC Docket No. 96-45, Order, 20 FCC Rcd 15095 (2005) (TracFone Forbearance Order); TracFone ETC
Designation Order, 23 FCC Rcd at 6206; Virgin Mobile USA, L.P. Petitionfor Forbearancefrom 47 u.S.C. §
2J4(e)(I)(A); Petitionfor Designation as an Eligible Telecommunications Carrier in the State of New York; Petition
for Designation as an Eligible Telecommunications Carrier in the Commonwealth of Virginia; Petition for Limited
Designation as an Eligible Telecommunications Carrier in the State of North Carolina; Petitionfor Limited
Designation as an Eligible Telecommunications Carrier in the State of Tennessee, CC Docket No. 96-45, Order, 24
FCC Rcd 3381 (2009) (Virgin Mobile Forbearance Order); Federal.State Joint Board on Universal Service;
Telecommunications Carriers Eligiblefor Universal Service Support; i-wireless, LLC Petitionfor Forbearance
from 47 U.S.c. § 2J4(e)(I)(A), CC Docket No. 96-45, WC Docket No. 09-197, Orer, 25 FCC Rcd 8784 (2010) (i-
wireless Forbearance Order); Telecommunications Carriers Eligiblefor Universal Service Support; Federal-State
Joint Board on Universal Service; Head Start Petitionfor Forbearance; Consumer Cellular Petitionfor
Forbearance; Midwestern Telecommunications Inc. Petitionfor Forbearance; Line Up, LLC Petitionfor
Forbearance, WC Doket No. 09- 1 97, CC Docket No. 96-45, Order, 25 FCC Rcd 10510 (2010) (Global
(continued.. ..)
12
Federa CommuDitiu COBmis FCC 11-3%
phone service.
50 This development ha expded choice in may sts for low-inme consumer wh
may have been unlikely to subscribe to wireline voice seice,51 bu it ha als led to significat grwt in
the fud. Prpaid wirles ETCs now acunt for one-thir of all Lifeline reimbuents.52
m. ESTABUSHIG PROGRA GOAL AN MEASURG PERFRMCE
28. As we move forwar to refonn and moderize the Commission's low-income supprt
mechanisms, we sek comment on the pro's peonnance goas, consistt with our sttory
obligations, and on how be to meaure the progr's perfonnance in achieving thos goas.
29. In estblishing peonce goals, we ar guided in the firs insce by the Act. Setion
254(b) outlines the principles upon which the Commission and the Joint Boa ar to ba policies for the
"prervaton and advanceent of universl service." Thes priciples include the notion th quaity
service should be available at 'just, renable and afordble" ras, and tht consumers in all regions of
the nation, including low-income consumer, should have access to telecmmunications and infonnation
services th ar resonaly comparble to service in ur ar at renably comparble ra.53 The
statute specifies that there should be speific, predictale, and suffcient federl and stte mechaisms to
prerve and advance universl seice. Setion 254(cXI) of the Act also sets fort certin crtea tht
we should consider when deciding what services ar eligible for universl service support including the
extent to which those services ar "essential to education, public health, or public safet;" and "consistent
with the public interest, convenience, and necessity.,,54
30. Historically, the primar goal for the Lifeline/ink Up progr has ben to faciltate the
availabilty of affordable phone service to low-income households. Over time, telephone penettion
rates for low-income consumers have increas although they stil remain below the national average and
a six percent gap has remained relatively stble in reent year. S5
31. In 2007, the Commission tok initial steps to improve the management of the low-income
(Continued from previous pae)
Forbearance Order).
50 For example, TracFone note th the initial SafeLin Wirless offerig was 68 fr minutes per month until a
competitor offered 200 fr minutes, to which TracFone responded with its 250-minute offer. See TraFone Dec. 7,
2010 Ex Parte Lettr, at 5.
51 NATIONAL BROADBAN PLA at i 73. According to some, mobile phones ar becomig more essential th
ladline phones for low-income consumers. See, e.g., Janice A. Hauge, Eric P. Chiang & Mar A. Jamison, Whose
Call is It? Targeting Universal Service Programs to Low-Income Households' Telecommunications Preferences, 33
TELECOMM. POL'Y 129, available at htq://ssm.com/abstrt=132428L. Pre-paid wirless offerigs ar oft ideal
for low-income or unemployedlunder-employed consumers becau they enable consumers to ber manage
expens. See, e.g., Nexus TraFone Lin Up Comments, at Attch. 1,6 (Declartion of August An and Olesya
Deney, QSI Consultig).
52 See USAC 2Q 201 1 FILING, Appedices at LI04 (Querly Low Income Disburment Amounts by Compay
(4Q20 1 0)), available at htt://ww.usac.orgabutlgovemance/fcc-fiings201 l/quaer-2.aspx.
53 See 47 U.S.C. § 254()(1),(3).
54 See 47 U.S.C. § 254(c)(I)(A),(D).
55 We note, however, that the dispar in peneton ras for low-income households livig on Tribal lands
compard to the national averae has ben significatly higher. See U.S. GOVERN ACCOUNABILIT OFFICE,
REPORT TO CONGRESSIONAL REQUESTERS, GAO 06 1 89, TELECOMMUNICATIONS: CHALENGES TO ASSESSING AN
IMPROVIG TELECOMMUNICATIONS FOR NATIVE AMRICANS ON TRAL LANS 2 (2006) (2006 GAO REPORT),
available at htq://ww.gao.gov/new.items/d06 1 89.pdf.
13
Federa CommunicatioDS Commisn FCC 11-32
progr by adopting meaurs of effciency and effecvenes.s6 At that tie, however, the Commission
concluded that it did not have suffcient data to detnnine approriate peormce goas.s7 In 2010,
GAO note that while the Commission had develope perfonnance meaur, it ha not quatified its
goal of incre telephone subscribership among low-income housolds.s8 GAO also note the
importce of developing baline and trd da for pat peonnce, and of identifying taet
perfonnance levels for multi-yea goals.
32. Clear perfonnance goals and meaurs should enale the Commission to deteine not
just whether federal funding is use for intended purses, but wheter tht fuding is accomplishing the
progr's ultimate objectves. S9 We now propose to estblish explicit perfonnance goals in order to
provide a basis for detennining whether Lifeline/in Up is succssfully promoting and advancinä the
availabilty of quality services at just, reonable, and afordable raes for low income consumers.
33. Consistent with the Act and GAO's recommendaions, we sek comment on thr
specific goals and related perfonnance meaurs for the Lifeline/in Up progr.
34. We propose that our fit perfonnance goal be to preserve and advance the availabilty of
voice service for low-income Americas.6 We note the vital role that voice telephony contiues to play
for consumers, paicularly for public saety and public health. We propose to define "availabilty" of
voice service for purposes of Lifeline/Link Up to mean that low-income households have access to that
service. We propose to adopt a goal of eliminating any difference in the availabilty of voice service for
low-income consumers compad to non-low-income consumers.
35. We seek comment on how to measur availabilty of voice serices for low-income
S6 In 2007, the Commission noted the goa of incrin phone sece subsbership among low-income
households. Comprehensive Review of the Universal Serice Fund Mangement, Administration, and Oversight
Federal-State Joint Board on Universal Serice; Schools an Libraries Universal Serice Support Mechanism;
Rural Health Care Support Mechanism; Lifeline and Link-Up, Changes to the Board of Directors for the National
Exchange Carrier Association, Inc., WC Doket Nos. 05-195, 02-6, 02-60, 03-109, CC Docket Nos. 96-5, 97-21,
Report and Order, 22 FCC Rcd 16372,16394-95, par 50 (2007) (2007 Comprehensive Review Order).
S7 2007 Comprehensive Review Order, 22 FCC Rcd at 163955, par. 51. The Commission noted tht it would
contiue to evaluate the effeciveness of th performance measures adopted for the low-income progr by
monitorig the number of progr beneficiares (carers), the number oflow-income customers for which each
carer receives low-income support and the numbe of connections supported. The Commission committed to
looking at other measurements as well, such as the time it taes USAC to process support payments and authorize
disburements, the average (mean) and median support amount awaded per carer, and total amount of support
disbured. The Commission also required USAC to rert anually to the Commission on the Lifeline anual
verification reults fied by Qwest, Verion, and AT&T. Id at 16395, par. 52.
S8 2010 GAO REPORT at 24.
S9 The Goverent Performance and Results Act (GPRA) of 1993 estlished statutory requiments for federl
agencies to engage in strtegic planing and performce measurment. See Governent Perormce and Results
Act of 1993, Public Law No. 103-62. GPRA is intended to imprve effciency and effecveness of federal
progrs thugh the establishment of speific goas for progr peormce. Id. GPRA requirs federl agencies
to: (1) develop strtegic plans with long-te outcome-related goals and objecves; (2) develop anual goals linked
to the long-te goals; and (3) measur progress towar the achievement of those goals in anual performance plans
and reort anually on their progress in pro peormance report. See 5 U.S.C. § 306; 31 U.S.C. §§ 1115-
1116.
60 47 U.S.C. §254(b)(1).
61 See
47 U.S.C. § 254(); see also Qwest Communicaions Comments, WC Doket No. 05-195 (filed Nov. 14,
2008).
14
Federa CommuDietioBS Commin FCC 11-3%
housholds. The Commission ha historically meaur telephon peon, which meurs voice
service subscriptions, as a proxy for availabilit.62 We propose to eslish as an outme meur the
differece beeen voice service subscribership ra for low-income housholds eligible for the Lifeline
and Link Up progr and voice seice subsbership rate for the housholds in the next higher income
level as defined in the CPS.63 Bas on th most rent infonnon this would suggt a tat
subscribehip ra for low-income housholds of 96.9 percnt, which is th subscribehip rate for
households with incomes in the $35,000-$39,99 rage.M We sek comment on wheer we should us
another meaur of availabilty .65 We sek comment on how we should define "low-income houshold"
for the pu of this pedonnance goal in light of the differng eligibilty stada th exist toy frm
st to st. For instce, for simplicity, should we us 135% of the Federl Povert Guidelines for a
family of four as the thshold for monitorig progr pedonnance? We seek coent on whether we
should inste compar subscribership ras for eligible low-income housholds with some other
meaur, such as the mean or median subscribership rate for all non-low income households.
36. We propose as our send pedonnce goal to enur th low-income consumers ca
accss support services at just reanable, and affordble rates.66 We have concluded in the pat that
the concept of afordbilty has both an absolute and a relatve component.67 The absolut component
taes into acunt wheter an individual ha enough money to pay for a service, and the relative
component taes into account wheter the cost of a service would reuire a consumer to spend a
disproportonat amount of his or her income on tht service.68 Comparg subscribership or adoption
rates among low-income households to nationwide subscribership and adoption rates may be useful in
evaluating whether supported services ar available to low-income households and affordble in absolute
tenns, but those comparsons may not be dispositive in evaluaing whether low-income households ca
afford those seices in relative tenns.69 We seek comment on whether an appropriate pedonnance
meaure for this goal would be to compa the percentae of low-income household income spent on a
voice service to the perentage of houshold income spent on voice service for the next highest income
range as identified by the Bureau of Labor Staistics.
37. As our third peronnance goal, we propoe to_ensur that our universl service policies
provide Lifeline/Link Up support that is suffcient but not excessive to achieve our goals.70
62 See WCB SUBSCRIERSHIP REPORT at 1-3.
63 WCB SUBSCRIERSHIP REPORT at Table 4.
MId
65 See Modernizing the FCC Form 477 Data Progam, Development of Nationwide Broadband Data to Evaluate
Reasonable and Timely Deployment of Advanced Serices to All American, Improvement of Wireless Broadband
Subscribership Data, and Development of Data on Interconnected Voice over Internet Protocol (V olP)
Subscribership, Service Quality, Customer Satisfaction, Infastrcture and Operating Data Gatheing, Review of
Wireline Competition Bureau Data Practices, WC Docket Nos. 11-10,07-38,08-190,10-132, Notice of Propose
Rulemakng, FCC 11-14, par. 32-33, 77 (reI. Feb. 8,201 I) (Broadband Data NPRM.
66 See 47 U.S.C. § 254(b)(1). When the Commission initilly implemented the 1996 Act it note that a varety of
factors may impac affordabilty of phone servce, including non-rate fars such as income levels, cost of livig,
populaton density, and the siz of the custmer's locl calling ara Universal Serice First Report and Order, 12
FCC Rcd at 8842, pa. 114- 1 7.
67 Universal Service First Repot and Orde, 12 FCC Rcd at 8837-38, par. 110.
68/d at 8837-38, par 110.
691d at 8839, par 113.
70
See 47 U.S.C. § 254()(5).
15
Federa CommunicatioDS Commision FCC 11-32
Administerng USF reuires balancing competing demands, reizing th incre ded for fuds
impos a grr contrbution burdn on consumers and businesses. As we have note previously, the
principles outlined in setion 254 reuire us to ensure that quality seices are affordable for all
consumers but we must also be "mindful ofthe effects th expande universal service mechanisms may
have on consumers.,,71 This goal includes ensuring th the LifelinelLink Up progr is acuntale and
fiscally responsible, with support disbursed effciently and effectively only to thos who nee it.
38. In the Connect America Fun Notice, we sought comment on measurng the relative
contrbution burden on consumers over time, defined as total infltion-adjuste expenditures of the Fund
each year, divided by the number of American households.72 We sek comment her on whether a similar
measure would be appropriate for Lifeline/Link Up, speifically trking whether the inflation-adjust
LifelinelLink Up expenditu per American household is incresing or decresing over time. In 2010, the
contribution burden for Lifeline/Link Up was equivalent to approximately $0.95 per U.S. household per
month.73
39. We also recgnize th a key component of achieving our goal of providing support tht
is suffcient but not excessive is to protet the universal service fund against waste, frud, and abus.
That benefits consumers and keeps raes more affordable for all consumers by reducing the nee to collect
funds for the progrm that are not appropriately utilze. We propose a number of rule changes in this
Notice that would reduce waste, frud, and abuse in the program. We seek comment on whether we
should establish as a perfonnance measure keeping errneous payments in the program below a speified
level, for instance by reducing levels of ineligible recipients to a specified percentage.74
40. We also seek comment on appropriate effciency metrcs. For exaple, is there a way to
measure increases in the percentage of low-income household subscribership relative to the amount of
funding spent per houshold receiving LifelinelLink Up? We seek comment on this and other measures
of effciency.
41. Although we are committ to taing all necessa steps to eliminate reduce waste, frud,
and abuse, we also recognize the potential negative impact of increased government regulatory burden,
especially on small companies, of some of the measurs that ca assist in detecting and deterng waste,
fraud and abuse. We seek comment on how best to balance these competing interests.
42. We sek comment on whether these th goals and associated perfonnance measures are
appropriate for the LifelinelLink Up program and ask that commenters consider the refonn proposals
below in light of the proposed goals and perfonnance measures outlined here. Are there additional or
71 See, e.g., Universal Service First Report and Order, 12 FCC Rcd at 8845-46, par. 125; see also High-Cost
Universal Service Support; Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Order on
Remad and Memoradum Opinion and Order, 25 FCC Rcd 4072,4087, par. 28 (2010) (Tenth Circuit Remand
Order) (stating that "if the universal service fud grows too lare, it wil jeopardize other statutory mandates, such
as ensurng affordable ras in all par of the countr").
72 USFIICC Transformation NPRM, FCC i 1-13, at par. 487.
73 This figu is derived by dividing the total projected disburments for Lifeline/Lin Up for 2010 ($1.3 bilion) by
the total numbe of housholds with telephone service (113.6 milion). See USAC 2Q 201 1 FILING, Appendices at
M04, available at htt://ww.usac.org/about/govemance/fcc-filingsl01 l/guarer-2.aspx; see also WCB
SUBSCRIBERSHlP REPORT at Table 1. We note that contrbutions to USF ar assessed on services provided to
businesses as well as residential households; this calculation includes business contrbutions to the USF, so the
amount per month on the phone bils of individual housholds is less.
74 See generally htt://paymentaccurcy.gov/ (showing the level of improper payments made by federal agencies for
varous programs since 2009) (last visited Mar. 1,2011).
16
Federa CommunictiDS Commiion FCC 11-3%
alterntive goas and perfonnce measur that we should consider To the extnt th th th goals
and peonnce meaures, or any others tht the Commission may adopt, may be in tension with eah
other, commenters should suggest how we should prioritize among competing goas.
43. Lat month we sought comment on whether brba should be a supprt seice. If
broadbad bemes a support seice, should we adopt a perfonnce goa of advancing the
availabilty of brobad to low-income housholds? Anogou to our proposa in th voice context we
seek comment on whether the Commission should establish as an outme meaur the differnce
between the broband peetrtion rates for low-income housholds an non-low-incoe housholds in
the next higher income level as defined in th CPS, if broabad bemes a supprted service. Should we
consider broba use in addition to broadbad adoption? Unlike voice seice, there is a much larr
gap in peneton raes for broadbad betwee low-income housholds and the genera populaton.
Should we estblish a speific numerical ta for narwing that gap over a pacular tie period?
44. If Lifeline is moderniz to support broadbad, how should we meaur afordbilty for
broadbad? Should we measur affordbilty sepaly for voice, brobad, and bundle offerngs?
We seek comment on what data we would nee to monitor the progr's progrs if we wer to adopt
such a perfonnance measur, and the least burnsome meas of obtining such data.7S
45. We invite commenters to propo additional or alternatve goals and meaurs for the
progr. We also sek comment on how our peonnance meaures should tae into acunt the acons
of other governental agencies, such as state regulators, tht may impact the Commission's abilty to
meet its universl seice goals. We note tht developing the rerd on these issues is consistent with
GAO's suggestions.76
IV. IMDIATE REFORM TO ELIMATE WASTE, FRUD, AN ABUSE
46. We are comritted to eliminating was, frud, and abuse in Lifeline/ink Up, and to
identifying and penalizing progr violations when they occur. We recognize that the reent expsion
in progr demand, as well as marketplace developments, present increase conces abut potential
waste and misconduct. We propose to stgten our rules to more rigorously ensur that the progr
subsidizes no more than one subscription per eligible residential addrss, and to improve audits of the
progr. We also propose rule changes to ensur th carers ar reimbursed only for the provision of
Lifeline services to currnt customers. Finally, we propose to modify our rules to the extent that they
offer unnecessa reimburment to carers for expenses tht may be inflated or unjustified. The
continued success of Lifeline /Link Up depends on tageting support to those who qualify, and ensuring
that support does not extend beyond the confines of our rules.
A. Duplicate Claims
1. Background
47. To achieve the statutory goal of providing telecommunications access to low-income
subscbers, while at the sae time contrllng the grwt of the universl serice fund and preventig
waste, frud, and abuse, both the Commission and the Joint Boad have consistently stated that Lifeline
support is limited to a single line per residence.77 In a series of orders grting wireless ETCs forbarce
7S See Broadband Data NPRM, FCC 11-14, at par. 103.
76 See 2010 GAO REPORT at 30.
77 Lif/ine and Link-Up, WC Docket No. 03-109, Report and Orer and Furer Notice of Proposed Rulemag, 19
FCC Red 8302,8306 par. 4 (200) ("Lifeline provides low-income consumer with discunts of up to $10.00 off
the monthly cost of telephone service for a single telephone line in their pricipal residence."); Federal-State Joint
Board on Universal Service, CC Docket No. 96-45, Reprt and Order, 12 FCC Rcd 8776, 8957 par. 341 (1997)
(contiued... .)
17
Federa Communications Commision FCC 11-32
frm other progr rules, the Commission reuir those ETCs to tae speific st to fuer
compliance with this reuirment. Speifically, the Commission reuir eah wireless ETC grte
forbece to obtain certifications frm Lifeline cusmers at the tie of seice acvation and anually
thereaftr that they receive Lifeline service frm that ETC only, and to estlish saegu to prevent
customers frm reeiving multiple Lifeline subsidies frm that ETC at the sae ads.78
48. Recntly, however, evidence has come to light suggesting that in many cas multiple
ETCs are seeking reimburment for Lifeline service provided to the sae residence. For exaple, an
audit by USAC found a significant duplication rate between cein ETCs in two st.79 In response to
that finding, on Janua 21, 2011, the Commission's Wireline Competition Buru set a lettr to USAC
providing dirtion for resolving duplicate Lifeline claims.so On Febru 22,2011, a group of industr
associations filed a peon for reonsideration and reuest for sty of the Janua 21st letr.81
49. In addition, paies have raise conces abut the scpe and enforceailty of the single
line per residence rule. In 2009, TraFone Wireless filed a let reuestng that the Commission clarfy
the scope of the rule as applied to group living facilties, such as nursing homes, and the Commission
sought comment on that reuest. 82 In their petition for recnsideration and reuest for sty of the
Burau's Janua 21, 201 1 lettr to USAC, the industr associations acknowledge evidence of duplicate
claims,83 but contend that the Commission has never promulgate a legally binding one line per
household rule.84
(Continued frm previous page)
(First Report and Order) ("qualifying subsbers may reive assistace for a single telephone line in their
pricipal residence"); Federal-State Joint Board on Universal Serice, Lifeline and Link-Up, CC Docket No. 96-45,
WC Docket No. 03-109,2010 WL 439013 I, par 34 (Joint Boad 2010) (''te Joint Boad agrees with commenters
that suggest it is importt to verify wheter Lifeline recipients ar reiving support in compliance with the
Commission's one Lifeline-supported line per household rue"); Federal-State Joint Board on Universal Service,
CC Docket No. 96-5, 18 FCC Red 6589,6592 par. 4 (Joint Board 2003) ("Lifeline provides low-income
consumers with monthly discounts on the cost of receiving telephone service for a single telephone line in their
pricipal residence.").
78 See Federal-State Joint Board on Universal Service; Telecommunications Carriers Eligiblefor Universal Service
Support; i-wireless Forbearance Order, 25 FCC Rcd at 8790, par. 16; Virgin Mobile Forbearance Order, 24 FCC
Rcd at 3387,3392, par. 12,25; TracFone Forbearance Order, 20 FCC Rcd at 15099, 15103, par. 6, 18.
79 USAC Independent Auditor's Report Audit No. LI200BE0 (Debe 3, 2010) (TraFone Audit).
80 Letter from Sharon Gilett Chief, Wirline Competition Buru, Federal Communications Commission, to
Richard Belden, Chief Operatig Offcer, Universal Servce Administrtion Company, DA 11-110 (Wire line Compo
Bur. 201 i), available at htt://ww.fcc.gov/DailLReleaes/aily_Business/20111db0209/DA-l I-II0AI.pdf.
81 See Petition for Reconsideration of the Wireline Competition Bureau's Januar 21, 2011 Letter to the Universal
Service Administrative Company, CC Docket No. 96-45, WC Docket No. 03-109 (Feb. 22, 2011) (Petitionfor
Reconsideration); Requestfor Stay of the Wireline Competition Bureau's Januar 21,2011 Letter to the Universal
Service Administrative Company, CC Docket No. 96-45, WC Docket No. 03-109 (Febru 22, 20 11) (Request for
Stay).
82 See Comment Sought on TracFone Requestfor Clarifcation of Universal Service Lifeline Program "One-Per-
Household" Rule As Applied to Group Livng Facilities, WC Docket No. 03- 109, Public Notice, 24 FCC Rcd 12788
(Wirline Compo Bur. 2009) (One-Per-Household" Public Notice).
83 See Requestfor Stay, Delartion of Dewey E. Alexader II, Dirtor Product Marketg, AT&T Serices, at
par. 3 (noting a USAC fiding that in one sta, more than 30,000 Lifeline subscbers were receiving support from
both AT&T and another ETC) (AT&T Affdavit).
84 See Petítionfor Reconideration at 12-13.
18
Federa Communictins ComDl FCC 11-32
50. The Lifeline/Link Up progr provides suppo for "a single tele line in a Lifeline
subscriber's principal residence."ss As previously note, when th pro rules we initialy adpte,
most customers ha only one option for telephone service: their incumbet LEC's wire line seice.
Tody, most low-income households have a choice of voice seice frm on or mor wireline prviders
an potentially multiple mobile wireless providers.86 These exp seic offering cr gr
risks th multiple Lifeline discounts may be provided to a single reide. Notwthding existing
pr protetions, including verification and certification reuireents 87 a subsbe may aply for
an obtin univerl service support frm more th one provide, eith knwingly or unwittngly. The
risk of consumers inadverttly obtaining duplica supprt service is agvat by the fat th some
Lifeline providers brad thir progr offerings with naes tht do not nely ma clea th the
offerings are support by Lifeline, e.g., "Assurace" or "SafeLink Wirles." As a relt, cosumer
may not be aware that they are improperly obtaining duplica beefits for a given reidece. In adition,
multiple carers may sek reimbursent for service provided to a single subsriber, potially
unawar that a support seice is duplicative.
51. Competition among ETCs offerng Lifelinesupport service in th sae seice
teto has also exabat th potetial for duplicave supp. For exaple, with a pre-paid wireless
service offering, the consuer pays for service in advance and does not reive a monthly bil at a fixed
address. This may mae it diffcult to detnnine wheer the Lifeline support for the pr-paid seice is
being provided to an adres that is also reeiving another Lifeline-subsidize service. Although the
Commission has taen significat ste to mitigate this risk, 88 concerns remin about supporting multiple
Lifeline service when the customer is not assoiat with a speific residential address.
%. Disussn
52. We propo rules that wil reuce the likelihoo tht residents of a single addrss wil
852004 Lifeline and Link Up Order/FNPRM, 19 FCC Red at 8306, pa. 4; see also Universal Service First Repo
and Order, 12 FCC Rcd at 8957, par. 341. A similar requirement applies to Link Up. See 47 C.F.R. §
54.4II(a)(I).
86 The Commission's 2010 Telephone Treds Report indicates nealy 60% of housholds have bo a lanline and a
wirless telephone. FEDERA COMMUNICATIONS COMMISSION, WIRLINE COMPETITON BUREAU, INDSTRY
ANALYSIS AND TECHNOLOY DIVISION, TRENDS IN TELEPHONE SERVICE at Table 7.4 (20 i 0) (TRNDS IN
TELEPHONE SERVICE), available at htt://hunfoss.fcc.gov/edocs public/attchmatchIOC-30 i 823A i .pdf. The
Universl Serice Monitoring Reprt also shows that telephone penetrtion rates for low-incoe households was
90.4% in Mach 2009 as compared with 88% in March 200. 20/0 Universal Service Monitoring Report at 2-2;
Universal Service Monitoring Report, CC Docket No. 98-202, Prpa for the Federal-Sta Joint Bod on
Universl Service in CC Doket No. 96-45, Table 2-2 (2005), available at
htt://hnfoss.fcc.gov/edocs.Jblic/athmatch/-262986A4.pdf. CTIA rert that wiless penettion
across the Unite Stas is approximately 93% in June 2010 as comp with i 1% in June 1995. CTIA Media,
Industr Info, U.S. Wireless Quick Facts, available at
htt://ww.ctia.orgmedia/industr info/index.cfmAID/l0323 (lat visited Mar. 1,201 i) (CTIA Quick Facs).
87 See 47 C.F.R. §§ 54.40, 54.410. For example, curntly, certfication rules applicable in federl default staes
require consumers th reeive income-based support to provide certfication under penalty of perjur as to their
qualification to recive support and as to the number of individuals in their household. See 47 C.F.R. § 54.41O().
88 The Commission ha conditioned forbce from the facilties reuirment for limite ETC designation upn
the caer requirg its customer to self-eerify at time of service activation and anually thereaftr that they ar
head of household and reive Lifeline-supported service only from that carer. See TracFone Forbearance Order,
20 FCC Red at 15095; Virgin Mobile Forbearance Order, 24 FCC Rcd at 3381.
19
Federal Communications Commis.FCC 11-3%
reeive more than one subsidiz service thugh the prgr.89 We underd th ther may be
rens to cree limited exceptions to the one-per-residential-addrss rule tht we propo in Section V.
In this procing, we pla to develop a full rerd to cra aproprly naiw exceptions to applicaion
of this proposd rule. We intend to consult wi ETCs, Tribal communities, the stes, and other
interested pares to devise a rule that maizs the numbe of Americas with acess to
communications services, but also prote the fud frm was, frd, and abus.
53. In addition, it may be necess for the Commission to tae action on an interim basis
while this proceeing is pending to addrss immediately the har done to the Fund by USAC
reimbursing ETCs for duplicae claims.90 The purse of the Lifeline progr is to provide
telecmmunications access to low-income subscribers. Recent audit reults indicate there is a risk that a
significant number of Lifeline consumers may be unnecessaly and improperly reeiving support for
more than one service per residential addrs.91 To address the problem of wasteful, duplicat Lifeline
support it may soon be necessar to adopt intem rules in this ar while the reord develops on the
issues on which we ar seeking comment.
54. To ensure that Lifeline support is limite to the amount necessa to provide acess to
telecommunications service for low-income subscribe, we propose several approaches to address
duplicative support. We propose to adopt a new seion 54.408 and to adopt several amendments to
sections 54.400, 54.405, and 54.4 i 0 that would faciltae the enforcement of a one-per-residential addrss
Iimitation.92 We also propose to amend setion 54.410 to require ETCs to submit to USAC unique
household-identifying infonnation for every supported household to help detennine whether two or more
ETCs ar providing Lifeline-supported service to the sae residential address.93 We also propose
remedies to address situtions in which a consumer ha received duplicate support and to deter such
abuses. These proposals ar a first step in deterrg waste, frud, and abuse, and we recgnize there may
be other appropriate actions that would tae longer to implement, such as the cretion of a dataas.
55. With these proposed rules, we seek to crete incentives for carers to avoid requesting
support for duplicative services, and to impose penalties for those who continue to do so. We also seek to
ensur that our rules protect subscribers' privacy and seice providers' proprieta business infonnation.
56. Measures To Assist in Detecting Duplicate Claims. A unique houshold identifier may
be helpful to ensure that a residential addrs does not reive more than one subscription that is
subsidizd by the program. Speifically, we seek comment on amending setion 54.410 by requiring
ETCs to provide such infonnation as cusomer names, addrsses, social securty numbers (either the full
number or the las four digits), birtdates, or other unique household-identifying infonnation to USAC on
their Fonns 497.94 Would the benefits of requiring subscribers to provide such infonnation outweigh the
burdens, including possibly deterrng some households frm applying for benefits?
57. We seek comment on the best way to accomplish this effciently and effectively
89 See discussion supra Secon IV.A (One-Per-Residece); discussion infra pa. 167-69 (One-pe-residential
addrss cerification and verfication); see also Appendix A.
90 See discussion supra par. 48-51.
91 See TraFone Audit; AT&T Affdavit.
92 See Appendix A, 47 C.F.R. §§ 54.400, 54.405, 54.408, 54.410.
93 See Appendix A, 47 C.F.R. § 54.410; see a/so discussion of Tribal households at infra par. 119-20.
94 See Appendix A, 47 C.F.R. §§ 54.400, 54.405, 54.410.
20
Federa Communitiu Commis.FCC 11-3%
consistt with prvacy stte, such as the Elecnic Communications Prvacy Act (ECPA)9S and
setion 222 of the Communications Act.96 For exaple, what inoron could an ETC be reuir to
provide to USAC on its Fonn 497 tht would enur th a houshold is not reivig multiple subsidiz
subscptons at the residence? What measur cold USAC put in plac to enur complian with
ECPA or oter applicable laws, such as reuig ETCs fir to obtain subsribe cont to sha
infonnaton?97 To the extent that us of custmer propriet network infonnon (CPN) is neeed to
ensur that a subsber at a single residential addr is not reiving multiple subsidiz subscriptions,
how do commenter suggest we ensur compliance with seon 222 of the Communicaons Act and our
implementing rules?98 Ar there other laws we nee to consider and ads? We also sek comment on
how be to addres an~ other concerns abut privacy, seurty, or proprieta da issues reulting frm
collection of this da. To stline enforcment, we propose to reuir all ETCs to provide USAC
with data in a consistent electronic fonnt to faciltate USAC's detetion of duplicate claims. We sek
comment on the burdens this would impose on caers pacipaing in the progr.
58. Remedies To Addess Dulicate Claims. On Janua 21, 201 1, the Wirline Competiton
Burau provided guidace to USAC on how to relve duplica subsidies when more th one ETC
seks sUPl:rt frm USAC for the sae subscribe.loo We propose to amend setion 54.405 to coify this
guidance. 01 We propose that when a duplica subsidy is discovere, USAC is to notify the ETCs to
discontinue including the duplicate subscriber in their list of subscribers for which the ETCs ar claiming
Lifeline support on the FCC Fonn 497.102 ETCs must notify the subscriber by phone, and in wrting
where possible, and explain that the subscriber ha 30 days to selec one Lifeline provider or face de-
enrollment from the progr. Once the subscribe selects a single Lifeline provider for the household by
signing a new certification, the chosen ETC must so notify USAC and the other ETC. The selected ETC
may then seek reimbursement for the subscriber going forward, while the other ETC must de-nroll the
household from its Lifeline service and may not seek reimbursement for tht subscriber going forward.103
We seek comment on this proposal.
95 18 U.S.C. § 2702(a)(3) (prohibiting a provider of "elecnic communication seice to the public" from divuging
a ''rcord or other information pering to a subscriber" to any governental entity unless otherwise permittd by
ECPA).
96 47 U.S.C. § 222.
97 See 18 U.S.C. § 2702(c)(2) (pitting a prvider to divulge a record or other informtion perining to a
subscrbe "with the lawfl consent of the customer or subscriber"); 47 U.S.C. § 222(c)(I).
9847 U.S.C. § 222(a) (imposing on ever caer a "duty to protet the confidentiality of
propriet informaton"),
(c)(l) (restctg us or disclosur ofCPNI "(eJxcet as requird by law or with the approval of the customer"),
(d)(2) (pennitting a carer's use and disclosur ofCPNI"to protect the rights or propert of the caer, or to protect
users of those services and other carer from frdulent, abusive, or unlawfl us of, or subscription to, such
service").
99 Id.; see also Sprit Joint Boar Reply Comments at 5; Data discussion infra Section VII.D at par. 220-21.
100 Letter frm Sharn Gilett Chief, Wirline Competition Bur Feder Communications Commission, to
Richar Belden, Chief Oprag Offcer, Univers Serice Administron Compay, DA 11-110 (Wirline Comp.Bur. Jan. 2 i, 20 i I), available at htt://ww.fcc.gov/Dily_Releass/ailLBusiness/201 IIdb0209/DA-I i-
i 10A1.pdf.
101 See Appendi A, 47 C.F.R. § 54.405.
102Id
103 However, a cusomer may chooe to renrll in the low-income progr with the non-chose ETC's Lifeline
progr at a later point in time. See 47 C.F.R. § 54.405(c), (d) (reuirg 60 days notice for terination).
21
Federa Communitions Commin FCC 11-32
59. Several ETCs and tre assoiatons have suggeste an alternve duplica reluton
proess to the Commission.
104 Under their proposal, USAC would sed wren notificaon, approved by
the Commission, to all subscribers it identifies as reeiving duplica Lifeline subsidies. Such notice
would require them to select one Lifeline provider frm a list of prviders on a form which the subsribe
would send back to USAC within 30 days. ios USAC would, in tu, notify the afec ETCs about the
wrttn notification to the subscriber, and the ETCs would continue to prvide Lifeline-support service
to the subscriber and sek reimburement frm the Fund until the USAC reluton prs is
complete.106 When USAC reeives a complet fonn frm the cusmer with its selecion, it would
notify only the ETC not selected by the subscriber, and th ETC would be reuire to de-nrll the
subscriber frm its Lifeline seice. Under this prpol, ifUSAC doe not reive a complete fonn
from the customer, USAC would be instcted to either notify both ETCs to de-enrll the subscriber, or
contact the subscriber by phone to detnnine the subscber's provider selecion.107 We sek comment on
this proposal. Speifically, we seek comment on the advantages and disavantaes ofUSAC notifying
the subscribers reeiving duplicate support as oppose to reuiring ETCs to do so. Would subscribers be
more or less likely to respond to an inquir from USAC (an entity they likely ar unfamilar with) as
opposed to their service provider? Would the fonn that USAC sends to the subscber include every ETC
serving the ar or jus the two ETCs involved with the request for duplicative support To what extent
would implementation of such a proposal increas adinistrtive costs for USAC, and thereby impact the
size ofthe Fund?
60. In the alternative, we could adopt a rule that when duplicate payments ar identified,
ETCs must notify the customer that they have 30 days to select a single ETC to provide Lifeline service
going forward. If the customer makes a timely selecon, the caer not selec wil no longer receive
Lifeline support for that customer. If the cusmer fails to mae a timely selection, the caer that has
provided continuous Lifeline service to the cusomer for the longest period of time would contiue to
receive Lifeline support and the other caer would no longer reeive support for that customer. We seek
comment on this proposal.
61. We also seek comment on whether consumers receiving duplicative support should be
de-enrolled in Lifeline aftr violatig the one-per-residential-addrss requirement one or more times.
After more than one duplicate subsidy is discvered should the consumer listed as the subscriber, or the
entire household, be de-enrolled frm Lifeline? If de-enrllment is tepora, for how long should the
exclusion from the progrm last? Ifpennanently, on what basis? Should we deny eligibility only if there
is evidence of intent to violate the "single support per residential addrss" provision, or if this is not the
subscrber or household's first such violation? Should we impose strcter penalties on a consumer or
household with multiple violations? Should we impose strcter penalties on a houshold receiving more
than two Lifeline/Link Up subsidies? Should we firt provide an opportnity for the subscriber to
demonstrate that the household's dual enrollment was due to an inadvertent mistae or misundersding
of applicable requirements? What information would need to be collected and maintained by USAC in
104 Lettr from United States Telecom Assoiation, CTIA, Independent Telephone and Telecommunications
Allance, Nationa Telecommunications Cooperative Association, Organization for the Prmotion and Advancement
of Small Telecommunications Compaies, Rurl Cellular Assoiaton, AT&T, Western Telecommunications
Allance, CentuLin Qwest, Trafone Wireless, Inc, Winds Communicatons, Inc and Verin to Marlene
H. Dortch, Secta, Federl Communications Commission, WC Doket No. 03-109 (Febr 15,201 i) (ETC
Duplicate Letter).
ios Id
106 Id
107Id
22
Federa COlBunitiu Co.mi FCC 11-3%
order to enur th ce subscribe ar prhibite frm pacipag in the pr in the fu? If
we do not peently or temporaly ba such subscribers, wha wold be an apate remedy?
Finally, we sek comment the potential impa on the telephone peeton ra amng low-income
housholds if this prpol were adpte.
62. We also propose a mechaism for reimburing th Univer Seice Fund in th event of
duplicate claims. Our rules curntly dire USACto suped or delay discunts offse, and supp
amounts provided to a carer if the caer fails to provide adua verficaon of th discunts
offsets, or support amounts upon reasonable reues or "if dir by the CommissiOl to do SO."I08 We
propose that USAC be reuir to sek revery for fuds frm all ETCs with duplicas for the
applicable periodi.e., if one or more individua residing at the sae addrs have be obtning
Lifeline support frm two or more provider simultaeously, USAC would be reuir to sek reveiy
frm all implicaed providers for all support reeived during the peod of duplicave seice, which we
propose to define as the period beginning at the time a duplica is identified until the time at which it ca
be demonstrte that the consumer or houshold is no longer reiving duplicate beefits. This approh
would crete appropriately stong incentives for providers to tae meaur to ensur that they ar not
seeking excessive support. We note that in this situion support would have ben prvided in
contrvention of our "single support per reidential addrs" rule, and thus, arly, neither ETC should
have reeived support durg the period of duplicative support. Furer, if the custmer does not reply to
the notice and is tenninated from Lifeline by both ETCs, we propose that USAC rever all Lifeline
support sought for that subscriber from both ETCs for the period of time between when the duplicate was
first identified to the point at which the cusmer is tenninate frm the Lifeline progr. We sek
comment on this proposal. We also seek comment on, alterntively, reuirng that USAC seek reoveiy
only frm the ETC that is not chosen by the consumer for the period of time over which duplicate Lifeline
support was provided. We seek comment on this proposal. Furer, we seek comment on whether we
should enable ETCs to avoid reimburement obligations if they demonstrte responsible efforts to avoid
duplicative fuding. What would those effort be and how could they be shown? Should we establish
certin minimum saeguds that could act as a sae habor for ETCs? Should we rect reovery only
upon a showing of negligence by the ETC? Should the ETCs be permitted to seek reimburement for any
recovere funds from the subscriber? For all of the above proposals, and any other approaches suggesed
by commenters, we sek comment on how we should deterine the period of duplicative coverage.
63. Addresses. Severa steholders have noted that customers have not ben pennitt to
obtain Lifeline or Lin Up service when using a P.O. Box as their maling address.109 Rather, ETCs have
required applicats seking support to provide a unique residential addrss. This pratice has ben use
to ensur tht the subscriber is eligible for supported service and is not receiving more than one
subsidized service. We note that the other infonnation we propose to collect-such as name, birth date,
and soial securty number-are unique to individuals but do not fully address concerns tht differnt
members of the sae household ar reiving subsidiz serice. In contrst, addrss infonnation might
be parcularly suitable to prevent that sitution. We sek comment on whether to coify as a rule the
curt pratice of reuirng unique residential addrsses, in order to assist both ETCs and USAC in
deterining whether an applicat is already receiving Lifeline- or Link Up-supported services. Under
such a rule, ETCs would be reuire to collect the residential addresses of their Lifeline and Link Up
applicants before they provided discunte service. Even if a customer reives mail at a P.O. Box, the
customer would have to provide a residential addrs to which its service would be tied.
108 47 C.F.R. § 54.707.
109 See, e.g., City of Cambridge TraFone One-Per-Houshold Clarfication Comments at 2; NNDV TraFone
One-Per-Houshold Clarfication Reply Comments at 2; SBI TraFone One-Per-Household Clarfication Comments
at 4-5; POTS TraFone One-Per-Houshold Clarficaton Comments at 2.
23
Federa Communications Commision FCC 11-32
64. We sek comment on this proposal. Ar ther circumstaces where a residential addrss
could not be provided? Ar there privacy concerns that we should tae into account when reuiring
customers to provide a residential addrss? How should we trt trsient applicants who do not have a
fixed address, or consumers who use rural route addresses, for whom ther may be no other U.S. Postal
Service address?llo Is there substitute infonnation tht we should require in the event that no residential
address is available?
B. Pro Rata Reportng Requirements
65. Background. An ETC may reeive Lifeline progr support only for active subscribers.
If a customer stops reciving service from the ETC, or if the customer no longer satisfies the eligibilty
criteria, the ETC is not eligible for support for that customer. i 1 1 ETCs submit FCC Form 497 to USAC
when seeking reimbursment for eligible consumers.
1 12 Fonn 497 includes a line for ETCs to report pro
rata funds for Lifeline customers who enrolled or disconnecte durng the month. The instrctions for
Line 9 of FCC Form 497 currntly state: "If claiming parial or pro-rata dollar, check the box on line 9.
Enter the dollar amount (if applicable) for all paial or pro-rate subscribers.,,1 13
66. Some ETCs have asserted that these instrctions are ambiguous. For exaple, some
ETCs contend that they are pennitted, but not reuired, to report, and sek pro rata recovery for,
customers that did not subscribe for the full month. They claim that the phrsing in Fonn 497 ("If
claiming parial or pro rata dollars") indicates that such submissions are optional, and does not require the
ETC to report parial or prorated subscribers. Some ETCs, including Qwest and Verizon, argue that
reporting partial-month subscription data would be overly burdensome. i 14 USAC has sought Commission
guidance on this issue.
1 IS
67. Discussion. We propose to codify the rule that all ETCs must report parial or pro rata
dollars when claiming reimbursement for Lifeline customers who receive service for less than a month.
110 See infa pars. 119-20 (application of the One-Per-Residence Rule in Tribal Communities).
111 See, e.g., 47 C.F.R. § 54.405(c).
i 12 See FCC Form 497, available at htt://ww.universalservice.orgl res/documents/li/pdf7orm-497-FCC-OMB-
USAC-NO-calculations.pdf.
113 See FCC Form 497, available at htt://ww.universalservice.orgl resldocumentsli/pdf7orm-497-FCC-OMB-
USAC-NO-calculations.pdf.
114 See Qwest Communications Reply Comments, WC Doket No. 03-109 (filed April 23, 2010); see also Verizon
and Verizon Wireless Comments, WC Docket No. 03-109 (fied April 9, 2010).
ii See Letter from Richard A. Belden, Chief
Oprating Offcer, Universal Service Administrtive Company to
Sharon Gilett Chief, Wireline Competition Bureau, Federal Communications Commission, WC Docket No. 03- 109
(fied Feb. 23, 2010) (USAC Letter). Speifically, USAC notes that audits of the low-income program have
identified carers that have not prorated requests for Lifeline support amounts for customer whose Lifeline service
is initiated or terminated mid-month, and asks the Commission what recovery action, if any, USAC should take
against an ETC that has failed to pro-rate support claims for parial-month Lifeline customers. See USAC Letter at
1-2; see also Comment Sought on AT&T Requestfor Review of a Decision of the Universal Service Administrative
Company Concerning Audit Findings Relating to the Low-Income Program, WC Docket No. 03-109, Public Notice,
24 FCC Rcd 7679 (2009); Comment Sought on AT&T Request for Review of a Decision of the Universal Service
Administrative Company Concerning Audit Findings Relating to the Low-Income Program, WC Docket No. 03-109,
Public Notice, 23 FCC Rcd 13497 (2008); Comment Sought on Qwest Request for Review of a Decision of the
Universal Service Administrative Company Concerning Audit Findings Relating to the Low-Income Program, WC
Docket No. 03- 109, Public Notice, 23 FCC Rcd 7845 (2008); Comment Sought on AT&T Request for Review of a
Decision of the Universal Service Administrative Company Concerning FCC Form 497, WC Docket No. 03- i 09,
Public Notice, 23 FCC Rcd 6407 (2008).
24
Federa Communications Commision FCC 11-3%
Such a rule would ensure tht all ETCs comply with the reuirment th sup may only be claied for
active subscribers, and thereby minimiz was of Lifeline fus. Carer routinely bil custmer for
paral months, and should have the capaity in their biling systms to deine whether a cusomer is a
Lifeline subsriber for the full billng period. We sek comment on our prpo.
C. Eliinating Reimbursment for ToO Limitation Serv
68. Backgrou. Toll limitation seices (TLS) include both toll blockig, which prvents
the placment of all long distace calls for which the subscbe would be chaed and toll contrl, which
limits to a pret amount the long-distce chares a subscribe ca incur durng a biling period.
1 16 In the
Universal Service First Report an Order, the Commission require ETCs to provide TLS to low-income
subsbers. At th time, consumers tyically purhas long distce service se~ly frm locl
service, and ra for long distace were considerly higher th they ar toy. 17 The Commission was
concerned at the time about studies demonstrting that the prima reasn subscribers lost acss to
telephone seice was failur to pay long distace bils. 1 18
69. Ou rules curently allow Lifeline support to compensate ETCs for the cost of offerig
toll limitation seice at no charge to eligible low-income consumers.
1 19 ETCs' reovery of cost for
providing TLS to Lifeline consumers is bas on the costs that ETCs would otherwise not incur if they
did not provide TLS to a given customer.l20
70. Discusion. We propose amending our rules to eliminate Lifeline support for the cost of
providing TLS to Lifeline customers. This rule, adopte more than a decade ago, may have outlived its
usefulness, given reuctions in long-distace callng rates. We also note that there is great varance in
TLS costs claimed by ETCs seeking reimburment, raging from $0 to $36 per Lifeline customer pe
month. 121 Such varance may be due in pa to the ambiguity of our rule govering TLS support which
states that support for TLS wil be equal to the ETC's incrementa costs, but does not derine incremental
TLS costs eligible for Lifeline reimburement. It is unclear, however, whether providing TLS imposes
any incremental costs on carers, since a number of ETCs do not sek any reimbursement for TLS cost,
despite providing TLS to their subscribers.12 Morever, the wide varance in support sought by ETCs
suggests that some may be inflating their tre costs. Elimination of Lifeline support for TLS could save
the progr roughly $23 milion in 201 1,123 which, in tu, could be used to conduct pilot progrs to
Il6 47 C.F.R. § 54.400(d).
11 Secion 271 of the Telecommuncations Act of 1996 prohibited the regional Bell operaing companies (ROCs)
from offerng most long-distace services until the Commission found that they had opened their local maet to
competition. See 47 U.S.C. § 271. Between 199 and 2003, the Commission found tht each of the RBOCs had
satsfied the staory criteria and accrdingly was eligible to compe in the long-distace market. See TRND IN
TELEPHONE SERVICE at 9-3. Since then, "the distictions beee the two markets have become blur as
customers acquir the abilty to selec among compeing carers" for all market. See id. at 9-2.
Il8 Universal Service First Report and Order, 12 FCC Rcd at 8980, par. 385.
Il9 47 C.F.R. § 54.403(c).
120 ¡d.
121 See Letter frm Karn Majcher, Vice Prsident, Universal Serce Admsttive Company to Trent Hader,
Chief, Telecommunications Access Policy Division, Wirline Competition Bureau, Federl Communications
Commission, CC Docket No. 96-45 (fied Feb. 25, 2011).
122 ¡d.
123 USAC 2Q 2011 FIING, at 17.
25
Federa Communications Comaiion FCC 11-32
provide brobad support or otherwise utiliz to provide eligible households with Lifeline discounts.124
We sek comment on this proposal. In the alternative, should we adopt a flat amount of reimburment
for TLS, and if so, what would be an appropriate amount?
D. Customary Charges Elible for Link Up
71. Backgroun. Link Up support reimburs wirline and wirless ETCs for the revenue
they forgo in reducing their customar char for commencing telecmmunicaions service and in
deferrng charges assesse for commencing service.12S Lin Up provides qualifyng consumers with
discounts of up to $30.00 of the initial costs of instling a single telecommunications connection at a
consumer's princigal place ofresidence;126 qualifying residents of Tribal lands ar eligible for additional
Link Up support.! 7 A consumer may not receive more than one Link Up discount and may be eligible
for Link Up again only upon a change of his or her principal place of residence. 128
72. Link Up disburements var across ETCs and ar not proportonate to Lifeline
reimburements.129 In December 2010, TracFone filed a Petition for Declartory Ruling with the
Commission seking a ruling that ETCs are not eligible to reeive Link Up reimbursements from the
federal Universl Service Fund unless the ETC imposes on all of its customers a customar chare for
commencing telecommunications service.130 TracFone notes tht providing Link Up subsidies for
activation charges that are not routinely impose on cusmers violates the purse of the Link Up
program and constitutes a waste of USF fuds.131 Several commenters agr, and suggest that the only
charges eligible for Link Up reimburement should be chaes imposed on all customers, rather than
charges fabricate by cariers for the purose of reeiving USF.13
73. Defining Customa Chage. We sek to eliminate any incentive or opportity for
carriers to impose charges on progr paricipants in order to increase universl service support as that
would represent a waste of funds. We therefore propose to amend our rules to define "customar charge
for commencing telecommunications service" as the ordinar initiation charge that an ETC routinely
124 See infa Section IX.B.3 (Broadband Pilot).
12S 47 C.F.R. §§ 54.41 1,54.413. Most pre-paid wiless ETCs do not receive Link Up support. See, e.g., TracFone
Forbearance Order, 20 FCC Rcd at 15098, par. 6 (2005).
126 47 C.F.R § 54.411.
127 See 47 C.F.R. § 54.41 i (a)(3).
!28 47 C.F.R. § 54.41 I(c).
129 For exaple, some ETCs ar receivig a significat amount of Link Up while other ETCs with similar Lifeline
expnditues ar not. See USAC 2Q 20 i i FILING, Appendices at LI04 (Qurly Low Income Disburement
Amouns by Company (4Q2010)), available at htt:/Iww.usac.org/aboutlgovernance/fcc-filingsl01 l/guarr-
~ (showing tht Lin Up disburments var significantly by ETCs and do not corrspnd with the amount of
Lifeline support sougt by the ETCs).
130 TracFone Wireless Inc. Petition/or Declaratory Ruling, WC Docket No. 09-197, CC Docket No. 96-45 (filed
Dec. 1,2010) (TracFone Link Up Petition) (aring that at least one ETC is imposing a customar charge only on
low income consumers but not other consumers).
131 Id at 8-9.
132 AT&T TracFone Lin Up Petition Comments at 3 (ageeing that an ETC canot impose a service acvation fee
on low-income consumers only); Budget PrPay, Inc and Great Call, Inc. TracFone Lin Up Petition Comments at
3-4; Ohio TracFone Lin Up Pettion Comments at 3.
26
Federa CODlulltill Commisn FCC 11-3%
imposes on all cusmers within a st.133 We sek comment on ou pro ament.
74. We also propo th Lin Up rules mae clea th acivaton chages th ar waived
reuce or eliminated when activaton is acmpaied by purhas of aditional prouct, services, or
minutes ar not customar chaes eligible for universl seice support. TraFone's petion indica
that it support this proposa, but other ETCs disa, aring th there ar legiti res for an
ETC to waive customa activation chares for low-income consum, including compliance with so
state reuirements.l34 For insce, some commenters sugest we cr an excetion to the pr role
in intaces where a state commission has ordere ETCs to waive the reinder of the connecion chae
not reimburse by USF.13 We seek comment on wheter, if we amend our roles as describe we should
regnize exceptions for certn categories or tys of fee waiver or reuctions.
75. We also sek to develop a rerd regaing the prevalence of sitatons in which ETCs
seek reimburment for connectig the sae customer more than one time, at the sae locon. For
exaple, if a customer's seice was discnnted for non-payment, do ETCs ever impose another
connection charge to resume seice to tht addr? Do they do so fruently, or as a matt of cour?
How would we evaluate whether such chaes ar renable? We sek comment on whether our roles
should be clarfied to prohibit ETCs from seking more than one Link Up subsidy for the same customer
at the sae location.
76. We sek comment on whether our Lin Up roles should be fuer amended to addrss
concerns with waste, frud and abuse in this ar. For exaple, one commenter su~gests that we reuire
each ETC to certify that its activation charge is equally applicable to all customers. 36 We sek comment
on whether such a cerfication process would effectively preent waste, and how burensome such a
certification requirment would be. In addition, we sek comment on whether we should adopt a role that
prohibits resellers frm imposing a connection charge on consumers when the underlying wholesale
provider has not assessed a similar connection charge on the reseller.
77. Link Up Support Amount. Historically, incumbent telephone companies incurd costs in
initiating service, such as the cost of visiting the housing unit to physically connect a telephone line to
initiate service. In contrst, today, service initiation in virtly all instaces for both wireless and
wireline providers is done remotely via softar, with the actul costs of installation likely to be
significantly lower than several deces ago.
78. Our roles speifying Link Up amounts have not ben upd to reflect the chages in the
indus that have occur relating to service initiation. We seek comment on what the tyical service
initiation fee is for non-Lifeline subscribe and ask whether we should reuce the currnt $30 cap on
Link Up support to some lower figue.
79. Our curnt rules specify tht ETCs may receive Lin Up support for the revenue they
forgo in reducing their customar charge for commencing telecommunications service.13 In order to
reeive Link Up support ETCs ar reuird to keep acurte records of the revenues they forgo in
reducing their cusomar charge for commencing service.138 The forgone revenues for which the ETCs
13 See Appendix A at 47 C.F.R. § 54.400e).
134Id
135 AT&T TraFone Lin Up Petition Comments at 3; Competive Eligible Telecommunications Carer TraFone
Lin Up Petition Comments at 4.
136 Budget PrePay, Inc. and Greatall, Inc. TraFone Link Up Petition Comments at 4.
137 47 C.F.R. § 54.413.
138Id
27
Federa Communications Commision FCC 11-32
may receive reimburment shall include only the differnce beeen the carer's cusmar connection
and the chages actully assessed to the paicipating low-income consumer. Morever, the reuction
shall be half of the customar chare or $30, whichever is les.139 As disus abve, ther is concern
that some ETCs may be inflating connection charges in an effort to collect money frm the Fund. In
order to make Link Up reimburment more trspt and limit potential was offuds, we seek
comment on whether we should reuire all ETCs seking Link Up reimbursment to submit cost support
to USAC for the revenues they forgo in reducing their customar chares. Since ETCs ar reuir to
keep accurte reords of the revenues they forgo for Link Up, it may not be to burdensome to requir the
ETCs to submit such data to USAC. We sek comment on this proposal and wheter there ar alternative
ways to ensur that Lin Up reimbursement is bas on actul revenues forgone as a result of conectig
low-income consumers. We also seek comment on what underlying costs may be reovere thougl Link
Up. For instace, should Link Up be provided for cost assoiat with mareting and customer
acquisition, or limited to costs associated with activating a phone line or estlishing a biling
relationship?
E. Customer Usage of Lifeline-Supported Servee
1. Baekground
80. ETCs receive Lifeline support on a per-subscriber basis. As discussed above, ETCs may
therefore have incentives to delay notifying USAC promptly when a subscrber has discontinued service.
Pr-paid wirless ETCs do not assess a monthly charge on customers and, therefore, do not bil their
customers for Lifeline-supported serice, even thougl they report such lines to USAC for reimbursement.
The pre-paid wireless ETC thus could potentially continue to reive Lifeline support for a customer who
abandoned the service months before.140 Moreover, beause the pre-paid wirless ETC does not receive
monthly payment from the subscriber, it may not even be awar when the subscriber has discontinued
service. Even carrers tht assess monthly chares may also have disincentives to identify discntinued
customers in a tiely fashion.
141 The Univers Service Fund should not be used to provide Lifeline
support to ETCs to subsidize customers who ar not utilizing support communications services.
8 i. Some states have imposed "non-usage" procedures on pre-paid wireless ETCs.142 These
139 47. C.F.R. § 54.41 l(a)(1).
140 There ar many reasons why a consumer may not us his or her Lifeline-suprted servce. For exaple, some
customers may have lost or abadoned their wirless devices, or may lack a readily accessible source of electrcity
to charge the device. In other cases, the consumer may have given or sold the phone to another person, in violation
of the ETCs' terms of seice.
141 For example, if a wireline ETC chages $12 a month for Lifeline service, and receives $10 from the USF and $2
from the subscrber, if the universal serice payment compensats the ETC for its costs of providing servce to that
subscnbe, it stil would be fiancially advantaeous for the ETC to reort the subscnber as actve, even if the
subscber does not pay his bils.
142 See, e.g., Petition ofTracFone Wireless, Inc. for Designation as an Eligible Telecommunications Carier in the
State of Wisconsin, 9385-TI-l00, Wisonsin Public Serce Commission Fin Decision, May 21, 2009 (Wisconsin
Non-Usage Order); Application of Nexus Communications, Inc. for Designation as an Eligible Telecommunications
Carier in the State of Georgia for the Limited Purpose of Ofering Wireless Lifeline and Link Up Service to
Qualifed Houeholds (Doket No. 19664), Application ofTracFone Wireless, Inc. for Designation as an Eligible
Telecommunications Carier in Georgiafor the Limited Purpose of Ofering Lifeline Serice to Qualifed
Households (Doket No. 26282), Georga Public Service Commission Orer Amending ETC Designations, October
20,2010 (Georgia Non-Usage Order); Application ofTracFone Wireless, Inc.for Designation as an Eligible
Telecommunications Carrier in the State of Kansas for the Limited Purose of Ofering Lifline Service to Qualifed
Households, Docket No. 09-TFWZ-945-ETC, Kanas State Corporation Commission Order Grating in Par and
(contiued....)
28
Federa Commuuicatins Commisn FCC 11-3%
prour ar designed to minimiz payments from the Univer Seice Fund for enlled Lifeline
customer who ar no longer using the service.143 Both TracFone and Vir Mobile have implemente a
policy of de-nrollng Lifeline custmers who have not us their wireless phones for 60 daYS.I44
%. Disusion
82. We want to ensur th Lifeline support is us for the beefit of low-incme subsbe
that ar aclly using the supported seice,14$ and we propo to amend our rules to preent ETCs fr
obtaining Lifeline support for inative consumer. Speifically, we propo to prhibit ETCs frm
seking reimburment frm the Universl Service Fund for any Lifeline cusomer who has faled to us
his or her seice for 60 coseutve daYS.I46 We sek comment on wheter a customer's failur to us
service for a speific period of time may renably demonstr, or serve as a proxy for, seice
discntinuaion. If so, we sek comment on whether 60 days is a renable peod, or wheter the peod
of inactivity should be shorter (e.g., 30 days) or longer (e.g., 90 days).
83. The proposed rule is intended to (1) prevent subsidies going to ETCs for cusmer that
ar not using the service; and (2) eliminat inctives that carers might have to ignore or fail to report
that a customer has (or apar to have) discontinued service. We do not sek to penaliz subscribe for
non-usae, and our propose rule would not affect the tenns or conditions of seice that might exist
beeen the ETC and the customer. Nor do we propose to reuir ETCs to discnnect subscribe for
non-usage. We recognize that some cusmers may us their telephones spangly, for emergencies or
ocasional communication. To prote consumers, we propose to reuire ETCs to aler customer if the
ETC imposes any obligation to us service durng a speified period of time in order to maintain
subsidizd service. We seek comment on how ETCs ca best infonn their Lifeline customers of any
reuirement to use the phone durng a speified peod of time. We also sek comment on whether our
propose rules could affect access to 91 i services, and if so, how we ca ensur that consumers maintan
access to emergency services. We note that the Commission's rules requir commercial mobile raio
service (CMRS) providers subjec to the Commission's 91 i rules to trsmit all wireless 91 1 calls,
including those frm non-service initializd phones, to Public Safety Answerig Points (PSAPS).147 We
do not seek to modify this rule and our propose rule would stil requir ETCs to trsmit a Lifeline
customer's wirless 91 1 calls, even if the ETC is no longer providing service to tht customer.
84. Although the concer that ETCs may continue to count subscribers that have stoppe
using seice appe gratest with respet to pre-paid wireless serice, those concerns ar not limited to
pre-paid wireless service. We sek comment on whether the rules we propose in this subsection should
be limited to parcular tyes of service, or should apply to all tyes of service.
85. Minimum Consumer Chages. In the 2010 Recommended Decision, the Joint Board
(Contiued from previous page)
Deying in Par Amended Application ofTraFone for Designtion as ETC for Limited Puose of Offerg
Lifeline Serice to Qulified Households, Deembe 14, 2010 (Kanas Non-Usage Order).
143 See Wisconsin Non-Usage Order; Georgia Non-Usage Order; Kansas Non-Usage Order.
144 Virgin Mobile 2010 ETC Order, DA 10-2433, at pa 24 (reuirg Virgin Mobile to adopt a 60-day usae
requirment); Lettr frm Mitchell F. Breher, Counsel to TracFone, to Marlene H. Dorth, Secta, Federl
Communications Commission, CC Doket No. 96-5 (fied Oc 22, 2010).
145 Wisconsin Non-Usage Order at 8; Georgia Non-Usage Orde at 2; Kanas Non-Usage Order at 6.
146 GAO reogniz this generl approach as one ste towad imroving the integrty of the Lifeline prgr. 2010
GAO REPORT at 36.
147
See 47 C.F.R. § 20.18(b).
29
Federal Communicatiu Commision FCC 11-32
expressed concern about consumers receiving Lifeline service offerings tht are offere at no cost to the
subscriber.148 In paricular, the Joint Boad raised concerns about prpaid wireless ETCs, which do not
provide a monthly bil and, in some cas, provide hansets and seice at no chae to consumers. 149
The Joint Board recommended that, to guard against waste, frud, and abuse in the Lifeline program, the
Commission consider wheter a minimum monthly ra should be paid by all Lifeline subscribers,
including eligible Tribal subscribers.lSO
86. We seek comment on how bet to prevent waste of universl service funds without
creating unnecessa obstales for low-income households to obtining vital communicaions service.
For instance, one option would be to adopt a rule requiring all ETCs in all sttes to collect some minimum
monthly amount from paicipating households. 151 If we were to adopt such a rule, what should that
monthly amount be.g., $1 or some other amount? Alternatively, should we consider reuiring ETCs to
assess a monthly fee on all Lifeline consumers equivalent to half ofthe customar monthly Lifeline
charges or half of the maximum subsidy provided for under our rules, whichever is less? Would either of
these reuirments, if adopted, appropriately balance the need to guard against waste, frud, and abuse in
the Lifeline progrm by ensuring tha low-income households have the incentive to make appropriat use
of their Lifeline-supported services, with the need to avoid deterrng eligible consumers from
paricipating in the progr?
87. Another option would be to require ETCs to collect some amount, such as $10 or $15, on
a one-time basis from each Lifeline household prior to commencing Lifeline service.152 Such a rule could
create appropriate incentives to ensure that Lifeline consumers genuinely want phone service and should
deter situtions in which Lifeline-support service has been activated on a phone that is unused or
improperly trsferrd to third paries.
88. Would either of these proposals create an unreasnable barier to enrollment for
households that need support but canot aford to pay any fee? What would be the proper amount of
financial contrbution from low-income consumers that would appropriately balance our dual objectives
of deterrng waste, frud, and abuse, while enabling those in need to obtain phone service? Should this
amount vary based on the income of the qualifying low-income household?
89. We seek comment on the administrtive burdens for ETCs of a requirement to collect a
minimal amount, such as $1 per month, from paricipating consumers. We acknowledge that in other,
non-Lifeline contexts, carers may choose not to bil their customers monthly, and it may not be cost-
effective to send a bil to collect such a small amount. Should we allow ETCs to collect a monthly fee on
a bi-monthly basis? If we were to adopt a progr-wide monthly fee requirement, should we explicitly
prohibit carers from waiving the fee? How can we adopt an approach that is technologically neutral and
can be implemented easily by ETCs with diverse business models?
90. Application o/Minimum Charge to Tribal Consumers. The Commission's rules currently
1482010 Recommended Decision, 25 FCC Rcd at 15626-27, par. 79.
149ld See, e.g., Assurance Wirless Lifeline Progr, Prgr Description,
htt://ww.assurcewireless.comlblic/MoreProgrs.aspx (last visited Mar. 1, 201l); SafeLink Wireless,
Lifeline/SafeLink Fact Sheet, htts://ww.safelinkireless.comlnrllmentPublic/benefits.aspx (last visited Mar. 1,
2011).
iso 2010 Recommended Decision, 25 FCC Red at 15626-27, par. 79.
isi See id
152 We note that while a consumer may obtain Lin-Up support for service installation, the fud only pays half of
that charge, up to $30. If, for instance, the caer were to charge $60 to initiate service, the consumer would be
paying $30 and the fud would be paying $30.
30
Federa Communicatins Commis.FCC ii:i%
reuire tht the baic loc residential rate for Tier 4 subribe (i.e., eligible low-ince houolds
reiding on Tribal lands) may not fall below $1 pe month.1S We have le anecly that some
caers do not curntly collec the $1 frm their Tribal cusers. While th Commission's cut rules
speify what the caer mus chage the Tribal subscbe, they do not explicitly reuir the ETC to
collec such amounts, therby allowing ETCs to waive the $ 1 pe month fee.l54
91. If we adopt a proposal to reuire all ETCs to collec a minimum monthly fee from
subscribers, we sek comment on whether to amend setion 54.403(a)(4)(i) of the Commission's rules to
specifically reuire a $ 1 monthly payment to be provided by each pacipag houshold to thir ETC.
Would this proposal, if adopte adequaly balace our objecive of ensurg afordle service for
eligible Tribal consumers while also guing aginst waste, frud, and abus in the Lifeline progr?
92. How would any of thes prposals impa subscribersip for low-income housholds on
Triba lands, which contiue to lag significatly behind subscribership for the nation as a whole?
F. DeEnrollment Proure
93. We prpose rules reuirng ETCs to de-nrll their Lifeline customers or housholds
frm the progr under speified cirumstaces. Speifically, we propose to reuir ETCs to de-nroll
their Lifeline subscribers when: (1) the subscribe is reeiving duplicat support and fails to selec one
ETC in the allott time aftr being notified of a duplicate claim; (2) the subscriber does not us his or her
Lifeline-supportd service for 60 days and fails to confinn continued desir to maintan the seice; or (3)
the custmer does not respond to the eligibilty verification survey. Under our propose rules, the
subscriber would reive notice that they could be de-enrlled from the progr if they did not tae
action by a specified date. Should that time fre be 60 days?
94. Some ETCs have argued that section 54.405(d) of our rules reuires that they give
customers 60-days' notice prior to terinating their Lifeline benefits. iss In addition, some state laws may
reuire similar notice provisions.1S6 The notice provisions curntly set fort in setion 54.405( d) of our
rules ar tied to consumer eligibilty for Lifeline, and ar not applicable to situtions involving subscriber
non-responsiveness as a result of a duplicate claim or non-usage of the Lifeline service. For
adinistrive simplicity, should the sae time fre be adopted for mandatory de-nrollment in the
circumstaces describe above, or should we adopt a shortr period, such as de-enrollment within a 30-
day period? We seek comment on our proposal to require ETCs to de-enroll Lifeline subscrbers involved
in the thre scenaros described above. Would a short peod be consistent with speific ste
notificaton reuirments that may exist in non-default stes? To the extent that commenters object to
our proposal for mandatory de-enrollment, they should offer specific alterntive solutions to protect the
fund against waste, fraud, and abuse.
G. Audits
95. Backgroun. Audits ar an essetial tol for the Commission and USAC to ensure
progr integrty and to detet and det was, frud, and abuse. Commission rules authori USAC to
conduct audits of carers that reeive USF monies, and to suspend pa~ents in situations where the
carer has failed to provide adequate verification for those discounts. S7 The 2008 FCC-USAC
1S 47 C.F.R. § 54.403(aX4Xi).
IS4 See 47 C.F.R. § 54.403(aX4).
iss ETC Duplicate Letter at 5.
IS6Id
IS7 47 C.F.R. § 54.707.
31
Federa Communications Commision FCC 11-32
Memorandum of Understading requires USAC to conduct audits, including audits of Fun
beneficiares,158 in acrdace with generlly acceted government auditing stadas, as requir by
section 54.702(n) of our rules.159 USAC's audit progr consists of audits by USAC's internl audit
division stff as well as audits by independent auditors under contrt with USAC.16O
96. In a 200 Executive Order regaing Improper Payments Infonnation Act (IPIA) of 2002,
Prsident Obama state that when making payments to progr beneficiares, federal government
agencies "must mae every effort to confinn the right reipient is receiving the right payment for the right
reason at the right time.,,161 Consistent with this diretive and guidance from the Offce of Management
and Budget, in 2010 the Commission direte USAC to implement a new initiative, Payment Quality
Assurance, to improve both the IPIA assessment progr and compliance audit progrs of the
Universal Service Fund. For the low-income progr alone, the FCC directed USAC to underte 60
IPIA assessments (Payment Quality Assurance or PQA assessments) and 48 compliance audits
(Beneficiar/Contrbutor Audit Progr or BCAP audits).162 USAC has already initiate 11 Lifeline and
158 See Memoradum of Understading Between the Federal Communications Commission and the Universal
Servce Administrive Company, at 7 (Sept. 9, 2008) (2008 FCC-USAC MOll, available at
htt://ww.fcc.gov/omd/usac-mou.pdf; see also Lettr from Dana R. Shaffer, Deputy Managing Direcr, Federal
Communications Commission, to Scott Barh, Acting CEO, Universal Service Administrative Company (dad
Oct. 13,2010), available at htt://www.fcc.gov/omd/usac-letters/2010/101310CPA-USAC.pdf.
159 47 C.F.R. § 54.702(n).
160 In addition, in the pat, the Commission's OIG ha conducted audits ofUSF progr beneficiares. See Offce
of Inspector General, Semiannual Report to Congr, Ocober 1,2009 thoug March 31, 2010 at 17-20. In a
Februar 12,2010, lettr to USAC, OMD dired USAC to sepate its two audit objectives into distinct progrs
- one focused on Improper Payments Informtion Act ("IPIA") assessment and the second on auditing compliance
with all four USF progrs. Improper Payments Infonnation Act of2002, Pub. L. No. 107-300, I 16 Stat. 2350
(2002). In addition to providing guidace on the implementaion of the IPIA assessment progr and compliance
audit program, the letter infonned USAC tht OMD would assume responsibilty for oversight ofUSAC's
implementation of both progrs. Letter from Steven Van Roekel, Managing Director, Federal Communications
Commission, to Scott Barh, Acting CEO, Universal Service Administrtive Company (dated Feb. 12,2010),
available at htt://ww . fcc.gov/omd/usac-letters/20 I 0/02 1 2 1 O-ipia.pdf.
161 President Obama fuer emphaize that the federal governent must intensify effort to eliminate payment
error while "continuing to ensur that Federl progrs serve and provide access to their inteded beneficiares."
Executive Order No. 13,520, 74 Fed. Reg. 62,201 (Nov. 20, 2009) (IPIA Executive Order); Lettr from Steven Van
Roekel, Managing Direcr, Federal Communications Commission, to Scott Barh, Acting CEO, Universal Service
Administrtive Company (dad Feb. 12,2010) (FCC IPIA Letter), available at htt://ww.fcc.gov/omd/usac-
letters/2010/021210-ipia.pdf; Lettr from Steven Van Roekel, Manging Director, Federal Communications
Commission, to Scott Barh, Acting CEO, Universal Service Administrtive Company (dated Oct. 13,2010),
available at htt://ww.fcc.gov/omd/usac-Ietters/2010/10 1 3 10CPA-USAC.pdf.
162 FCC IPIA Letter; OFFICE OF MGMT. & BUDGET, EXECUTIVE OFFICE OF THE PRESIDENT, OMB CIRCULAR A- 123,
MAAGEMENT'S RESPONSmlLlTY FOR INTERNAL CONTOL (2004). The Compliance Audit progr is known as
Beneficiar/Contrbutor Compliace Audit Progr The IPIA assessment program was developed with the
following objectives: (I) separtely cover all four USF progr; (2) measure the accurcy of the Administrtor's
payments to progrm applicants; (3) evaluate the eligibilty of progr applicants who have reeived payments; (4)
include high-level testing of informaton obtained from program paricipants; and (5) tailor scope of procdures to
ensure reonable cost while meeting IPIA requirements for saple siz and precision. The compliance audit
progr was developed with the following objectives: (I) cover all four programs and contrbutors; (2) tailor audit
ty and scope to progr risk elements, siz of disburement, audit timing and other specific factors; (3) keep costs
reasonable in relation to overall progr disburements, amount disbured to beneficiar being audited, and USF
administrtive costs; (4) spre audits throughout the year; and (5) retin capacity and capabilty for tageted and
risk-baed audits. See FCC IPIA Letter at 2, 4.
32
Federa Communieatiou Commision FCC 11-32
Link Up BCAP compliance audits in 201 1.
97. Discussion. Waste, frud, and abue in the universl service pr jeopaiz the
availabilty of funds for supportd services and impose unjustifiable costs on caers an rapayers. We
therefore sek to ensure there is a focusd and effective system for identifying and dening progr
abuse. We seek comment on ways to imprve the currnt low-income audit prgr in light of grwing
concerns about such issues as duplicate payments and consumer ineligibilty.163 In paricular, we sek
comment on ways to improve the audit proess to reuce imprope payments and asses risks. In doing
so, how can audits be tagete to better uncover the scpe of errrs assoiate with improper payments?
What aditional measures should be taen to mitigate the potential for progr violations?l64 Are there
additional measures or incentives, beyond thos that curntly exist, tht we should implement to
encourage people to report abuses? Should we impose additional penalties, beyond de-enrollment frm
the progr, to discurge progrm abuse?
98. With the growth of newly designate ETCs in a number of staes, thre may be a nee for
a more rigoros audit progrm to provide assurance tht new parcipants have established adequate
internal controls to meet their obligations. For that rean, we propose that all new ETCs be audited aftr
the firt yea of providing Lifeline-supprt seice. We sek comment on the appropriat geogrphic
scope of the initial audit. How should such audits be designed to ensure that any problem ars ar easily
and thoroughly identified? Most audits exaine an ETC's compliance with a wide varety of
Commission requirements. Should initial audits focus on a smaller number of more importt
reuirements, and if so, which ones? Although we sek comment on more rigorous, focuse audits for
new program paricipants, we note that we wil also continue to direct USAC to conduct radom audits to
ensure ongoing compliance with our rules.165
99. We also seek comment on how to improve the Commission's directive to USAC to
establish a systematic approach to assessing internal controls and learing from audit findings.l66 For
exaple, we propose that negative audit findings above a speified dollar threshold, or impating a
speific percentage of an ETC's Lifeline customers, trgger shorter intervals between audits, an expaed
audit for the company at issue, and/or an additional audit the following year in the relevant study area.
What should that dollar threshold be? Would the cost assoiated with such audits outweigh the benefits
that would accrue? What follow-up should the Commission require ofUSAC in light of negative
Lifeline/Link Up audit findings?
100. We also seek comment on appropriate Commission responses to multiple findings of
non-compliance, including repeate non-compliance above the speified thresholds or multiple findings
163 The 2010 GAO Reprt also expressed concern about the increas risk of waste, frud, and abuse due to
consumers simultaeously receiving Lifeline discounts on both a wirline and wireless phone. 2010 GAO REPORT
at 35.
164 Whistleblower Protection Act of 1989, Pub. L. No. 101-12, 103 Stat. 16 (codified at 5 U.S.C. §§ 1211-1219,
1221, 1222,3352).
165 See, e.g,. 47 C.F.R. §§ 54.413(b), 54.417 (speifying recordkeeing requirements for ETCs seeking universl
service Lifeline and Lin Up reimburement).
166 Lettr from Steven Van Roekel, Maning Diror, Federal Communications Commission, to Scot Barh,
Acting CEO, Univerl Service Administrtive Company (date Jan. 25, 201 I), available at
htt://www.fcc.gov/Daily Releases/aily Business/2011/db0210/DA-l 1-128A1.pdf; Lettr from Steven Van
Roekel, Managing Dirctor, Federal Communications Commission, to Scott Barh, Acting CEO, Univeral Service
Administrtive Compay (daed Oct. 13,2010), available at htt://www.fcc.gov/omd/usac-
letters/20 i OIl 0 131 OCPA-USAC.pdf.
33
Federa CommunicatioDS Commin FCC 11-3%
of non-compliance with Lifeline or Link Up reuirments in a single audit.
101. The Commission's rules alrey diret USAC to "suped or delay discts, offsets and
support amounts provided to a caer if the caer fails to provide aduate verfion of discounts,
offsets and support amounts provided upon renable reuest ,,167 Should we estblish a thhold
(either aggrgate dollar amount or peentae of suppo payments) that would automaically result in a
frze on future payments from the progr until the caer reediat idetified issues? Under what
circumstaces should we consider revoking an ETC's grt of force or designation as an ETC? We
seek comment on other consequences that should reult from negative audit fidings.
i 02. In 2005, the Commission sought comment on subjecting all USF reipients to
independent audits, but ultiately did not adopt any such requirment. 168 In light of incre conces
about potential waste, fraud, and abuse in the progr, we agn seek comment on whether to requir
some or all ETCs in the progr to engage an indepndent fin to asse compliance with the progrm's
requirements. Ifwe were to impose such a reuirement, how oftn should we reuir the review (e.g.,
anually, or every few year)? Should all ETCs that pacipate in the progr be subject to the
requirement, or only some? If we were to limit this requirment to only cer ETCs, what would be the
appropriate criteria for imposing such a requirent? For exaple, we might impose the requirement on
ETCs that have ben found to have committed violations in the pa that reeive more th a paricular
amount of progr support or that have experienced significat incres in progr support. Audits
paid for by the ETCs could create a self-policing environment that would guad aginst waste, frud, and
abuse, but would also impose an expense on providers. We sek comment on the advantages and
disavantages of such a system, and on the burden of such a requirment on different cariers, including
small ETCs. Commenters should discuss whether a lack of negative audit findings, or alternatively, proof
of resolution of all negative findings, should impa the scpe or fruency of futu audits. We also sek
comment on what tye of audit engagements should be reuire if we were to adopt such a reuirement.
If we were to adopt such a requirment, we propose to mandate that covered ETCs provide audit report
to the FCC, USAC, and relevant states, and that the FCC and USAC should be deemed authorized users
of such reports.
167 47 C.F.R. § 54.707.
168 In the 2005 Program Management NPRM, the Commission sought comment on whether reipients of fuds from
any or all of the support mechansms should be subject to an independent audit requirment that would be paid for
by the recipients, and, if so, whether only recipients above a set amount ofUSF support in a given fiscal year should
be subject to this requiment. See Comprehensive Review of the Universal Service Fund Management,
Administration, and Oversight; Federal-State Joint Board on Universal Service;, Schools and Libraries Universal
Service Support Mechanism;, Rural Health Care Support Mechanism, WC Doket No. 02-60, Lifeline and Link-Up;
Changes to the Board of Directors for the National Exchange Carier Association, Inc., WC Docket Nos. 05-195,
02-6,02-60,03-109, CC Doket Nos. 96-5, 97-21, Notice of Prposed Rulemakg and Furer Notice of Proposed
Rulemakng, 20 FCC Rcd 11308, 1 1340, pa. 77 (2005) (2005 Program Management NPRM. The Commission
also sought comment on the costs of such audits; the appropriate scope and methodology of tageted independent
audits that would be performed at the recipients' expens; and wheter, in the event that waste, frud, or abus wa
dete, reipients that were not reuird to pay for their audits should be reuired to reimbur USAC or the
Commission for the cost of the audit, or to pay other penalties. See id. at 11340-4 I, par. 77. The Commission has
previously reuired reguated entities to obtain an independent auditor to confi compliance with statutory or
regulatory obligations, such as our cost allocation rules and rules requing the Bell Opratig Companies to have
separte affliates upon entr into the long-dtace marketplace.
34
Federa Co.....nictins Commis.FCCll-3
v. CLAG CONSUMR ELIGmILlT RULES
A. One-Pe..Residenee
1. Baekgro.nd
103. As prviously note th Commission has sta tht eligible consum may reive
univers seice low-income support for "a single line in their prcipal residence. "169 This reuirement
historically was intended to taet support where it was neeed most an to maiz the number of
Americans with acess to the telephone network. In pratice, this reuirent has be implemete by
providing one Lifeline/ink Up discunt per reidentil addrss. This pratice reflec the fact that in th
immediate wake of the i 996 Act, the prgr provided support prminatly for wirline service.
104.' The Commission prmulga rules unde the 199 Act th enabled compeve wireless
and wirline carers to be designate as ETCs eligible for fede univer service Sup.170 Since that
time, the marketplae ha changed significatly, with a wide ary of wireline and wirless service that
compete with tritional incumbent LECs. As of June 20 i 0, 93 percnt of America subscribe to
wirless phone services,17 and more than 25 peent of households wer wireless-nly.17 This incre
in wirless subscriptions comes in tadem with a rise in the telephone penetrion rates among low-
income consumers, many of whom use wireless service.173 In recent year, the Commission and states
have designated several wireless caers as ETCs for the purse of providing Lifeline sUpport.174 These
designations have enabled cariers to prvide a varety of competitive services to low-income consumers
in several states. The emergence of competing carer and multiple services ha enhance consumer
choice, and led to an increase in the average number of monthly minutes included in a Lifeline wirles
plan at no chare to the consumer, frm about 60 minutes in 2008 to 250 minutes toy. 175
105. But the increasing availabilty of wirless Lifeline services has also made it more diffcult
to limit low-income support to a single line per residence. While a fixed wirline connection is oftn
shard by all household residents, mobile service is more often use on an individual bais. It is now
common for non-Lifeline consumers tht can afford to do so to purchas both wirline and wireless
telephone services, and eah member of a residential household may have his or her own wirless
phone.176 With grter availabilty of services from wireless Lifeline providers comes increaed
169 2004 Lifeline and Link Up Order, 19 FCC Red at 8306, pa 4; Universal Service First Report and Order, 12
FCC Rcd at 8957, par 341.
170 See Universal Service First Report and Order, 12 FCC Rcd at 8969-73, par. 36472; infra section IX.C
(Eligible Telecommunicaions Carer Requiments).
171 See CTIA Quick Facts, htt://ww.cti.orgmedia/industrinfo/index.cfiAID/10323 (las visite Mar. I,
201 I).
17 See WIRLESS SUBSTITION SURVEY at I.
17See WCB SUBSCRIERSHIP REPORT at I, Char 4, Table 4; see also supra note 86 and par. 26-27 (providing
backgrund informon ilustrtig the growt in wiless penettion, parcularly in low-income households).
174 See infa seion IX.C (eligible telecmmuncations carer reuiments).
175 Compare, e.g., TracFone Wireless, Inc. 's Petition/or Waiver 0/47 C.F.R. § 54.403(0)(1), CC Doket No. 96-5,
at 9 (filed May 4, 2009) (notg tht TracFone's pas offerigs of between 55 and 68 fre minutes per month to
Lifeline customer), with Leer frm F.J. Polla Prsident and Chief Executive Offcer, TracFone Wirless, Inc., to
Hon. Julius Genchowski, Chai Federl Communcations Commission, CC Doket No. 96-5, at i (filed Aug.
30,2010) (noting that TracFone now offer 250 fr minuts pe month to Lifeline customers).
176 See supra note 86 (stg that nealy 60% of housholds have both a wirless and a wiline telephone).
35
Federa CommunicatioDS Commisn FCC 11-3%
likelihoo that a residence may receive Lifeline-supported telephone service frm multiple sour.17
And carer practices of providing hands to progr paricipats at no cot and mareting Lifeline-
supported seices under differnt tre names incres the likelihoo th a houshold and even a
parcular individual may sign up for multiple Lifeline service. New service feas, such as calling
plans that include additional handses at no additional charge, also prnt challenges for the application
of our existng reuirements.
2. Disussion
106. In this NPRM, we propose to adopt a one-per-residential addrs reuirement in setion
54.408 of our rules.178 We sek comment on wheter coifying this reuirement as "one-per-residence"
would aid in administtion of the reuirement by providing a brght line tht could be detennined by
reference to external soures. The Commission has not codifed any definition of a "household" for
purpses of Lifeline and Link Up, and varous qualifying progrs may utiliz different definitions of
households. We also note that in other context, consumers seking benefits from stae or other federal
assistace progrs may undergo a more robust process to qualify for benefits, such as an interiew by
soial service agencies to detennine eligibility, which may provide an additional level of assurce that
the applicant in fact complies with relevant program criteria. We seek to adopt a rule that provides a
bright line that is easy for USAC and ETCs to administer.
107. The one-per-residential addrss rule that we propose to adopt is consistent with our
existing single-line per residence requirement.17 But some ETCs dispute the validity of the single-line-
per residence Iimitation,180 which raise concern that they ar not aderig to an existing requirement that
is designed to minimize waste, frud and abuse; taget support where it is needed most; and maximize the
number of Americans with access to communications services. As noted above, it may be necessa for
the Commission to tae action on an interm basis while this proceeding is pending to address concerns
with USAC reimbursing ETCs for duplicate claims.181
108. We understad tht there may be situtions - such as residents of commercially zoned
buildings, those living on Tribal lands, and group living facilties - where application of the one-per-
residential address rule may produce unintended consequences that would deprive deserving low-income
consumers of the support that they otherise would be entitled to. We encourage ETCs, Tribal
Communities, the states and other interesed pares to provide input on a rule that maximizes the number
of Americans with access to communications services, but also protects the fund from waste, frud and
abuse.
109. We seek comment on how best to achieve the purses for which the single line per
residence requirement was designed. We propose to maintain this longstading reuirement, which
177 In 2008, the Commission fit designated a wirless reseller as a limited ETC for the pure of receivig
Lifeline support. See TracFone ETC Designation Order, 23 FCC Rcd at 6206. That reseller, TraFone, offers
hads and wirless service at no cost to qualifying low-income households. Oter ETCs have followed suit, and
low-income households now benefit from a number of competitive offerings. See, e.g., Virgin Mobile Forbearance
Order, 24 FCC Rcd at 3381.
178 Appendix A at 47 C.F.R. § 54.408.
179 See 2004 Lifeline and Link Up Order, 19 FCC Rcd at 8306, par. 4 (specifyng that support for Lifeline
subscrbe is for "a single telephone line in their pricipa residence"); see also Universal Service First Report and
Order, 12 FCC Rcd at 8957, par. 341.
180 Petition/or Reconsideration (arguing that the Commission has never adopted a generally- applicable one-per-
houshold rue).
181 See discusion sura pa. 48-51.
36
Federa Communicatias ComaiÎl FCC 11-32
balance our sttury obligation to ensur that low-income consumer have ac to phne sece at
renable ras and to ensur that support is suffcient, but not exceive.l82 We se coent below on
how to derme a "reidential addrss" for the purses of the Lifeline an Link Up pr. We also
sek comment on how bet to intere the one-pe-reidential addr reon in light of cUßnt
service offerings and in the context of grup living argements or oth sitons th may po unique
circumstces. ,,183
1 10. In addition, we sek input on whether a different aph would be see th nee
of low-income consumers in light of our sttory obligations, as well as the changing communicaions
marketplac. We note that several commenters in the Joint Bod proing suges th the
LifelinelLink-Up progr should provide support for one wireless servce per eligible adult rathr th
one seice per residential address, with some suggestg tht would be in keeing with the sttory
principle that low-income consumers should have accs to seice th ar renably copale to th
services enjoyed in urn aras.l84 This approah would tae into acunt the fact tht telephone us ha
changed since we firs implemente the 1996 Act. Fiftn year ago, wireless service was not a
mainstr consumer offering; tody, 93 percnt of the general population has wireless service.18S At the
same time, providing support to each low-income adult rather th to eah reidential addrss could
significatly increase the siz of the progr. Would allowing support for one wirless subscription per
eligible adult be inconsistent wit our sttutory obligation to ensure that support is suffcient, but not
excessive?l86 We seek comment on whether the benefit that wirless service affords low-income
consumers outweighs concerns assoiated with growt of the fud. If the fuding dedicated to the
progr were cappe, as discusse more fully below, a one-per-adult rule would likely mean that a much
smaller benefit would be available to each progr paicipant than under a one-pe-residential addrs
rule. We sek comment on these issues.
182 See 47 U.S.C. § 254(XI), (3), (5).
183 In an Ocober 200 Public Notice, the Buru sought comment on how to apply the one-per-household rule in the
context of grup livig failties, such as assiste-living center, Tribal residences, and aparent buildings. See
One-Per-Houehold" Public Notice, 24 FCC Rcd at 12788; Letter frm Mitchell F. Brecher, Counel for TraFone,
to Marlene H. Dorth, Secreta, Federal Communications Commission, WC Doket No. 03-109 (fied July 17,
2009). We sek to refrsh the record on the issues raised in the One-Per-Household Public Notice and seek
comment on other relate issues.
184 See, e.g., GCI TraFone One-Per-Household Clarfication Comments at 7; SBI TracFone One-Per-Houshold
Clarficaton Comments at 12 (stating that "(r)eplacing the one-per-household rule with eligibilty stadads that
pennit a single household to reeive Lifeline asistace for more th one telephone, subject to approprite
ceification requirments, would be more in keeping with the Commission's commitment and more reflective of the
choices and opportities that consumer expec in tody's telecommunications maketplace"); MFY Lega Seices
TraFone One-Per-Houshold Clarfication Comments at 2-3 (recommending tht the Commission "chage the
identification of households within private apaent buildings so tht each qualified household, including single
individuals who may live with rommat, is able to apply for and receive Safelink serice"); NASUCA TracFone
One-Per-Household Clarfication Comments at 2 (aging that the Commission "should revisit its position and
clarfy that a person or a faily may constitute a houshold and nee telecommunications serce, without having a
private home or aparent"); AT&T TraFone One-Per-Houshold Clarfication Comments at 1-2 (staing th
ETCs should be permitted to provide Lifeline services to any qualifying individual residing in a grup living
facilit).
iss See CTIA Quick Facts, htt://ww.ctia.orgmedia/industr info/index.cfmAID/l0323 (last visite Mar. I,
2011).
186 See 47 U.S.C. § 254(bX5).
37
Federa CommanicatioDS Commiion FCC 11-3%
a. Defining "Reidence"
11 i. We prpose a rule in setion 54.408 to limit prgr support to a single subscription per
U.S. Postal Service addrss, and seek comment on wheter this approh would promote affordable
access to telephone serice consistent with the goals of seion 254.187 Under this proposal, where
unrlated individuals and/or familes shar a U.S. Postl Seice addrss, such individuals and/or familes
would be limited to one subscription for that "residence." ISS We seek comment on whether this approach
best serves progr goals. The progr was estblished to ensur that all consumers, even those of
limited means, would have a "lifeline"-a baic telephone seice to coec them to the rest of soiety.
Supporting one service at each residential addrss may effectively fulfill this goal, and may also help
prevent waste and abuse of progr resoures. Morever, this approach may be more adinistrtively
feasible than other options for defining who is eligible for supprt such as family-bas definitions that
require an accurte detennination of wheter peple living togeter ar independent or relate.
112. Puuat to this proposa, upon reeiving an application for Lifeline support an ETC
could us the U.S. Postal Service residential addrss as a proxy to detennine whether the ETC is already
providing Lifeline support to that addrss. If so, the ETC would reject the applicaion for support.
Additionally, as discussed infra, we propose to require that Lifeline subscribers initially certify when
applying for serice, and thereafer verify annually, that they are reeiving support for only one line pe
residential address (defined for these purses as all of the persons who reside at a unique U.S. Postal
Service address):89
113. We recognize that ther may be soe residences for which ther is no unique U.S. Post
Service addrss. For example, we understad th there ar aparent buildings where the residents live
separately, but their units lack distict identifier and mail is delivered to and distrbuted by a single point
of contact such as the building manager. Similarly, when multiple persns or familes share a residence,
unique addresses may not be available. Customers in rul aras may share a rul route address. We
seek comment on what actions could be taen in such situtions to ensur that Lifeline and Link Up
benefits ar available to eligible consumers. Is there other infonnation that a carer could collect to
verify that the residence does not alrey reeive support from the progr? Alternatively, if one
subsidized service were available for such loctions, would that satisfy the congressional goal of ensurng
affordale access to telephone service?
1 i 4. As noted above, some custmers rely on a P.O. Box rather than a U.s. Postal Service
residential address. How should we detnnine eligibilty in those situtions? Should we require ETCs to
collect additional verifying infonnation, and if so, what?
i 15. Our rules also limit support to the subscriber's pricipal residence.l90 We seek comment
on how to ensure that a subscriber does not obtain support at more than one location. We propose that
each subscriber provide unique identifying infonnation (as discussed in Section N) to prevent the same
subscriber from receiving support at multiple locations. We seek comment on this proposal. We also
seek comment on whether we should reuire subscribers to certfy that the addrss provided is their
187 See Appendix A, 47 C.F.R. § 54.408(aXI).
188 See id To the extent that the Lifeline/Lin Up provider could demonstrte tht an applicant possesses a distinct
unit number, as would be the case for individuals residing in an aparent building, for exaple, th would be
suffcient to establis a unique address.
189 See infra par. 167-69 (One-pe-residential addrss certfication and verfication).
190 See Appendi A, 47 C.F.R. § 54.408(aX2).
38
Federa CommuuitioBS Comll FCC 11-3%
prcipal residence, in order to reive Lifeline and Lin Up SUpprt191
116. We sek comment on wheter our U.S. Postl Seice adba prpol should be
modified to acmmodte differt ty of living situtions, and if so, how. For exaple, should th
propo definition of "reidential adss" be modified to acmmod cen living argements?
Should ther be an exception for unlate adult rommates or multiple failes shag a reidece?
Should we allow more th one discunt per residece in the ca of multi-generational failes, for
exaple if the low-incoe family includes an eligible adult child or elderly relative? Commenter that
propose a differnt defiition of ''ridence'' frm the one we prpose above, or exceptions to th
definition, should explain how the Commission could ensur, in administtively feaible ways, that
support is being provided appropriately, however tht term is defined.
b. Applictin of the One-Per-Residence Rule to Commereia Zoned
Builing
117. Although the Commission's rules prvide low income support for reidential cuser,
the Commission has leaed of instce wher otherise eligible applicats have ben denied Lifeline
and Link Up seice beus they live in facilties that ar zoned for commercial, rather th reidentia
use. This may occur, for exaple, when individuas reside in single-room ocupacy buildings, lodging
houses, rooming houses, shelters, and other group quars.192 This appeas to be a paicular problem in
urban ar.
193
118. We sek comment on how we ca ensure that consumers have access to low-income
support even if they reide in a commercially-zoned location. We note that commercial reidences tend to
be group living facilties rather than individual residences. If the Commission adopted speial rules for
group living facilties, would those rules reslve concerns about providing support to eligible subscribers
who live in commercially-zoned areas? Ar there additional steps we should tae to verify that Lifeline
and Link Up subsidies ar not being provided to commercial entities?
c. Application of the One-Per-Residence Rule in Tribal Communiti
119. On some Tribal lands, several households may occupy a single housing unit.194 We sek
comment on whether we should adopt a special definition of "residence" on Tribal lands th will ensur
that Lifeline and Link Up service is provided to eligible consumers. For exaple, to the extnt there ar
multi-generational familes sharng a residence in Tribal communities, should there be an exception to our
proposed one-per-residence rule? How can the Commission ensur that the progr does not provide
duplicative supprt to households on Tribal lands? In order to craft a rule that appropriatly taes into
account conditions on Tribal lands, we sek additional infonnation about housing argements in Tribalar.
120. Some commenters responding to the "One-Per-Household" Public Notice st that
residents of Tribal Lands fruently lack unique U.S. Postl Serice addrsses, and insea reeive mail at
191 See id
192 See, e.g., Manatt Legal Servces TraFone One-Per-Houshold Clarfication Comments at 2; NCLC TraFone
One-Per-Houshold Clarfication Comments at 4-5; NNDV TraFone One-Per-Household Clarficaton Reply
Comments at 2; MOTC TraFone One-Per-Household Clarfication Reply Comments at 3 n.9.
193 See Manatt Legal Serces TraFone One-Per-Household Clarfication Comments at 2; NCLC TraFone One-
Per-Household Clarficaion Comments at 4-5.
194 See, e.g., NCLC TraFone One-Per-Household Clarficaion Reply Comments at 6; SBI TracFone One-Per-
Houshold Clafication Comments at 6, 10.
39
Federa CommunitioDS Commisn FCC 11-3%
communl P.O. boxes.195 We thus seek comment on how to apply the "one-per-reidece" rule to Triba
lands if we were to adopt the proposal generly to derme reidetial addrs on the bais of a U.S. Postal
Service address. Given the very low telephone peetron ra on Tribal lands, we do not want our rules
to impose baers to consumers or households living on Tribal lands tht ar eligible for, and desperaly
nee, Lifeline discunts. At the sae time, we mus ac as respnsible stwards of the Fund. If the
Commission were to exempt Tribal members frm providing a unique U.S. Post Service addrss, what
meaurs should the Commission adopt to gu aginst the posibilty of was, frud, and abuse?
d. Ensuring Acces for Residents of Group Living Quarters
121. Some commenters have suggesed that the Commission should consider how ber to
ensur that the progr is effectively serving low-income residents of group living quaers, such as
residential facilties for seniors or for victims of domestic violence.l96 We sek comment on how
eligibilty should be defined for residents of group living quars, including the effects on eligibilty
when a resident moves out of a grup living facilty, and what meaurs ar necssa to prevent waste,
frud, and abus.19
122. Under the propod rule, relate or unlate living together at a single posta address,
residents of a group living facilty-which could be doze or even hundreds of individuals-would be
eligible for only a single Lifeline support service. Is this approach adequate to ensur availabilty of
basic communications serices to all Americas, including low-income consumers, as section 254
requires? If not, how should the progr support service to low-income consumers residing in group
living facilties? Should the program provide support to each separte and unrlated individual or family
(e.g., a maried couple living together at a nuring home) living in group facilties?
123. Alternatively, should we create an exception to our proposed one-i:r-residence rule for
eligible consumers in a group living facilty to obtain Lifeline or Link Up seice? 98 Is there an
195 See SBI TracFone One-Per-Household Clarficaton Comments at 4-5.
196 See, e.g., Flonda PSC & OPC TraFone One-Per-Houshold Clarfication Comments at 3; NCLC TracFone One-
Per-Houshold Clarfication Comments at 5; HA TraFone One-Per-Household Clarfication Comments at 2;
Manatt Legal Services TracFone One-Per-Household Clarfication Comments at 1-2; MOTC TracFone One-Per-
Houshold Clarification Reply Comments at 4; NASUCA TracFone One-Per-Household Clarfication Comments at
2; SBI TracFone One-Per-Household Clarfication Comments at 2; TraFone TracFone One-Per-Household
Clarfication Reply Comments 'at 7; NNDV TracFone One-Per-Household Clarfication Reply Comments at 2;
GCI TracFone One-Per-Household Clarfication Comments at 6; AT&T TraFone One-Per-Household Clarfication
Comments at 1-2; MFY Legal Serces TracFone One-Per-Houshold Clarfication Comments at 2. The U.S.
Census Bureau defies "group living quars" as:
(a) place where people live or stay, in a group living argement, that is owned or managed by an
entity or organizaon providing housing and/or servces for the residents. This is not a tyical
household-ty living argement. These seices may include cusodial or medical car as well
as other tys of assistance, and residency is commonly restrct to those reeiving these
services. People living in group quaer ar usualy not rela to each other.
2010 Decennial Census Local Upda of Cenus Addrssees (LUCA) Progr, Frequently Asked Questions
Febru 2008,
ww.census.gov/geo/ww/luca2010Ilucafag.htm#WhtistheCensusBureaudefinitionofagroupguarers (last visited
Mar. 2, 2011). Some exaples of group quars include: nuring homes; hospitas with long-term care failties;
dormtones for workers; religious grup quaers; and shelters. Id
197 2010 Recommended Decision, 25 FCC Red at 15602, pa 12.
198 See, e.g., AT&T TraFone One-Per-Houhold Clarficaton Comments at 1-2; Flonda PSC & OPC TracFone
One-Per-Household Clarfication Comment at 3-4; GCI TraFone One-Per-Household Clarfication Comments at
6; Manat Legal Services TraFone On-Per-Houshold Clarfication Comments at 1-2; MOTC TracFone One-
(contiued.. ..)
40
Federa CODlDlunicatiDS Commisn FCC 11-32
adinisttively feasible way to approh this challenge that also provides prteion ag was,
frud, and abus? For instce, should we reuire the adinisttor of grup living failties to cefy to
ETCs and/or USAC the number of sepa and unlat individuals or familes in the facilty In that
sitution, the facilty would be responsible for applying for Lifeline/ink Up support on behaf of its
residents.l99 Under this approch, how could ou rules ensur verificaton of th inco eligibilty of the
subsribers for which a group failty is seking suppor? Should the facilty be reuir to provide the
ETC documentation of the residents' eligibilit
124. Should we reuir that consers residing in grup facilties provide ceficaion from
facilty st that corrobora applicats' reidece in a grup living facilty, as well as infonnation about
the number and tys of persons served by the facilty? Should the Commission set differnt eligibilty
criteria for pennanent and tempora reidents of group living faciltiesioo
125. We sek comment on the feaibilty of making Lifeline funding available to agncies or
non-profit orgizions that ar able to provide communications services to residents of group living
facilties.201 As the Joint Boa acknowledged such insitutions do not qualify as ETCs eligible for
support and we therefore sek comment on the afPlication of seion 254( e) of the Act, which limits the
recipients of universal serice supprt to ETCs.20 If fuding were made available to such organizons,
what if any additional meaures would be neeed to gud against waste, frud, and abuse? For exaple,
in a sittion where the applicat lacks a residential or mailng address, how would the ETC verify the
customer's initial and ongoing eligibilty for Lifeline services?
B. Tribal Lifeline Eligibilty
126. It is well established that federaly regnize Tribes have sovereignty, and exercise
jurisdiction over their members and terrtory with the obligation to "maintain peac and goo order,
(Continued from previous pae)
Per-Houshold Claficaion Reply Comments at 4; NASUCA TraFone One-Per-Household Clarfication
Comments at 2; NCLC TraFone One-Per-Houshold Clarficaon Comments at 8; NNDV TraFone One-Per-
Household Clarfication Reply Comments at 2; TracFone TraFone One-Per-Houshold Clarfication Reply
Comments at 7; SBI TraFone One-Per-Houshold Clarficaion Comments at 12.
199 See, e.g., City of Cabridge - COC TraFone One-Per-Houshold Clarfication Comments at 3 (propoing that a
group living qua would apply for a "waiver" of the one-pe-houshold policy by filing a form with ETCs
establishing its grup facilty statu. Therefter, "residents at the named failty would be entitled to reeivig
Lifeline telephone servce, as if they had their own private residence."); cf Ohio Commission TraFone One-Per-
Houshold Clarfication Comments at i 0 (proposing tht the FCC consider providing each grup livig facilty with
a phone with a specified number of minutes per month to be allocate between the residents of the failty).
200 See, e.g., Benton Joint Boa Comments at 6; Consumer Advisory Committee Joint Boad Reply Comments at 9-
10; Ohio Commision Joint Boar Comments at 7; Smith Bagey Joint Board Comments at 4; Smith Bagley Joint
Board Reply Comments at 8; TraFone Joint Boar Comments at 4-5. Cert commenter acknowledged the
unique challenges faed by residents of grup housing. Benton, the Consumer Advisry Committe, and Consumer
Groups assert that low-income support should be extnded to reidents of grup housing, though not necessly
automatcally. Benton Joint Boa Comments at 6; Consumer Advisory Committ Joint Board Reply Comments at
9; Consumer Groups Joint Boad Comments at 12-14; Consumer Groups Joint Boa Reply Comments at 5; FPSC
Joint Boad Comments at 4.
201 2010 Recommended Decision at 15602, pa. 12. Puuat to seion 254(e) of
the Act only eligible
telecommunications carer may receive univer service fuding. 47 U.S.C. § 254(e). Thus, to the extent tht we
adopt a proposal permitting non-profit group living failties to apply for Lifeline and Lin Up discounts on their
residents' behalf, Lifeline and Link Up suprt could be distrbuted to the eligible telecommunications carer
which, in tu would provide biling discunts to the grup living failty.
20 See 47 U.S.C. § 254(e).
41
Federa CommunicatioDS Commision FCC 11-3%
improve their condition, estblish school systms, and aid their peple" within their jursdictons.103 In
2000, the Commission fonnal1y regniz Tribal sovereignty in its Stateme of Policy on Establishing a
Govemment-to-Govemment Relationship with Indian Tribes.204 The federal governent also ha a trt
relationship with Indian Tribes, as reflected in the Constituion of the Unite Stas, traties, federl
statutes, Executive orders, and numerous cour decisions.lOs Consistent with this relationship, the
Commission, in its June 2000 Tribal Order, adopt meaurs to promote telecommunications
subscribership and infrstctu deployment within Amerca Indian and Alaska Native Tribal
communities.206 Accordingly, in the Tribal Order, the Commission modified its rules to crea enance
Lifeline and Link Up progrs intended to provide acss to telecmmunications services for low-
income consumers living on Tribal lands. 207
127. Income-based eligibilty. The Commission's curnt rules regading Tribal eligibilty for
Lifeline support have been subject to differing interpretations. Speifically, ETCs, USAC, and Tribal
groups have indicated there has been inconsistncy and confuion among federal default and non-default
states regading whether residents of Tribal lands may qualify for paricipation in the program based on
income, even though there is languge in Commission orders so indicating.208
128. We propose to revise sections 54.409(a) and 54.409c) to more clearly reflect that
residents of Tribal lands ar eligible for Lifeline and Lin Up support bas on: (1) income; (2)
paicipation in any Tribal-specific federl assistce progr identified in our rules; or (3) any other
progr identified in subsetion 54.409(b) of our Lifeline and Link Up rules.209 We seek comment on
203 Policies to Promote Rural Radio Serice and to Streamline Allotments and Assignent Procedures, MB Docket
No. 09-52, Firt Report and Order and Furer Notice of Proposed Ruleming, 25 FCC Rcd 1583, 1585 (2010)
(Rural Radio Order) (internl citations omittd).
204 Statement of Policy on Establishing a Government-ta-Goverent Relationship with Indian Tribes, Policy
Statement, 16 FCC Rcd 4078, 4080 (2000) (Tribal Policy Statement).
205 See, e.g., Seminole Nation v. United States, 316 U.S. 286, 297 (1942) (citig Cherokee Nation v. State of
Georgia, 30 U.S. 1 (1831)); United States v. Kagama, 118 U.S. 375 (1886); Choctaw Nation v. United States, 119
U.S. 1 (1886); United States v. Pelican, 232 U.S. 442 (1914); United States v. Creek Nation, 295 U.S. 103 (1935);
Tulee v. State of Washington, 316 U.S. 681 (1942); The Indian Self-Determination and Education Assistace Act of
1975,25 U.S.C. § 450 (2006).
206 See generally Tribal Order.
207 See Tribal Order, 15 FCC Rcd at 12219-12252, par. 20-85. Enhanced Lifeline support otherwise known as
Tier 4 support, provides up to an additiona $25 per month in federal Lifeline support to eligible low-income
consumers living on Tribal lands, as long as that amount does not brig the basic local residential telephone rate
below one dollar. See 47 C.F.R. § 54.403(a)(4). Enhced Link Up support provides up to an additional $70 in
federal Link Up support to eligible low-income consumers living on Tribal lands. See 47 C.F.R. § 54.41 l(a)(3).
208 See Letr from Melissa E. Newman Vice Prsident Federal Regulatory, Qwest Communications International,
Inc. to Marlene H. Dortch, Secret, Federl Communicatons Commission, CC Docket No. 96-45, WC Doket No.
03-109 (filed Dec. 16,2010) (Qwest Dec. 16,2010 Ex Parte Leter); Letter frm Darell Gerlaugh Board of
Directors, Gila River Telecommunications, Inc., to Geoffy Blackwell, Chief, Offce of Native Affir and Policy,
Federal Communications Commission, WC Docket No. 03-109 (fied Feb. 24, 2011) (Gila River Feb. 24, 2011 Ex
Pare Leter); Lettr frm Susie Allen, Membe, Colvile Business Council, The Confederated Tribes of the Colvile
Resation, to Rebeka BiD Attorney Advisr, Wireline Competition Burau, Federl Communicatons
Commission, WC Docket No. 03-109 (filed Feb. 25, 201 1) (Colvile Feb. 25, 2011 Ex Parte Letter). See Federal-
State Joint Board on Universal Service; Promoting Deployment and Subscribership in Unserved and Underserved
Areas, Including Tribal and Insular Areas, Twenty-Fift Order on Reconsidertion, Reprt and Order, Order, and
Furer Notice of Prposed Rule Making, CC Doket No. 96-45, 18 FCC Rcd 10958, 10970-71, par. 23-24 (2003)
(Second Tribal Order).
209 See Appendix A, 47 C.F.R § 54.409.
42
Federa CommunicatioDS Commisa FCC 11-3%
this prsal.
129. Proam-based eligibilty. Under section 54.409 of th Comission's rules
paicipaion in the federal Foo Stap Prgrm (or the Supplemental Nuttion Asist Pr
(SNAP) as it is currntly named), qualifies residents of Tribal lands for LifelinelLink Up Sup.210 The
Lifeline/ink Up rules do not, however, grt eligibilty base on pacipaion in the Foo Distrbuon
Progr on Indian Reservations (FDPIR), a fedral program tht provides foo to low-ince
housholds living on Indian reservations, and to Native America familes reiding in designat ar
nea reservations and in the State ofOklahoma.2l As discusse more fully below, eligible reidets of
Tribal lands for the purse of the Lifeline/ink Up progr ar qualifying low-income households on a
reservation, whe "reservation" is defined as any federally-reognize India trbe's rervation, pueblo,
or colony, including fonner reservations in Oklahoma, and Alaska Native regions.212
130. The service and eligibilty criteria for FDPIR ar similar to thos of SNAP, and ar bas.
on income levels th must be rertified on a peodic basis.2l A household may not paicipate in both
FDPIR and SNAP, and any given reservation could have certin households pacipating in FDPIR and
others paicipating in SNAP.214 Approximately 276 tribes curently reeive beefits under FDPIR,215
suggesting that thre ar households on Tribal lands tht are not be sered by the Lifeline/Link Up
progr simply beuse they have chosen to reeive FDPIR benefits inst of SNAP beefits. Furer,
we understad tht Tribal elders, a paicularly vulnerable population, oftn seek FDPIR benefits raer
than SNAP benefits.216 As such, allowing residents on Tribal lands to qualify for low-income support
bas on paricipation in FDPIR is consistent with the purpose of the current trbal eligibilty criteia,
furters the goal of providing access to telecmmunications services by low-income households on Tribal
lands, and the goal of tageting those in the greaest need.
131. Accordingly, we propo to amend section 54.409(c) of the Commission's rules to allow
progrm eligibilty for residents of Tribal lands paricipating in FDPIR.2l We sek comment on this
proposal. We also sek comment on whether there ar any other federally- or Tribally-administere,
income-based assistace programs, such as those focused on the elderly, which should be included in our
210 See 47 C.F.R. § 54.409. See also Unite Stas Dearent of Agricultu, Supplemental Nutrtion Assistce
Progr (SNAP), Eligibilty Criteria, htt://ww.fus.usda.gov/snap/ap.licantrecipientseligibilty.htm (last visite
Mar. 4, 201 i).
211 See United Stas Deparent of Agrcultue, FD Prgrs, About FDPIR,
htt://ww.fus.usd.gov/fddlprogms/fdpir/aboutJdpir.htm (last visited Dec. 20, 2010); see also Food Distrbution
Fact Sheet, Octobe 2010, available at htt://ww.fis.usda.gov/fddlprogrmslfdpir/pfs-fdpir.pdf(last visite Ma.
3,2011).
212 See 47 C.F.R. § 54.40(e); see also supra par. 129 (discussing the definition of Tribal lands).
21 Food Distrbution Fac Sheet, October 2010, available at htt://ww.fus.usda.gov/fdd/progrslfdpir/pfs-
fdpir.pdf(last visite Mar. 3,201 i); see also FOOD & NUTRITON SERV., U.S. DEP'TOF AGRIC., FOOD DISTRIBUTION
ON INDIA RESERVA nONS, NET MONTHLY INCOME STANDARS, FNS HADBOOK EXHIBIT M (20 i 0),
htt://ww.fus.usda.gov/fdd/dbks-instrctlS501 -ChangesÆxhibitM FY20 i i .pdf; see also Unite States
Depaent of Agrcultue, Food & Nutrtion Service, Supplemental Nutrtion Assistace Progrm, Eligibilty,
htt://ww.fus.usda.gov/snap/applicantrecipientseligibilty.htm (last visited Mar. 2, 201 i).
214 Gila River Feb. 24, 201 i Ex Parte Lettr.
215 See supra note 21 i (Food Distrbution Fac Sheet); see also U.S. Deparent of the Inteor, Burea ofIndian
Affair, What We Do, htt://ww.bia.govlWatWeDo/index.htm(lastvisitedMar. 2, 201 i).
216 Colvile Feb. 25, 201 i Ex Parte Ler.
217 See Appendix A, 47 C.F.R § 54.409.
43
Federa Communications Commissn FCC 11-3%
progr eligibilty rules for residents of Tribal lands.
132. Location-based conditions. In the Triba Order, th Commission defined the term
"Tribal lands," "reseation," and "nea reeration" for the purse of estblishing eligibilty for the
Tribal Lifeline and Link-Up progrS.2lS Speifically, the Commission modified its rules to prvide
support to individuals residing on "any fedlly recogniz Indian (T)ribe's reseration, Pueblo, or
Colony, including fonner reservations in Oklahoma Alaska Native regions esblished puruant to the
Alaska Native Claims setlement Act (85 Sta. 688), and Indian allotments,,,219 as well as those residing in
"tose aras or communities adjacent or contiguous to reseations th ar designte as such by the
Deparent of Interior' s Commissioner of Indian Afai, and whos designatons ar published in the
Federal Registr .,,220
133. In its August 2000 Tribal Stay Order an Furher Notice, however, the Commission
stayed implementaon of the Tribal Lifeline and Link Up progrs as they applied to qualified low-
income households "near rervations.'.i21 The Commission noted that, after its adoption of the definition
of "Tribal lands" in the Tribal Order, it leaed tht the ter "near reservation," as defined by the Burau
of Indian Affair (BIA), might include ''wide geogrphic areas that do not possess the charteristics that
warted the tageting of enhanced Lifeline and Link(-)Up support to reservations, such as geogrphic
isolation, high rates of povert, and low telephone subscribership.',222 Accordingly, in its Tribal Stay
Order and Further Notice and its May 2003 Second Tribal Order, the Commission sought comment on
how to identify geogrphic areas adjacent to reservations that shar similar charcteristics with the
reserations.22 Since then, the Commission has not taen fuer action regarding the definition of "near
reservation," and currntly provides enhanced low-income support only to those living on, not near,
Tribal lands.
134. We now propose to amend seon 54.400( e) of our rules to remove the ter and
definition of "near reservation," as its inclusion in the rules creates confuion.224 We also propose to
adopt a new rule section 54.402 to adopt a designation pross for those Tribal groups and communities
seeking designation as Tribal lands under the Commission's rules.22s We seek comment on this proposaL.
The designation process we propose is consistent with the proess reently proposed by the Commission
in the Rural Raio Service Second R&O.i26 That Order addresses the definitions of "Tribal lands" and
21S See Tribal Order, 15 FCC Rcd at 12217-19, par. 16-19; see also 47 C.F.R. § 54.400(e).
219 Tribal Order, 15 FCC Rcd at 12218, par 17 (defiing "reration").
220 Id (defiing ''near reservaton").
221 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, Order and Furher Notice of
Proposed Rulemakg, 15 FCC Rcd 17112,17112-13, par. 1 (2000) (Tribal Stay Order and Further Notice).
222 Id at 17113, par 3.
22 Id at 17114-15, par. 5-6; Second Tribal Order, 18 FCC Rcd at 10974-77, par. 33-38. In the Second Tribal
Order, the Commission also declined to adopt chages to the defiition of "reservation" made by the BIA, notig
that "(t)o alleviate the potetia for ongoing adminstrtive uncertinty. . . any futue modifications to the defiition
of , reservon' or 'near reervation' wil tae effec in the context of the unversl servce progr only upon
specific action by the Commission." Second Tribal Order, 18 FCC Rcd at 10967, pa. 17.
224 See Appendix A, 47 C.F.R. § 54.400(c).
22S See Appendix A, 47 C.F.R. § 54.402.
226 Policies to Promote Rural Radio Service and to Streamline Allotment and Assignment Procedures, Second
Report and Orer, Firt Order on Reconsidetion, and Second Furer Notice of Proposed Rule Makg, MB
Docket No. 09-52, FCC 1 1 -28 at par. 6- 1 1 (reI. Mar. 3, 201 1) (Rural Radio Service Second R&O).
(contiued.. ..)
44
Federa CommuDitias CommÎ FCC 11-3%
"nea reaton ar" for the purse of deteining whether a rao ston application seg to
serve a Tribal counity of licens is a "licele community" th qualifies for speial
consideration.22 The Commission adopte a pros whereby an aplicat sekig to estalish eligibilit
may submit any probative evidence of a connection beee a defined community or ar and th Tribe
itself.228 We propose to adopt a similar pros for Tribal grups and communities seking to reive
Lifeline and Lin Up support but whos lad is not defied by setion 54.400e).229 Use of such a
procs would see the public interst by affording flexibilty to Tribe in non-landed situons,
parcularly given th the circumsces of such Tribe are so vared.
135. We prpose to delegae authority to relve such designons to the Wirline
Competition Buru. We propose that such a reuest to designat an ar as a Tribal land for pu of
Lifeline and Link Up should be fonnally reueste by an offcial of a federlly regniz Tribe who ha
prope jurisdiction. The reuest should explain why the communities or ar asociate wi the Tribe
do not fit the definition of Tribal lands set fort in the Commission's Lifeline/ink Up prgr rules, but
which ar regions so Native in their char or loction, as to support the purse of providing enhce
Tribal Lifeline/ink Up progr sUpport.230 A showing should also detl how providing progr
support to the ar would aid the Tribe in sering the nee and inte of its citins in that community,
and thus fuer th Commission's goals of providing Tribal support. Most prbative would be evidece
that a Tribe delivers seices to the ar at issue. However, the Tribe could offer other evidence,
including the federl governent's provision of services to Tribal members in the identified ara.
Prbative evidence might also include a showing that the Census Burau defines the ara as a Tribal
service ara that is us by agencies like the Depaent of Housing and Urban Development.231 Furer,
persuaive evidence of a nexus beeen a community and a Tribe might also include showings that a
Tribal governent has a derined set, such as a heauaers or offce, in the ar combined with
evidence that Tribal citizens live and/or ar served by the Tribal governent in the ar at issue. A Tribe
might also provide evidence that a majority of members of the Tribal council or bod live within a
certin radius of the ara. An applicant might also show that more than 50 percnt of Tribal members live
exclusively in the geogrphica ara. Additionally, trbes might provide other indicia of a connection,
such as Tribal institutions (e.g., hospitals or clinics, museums, businesses) or activities (e.g., confernces,
festivals, fairs). We seek comment on any other factors that could help detennine whether a geogrphical
area is predominantly Tribal, such that low-income residents in the ar should reive the benefits of
enhanced Tribal progr support.
136. In addition to the showing requird, it is importt that an applicant seking to tae
advantage of enhanced Tribal progr support set fort a clealy defined area to be covere. The nee
for such a demonstrtion is in line with the purses of enabling Tribes to serve their citizns, to
perpette Tribal cultu, and to promote self-government. In evaluating such reuests, we propo to
delineate the "Tribal Lands" equivalents as narwly as possible and view most favorably proposals that
(Contiued frm previous pae)
227 Rural Radio Service Second R&D at par. 6 n. 13,7 n.19. The Media Burau's decision to adopt a waiver
procss is informed by the comments of a few pares. ¡d. at par. 8; see also Koahic Brocat Corpraion
Comments, MB Doket No. 09-52 (filed May 4, 2010); Native Public Media & National Congrss of American
Indi Comments, MB Doket No. 09-52 (filed May 4,2010) (NM/CAI Comments); Catolic Raio
Assoiaton Comments, MB Doket No. 09-52 (filed May 4,2010).
22 Rural Radio Service Second R&D at par. 9-10.
229 See Appendi A, 47 C.F.R. § 54.400(c).
230 See Appendix A, 47 C.F.R. §§ 54.403(a)(4), 54.409(c).
231 See NPM/CAI Comments at 8-10.
45
Federa Communications Commion FCC 11-32
desribe naowly defined Tribal lands, to enable the provision of services to Tribal cits rar th to
non-Tribal members living in adjacnt ar or communities. We seek comment on this prposal.
137. ETC Designion on Tribal lan. Additonally, we acknowledge that caers serving
households residing on Tribal lands could benefit frm gr claty regaing the ETC designtion
proess for Tribal lands. However, as this issue ha broer aplicabilty beyond just the Lifeline/ink
Up progr, the corrsponding issues and reuest for comment ar addrese in the Ofce of Natve
Affai and Policy's Native Nations Notice of Inquiry.232 For exaple, the Notice of Inquir seeks
comment on how speific an ETC designation including Tribal lands should be, ~arcularly for carers
seking designation for the sole purse of paicipaing in the Lifeline progr. 3 The Notice of Inquiry
also seeks comment on the natu of consultation with Tribal goverents tht should be included in the
ETC designation proess and whether carers and Tribal governments should be reuire to file a
proposed plan to serve with the Tribal lands.23 Finally, the Notice of I"iuiry seks comment on whether
varing amounts of Lifeline support should be available on Tribal lan. 35 We also sek comment on
these issues and on the Lifeline progr proposals contained in the Native Nations Notice of Inquiry.
138. SelfCertifcation of Tribal lan residence. Section 54.409(c) of the Commission's rules
require that ETCs offering Lifeline services to reidents of Tribal lands must obta the consumer's
signatu on a document certfying that the consumer reives beefits frm at leat one of the qualifying
programs and lives on a reservation.236 On April 25,2008, Qwest Communications International Inc.
(Qwest) fied a request for review of cein USAC audit findings.23 The USAC audit found that, among
other things, Qwest provided Tier 4 support for subscribers who were not residing on eligible Tribal lands
and did not provide Tier 4 support to subscribers who were eligible residents of Tribal lands.23 Qwest
asked the Commission to find that USAC errd when it concluded that Qwest is inappropriately seeking
enhanced Lifeline support for customers that do not reside on Triballands.239 Qwest argued tht it has
fulfilled its obligation to ascertin wheter a cusomer lives on a reseration by obtaining a signed
certifications stating that the customer lives on a reservation.i40 USAC responded that Qwest should
establish additional contrls.i41 The Commission sought comment on the Qwest Petition in 2008.242
232See Improving Communications Services
for Native Nations, CG Docket NO.1 1-41, Notice of Inquir, FCC 11-30
at par. 23-32 (reI. Mar. 4, 2011) (Native Nations NOl).
233 Native Nations NOI at par. 28-29.
234 Native Nations NOI at par. 30.
235 Native Nations NOI at par. 32.
236 See 47 C.F.R. § 54.409(c).
237 Request for Review by Qwest Communications International, Inc. of the Decision of the Universal Service
Administrator, WC Docket No. 03-109 (filed Apr. 25, 2008) (Qwest Petition).
238 See Qwest Petition at Attchment 3 (Results of Low Income Limited Review ofQwes Colorado, at 10-11,
Findin 4) and Attchment 4 (Results of Low Income limited Review of Qwest Idao, at 11 - 12, Finding 4).
239 Qwest Petition at 6-9.
240 Id
241 Qwest Petition at Attchment 3 (Results ofUSAC 2006 Low Income Limited Review of Qwest Colorao,
Finding 4).
242 See Comment Sought on Qwest Request for Review of a Decision of the Universal Serice Administrative
Company, WC Docket No. 03-109, Public Notice, 23 FCC Rcd 7845 (Wirline Compo Bur. 2008) (Qwest Public
Notice).
46
Federa Communicatins Commin FCC 11-3%
139. As discusse above, Tribal land addrese ar oft no stghtfor.243 AT&T an
the US Telecm Assiation (USTelecm) fied comments suppngQwes stg th th
Commission did not intend ETCs to tae aditional ~ beyond obting a self-ecan, to
deteine whether an aplicat lives on Tribalads.2 Alltel Communication, LLC (AllteL, which
subseuently was acuir by Verin), Rurl Cellular Corpration (Rur Cellular), an Smit Baley,
In. (SBI) also filed reply comments supporting Qwes.24S Alltel acknowled th Tribal lads ar
historicaly underrved ar in which residets and experience ver low telepon peon raes.246
Alltel argued that an incre buren on ETCs to verify Tribal residency would not imprve sece on
Triba lands, but would only serve to discure ETCs from seing thes ar as cog aditional
verifICion prours is very challenging due to the unique living argets an identificaon
pratices of may Tribes.247 For exaple, the Rosbud Sioux Tribe acknowledged th th ar no
physical addrsses on the Rosebud Indian Reseation.248 Additionally, the Spirt La Tribe st th
all mail sent to the reseation is addrssed to P.O. Boxes or General Delivery.249
140. We prpose to amend setion 54.409(c) of the Commission's rules to disalow self.
certification of income or progr eligibilit for residents of Tribal lands reiving Lifeline/in Up
support consistent with our proposal below to n;uire all Lifeline/Lin Up recipients to prvide prof of
income or paricipaion in a qualifying progr.2S We propose to reuire a consumer reeiving low-
income support and living on Tribal lands to show documented proof of parcipation in an eligible
progr or eligibilty basd on income, like all oter low-income consumers as there do not appear to be
unique reons why Tribal households should be exempt from a general requirement to prouce
documentaon of qualificaion for program support. We sek comment on this proposaL.
141. We do, however, reogniz there may be challenges in verifying Tribal residency due to
unique living argements on Tribal lands, and therefore maintain the self-certfication reuirement as to
Tribal land residence.2s1 We propose to clarfy that reeipt of self-certfication of residence on Tribal
lands, along with documentation of income or pacipation in an eligible progr, is suffcient
documentation for an ETC to provide enhce Lifeline support. The current rules do not reuir the
ETC to establish fuher verification processes or contrls to ascertin that the customer is a Tribal
243 See Tribal Address discussion supra at pa. 119-20.
244 See AT&T Comments, WC Docket No. 03- 1 09, at 2-4 (filed Jun. 16, 2008); Unite Stas Telecom Assiation
Comments, WC Docket No. 03-109, at 7-9 (filed Jun. 16,2008).
245 See Alltel Communications, LLC Reply Comments, WC Docket No. 03-109 (fied JuI. 1,2008) (Alltel Reply
Comments); Rurl Cellular Corpration Reply Comments, WC Doket No. 03-109, at 2-3 (filed JuI. 1,2008) (R
Reply Comments); Smith Bagley Reply Comments, WC Doket No. 03-109, at 2-3 (filed Jul. 1,2008) (SBI Reply
Comments).
246 See Alltel Reply Comments. As of2006, the telephone peettion ra on Tribal lands in the lower 48 sts was
about 67.9010 and in Alaska Native vilages was about 87%. See 200 GAO REPORT; see also FEDERA
COMMICATIONS COMMISSION, INDUSTRY ANALYSIS AN TECHNOLOY DIVISION, TELEPHONE SUBSCRIERSHI
ON AMRICAN INDIAN RESERVATIONS AN OFF-RESERVATION TRUST LAN (2003).
247 Alltel Reply Comments at 1,3-4, Atthment (statig tht multiple customers oftn identify a common biling
addrss or P.O. Box which may be outide the reservaton boundaes).
248 See Alltel Reply Comments at Atthment.
249 See Alltel Reply Comments at Atthment (this trbe also acknowledged tht it does not have access to a 91 1
system).
2S0 See Appendi A, 47 C.F.R. § 54.409(c).
2S1 See Appndix A, 47 C.F.R. § 54.409(cX2).
47
Federa Communications Commion FCC 11-32
member or lives on Tribal lands before providing ence Lifeline sUpport.252 We sek comment on this
propose clarfication.253
VI CONSTRG TH SIZE OF TH LOW-INCOME FU
142. Background. The Commission ha a sttutory obligation to crete speific, preictable,
and suffcient universal service support mechaisms.2S4 As note in the National Broadband PLan
unconstined growt of the Univers Serice Fund would jeopadiz universl service by increing the
contrbution burden on American consumers and businesse, thereby discuring adoption and us of
communications services.255 Certin USF progrs ar cappe including the schools and libraes and
rural health car support mechanisms.256 With the implementation of the interim competitive ETC cap for
the high-cost progr in 2008, the only major components of the fud that remain uncappe ar the low-
income progr and the interste common line support mechanism in the high-cost progr, which
provided $1.7 bilion in 2010 to rate-of-rtu carers in rul, Tribal, and insular ar and has been
growing. The Connect America Fun Notice sought comment on limiting the total size of the high-cost
progr and on capping interstate common line support.2S
143. As noted above, the size of the low-income progr has grown significatly in rent
year, from a roughly inflation-adjusted $667 milion in 2000 to $1.3 bilion in 2010.258 According to
GAO's recent report the low-income fund grew in 2009 primarly due to the emergence of pre-paid
wireless, Lifeline-only ETCs.259 USAC projects tht the low-income progr fud wil be $ 1.5 bilion in
20 i 1.260 In its recent 2010 Recommended Decision, the Joint Boad reommended that the Commission
develop a full record on the recent grwt in low-income progr support.261
144. Discussion. We ar mindful of the impat of the growt in the progrm on the
consumers and businesses that ultimately support USF thugh fees on their phone bils. As we underte
252 However, the ETC is still required to adopt a process for verificaion of income or progr eligibilty. See
Verification discussion supra Section VII.B.
253 We note that should we adopt these proposals, there are other outstadig issues preventing the complete
resolution of the Qwest Petition durg this proceeg.
254 See 41 U.S.C. §§ 254(b)(5).
255 See NATIONAL BROADBAN PLAN at 149 (Recmmendation 8.11); see also High-Cost Universal Service
Support; Federal-State Joint Board on Universal Service, WC Docket No. 05-331, CC Docket No. 96-45,
Recommended Decision, 22 FCC Rcd 20411,20484, par 25 (Jt. Bd. 2001) (2007 Recommended Decision).
256 See, e.g., 47 C.F.R. § 32.9000 (defiing mid-siz incumbent local exchage carer with anual revenue indexed
for inflation as measured by the Deparent of Commerce Gross Domestic Product Chain-tye Price Index
(GDPCPI)); Schools and Libraries Universal Service Support Mechanism, A National Broadband Plan for our
Future, CC Docket No. 02-6, GN Doket No. 09-51, Sixth Reprt and Order, 25 FCC Red 18762, 18781, par 36
(2010) (E-Rate Sixth Report and Order) (amndin Commission rules to index the E-ra progr fuding cap to the
ra of inflaton on a going-forwar bais).
257 USF/ICC Transformation NPRM FCC 11-13, at pa. 394-97.
258 Adjustments for inflation were calculate using the Burau of Labor Statistics' Consumer Prce Index Inflation
Calenda. See htt://ww.bls.gov/datainflatoncalculator.htm (last visited Mar. 2, 2011).
259 2010 GAO REPORT at Exec. Sumar. As discussed abve, prepaid wirless Lifeline servce now accounts for
one-third of Lifeline support.
260 See USAC 2Q 2011 FILING, at 16.
261 See Joint Board Recommended Decision, 25 FCC Rcd at 15630, par. 91.
48
Federa CommunitioDS ComMini.FCC 11-3%
comprehensive refonn and modernization of USF, we ar committ to cotrllin co an consning
the overall size of the Fund.262 May of the prposas contained her to elimin wa, fr and
abuse and improve progr administrtion could reuce expnditu an th siz of th prgr. For
exaple, eliminating duplica claims and tightening our roles on cus cha eligible fo Link Up
support should reult in reuce expenditures. We note that fud grwt is not nesaly indicative of
waste, frud, and abus.263 We regniz th demand for low-income support fluctu ba on a
number of factors, including changes in qualifyng assistace prs and maronomic conditons.
We also note th the prgr ha an ultimat ca in that only a define polatn of eligible low-
income housholds may pacipate in the progr, an support is limite to a maimum of $10 pe
month per houshold (other than on Tribal lands). We sek comment gey on how to balance thes
principles, while retaining our commitment to enabling households in economic dists to obtin acss
to essential communications serices.264
145. In light of concerns about the grwt ofLifeline/ink Up, we sek comment on a
proposal to cap the size of the Lifeline/Lin Up progr, for exaple at the 2010 disburment level of
$ 1.3 bilion.26 We ask whether and how a cappe fund could continue to ensur telephone acces for
low-income households266 and support potetial expasion for broadbad as discusse below.267 We sek
comment on wheter any cap should be pennanent or tempora, perhaps lasing for a set period of year
or until the implementaion of stctual refonns propose in this Notice.
146. If the Commission were to cap the progr, either as an interim meaur or perently,
what would be an appropriate cap level? How should such a level be deteined? For exaple, should it
be higher or lower th the 2010 size of the progr? Should a cap be indexed to inflation, similar to
other USF progr fuds subject to cas, or adjusted ba on unemployment ratesi68 We sek
comment on whether there should be exceptions to a cap. For exaple, should low-income support for
eligible residents of Tribal lands be exempt, given the very low telephone penettion rae on Tribal lands,
as well as the unique circumstaces and challenges fac by residents of Tribal landsi69 Ifwe wer to
262 As we sta in the USF/ICC Transformation NPRM, the Commission ''plans to be guided by the followig four
priciples (including) . . . Contrl the siz ofUSF as it trsitions to support brobad, including by limiting wate
and ineffciency." See USF/ICC Transformation NPRM, FCC 11-13, par. 10.
263 See 20/0 Recommended Decision, 25 FCC Rcd at 15647-48 (statement of Senior Assistat Attorney Generl
fftch).
264 As the United States Cour of Appeals for the Fift Ciruit held in Alenco, "(t)he agency's broa discrtion to
provide suffcient universl service fuding includes the decision to impose cost controls to avoid excessive
expnditus that will detct from univerl serce." Alenco Commc'ns, Inc. v. FCC, 201 F.3d 608,620-21 (5th
Cir. 2000) (Alenco). The Alenco cour also found that "excessive fuding may itslf violate the suffciency
reuirments." Id at 620. The United States Cour of Appeals for the Tenth Ciruit has sta tht "excessive
subsidization arbly may affect the afordilty of telecommunications serices, thus violatg the priciple in
(secon) 254(bXl)." Qwest Comm 'ns Int/ Inc. v. FCC, 398 F.3d 1222, 1234 (lOdi Cir. 2005).
265 This figur is bas on USAC estites. See USAC 2Q 201 i FILING, Appendices at M04.
266 The Commission ha had a long-stading commitment to providig support tht is suffcient but not exceive.
See Tenth Circuit Remand Order, 25 FCC Red at 4088, par. 29 (concluding th a deing the suffciency of
support must also tae into account the Commission's generaly applicable responsibilty to be a pruent gudia of
the public's resoures); see a/so discusion supra Seon II (discussing the balancing of these objectives).
267 See infra Seon IX.B (The Traition to Broadd).
268 See, e.g., 47 C.F.R. § 32.9000; E-RateSixthReport an
Order, 25 FCC Red at 18781, pa 36.
49
Federa Communications Commisn FCC 11-32
adopt a cap, should that cap be adjuste for ince, if naonal or locl unemployment exceed a
speified level?
147. We also sek comment on the apprpriat way to adinister a cap. Is a national cap
more effcient, or would a stte-by-sta ca be a more equitable way to administ the Low Income
progr fud? As note abve, the Act contemplate achieving renably compale acss in all
regions of the countr. 270 Should regional differce be acunte for under a capi71
148. If the Commission were to cap the progr we may also nee to implement methods for
prioritizing support among potential reipients. Should curnt parcipats in the progr reeive
priority fuding within a cape system? Alterntively, should fuding be available on a first-come, firs-
served basis aftr a specified date for rellment in the progr? If so, given tht disbursements var
monthly, how could ETCs be notified when the cap had ben reached? If a paricipant loses services for
any reason, such as non-use, should th pacipat necssaly reive fuding upon re-enrollment, or
would that persn potentially have to wait until the next fuding year Should monthly benefits be
reuced to ensure that all eligible households that sek to paricipate in the progr ca do so, even if
they would reive a smaller benefit than progr pacipats curntly receive? We seek comments on
these issues and other practical and operational issues that would need to be addrssed if the progr
were capped.
149. If the Commission adopts a rule capping the low-income fud, should that cap be
maintained if the Commission decides to support broadband with progr fuds? Would the inclusion of
broadband necessitate different a different approch to prioritizng benefit allocions?
VI IMROVIG PROGRA ADMITRTION
150. In this section, we sek comment on how to improve key aspets of the curnt
administrion of Lifeline/Link Up, consistent with our goals of reucing wase, frd, and abuse and
modernizing the progr. As discussed above, the Commission has historically provided considerable
discretion to the states to administe key aspects of the progr, such as eligibilty, enrollment, and
ongoing verification of eligibilty. In order to bolster oversight of this federl progr, we propose a core
set of federal eligibilty, certification, and verification requirements that would apply in all states, while
seeking comment on allowing states to adopt additional measur tht could complement the federal
stadads. Speifically, we propose to eliminate the option of self-certifying eligibility and to requir all
consumers in all states to present documentation of progr eligibilty when enrollng. We propose to
increase sample sizes for ongoing verification and to reuir ETCs in all states to submit verification data
to USAC and the Commission.
151. We also seek comment on ways to reuce baers to paricipation in the progr by
service providers and low-income households, speifically though the use of coordinated enrollment with
other social service assistce progrs and the development of a national databa that could be used for
enrollment and verification of ongoing eligibilty. These proposals ar intended to improve
(Contiued frm previous page)
269 In imposing an inte cap on one component of th high-cost fud, the Commission crted an exception for
compeitive ETCs servng trbal lands. In the Matter of High-Cost Universal Service Support Federal-State Joint
Board on Universal Service; Alltel Communications, Inc., et al.Petitions for Designation as Eligible
Telecommunications Cariers RCC Minnesota, Inc. and RCC Atlantic, Inc. New Hampshire ETC Designation
Amendment, WC Doket No. 05-337, CC Docket 96-45, Orer, 23 FCC Rcd 8834 (2008).
270 See supra Secton II (Establishing Pr Goals and Measurg Performce) (citing 47 U.S.C. § 254(bXI),
(3)).
271 See supra par. 36 (noting that affordbilty ha both an absolute and a relatve component).
50
Federal CommunietiDS C...it FCC 11-32
administrtive effciency, improve service delivery, and protec an impe pr acs for eligible
beneficiares.272
A. Eligbility Criteria for Ufeline and Unk Up
i 52. Backgroun. As discusse eligibilty reuirmets for th Ufeline an Lin Up
progrs var from state to state. Curntly, Lifeline and Link Up eligibilit is ba up paicipaon
in certin means-teste progrms and, in some stas, upon income. The fedl default Lifeline and Link
Up eligibilty criteria-which apply in eight sttes and two tetoriesuire consurs to eith (l)
have a household income at or below 135 percent of the Federa Pover Guideline;273 or (2) paicipa
in at lea one of a number of federal assistace progrs.274 Our rules allow the 42 reining st with
their own Lifeline and Link Up progrs flexibilty in estalishing their own eligibilty critea.
i 53. During its most recent deliberations, the Joint Boad remmended th th Commission
seek comment on whether to adopt for all stas unifonn minimum income- and prog-ba eligibilty
stadads.275 Although the Joint Boa support the concept of minimum unifonn eligibilty
requirements, it acknowledges the nee to explore more fully the potential burdens and benefits.276
i 54. Discussion. We propose to amend our rules to require all states to utilize, at a minimum,
the progr criteria currently utiliz by federal default states.27 We fuer propose to allow stas to
maintain existing state-speific eligibilty criteria that supplement the federal criteria. Currntly, some
states' criteria ar more pennissive than the federal criteria.27 For example, Georgia extds prgr
eligibilty to senior citizens paricipating in low-income discunt plans offere by locl power and gas
272 We not tht in other contexts, the federl governent is workg to improve the delivery of federal assistce
progrs administered though state and local governents or where federal-sta coopetion is beeficiaL. See
Parer4Solutions, The Parership Fund for Progrm Integrty Innovation, htt://ww.parer4solutions.gov/. The
Parership Fund for Program Integrty Innvation was established by the Consolida Appropriations Act of 20 10,
Pub. L. No. 111-117, 123 Stat. 3034 (to be codified as scatered statutes).
27347 C.F.R. § 54.409). Basd on the curent federal povert guidelines for the 48 contiguous states and
Washington, DC, anual income of 135% of the guidelines is $14,702 for a one-persn household or faily;
$19,859 for a two-persn household or family; $25,016 for a th-person houhold or family; an $30,173 for a
four-persn household or family. Anual Upda of the U.S. Dep't. of Health and Human Sers. Povert
Guidelines, 76 Fed. Reg. 3,367, 3,637-38 (Jan. 20,2011).
274 Federal progr qualifying consumers for the low-income progr are: Medicaid; Supplemental Nutrtion
Assistance Prgr (SNAP), formerly known as Food Staps; Supplemental Securty Income (SSI); Federal Public
Housing Assistace; Low-Income Home Energy Assistance Progr (UHEAP); National School Lunch Progrm's
free lunch progr; and Tempora Assistace for Needy Familes (T ANF). Low-income consumers living on
Tribal lands may qualify by paricipation in one of several additional assistace progrms: Buru of Indian Affairs
general assistace; Tribally-adinistere TANF; or Head Sta (only those meeing its income-qualifying stdads).
See 47 C.F.R. § 54.409c).
2752010 Recommended Decision, 25 FCC Rcd at 15601, par. 8-9.
276 ¡d.
277 See 47 C.F.R. § 54.409a), (b).
278 See Georgia Public Service Commission - Lifeline Assistace Prgr & Lin-Up Georgia,
htt://ww.psc.state.ga.us/consumer comer/cc telecom/advisory/lifeline.asp (last visited Marh 1,201 I); see also
Florida Public Service Commission - Lifeline Assistace and Link-Up Florida Brochure,
htt://ww.floridapsc.com/utilties/telecomm/lifeline/engbrochure.aspx (last visited March 1,201 I); Kasas
Corpration Commission - Kanas Lifeline Progrm, htt://ww.kcc.state.ks.us/pi/ifeline.htm (last visited Marh
1,2011).
51
Federa CommunicatioDS Commision FCC 11-3%
companies.279 Ifwe wer no longer to allow sts to utiliz these existing state-speific eligibilty
criteria, curt subscribers would beme ineligible for Lifeline benefits, which could result in
considerable consumer disruption. We sek comment on wheter, going forward, staes should be able to
impose additional pennissive eligibilty criteria they deem appropriate, so long as these additional
eligibilty criteria ar reonably tied to income and the stte in question provides additional moneta
support to supplement the federal support.280 We regniz that more pennissive eligibilty criteria could
increse the number of Lifeline subsribe, and sek comment on how to ste the right balance between
national unifonnity and state flexibilty to addrss loc circumces. We fuer sek comment on the
natu and magitude of the potential impac co, and benefits of imposition of our propose minimum
eligibilty requirments.281
155. Today, ETCs operating in multiple states have to develop stte-speific policies and
proceurs to assur compliance with state-specific progr eligibilty requirments. More unifonn
eligibilty requirements could potentially lead to more stamlined and effective enollment of eligible
consumers, while lessening regulatory burens on service providers. Morever, as we explore cost-
effective ways to stngten the process of certificaton and validation of household eligibilty,282 more
unifonn requirements could also lessen administve cost for the progr and faciltate more effective
monitoring and auditing. We ask whether reuirng all sts to utliz the federal eligibilty criteria
would simplify ETC processes for enrollng eligible housholds and verifying ongoing eligibilty.
156. Would estblishing a federl baseline of eligibilty critea place any burdens upon the
sttes? What administrtive changes would be require in those states where enrollment and ongoing
verification of eligibilty fuctions ar perfonned by a state governental agency or third-par
administrtor? Would any such burdens be justified by the benefits of a minimum unifonn system?
From the perspective of sttes or serice providers, what ar the benefits or burdens of maintaining the
curnt system in which reuirements var from state to st? We ask whether allowing sttes to
maintain and add pennissive eligibilty critera beyond any minimum unifonn criteria would prevent
existing eligible Lifeline customers from losing Lifeline support. Finally, we ask whether a federal
baseline of eligibilty criteria would incre progr parcipaion.
157. In its 2010 Recommended Decision, the Joint Board also recommended that we seek
comment on raising the progr's income eligibility criteria of 135 percent or below of Federal Povert
Guidelines to 150 percent or below of the FPGs.283 We seek comment on raising the federa income
threshold for program paricipation to 150 percent or below of the Federal Povert Guidelines. Some
federl profams linked by the low-income progr such as LIHAP, alry have a 150 percent
threshold.2 A number of commenters in the Joint Boad proeeding urged that the income eligibilty
stada be increasd in 150 percent.i85 The FPG fonnula has ben criticized as dated and inaccurte,
279 Georgia Public Serce Commission - Lifeline Assistace Prgr & Lin-Up Georgia,
htt:/Iww.psc.state.ga.us/consumer comer/cc telecmladvisoryllifeline.asp (last visited Marh 1,201 i).
280 See 47 C.F.R. § 54.409(a); see also 20/0 Recommended Decision, 25 FCC Red at 15601, par. 8-9.
28120/0 Recommended Decision, 25 FCC Rcd at 15601, par. 8-9; see infa Secton VII.D (seeking comment on
the development and implementation of a centrliz dabas, including the costs of constrcting and maitaining a
database).
282 See infa Secton VII.D.2 (dabas).
2832010 Recommended Decision, 25 FCC Red at 15601, par. 10.
284 Benton Joint Board Comments at 5-6.
285 See, e.g., NASUCA Joint Board Comments at 7.
52
Federa CommuntiDS Commisn FCC 11-3%
with the Consumer Groups notig that some stuies have sugg income levels for ecic "self-
suffciency" at 161 peent of the povert level.28 In 2004, the Commision soght coent on whetr
the income-ba critea for federal default sts should be incr to 150 pet of the Federl
Povert Guidelines. At th time, the Commission prete a st anysis that cocluded th raising
the income thshold might only have minimal on telephone peettion ra but cold relt in may
new Lifeline subscribes, potetially resulting in an aditiona $200 milion in ded for Lifeline.28
We sek to upd the rerd on this issue. We also sek comment on loweng the thhold frm the
curnt level (135 percnt of the FPG).
B. Certtin and Verition of CODSumer Elibilty for Lie6ne
158. The applicabilty of federl and sta rules governing initial cefica and ongoing
verification of consumers' eligibilty for support curtly depeds on whet the cusmer reides in a
federl default stte or non-federal default st.21S Accrdingly, ETCs providig seice in multiple
sttes may be reuire to comply with varous stte and/or federal certification and verification
procedurs.289 "Certification" refers to the initial detnnintion of eligibilty for the progr;
''verification'' refers to subseuent detinations of ongoing eligibilty.29
159. We believe it is time to tae a frh look at thes rules, taing into acunt both our
experience with the progr over the pat i 5 yea and the many changes in service offerngs since the
progr bega. Our analysis is infonned by the Joint Boar's Recommended Deision, and by the rent
GAO review of the program.291 According to GAO, some sttes fmd that consumers ar detrr from
enrollng by the diffculty of certfication and verification produrs.292 GAO also notes that there ar
risks associated with the self-certfication of subscriber eligibilty and the accury of amounts claimed by
ETCs for reimbursement. 293 Our proposals are intended to improve the integrty of the program by
improving federa reuirments and introducing greater consistncy thoughout the countr. We seek to
balance the need to ensur that the progr support only inteded beneficiares, with the need for
administrvely workable reuirments that do not impose excessive burdens or cost.
286 Consumer Groups Joint Boar Comments at 7-8.
2872004 Lifeline and Link Up Order, 19 FCC Rcd at 8332-8333, Appedix K.
288 See generally 47 C.F.R. §§ 54.410(a), (c). As explained above, states with their own low-income progrs may
establish their own eligibilty, cerfication, and venfication reuirments and are referrd to as "non-federal default
states." States without their own low-income progr must follow the federal eligibilty, certfication, and
venfication reuiments and ar referred to as "federl default states." See Eligibilty discussion at supra par.
152-53.
289 See 47 C.F.R. § 54.41O(cXl),(2). A few sts fae even more complicated venfication proedurs due to the
limtation of their jursdction over cert carers. The Commission retly concluded th when a state
commission madates Lifeline support but does not impose cerification and venfication requirements on certin
caers within the stae, the affeced carer mus follow federa defalt cntena for certfication and venficaon
puroses. See Lifeline and Link-Up, WC Docket No. 03-109, Order and Declartory Ruling, 25 FCC Rcd 1641,
1641, 1645, par. 1,9 (2010) (Lifeline Declaratory Ruling).
290 See Venficaon disussion at supra par. 160-; see also 2010 Recommended Decision, 25 FCC Red at 15606-
15611, par. 23-34.
291 See generally 2010 Recommened Decision, 2S FCC Rcd at 1560-11, par. 23-34; 2010 GAO REPORT at
Figue 2, Appedi II, Table 7 (Administrtive Procse and Responsibilties).
292 See 2010 GAO RERT at 23, Figu 2.
293 See 2010 GAO REPORT at 37.
53
Federa Communications Commison FCC 11-3%
1. Background
160. Initial certifcation. Curntly, in order to qualify for service thugh the progr, a
consumer must firt demonstrte that he or she meets eligibilty critera estblished under either feder or
stae rules. Pusuat to our rules, the eligibilty criteria ar bad "solely on income or on factors dirctly
related to income.,,294
161. Section 54.409(d) of the Commission's rules penn its consumers in fedral default stas
to prove eligibilty for Lifeline by either: (1) self-crtfying th they ar eligible for Lifeline support
bas on paricipation in cerin feder progr; or (2~roviding documentaion showing that they mee
the income thshold requirements set fort in our rules. 5
162. Certification practices var among the non-federal-default states. According to GAO, 16
stas pennit self-certification under penalty of peur, 25 sttes require documentation of enrollment in a
qualifying progr, and 9 states have in plac automatic enrllment of eligible consumers.296
163. Verifcation of continued eligibilty. Curntly, in the federal default sttes, ETCs must
annually verify the continued eligibilty for a statistically valid radom saple of their customers.297
Specifically, those subscribe that are sapled must present or submit a copy of their Lifeline-qualifying
public assistace card and self-certify under penalty of perjury that they continue to paicipate in that
progr. Subscribers qualifying based on income must present documentation of income, and self-crtify
the number of individuals in the household and that the documentation presented accurtely represents
their household income. ETCs ar reuir to retan copies of the self-certfications (but not the
underlying documentation of income).
164. Currently, each non-federal-default stte may adopt its own method for verifying
continued eligibilty. According to GAO, 14 states conduct random audits of Lifeline recipients, 20 states
require periodic submission of supporting documents, 13 states reuire an anual self-crtification, 13
states use an online verification system using databass of public assistace paicipants or income
reports, and 17 states conduct verification by confining the continued eligibility of a statistically valid
sample of Lifeline recipients.298
165. This varabilty across states is potentially problematic for consumers, ETCs, and the
Commission. State-by-state differences ca complicat ETC compliance and USAC auditing, confuse
consumers who may be more trsient in residence than the generl population, and increase the potential
for abuse. Additionally, as more fully described below, the Commission curently has access to
verification results only from the federal default sttes and a hadful of sttes that voluntaly offer their
verification results,299 giving the Commission an incomplete view of verification results and what
improvements can be made to decrease the potential for waste, fraud, and abuse.
166. The Joint Board recommended that the Commission adopt a "floor," or minimum set of
294 47 C.F.R. § 54.409(a); see a/so 47 C.F.R. §§ 54.409(b), (c); 54.515.
295 47 C.F.R. § 54.409(d)(I), (2).
296 2010 GAO REPORT at 51.
297 47 C.F.R. § 54.410(c).
2982010 GAO REPORT at 51.
299 In addition to the fedral default states, the following non-federl-default states requir ETCs to submit their
verification results to USAC: Alabama, Arsa, Arna New York, Nort Carolin Pensylvania, and West
Virinia.
54
Federa CommunieatiDS Commin FCC 11-3%
requirments for verification prours, upon which the stes may impse additional pr.30
The Joint Boa note that uniform minimum verification prour and sapling crtea cold help
resolve the curnt confuion and prical diffculties tht have arse fr inconsistnt metod.
%. Disusion
167. On-per-residentia adess certifcation an veriation. We prse to amen seon
54.410 of our rules to reuir that all ETCs obtain a ceficaon when initilly enllng a subscbe in
Lifeline that only one Lifeline service will be reeived at tht addr.301 We also prpose to amd
setion 54.410 of ou rules to reuir th all ETCs obtain a ceficaion frm ever subsribe verified
durng the anual verification pross tht the subscriber is reiving Lifeline supprt for only on line
per residence.302 Requirng "one-per-residence" cerfication initially at sign-up an then on an ongoing
basis should highlight and remind the consumer tht support is available for only one line per reidence
and reuce invertt pro violations. We seek comment on thes proposals.
168. The fonn use for such ceficaon shall explain in clea and simple tes tht this
federl benefit is available for only one line per residence, and tht consumers ar not pennitted to reive
benefits from multiple prviders. Furer, the cerficaton fonn shall contan langue stting tht
violation of this reuirment would consttute a violation of the Commission's rules and may consttu
the federal crime of frud, which wil be prosecut to the fullest extnt. We seek comment on this
proposal and ask whether there is any other langue that should be reuire on the fonn.
169. We propose that compliance with the one-per-residence rule shall be verified anually,
using the sae procurs and fonns described above. Anual one-per-residence verification results
should be reportd along with the sapling data to USAC and the Commission, as discussed more fully
below. Finally, any subscriber indicaing they ar receiving more than one subsidy per addrss shall be
de-enrolled pursuat to the process for duplicates describe above.303 Any non-responders shall also be
de-enrlled puruat to the tennination process identified in our rules.30 We sek comment on these
proposals.
170. Modifing certifcation procedures. We propose to amend setion 54.409(dXl) to
eliminat the self-certification option and reuire all consumers in all states to present documents to
establish eligibilty for the progr. We ar conceed that the self-cerification process does not provide
adequa assurce that support is being provided only to qualifying custmers. Self-certification offers
minimal protection against those intentionally seeking to defrud the progr and fails to exclude
customers that ar not eligible to parcipate but simply misunderstad the eligibilty reuirements. This
proposal would reduce the number of ineligible consumers in the program and reduce opportnities for
waste, frud, and abuse.
171. We seek comment on this proposed rule change to eliminate self-certification for
progr eligibilty. Wil the rule change help identify and eliminate ineligible consumers frm enrollng
300 2010 Recommended Decision, 25 FCC Red at 15607, 15608, par. 26, 28.
301 See Appedix A, 47 C.F.R. § 54.410.
302 See Appedix A, 47 C.F.R. § 54.410; see also 2010 Recommended Decision, 25 FCC Red at 15610-1 1, par 34.
Note that prepad wiless ETCs, such as TraFone and Virin Mobile, are alrad subjec to such a requiment.
TracFone ETC Designation Order, 23 FCC Rcd at 6214-15, par. 21; Virgin Mobile Forbearance Order, 24 FCC
Rcd at 3392, par. 25; i-Wireless Forbearance Order, 25 FCC Red at 8790, pa 16; Global Forbece Orr, 25
FCC Rcd at 10517, par. 16
303 See Duplica Claims discussion at supra secon IV.A.2.
304
See 47 C.F.R. § 54.405(c), (d).
55
Federa CommunicatioDs Commisn FCC 11-3%
in the progr? To the extnt that any commente oppose this propose chage, we encoure
alternative suggestions that we could implement quickly to reuce opportities for ineligible cusomers
to parcipate in the progr. We sek comment on wheter this propo chage would prsent an
undue burden on ETCs and/or consumer.
i 72. We also propose to amend setion 54.409dX3) to reuire that a consumer notify the ETC
within 30 days if the consumer has knowledge that he or she no longer qualifies for Lifeline progr
support.305 A consumer would be reuird to notify its caer upon knowledge that they no longer meet
the income critera, no longer pacipate in a qualifying progr, ar reeiving duplicat supprt or
otherwise no longer qualify for progr support. We sek comment on this proposal.
173. Modifing anua verifcation procedurs. We ar concerned that although the curnt
sampling methodology for federl default stes may provide some insights into the percentage of
ineligible subscbers for a given ETC, we ar concered th it may not adequately protect the progr
from waste, frud, and abus as it does not result in de-enrllment of all ineligible subscribers.
174. We propose changes to our anua verfication prcedurs in th aras. First, consistent
with the Joint Boards reommendation, we prpose to amend section 54.410 of the Commission's rules
to adopt a unifonn federal rule to serve as a minimum thshold for verification sapling. Second, we
propose to require ETCs to de-enroll from the program consumers who decline to respond to an ETC's
verification attempts. Third, consistent with the Joint Board recommendations, we propose UDifonn
procedures for the collection and submission of verification dat across all states. We sek comment on
these proposals and ask whether there ar other verification issues for which we should consider adopting
a set of unifonn procedurs. We also sek comment how thes proposals would impact existing ETC
compliance plans for specific wirless prviders.
i 75. We propose that these unifonn minimum stda apply to all ETCs in all states
regardless of any varances in stte eligibilty crteria. We reognize that individual states may have state-
specific Lifeline progrs, and therfore may have concerns tht ar not applicable to ETCs in all sttes.
Therfore, we propose that states be allowed to implement additional verification procedures beyond the
unifonn minimum required procedures to accommodate those differences. We seek comment on this
proposal. We also seek comment on whether there ar any state verification processes that would be
useful to adopt as a minimum unifonn verification requirement to be applicable in all states.
176. The Joint Board also recommended that "sttes be allowed to utilze different and/or
additional verification proceurs so long as those prours ar at least as effective in detecing was,
fraud, and abuse as the unifonn minimum require procedurs.,,06 We seek comment on this proposal.
For commenters that support this option, how, if at all could the Commission monitor whether different
state procedures ar "at least as effective" as the federal stadas? Would this proposal adequately
address our concerns about the adinistrve burdens created by inconsistent stdards among states?
i 77. Uniform sampling methoology. We prpose to amend secion 54.410 ofthe
Commission's rules to establish a uniform methodology for conducting verification sampling that would
apply to all ETCs in all states and provide additional protections against was, frud and abuse.
307
178. As note above, the Commission's rules requir ETCs in federal default states to
implement procedures to verify anually the contiued eligibilty of a sttistically valid radom sample of
305 See Appendix A, 47 C.F.R. § 54.409(c)(3).
306 2010 Recommended Decision, 25 FCC Red at i 5608, par. 28.
307 See Appendi A, 47 C.F.R. § 54.410.
56
Federa Communicatins Co..is FC 11-3%
Lifeline consumer an provide findings to USAC.30 The Commission ha prioly spifi th th
siz of anua saples should be ba on a number of facrs includin th numbe of Lifelin
subscribers served by the ETC and the previously estiat proon of Lifeline subsbe seed tht
ar "inpropriately tang" Lifeline service?09 The Joint Bo re th th Coision
rensider the equaion us to calculate acceptable saple siz sugg tht curt sale ar not
lare enough to reveal the percntage of ineligible consumers reiving SUpp310 Th Joint Bo al
stte that a unifonn minimum stada for conducting the "ststcaly valid ra saple" would
help ensur acur, improve consistency among the sapling data and asist in anlyzng reonal and
national verificaon issues.3l
179. Ther ar several potential issues with our curt sapling meodology. Fir alough
our calculation method is designed so tht por results frm prior yea reuir an ETC to saple a larer
numbe of customers in following year, the curt methodolog assumes that no more th six percnt
of customers would be found ineligible in any given year.31 As such, the tables tht may ETCs use to
deterine the number of cusomers they must surey do not coteplat a sitution in which mor th
six percnt of custmers ar found ineligible.31 To iluste the point, the minimum number of
customers sureyed incres as the number found ineligible in the prvious yea incre frm zero to
fift pent. However, beause our instctions set a "cut off" of six pecent ineligible, an ETC with
400,000 Lifeline subscrbers (half of whom were estimate to be ineligible) would only nee to surey
244 cusomers.314 As such, some ETCs may be sapling to few customers for their annua verification
surey results to be statistically valid.
180. Second, our currnt methodology creates little incentive for the ETCs to obtin responses
from all consumers in the saple; the only consequence for non-respons is to de-enroll an adittedly
small number of consumers in the saple population. The penalties for non-response largely fall on the
subscriber (who may lose service despite eligibility), while ther is little incentive for the ETC to educate
customers about the importce of a prompt response.
181. Third, a stistically valid saple by definition prvides only a bais for estmating the
total number of ineligible consumers for a paicular ETC; it does not result in de-enrollment of all (or
even most) ineligible subscribers for that ETC. A hypthetical exaple ilustrtes the problem: if the
anual verification surey estimates tht half of a lare ETC's customers ar ineligible in one year, the
ETC need only survey 0.27% of its customers the following year.315 In other words, if an ETC has
308 See 47 C.F.R. § 54.410(cX2). The recent GAO Report states tht 17 states conduct verification though a
statistically valid saple of Lifeline support reipients. See 2010 GAO REPORT at Table 6 (the report does not
identify the methodology used by the sttes); see also 2010 Recommended Decision, 25 FCC Red at 15609, par 31
n.n.
30 See Appendix B (Saple Siz Table); see also 2004 Lifeline and Link Up Order, 19 FCC Rcd at 8365, Appendi
1-1.
3102010 Recommended Decision. 25 FCC Red at 15608-09, par. 30.
31 2010 Recommended Decision, 25 FCC Rcd at 15608-09, par. 30.
312 See Appendix B ("In all instace, the estimated proporton P should never be less than .01 or more than .06.").
31 See Appndi B.
314Id
315 For ilustrtive purses, we focus on ETCs with a lare numbe of Lifeline subscbers (400,000 or more) in a
stae. For thes ETCs, the minimum saple size is 2.706*P*(1-P)l.oo625, where P is the perentae of customers
found ineligible in the previous surey. Beca tht formula may overstimat the sttistcally necess saple
siz for smaller ETCs, the Commission also ha provided another formula for these ETCs th adjus for siz.
(contiued.. ..)
57
Federa Communications Commion FCC 11-32
400,000 Lifeline subscribers and half (or 200,00) wer estimat to be ineligible, the ETC would only
nee to surey i ,082 Lifeline customers the following year for the saple to be stistcaly valid (and
assuming the sae ineligibilty rate, would then de-nrll no more than half, or 541, of the sapled
customers for ineligibilty). In short the curt methodology fails to identify the ineligibles who ar not
par of the sample.316
182. Given these potential issues, we propo to amend setion 54.4 1 0 of the Commission's
rules to estblish a unifonn methodology to be use by all stte for deteininl minimum verification
saple sizes to provide additional protections against was, frud and abus.31 Speifically, we set forth
two alternative proposals for detennining how many Lifeline cusomer an ETC must surey eah year.
The first alternative is a saple-and-census proposal, which would allow an ETC to saple its customers
so long as the rate of ineligibilty among responders to the surey is below a fixed thhold. If that
ineligibilty rae exceeds the theshold, however, the ETC would be reuired to tae a census of all
customers. The second alternative is to modify the curnt fonnula used in the federal default states and
apply it unifonnly to all states. Both alternative proposals ar intended to ads the thre issues with
our curnt sapling methodology, but in distinct ways. We describe each alternative below and invite
comment on the relative advantages and disadvantages of these two alterntives.
183. We describe the possible implementation of the saple-and-cnsus approch by
providing an exaple using 5 percent as the thshold for a full census: Each year, ETCs would saple
enough customers so that at least 300 customers respond to the verification surey; if the lower bound of
the confidence interval for the estimate of ineligible subscribers is at or above 5 percnt of total
respondents, then the ETC would be requird to tae a census of all Lifeline customers that year and
verify that each and every customer is eligible to parcipate in the Lifeline progr. We sek comment
on each component of the saple-and-census approach: (l) the minimum number of customers that must
respond to the surey for each ETC, (2) the thshold rate that would detennine when the number of
ineligible respondents is unacceptbly high, and (3) the census requirment to remove ineligible
customers from Lifeline's rolls if that thshold is crsse.
184. Firs, we seek comment on the appropriate minimum number of respondents needed for
an accurate sample. We note that under our curnt rules, an ETC with 400,000 Lifeline subscribers in a
given state is required to saple no more than 244 customers, while an ETC with 10,000 subscribers is
required to sample no more than 238 customers, and an ETC with 500 subscribers is require to saple
no more than i 64 customers. Our objective is to establish a minimum required number of respondents
that would provide suffcient assurce that the results of the saple ar indicative of the population at
large, regardless of the expected margin of error. As set fort more fully in Appedix C, a sample size of
300 would have a margin of error no grater th 5.7 percent, regardless of the number of ineligibles
ultimately identified. Thus, for instace, if ther were 300 respondents, and the surey identified a 10
percent ineligibilty rate, that would suggest the actul eligibilty rate in the entire subscriber base is
somewhere between 6.6 percent and 13.4 percent. Should we consider a larger or smaller sample size
basd on the number of Lifeline customers an ETC ha in a sta? Reducing the reuir number of
respondents for sIDaller ETCs could result, for example, in sizbly larger margins of error. On the other
(Continued from previous page)
Specifically, the minimum saple siz for ETCs with fewer than 400,000 Lifeline customers pe state is N/(l +((N-
1)/(2. 706*P*( I-P)1.00625) n. wher P is the perctage of customer found ineligible in the previous surey and N
is the number of Lifeline customers the ETC curntly has. 2004 Lifeline and Link Up Order/FNPRM 19 FCC Rcd
at 8366, Appedix J-2 and J-3.
316 However, the Commission does have the meas to identify ineligible subscnbers that are not par of statical
surey, including but not limited to the us of audits.
317 See Appendix A, 47 C.F.R. § 54.410.
58
Fedra Communications Commisn FCC 11-32
hand, a unifonn number of respodents applicale to all ETCs cold reuire smale ETCs to surey all or
most of thir Lifeline customers eah year, which could be burensme. Such a reuirt also cold
pose buen to the extent that not all of the sureyed subscribe rend to the suey. Ou goal is to
estalish a minimum number of respondents tht is expsive enough to fully under the sc of
violations and deenrll thos who ar ineligible, but tht does not impo unss co on th
progr or on ETCs. We sek comment on how to appropriately balance the co and beefits
asociat with implementing a stada minimum number of respondets including th buren th
may be impo on consumers as well as ETCs.
185. Next, we sek comment on the thhold rate tht would be us to deine when the
numbe of inligible cusmers found in the surey warts a full ce. For th purses, we
distinguish beeen Lifeline subscribers tht fail to repond to a verificaion atmpt and th th ar
afrmtively ar found to be ineligible.31 The exaple abve set the thshold at 5% of respondents. Is
this thshold appropriat? If not, what should be the trggering thhold? Should the thshold be
higher in regnition of the fact that progr rules allow a subscribe to reman in the prgr for a
period of six days aft beming ineligible'l19 Should it be lower, in order to fuer reuce was,
frud, and abus? 320 In the same vein, should we establish an anlogous thshold for the percentage of
customers who do not respond to the ETC's verification surey? In other words, is there a level of non-
responsiveness that should be deemed aceptable'l21 If so, how could the Commission detennine that
thshold? If non-response rates exce a spified thshold, should that level of non-reponse also
trgger a full census, or are less burensome measures to verify subscribe eligibilty more appropriate.
186. Finally, we seek comment on the census component, i.e. on the reuirment that an ETC
must verfy the eligibilty of all Lifeline customers in a stte if the ineligibilty rate of surey respondents
excees the thshold. Should an ETC be require to conduct the census immediatly, i.e., within a
speified number of months of completing the surey, or the following year (in plac of the anual
verificaion saple)? If the number of ineligible repondents found durng the cesus exceeds the
theshold rate, should the ETC be requird to conduct another census the following yea in lieu of a
staistically valid saple? Should an ETC whose ineligibilty rate exceds the thshold be reuired to
perfonn a census of all Lifeline customers each year until the ETC can estblish that fewer than 5 pet
of respondents ar ineligible?
187. Should we estblish another, higher thshold of ineligibilty that would trgger a
proceding to detennine whether that ETC's abilty to paicipate in the Lifeline progr should be
revoked? For exaple, if two censuses in a row show that more then 10% of a paricular ETC's Lifeline
customers ar ineligible, would that be evidence tht the ETC has failed to implement adequate internl
contrls to assure compliance with Commission rules to such degree that it would be appropriate to
318 In addition to non-responder, should we exclude Lifeline customer who are no longer eligible for the prgr
have reived a notice of termintion, and ar wiin the 6O-dy teinaon window? See 47 C.F.R. § 54.405(d). If
so, how should we trat such customer and how would an ETC detine when a pacular custoer lost
eligibilty?
319 We note th a higher thshold may be appropre in the context of the Lifeline progr since Lifeline
subscrbers have 60 days to de-enrll if they lose eligibilty (and the surey may occur durg this 6O-day window
for some subscbe). See 47 C.F.R. § 54.405.
320 Under the Improper Payments Information Act of2002, that if more than 2.5% of payments for a given federl
progr are errneous, then a progr is deemed "at risk," and the federl goverent is reuid to tae sts to
reduce the level of improper payments. See Payment Accur, htt://paymentaccurçy.gov (last visite Ma. 2,
201 i).
32120/0 Recommended Decision, 25 FCC Rcd at 15609, par. 31.
59
Federa CommunieatioDS Commion FCC 11-32
revoke that ETC's designaton to receive feder Lifeline and Link Up support? If so, what would be the
effect on subscribers reivig service frm the offending ETC? For exaple, should subscbers be
offere an automatic trsfer to a different ETC or be reuir to re-enrll?
i 88. In the alterative, we seek comment on how to modify the curt fonnula use in federal
default states and applying that revise fonnula in all sttes. We propose to eliminate the curt ca on
the estimated ineligibilty rate of 6 percent. Should we reuir a larger saple siz tht would grually
incras the number of customers that an ETC must surey eah yea when a speified level of
ineligibilty is found? We reognize that a stastcally valid saple is likely suffcient when the
percntage of customers found ineligible is ver low and the saple siz is suffciently lare.322 But if
the
number of ineligible subscribe (including those tht do not repond to the verification surey) becomes
significant, should ETCs be required to verfy eligibilty of a proportonately larer number of customers
than necessar for a statistically valid saple, to provide increing incentives for the ETC to root out any
potential was, frud, and abuse? We sek comment on potetial modifications to the existng formula to
better comport with our goals for revising the anual verification sapling procurs of ETCs.
189. We sek comment on both alternative proposals. To what extt would eah proposal
address the potential issues with tody's methodology? Each prposal would eliminate the 6 percent
"cut-off that may distort the statistical reliabilty oftoday's sapling methodology. Each could
incentivize ETCs to educate their customers and incre the response raes of customersthe sample-
and-census proposal would do so by puttg the onus on ETCs to get a suffcient number of respondents,
while a modifed fonnula potentially could allow smaller verification surveys the following year if more
customers respond to the verification surey. The fi proposal includes a method for weeding out
ineligible customers when one yea's surey suggest tht the number of ineligible customers is
unacceptably high. Under the send approh, it could tae severl year to more fully identify
ineligible subscribers for a given ETC and in the meawhile, ineligible consumers would continue to
reeive support in contrvention of our rules. We also acknowledge while our curnt statistical sampling
methodology may work well for ETCs with a large number of subscribers, there is a risk of highly
uncertin results for ETCs with small Lifeline subscriber populations.
190. We seek comment on these two proposals. We also seek comment on alternative
proposals. Are there other ways to modify the curnt federal methodology to improve it as we seek to
make that the unifonn minimum federal stada in all sttes? We also seek comment on methods used
by non-federal default states to select a saple of subscribers that might provide a model for a uniform
federal stadard. What saple size and confidence intervals ar use by the varous states that require
statistical sampling?
191. Procedures to be followed after sampling. When an ETC samples its customers, there are
thee possible outcomes: (1) some subscribes wil not respond; (2) some respondents ar eligible; and
(3) other 1'spondents ar ineligible.
192. We propose to requir ETCs to de-enrll frm the progr consumers who decline to
respond to the ETC's verification attempts. Our rules requir ETCs in all sttes and tertories to
tenninate Lifeline serice if the carer has a reasnable basis to believe that a subscriber no longer
322 See Appendix C (Verification Sample Siz and Mar of Error). Under the Imprope Payments Information Act
of2002, a progr is "at risk" if the errneous payment rate exceeds 2.5% and the total amount of erroneous
payment is grater than $10 milion. Imprope Payments Information Act of2002, Pub. L. No. 107-300, i 16 Sta.
2350.
60
Federa CommuaitiBs Comm__FCC 11-3%
satisfies the qualifying critea.32 Codifying the spific reuit th th be delle for non-
rense in ou rules would fuer protet the progr frm was, fr and ab. ETCs conduct
verficaion sueys tyically reeive response frm only so of th coer surey. We no th
ETCs alr routinely de-nrll cusomers that do not respo to th ETC's verficaon effor so this
rule would not impose significat burens on ETCs. We sek comment on ths prl.
i 93. Collection an submission of verifcation saming da. Und CWTt rules the
Commission ha access to verificaion reults only frm ETCs in fed defalt st and in a hadful of
staes tht reuire ETCs to submit infonnation anually to USAC.32 The Joint Bo not th
gatherig the sae minimal dat fr all sttes would provide the Comission a more complet pict
of how the Lifeline progr is utilze an would help identify regiona an naonl verficaon
issues.325 A more comprehensive data set would also allow the Commission to continue refining its rules
and policies to reuce waste, frud, and abus in the progr. We propose to reuire all sttes to submit
verfication sapling data to USAC. We sek comment on this proposal.
194. Consistent with the Joint Boar's recommendaon, we sek comment on wheth
verificaon reults submitt to USAC and the Commission should be sha with all stteS.326 The Joint
Boar also points out that making aggrgate verification results available to the public could be infonn
intereste paes about whether universal service fuds ar being use for their intended purse.32
Accordingly, we sek comment on whether the Commission should peodically publish aggated
verification reults. Finally, we sek comment on whether infonnation relatig to any other Lifeline or
Lin-Up eligibilty criera should be gathere by ETCs and submitted to USAC and the Commission
durng the cerfication and verification proesses.
195. Certifcation an verifcation best practices. Consistent with the Joint Board's
recommendation, we sek comment on states' certification and verfication practice.328 The Joint Bo
noted that it reived limited infonnation regarding state certification and verification practices.329 More
comprehensive data on stas' practices would assist the Commission with estlishing appropriate
unifonn minimum stadads. Therefore, we sek to build the record regarding best practices for
certifying and verifying household eligibilty. We encourge sttes, ETCs, Tribal governments, consumer
groups, and others to provide us with their experiences with different cefication and verification
procedur, and to identify those that could be adopted as unifonn minimum stadas for all sts.
i 96. In paricular, we seek data on how progr eligibilty is verified in parcular states, how
frequently verification is reuire by whom verification is conducted, and the scope of the verification
process (e.g., the proportion of subscribers that ar sapled). We also seek data on whether states impo
different verification responsibilties on different tys of carers. For exaple, we understad that in
32347 C.F.R. § 54.405(c),(d). Th may also include non-reponder. See Appendix B; Deadlinefor Annual Lifeline
Verifcation Surveys and Certifcations, WC Docket No. 03-109, Pulic Notice, 25 FCC Red 7272, 7277, par. 8
(Wirline Compo Bur. 2010) (Verifcation Public Notice).
324 The followig non-federal-default sttes requir ETCs to submit their verfication results to USAC: Alaba,
Arkasa, Ar New York Nort Carlina, Pensylvania, and Wes Viria. Given th there ar 10 federl-
default state, ths means USAC curtly reives verification results for a tota of 17 states and tetories.
3252010 Recommended Decision. 25 FCC Red at 15607-08, pa. 27.
326 2010 Recommended Decision, 25 FCC Red at 15608, par. 29.
3272010 Recommended Decision, 25 FCC Rcd at 15607-08, pa. 27.
3282010 Recommended Decision, 25 FCC Rcd at 15608, par 29.
3292010 Recommended Decision. 25 FCC Rcd at 15610, pa 33.
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Federa CommunicatioDS Commiion FCC 11-32
some states Lifeline-only pre-¡aid wireless caers may be subject to verification reuients different
frm other tys of caers.33
i 97. Certifcation an verifcation responsibilities an cost. Consisnt with the Joint Boar's
2010 Recommended Decision, we sek to develop a fuller re on who should be certifying and
verifying continued eligibilty.33 In the feder default sttes ETCs peonn these fuctions, while in
other states, third-par administtors or soial services agencies may perfonn them. Comprehensive
data on cerification and verification respnsibilties and cost would assist the Commission in
detennining the most appropriate entity to cerfy and verify Lifeline consumers' eligibilty. Speifically,
as suggested by the Joint Boar, we seek comment on the costs of reuiring ETCs, sts, or thir-paries
to underte certfication and verification procurs.332
198. Requiring ETCs to verify eligibilty by interatig with consumers may present
challenges, including consumers' hesitacy to prvide persnal infonnation to ETCs.333 We also note
that to the extent an ETC is seking to build a Lifeline cusmer ba, it may not have the sae incentives
to verify continued eligibility for beefits as would a neutrl third par or governent agency.
Additionally, federal, state, or Tribal agencies administng qualifying progrs may be able to provide
more reliable and more accurate infonnation than consumers for verifying progr or income
eligibility.334 Therefore, we seek comment on wheter ETCs should continue to be responsible for
conducting eligibilty certification and verification diretly with Lifeline consumers, and on how income-
based eligibilty can be verified if not directly though the consumer. Furer, we seek comment on the
relative merits of relying upon ETCs, state agencies, Tribal governents, or other third-par entities to
conduct initial certification and subsequent verification of eligibility. We seek comparsons of state
practices or procurs, including how varous prtices have impacted the number of ineligible
subscribers and duplicates, and other fonns of was, frud, and abus.
C. Coordinated Enrollment
1. Background
199. Coordinate enrollment is a mechanism that allows consumers to enroll in the Lifeline
and Link Up progrs at the sae time they enrll in a qualifying public assistace progrm. The
Commission has encouraged coordinated enrollment as a best practice since the 2004 Lifeline and Link
Up Order. The National Broadband Plan recommended that the Commission encourage stte agencies
responsible for Lifeline and Link Up to strline enrollment for benefits, and suggested the use of
unified online applications for social services.33 In its 2010 Recommended Decision, the Joint Board
affnned tht coordinated enrollment should be encoured as a best practice.336
200. Several states use cordinated enrllment to allow ETCs to confinn in nea real-time
330 See NASUCA Joint Board Reply Comments at 14 (identifying tht FL reuirs verfication every 60 days for
some pre-paid wiless carers); see also generally TracFone ETC Designation Order; TracFone Forbearance
Order; Virgin Mobile Forbearance Order; i-Wireless Forbearance Order; Global Forbearance Order (identifying
the federal requiements imposed on prepaid wiless carer).
33120/0 Recommended Decision, 25 FCC Rcd at 15609-10, par. 32.
332Id
333Id
334 See id
335 NATIONAL BROADBAN PLAN at 175.
336 2010 Recommended Decision, 25 FCC Red at 15604, pa 18.
62
Federa CommuDitiDS Co.8Ua FCC 11-3%
wheter a potetial customer is eligible for support.33 Coordin enllment is dit fr
"automatic" or "automated" enrllment, in which a st automatcaJY enlls eligible consum in th
Lifeline progr when such consumer subscribe to phone servic.3 Unlike autc or aued
enrllment, coordinat enrllment reuires eligible cosumer to afatvely choo to enll in the
Lifeline progr.
%. Disussion
201. We ag with the Joint Bo's reommendaion tht cordina enllment should be
encourged as a bet pratice by the st.339 Coordina enrollmt ca provide an importt
protetion aginst frud beuse eligibilit is certfied by the appropriat st or Triba agency. We also
agr with th Joint Boar and many commenters that there ar cein adinistive, tehnologcal, and
funding issue associat with coordina enrllment. We sek comment on whether mating
cordina enllment would be appropriat, though we note that th rerd is not yet well develope on
this issue. We sek fuer infonnation about the co and beefits of cordinate enllment. We also
seek to understad what if any stps the Commission might tae to faciltate coordin enrllment in all
stas.34
202. Administrative issues. We sek to build on the informtion we have collec frm sttes
and Tribal governents that ar developing electronic interfacs to adinister the Lifeline/Link Up
progr thugh cordinate enrollment. In the Joint Boar proceeing, a few states provided detiled
informtion regarding their coordinate enrllment best practices. For example, California explained that
it moved from an automatic enrollment system to a system that preualifies eligible consumers who must
then affrmatively accept the service.341 Additionally, the GAO Report noted that sttes in its surey
found that using varous tys of automatic enrollment proedurs has a positive impact on reching and
enrollng eligible consumers.342 We sek comment on ways to ensur that cordinat enrollment
provides fair and equivalent access to all providers of Lifeline service in a stte,343 how to provide prompt
and accurte notification of customer eligibilty to carers,344 and whether and how to ensur that a
cordinated enrllment progr would not prevent eligible consumers from qualifying under the income
337 See Federal-State Joint Board on Universal Service, CC Docket No. 96-5, Recommended Decision, 18 FCC
Rcd 6589, 6608, par. 38 (Jt. Bd. 2003) (2003 Recommended Decision); see also LIFELINE ACROSS AMERICA
WORKG GROUP, REPORT OF THE FCCINARUCINASUCA WORKG GROUP ON LIFELINE AND LIN-Up: "LIFELIN
ACROSS AMERICA" 6 (2007), htt://ww.lifeline.govILLLUReprt.pdf(WORKINGGROUP REPORT). In its Report
the Workig Group cited Iowa, New Mexico, New Jerey, New York, Nort Dakota and Washington as states
utilizng auomatic enrllment in some fahion. WORKG GROUP REPORT at 6, 10; see also 2010 GAO REPORT at
19.
338 Nebrka PSC Joint Boar Comments at 4-5.
3391d
340 CPUC Joint Boad Comments at 13-14; PRWI Joint Boar Comments at i i, PRWI Joint Bod Reply Comments
at iS; Smith Bagley Joint Boa Comments at ii and at 9-10; Smith Bagey Joint Boa Reply Comments at 14
(suggestig that curnt economic conditions and sta budgeta problem appar to make an automatc enrllment
mandate impracal unless sources of feder fuding could be identified).
341 CPUC Joint Boa Comments at 7.
342 2010
GAO REPORT at 19.
343 TraFone Joint Boa Comments at 7.
34 Id at 6.
63
Federa Communications Commision FCC 11-32
criteria.345 We also sek comment on how many and which sts and Native Nations would reuire
chages in state or Tribal laws to effectute cordinated enrllment.
203. Technological issues. Individual sts or Tribal governents may face unique
technological circumstaces and burens that mae it impraical or unduly burnsme to implement
cordinated enrollment. For exaple, the abilty of a stte or Tribal governent to implement
cordinated enrllment may depend upon the capailties of existing da prossing equipment, soft,
and data communication networks. We sek comment on thes burens and sek detailed infonnation on
the technological hurdles that states or Tribal governments would fac, and how these challenges ca be
overcme. How many states and Tribal governents would nee to upgre or add data processing
equipment, softar, dat networks, or other technology solutions in order to implement coordinatd
enrollment?
204. Funding issues. We ar awar that there could be significant costs assoiated with
coordinated enrollment, including the costs of safeguing consumers' privacy and securty,
administering the progr, and developing and maintaining softar and equipment.346 How have states
that have implemented cordinated enrollment fuded associated costs? If the Commission were to
mandate coordinated enrollment, should states and Tribal governents be reuir to provide all of the
necessar fuding, or should the Universal Serice Fund be some of those cost, and if so, what
porton? We ask states that have develope or are developing cordinated enrllment progrs to
provide data on the associat costs. We also sek comment on the overall cost savings, if any,
associated with coordinated enrollment, and on any other beefits tht arse frm coordinated enrollment.
For exaple, have coordinated enllment procedurs helpe sttes or Tribal governents better taget
benefits to intended beneficiares? We ask for comment on the extent to which coordinated enrllment
might lead to increased paricipation in the low income progr. We seek comment on whether
coordinated enrollment would reduce frud if pacipants were requir to use a coordinated enrollment
process in order to obtain benefits. We encourge commenters to quatify, to the extent possible, the
magnitude of any administrtive cost and potential savings of coordinated enrollment.
D. Databas
1. Background
205. The measures we propose above to reuce waste, fraud, and abuse could be implemented
quickly to stngten the progr, but we are also interest in more comprehensive improvements. In
paricular, a national databas or infonnation management system could substtially reduce burdens on
consumers, ETCs, states, and USAC; eliminate the need to certify eligibilty on a state-by state basis; and
help identify program violations. Some argue that a national databas may be the only effective method
for protecting the progr against waste, frud, and abuse.347
206. The National Broadband Plan recommended that the Commission explore the steps
necessa to implement a centrlizd databae for online cefication and verification of low-income
345 Commenters to the Joint Board Refe"al Order expre concern tht coordite enrllment would captue
only those eligible consumers parcipatg in federl assisce progr, but not low-income households that do
not parcipate either by choice or due to other faors. See PRWI Joint Board Comments at 10; Smith Bagley Joint
Boar Reply Comments at 14. MoPSC poin out the nee to atempt to avoid reluctace on the par of federa
agencies to allow any paries dict access to their data bases. MoPSC Joint Boar Comments at 5.
34 Consumer Groups Joint Boa Comments at 15; CPUC Joint Board Comments at 13-14; FL PSC Joint Board
Comment at 4-5; PaPUC Joint Boad Comments at 5; PaPUC Joint Boad Reply Comments at 5-6.
347 Lett frm Alan Buzott Executive Diror, Federa Regulatory Affair, Verion, to Marlene H. Dorth,
Sere, Federl Communications Commission (dated Dec. 14,2010) (Verin Dec. 14,2010 Ex Parte Lettr).
64
Federa CommunicatiDS eomis FCC 11-3%
households bas on numerous propsas in the recrd.34 Similary, the Joint Bo encourge th
Commission to fuer explore the implicaions of creting or sug soe ty of eligibilty
databas.349 Many ETCs, st commissions, and consumer adoc al support the implemetation of
a databa.35O
207. We propo to crete a national databa to verfy coumer eligibilty, trk vefication
and check for duplicates to ensur gratr progr acuntabilit. We sek to develop a robus rerd on
the development and implementation of a centrliz data, includng comments on who should
adinister the dataas; whether there should be one national daba or multiple regiona or st
dabas; what fuctions the daba should include; the cost of conscting and maintaining a
databa and what funding sours should be use to defry thos cost; and how data seurty and
privacy issues should be adresse.
%. Disusion
208. Administration. We sek comment on who should adistr the progr da.
Should USAC be the priar adinistrtor of a centriz syste or should the Commission select
another thir-pa to adinister the daba? Is a governental agency in a better position to safegu
consumers' highly sesitive infonntion, such as household income, than a third_pacr51 Several
commenters note that sta social service agencies interat most closely with the prgr's taget
population, and may be most compet to deal with low-income housholds' sensitive documents.352
What models or best practices ar there in other contexts for soial service progrs?
209. Functionality. We have head from several ETCs that a national dataas may be the
348 See NATIONAL BROADBAND PL at 173; see also Nebraka Public Service Commission Comments, GN Doket
Nos. 09-47, 09-51, 09-137, at 9 (filed Dec. 7, 2009) (sugestin ''te Commission should work with sttes to
develop an accur system that could be adistered either at a centrl locaton or as a cooperative argement
between staes and the Universal Service Administrtive Compay for eligibilty and verificaton oflow-income
parcipants"); NASUCA Comments, GN Docket Nos. 09-47, 09-51, 09-137, at 35 (filed De. 7, 2009) (sugestig
th "a unverl databae could be created to trp 'double-dippe'" who seek to obta Lifelie-supported servce
frm two differet providers).
3492010 Recommended Decision, 25 FCC Rcd at 15611-12, pa 36.
350 See, e.g., AT&T Joint Boa Comments; CPUC Joint Boa Comments; CTIA Joint Board Reply Comments;
FPSC Joint Boar Comments; MAG-Net Joint Boad Comments; NASUCA Joint Board Comments; Nexus Joint
Board Comments, NPSC Joint Board Comments; Ohio PUC Joint Board Comments; Qwest Joint Boar Reply
Comments; Smith Bagley Joint Board Comments; TracFone Joint Board Comments; US Telecom Joint Boad
Comments; Vern Joint Board Comments; YourTel Joint Boa Comments; see also Lettr frm Mitchell F.
Breher, Counl, TraFone Wireless, to Marlene H. Dorth, Secet, Fedra Communicatons Commission, WC
Doket No. 03-109 (filed Dec. 7, 2010) (fraFone Dec. 7,2010 Ex Parte Lett); Vern Dec. 14,2010 Ex Parte
Le Leer frm Matt Connolly, Special Prjec Maner, YourTel Amerca, Inc., to Marlene H. Dortch,
Secrta, Feder Communications Commission, WC Docket No. 03-109 (filed De. 10,2010) (YourTel Dec. 10,
2010 Ex Parte Ler).
351 Verin, for exaple, noted tht California and Texas alady have sta-contred Lifeline adinistrrs. See
Vern De. 14,2010 Ex Pare Letter.
352 Le from Genevieve Morell, Counl, Emeros, to Marlen H. Dorth, Secre, FCC, CC Docket No. 965,
WC Doket No. 03-109, da December 16, 2010 (Emeros De. 16,2010 Ex Parte Lettr); Leer frm Genevieve
Morell, Counsel, Emerios, to Marlene H. Dorth, Sec, FCC, CC Doket No. 96-5, WC Doket No. 03-109,
date Deember 16,2010 (Emerios Jan. 4, 201 i Ex Pare Ler).
65
Federa CommunicatioDS Commisn FCC 11-32
best means to prte against waste, frud, and abus.3S We sek comment on how we ca cre and
implement a databas that would enable effcient enrollment by households in the progr but also gud
against waste, fraud and abuse. For exaple, AT&T proposes a natonal PIN da that would answer
two questions: 1) has a consumer ben deemed eligible by the st; and 2) is the consumer alrey
receiving Lifeline discounts? Under AT&T's proposal, sts would asume reponsibilty for
deterining consumer eligibilty and asigning a PIN that would be provided in blocks to varous sttes
by USAC. ETCs would acss the daas and be able to detnnine and change the status of a
consumer.
354
210. We sek comment on what functions should be served by a centrlize da and the
priorities for implementation. We are interested in underding wheter there ar databas or systems
used to faciltae other government-supported progrs that can see as models.
21 1. First, we seek comment on the functonality tht should be included in any infonnation
system that faciltates enrllment certificaion, and ongoing verification of eligibilty. For exaple, how
could a system simplify the cefication procss and provide rel-time electrnic verification of consumer
eligibilty'f55 How can we ensure that the databa provides ongoing verification of consumer
eligibilty'f56 In addition, we seek comment on the ty of infonnation that the database would need to
contain regarding a consumer's curent Lifeline enollment status.35 How would ETCs access eligibilty
infonnation? CGM notes that Wisconsin prvides rel-time certification of customer eligibilty at the
time of enrollment.358 Could Wisconsin's systm provide a model for a nationwide database?
212. In addition, we seek comment on wheter a nationwide databas could effciently and
effectively faciltate ongoing verification of customer eligibilty. We seek comment on how a databae
would receive updates on changes in consumers' eligibilty frm apsropriate social service agencies so
that eligibilty for Lifeline could be monitore in a timely maner. For exaple, if a database is linked
to a federal or state system that contans infonnation regading customer enrllment in a qualifying
progr and the subscriber becomes ineligible in that qualifying progr sometime aftr enrllng in
Lifeline, how would the system notify the ETC that the subscriber is no longer eligible for Lifeline?
Would the system alert the ETCs on a periodic bais or every time a subscriber drops out of the qualifying
progr? We seek comment on the procedurs ETCs would follow when a subscriber becomes
353 Letter from Mar L. Henze, Assistat Vice Prsident, Federl Regulatory, AT&T Servces, to Marlene H.
Dortch, Secrta, Federl Communications Commission, WC Docket No. 03- 109, at 4 (filed Sept. 24, 2010)
(AT&T Sept. 24, 2010 Ex Parte Lettr); TracFone Dec. 7, 2010 Ex Parte Leter; Venzn Dec. 14,2010 Ex Parte
Lettr.
354 Lettr from Mar L. Henze, AT&T, to Marlene H. Dorth, Seceta, FCC, CC Doket No. 96-5, WC Docket
No. 03-109 (filed Feb. is, 2011)(AT&T Feb. is, 2011 Ex Parte Letter).
355 See supra Section VII.B (Certficaion and Verification of Consumer Eligibilty for Lifeline).
356 See supra Section VILA (Eligibilty Critera for Lifeline and Lin Up).
357 PRWI Joint Board Comments at 10.
358 Lett frm Steven A. Augutino, Counl, COM, LLC, to Marlene H. Dorth, Sec, FCC, CC Docket No.
96-45, WC Docket No. 03-109, (filed Dec. 9, 2010) (CGM De. 9, 2010 Ex Parte Lettr). COM is a softar
development fi that design, develops, and deliver softare systems and outsured solutions to serice
provider, includig compeitive and incumbent wirline providers and wirless provider.
359 Staeholder have reprtd on their expence using different state systems and proesses, such as Texa,
California, and Florida tht utiliz differet method for updg consumer eligibilit informaton. See Letter from
David J. Redl, CTIA, to Marlene H. Dortch, Secta, Federa Communcations Commission, CC Docket No. 96-
45 (filed Jan. 13,2011) (CTIA Jan. 13,2011 Ex Parte Lettr); Verizon Dec. 14,2010 Ex Pare Letter.
66
Federa COImuDitins Commin FCC 11-3%
ineligible. For exaple, would the subscbe be given a gr peod to seur alteve service on
de-enrlled in Lifeline? How, if at all, could a daas be upd to reflec change in income
eligibilty
213. We also sek comment on wheter a naonal data would relve the issue of anua
verficaion by providing an effective meas of verfYg custmer eligibilty monthly, qualy, or
anualy? How could a nationwide dae accommodte the differences in sta Lifeline praices,
which include varing Lifeline eligibilty criteria and verificaton mehaismst61 Additionaly, we sek
comment on the impact a national dabas would have on carer' administtive buren.362
214. Secnd, we seek comment on the fuctionality require to elimina duplica claims for
supporf3 and generally gu aginst waste, frd, and abuse.3M Staeholders have stte tht a naiona
da could eliminae frudulent and duplica clais for Lifeline suppo by perfonning a pre-
qualificaion addrss verfication.36s Curntly, only Texa has a daba that ca identify duplica
claims, but the databae doe not allow ETCs to detennine immediately if a houshold is enrolled in
another progr.366 Rather, ETCs must wait to hea frm the system adinistrtor whether the potential
household is being seed by another ETC. Becus the Texa dabase is not upd in re-time,
staeholders report that ther is significant lag-time in signing up customers.367 Is it necssa or
desirble to updte the datase on a re-time bais?
215. Third, we seek comment on how the databas would be populate and by whom. Some
commenters have pointed out that a national daba populat by the sts as well as ETCs could
simplify the ceficaion proess by providing accurae and up-tote infonnation on eligibil~.36 Oter
commenters explain that stte soial service agencies ar best situd to provide these inputs.3 9 We sek
comment on what authority the Commission has to require state social service agencies to provide inputs
in the dabase. We sek comment on who should be charged with populating the dabase.
216. A national database would need to have the abilty to nonnalize or stdariz da into a
common fonnat in order to account for varations in consumer- or ETC-provided data fields, espeially
addrsses. What entity or entities would be responsible for populating a national databa with the
necessar customer eligibilty infonnation? Would ETCs populate the database for all customer data and
if that is the responsibilty of ETCs, should we impose different deadlines for completion depending on
the number of Lifeline subsribers for each ETC. Would a phas implementation schedule be an
appropriate way to populate such a national dabas? Ifwe were to adopt such an approch, what
360 AT&T Joint Boa Reply Comments at 3-4; Nebraka PSC Joint Boa Comments at 6.
361 AT&T Joint Boar Comments at 3.
362 CPUC Joint Boad Comments at 17; Smith Bagley Joint Board Reply Comments at 10.
363 See supra Seion IV.A (Duplica Clais).
364 See supra Secion N (Immediate Measur to Elimina Waste, Frad, and Abus).
36S See, e.g. AT&T Joint Board Comments at 14; FL PSC Joint Boa Comments at 3; Leap Joint Boar Comments
at 6; Sprit Joint Board Reply Comments at 5; see also Emerios Dec. 16,2010 Ex Pare Meetig.
366 TraFone Dec. 7,2010 Ex Pare Let.
367 ¡d.
368 CGM De. 9, 2010 Ex Parte Lettr; Emerios De. 16,2010 Ex Parte Letter; Emeros Jan. 4, 2011 Ex Parte
Lett.
369 Emerios De. 16,2010 Ex Pare Leer; Emeros Jan. 4, 201 i Ex Pare Leer.
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Federa CommunicatioDS Commisn FCC 11-32
thrhold should we estblish to detennine when differt prviders ar reuire to paicipate, and
should tht be bas on the size of the ETC (tot subsbers) or the number of low-income subsribe it
has?
217. Fourt, we seek comment on the syst reuirments of a natonal daba. For
exaple, Emerios noted that a databa must be flexible enough to allow for consumers to eaily switch
between providers,370 and CTI points out that a databa should include enough fields so that if the fud
supports other services in the future th the data would remain relevant and useful.37 We seek
comment on these issues as well as other matt implicate by a national databa.
218. Costs an Funing. We sek comment on the be way to fud and maintain a national
database. Should databa adinistrion be fuded completly or paially frm the Univerl Service
Fund'l72 Alternatively, if fees ar asse on ETCs to fud a national daba, should fees be assesse
on a per Lifeline-applicat bais, per instce of acing the dabas (per "dip" into the database), or
both? Emerios estimates that a centrliz daba would cost approximatelt $1 per applicaion to
administer.37 CGM and YourTel sugges that ETCs pay $.05 - $.10 per dip.3 4 How many "dips" would
be expeted per year? Is there some other ETC assessment mechanism that would be more apprpriate,
such as a one-time flat fee? Verion suggest that California's model of fuding a third-par
administtor using a customer-biled surharge is an effective strtegy.375 Ar there exaples of funding
for progr parcipation databases in other context that could serve as a model'l76
219. We seek comment on what cost the stes might incur if a national database were
established. For exaple, what cost would be assoiated with se-up, continuous operation, and
updating of appropriate stte databases that may be use for stte low-income progrs, as well as
establishing appropriate telecommunications and infonnation link and electrnic data interfaces (EDIs)
with a national database. Additionally, would existing stae dataass nee to be modified in order to be
compatible with a national databas and at what cost? Could a national dataas have the inherent
capabilty to perfonn seamless data protocol conversions while interating with the state databass? The
existing proposals have not addrssed how the relate non-reurrg and reurng costs would be
allocated among the individual states, the nationaVfederlevel, and ETCs.37 However, as Emerios
points out states could be incentivized to connect to an existing national database because of the reduced
costs of interfacing with a single databas rather than potentially interacting with numerous providers.378
Thus, even in the absence of a state mandate to interace with a national daba, states may fmd moving
towards automation to be fiscally sound. Alternatively, ar there federal agencies with which we could
parer to populate consumer eligibilty data?
370 Emerios Dec. 16,2010 Ex Parte Lettr; Emerios Jan. 4, 2011 Ex Parte Letter.
371 CTIA Jan. 13,2011 Ex Parte Letter.
372 AT&T Joint Board Comments at 9- 1 0; AT&T Joint Boar Reply Comments at 3-4.
373 See Emerios Jan. 4, 2011 Ex Parte Lettr, at 4.
374 CGM Dec. 9, 2010 Ex Parle Letter.
375 Vern Dec. 14,2010 Ex Parte Lettr.
376 For example, we note tht Medicaid utilizs the Medcaid Mangement Information System (MMIS) which
encompasses one criteria for eligibity for Lifeline and Lin Up. See Medicaid Management Informon Systems
(MMIS) Overiew, htts:/Iww.cms.gov/MIS; see also 47 C.F.R. § 54.409(b).
377 PaPUC Joint Bo Reply Comments at 6-7.
378 Emeros Dec. 16,2010 Ex Parte Lettr; Emerios Jan. 4, 2011 Ex Pare Lett.
68
Federa Communictions Com..FCC 11-3%
220. Data Secuity an Privac Issues. We note th th pr-b limitaon on th
governent's access to cusomer informion in Title II of Elecic Counicaions Prvacy Act
(ECPA), setion 222 of the Communicaions Act, and our implem nile an th prvac prvisions
of th Cable Act, may be implicated by collecion of the da discus he.379 We sek commt on
whether any of these pre-existing regulatry or sttuory reuirets wold impo any rections on
the storage by a dabas adinistrtor of customer eligibilty, cefica and verificaon da We
sek comment on how be to addrs these concerns. We ask coent to su ways in which a
datbae could comply with any such reuirements and how cold it be se up bo to get usful da and
to minimize the burden on consumers an rerting entities? Ar the cos alleviat if consrs
provide infonnation diretly to the Commission, or if the ETC obtins coumer coset thoug a
waiver at the time of enrllment? If the lat, what stps could the Comission tae to en tht
consumers have provided consent? How could the Commission addr any oth privacy issue, and any
other legal impeiments to the creation an maintenace of such a dat? Ar thre othr da
that have ben constrcted tht could see as a model for developing a da for Lifelinelin Up?
Speifically, we sek input frm the sta tht have develope simila daba on how best to achieve
our goal of allowing ETCs to access relevant da while proing consumer' prvacy.
221. We note that differet st have differnt laws govering prvacy of cosum data.
We sek comment to ber understad the differences in state privacy and seurty laws conceing the
progr eligibilit data. We also sek comment to explore how to constct an IT platonn that could
ensur data seurty while enabling convenient access for all Lifeline provider across the countr.
Emerios points out tht having a single platfonn, populated by ETCs, which all sts ca acss,
decres the risk of securty breaches by reucing the number of portls for inputtg sensitive
infonnation.380 Would a national databas be a more effective way to ensur consumer privacy than
requiring individual ETCs to gather documentation establishing household eligibilty'l8
222. State/Regional Database. We also sek comment regarding the feaibilty and potential
advantages and disavantages of regional and ste databass as oppose to, or in addition to, a naional
databae. We sek comment on several key factors tht parlel the critical issues outlined above for a
national databa, such as adinistrtion, cost and funding, prvacy, and da seurty issues. We ar
intereste in the advantages and disavantaes of these possible models.382 Consistt with the goal of
preventing wase, frud, and abuse, where a state ha taen steps to automate the process to stamline or
enhance eligibilty and certification produres and/or to prevent duplicate claims, we propos to reuir
all ETCs operating in that stte to utilze that stte-maaged proess. We sek comment on this proposal.
E. Electronic Signature.
223. Section 54.409(d) reuires carers to "obtain (a) consumer's signatue on a document
certifying under penalty of perjur" tht the consumer meets certin Lifeline eligibilty reuirements.383
Section 54.410 reuires caers to verify continued eligibility by sureying consumers who must prove
their continued eligibilty and "self-certify under penalty of perjur" to certin reuirments relevant to
379 See, e.g., 18 U.S.C. § 2510; Eleconic Communications Act (ECPA), tit. II (Store Communications Act
(SCA)), 18 U.S.C. § 2701 et seq. (2006); Cable Communications Policy Act of 1984 (the Cable Act), 47 U.S.C. §
551 et seq. (2006); 47 U.S.C. § 222.
380 Emerios De. 16,2010 Ex Pare Lett Emerios Jan. 4, 2011 Ex Pare Lett.
381 See, e.g., AT&T Joint Boar Reply Comments at 10-11; TracFone Joint Boad Comments at 7.
382 See AT&T Joint Boa Reply Comments at 10-11; TraFone Joint Boar Comments at 7.
383 47 C.F.R. § 54.409(d).
69
Federa Communications Commin FCC 11-32
continued eligibilty.3M Virg Mobile has reues to enll Lifeline consumer online by allowig
applicants to electrnically sign the application and to enrll cusomer by telephone using an Interactive
Voice ResEonse (NR) system, which rerds and saves by phone an applicat's ceficaton of
eligibilty. 85
224. The Electronic Signatus in Global and Natonal Commerc Act (ESign Act)386 and
Governent Paperwork Elimination Act7 make clea th elecnic signs have the sae legal
effect as wrtten signatus. We propose to allow consers to elecically sign the "penalty of
perjury" reuirements of setions 54.409(d) and 54.410 of the Commission's rules. Because ther is no
general Commission rule on use of elecnic signats, we sek comment on the rules defiing and
guidelines for accepting electronic signatres for Lifeline enrllment, cefication, and verification. For
exaple, should sections 54.409( d) and 54.410 be amended to make clear that electronic signatu is an
aceptable "signature on a document" as reuired by the rules? We sek comment on how we can ensur
that ETCs maintain copies of the household certifications in the event of duplicates or other questions
concerning compliance with our rules.
225. We seek comment on whether an NR telephone system is an acceptable method to verify
a consumer's signatu under sections 54.409(d) and 54.410 of the Commission's rules.388 Unlike setion
54.410, section 54.409( d) specifically requires a signatu by an eligible consumer, and we seek comment
on whether an interactive voice response (N) telephone system satisfies the signatu reuirement of
the rules. We note that the Commission has allowed the use of automate processes in other instaces
requiring verification by adopting rules specifically authorizing the us of such automated procsses.389
How would ETCs satisfy the recordkeeping requiments of setion 54.417 using an IV telephone
systemr90
VI. CONSUMR OUTACH & MATIG
226. Section 21 4( e)( i )(B) of the Act reuires ETCs to advertise the availabilty of services
supported by universal service funds ''using media of genera distbution.',391 Over the year, the
Commission has highlighted the importce of outrach to low-income consumers,392 including by
adopting outrach guidelines in its 2004 Lifeline and Link Up Order.393
384 47 C.F.R. § 54.510.
385 Letter from Peter Lure, Virin Mobile USA, L.P., to Sharn Gilet Chief, Wireline Competition Bureau,
Federal Communications Commission, WC Docket No. 09-197 (filed Marh 4, 2010).
386 15 U.S.C. §§ 7001-7004 (2006).
38744 U.S.C. § 3501-20 (2006).
388 47 C.F.R. §§ 54.409(d), 54.410.
389 See, e.g., 47 C.F.R. § 64.1 i 20 (allowing automated third pa verification of a subscrber's preferred carer
change).
390 47 C.F.R. § 54.417 (reuig ETCs to mainta the documentation reuir in §§ 54.409(d) and 54.41O()(3) for
as long as the consumer receives Lifeline sece frm that ETC.).
391 47 U.S.C. § 214(e)(I)().
392 Tribal Order, 15 FCC Rcd at 12250, par 78.
393 These outreach gudelines ar: (1) State and carer should utiliz outrch materials and methods designed to
reach housholds th do not curently have telephone service; (2) staes and caer should develop outrach
advertsing th can be re or acesse by any sizeable non-English speg populations within a carer's serice
ara; and (3) stte and caers should coordinte their outrach effort with governental agencies/trbes tht
(contiued.. ..)
70
Federa CommuDitioDS Comll FCC 11-3%
227. Advertising the availabilty of disunte sece availale to low-in holds
falls into two relat cagories: outrh and maeting. Outrh entails ining public awaes of
the prgr while mareting relats to how ETCs describe an sell th USF-su pruc to
consumer. Th Commission wants to ensur th eligible consumrs ar mae awa of th avalailit
of Lifelin and Link Up and seeks comment below on effecve outrh me to low-inco
households. Morver, as discusse below, some ETCs ar eneticaly maetg Lifelin and Link
Up-support pruct. We seek comment on wheter we should impo mag guidelines on ETCs
to ensur th consumer fully underd the beefit being offer which may help prent the prblem
of duplica supprt.
228. In its 2010 Recommnded Decision, the Joint Boar looke at bo ouch an
mareting and ured the Commission to adopt mandato outrh reuireents for all ETCs th reive
low-income support frm the Univer Service Fund.394 In supprt the Joint Boad cite USAC da
showing th in 2009, only 36 percnt of eligible consers paicipa in Lifeline.395 Bas on this
statistic, the Joint Boar expresse conce th curt outrh is ineffecve or that some ETCs ar
neglectig low-income outrh altogether.396 The Joint Boar also remmended that the Commission
review carer best praice on community-ba outrh;397 clarfy the role of the sts in perfonning
low-income outrach,398 including working with ETCs to fonnulate method to reach housholds that do
not curtly have telephone and/or bradbad seice;399 and monitor ETCs' outrh effort.40 With
respet to maeting, the Joint Boad encourged the Commission to provide ETCs with the flexibilty to
market their service offerings to eligible consumers in accordace with their respetive business models,
and reommended that the Commission seek comment on whether ETCs should be reuir to submit a
marketing plan to the state or Commission descbing outrach effort.401
229. Oueach to Households Without Telephone Service. In 200, the Commission adpted
an outrch guideline recommended by the Joint Boar that staes and carers utiliz materials and
methods designed to rech low-income housholds that do not curntly have telephone service. In its
2010 Recommended Decision, the Joint Boad remmended that states should assist ETCs in two
primai ways in fonnulating method to rech households that do not currntly have telephone and/or
broadband service.402 Fir, states can identify appropriat community institutions to paricipate in public-
private parerships.403 Secnd, states ca asist ETC outrch effort by identifying unserved and
(Contiued frm previous page)
adinister any of the relevant goverent assistce progrs. 2004 Lifeline and Link Up Order, 19 FCC Red. at
8326-28, par. 45-48.
394 2010 Recommended Decision, 25 FCC Rcd at 15619, par. 60.
395 Id at 15618-19, par. 59 n.152.
396 Id at 15618-19, pa. 59-60.
397 Id. at 15621, pa 64.
398 Id. at 15622, pa. 67.
399 Id at 15622, par 68.
400 2010 Recommended Decision, 25 FCC Red at 15623, pa. 70.
401 Id at 15620-21, par. 62-63.
402 Id at 15622, pa. 68.
403 Id
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Federa Communications Commisn FCC 11-32
underserved populations for whom outrh would be beneficial.404
230. We sek comment on the effcay of curnt effort by stas and ETCs to reh low-
income consumers without phone service, and what more can be done to improve outh, paicularly in
sttes where adoption of phone service is below the national average. We sek exaples of public-
private parerships that have been effective in reching low-income housholds without phone service.
In addition, we would like to better understad how st soial service agencies or public utilit
commissions identify unserved populatons in their sts, and whether and how they could sha such
infonnation with ETCs operating within their sts. We also seek comment on the role of Tribal
governents and orgaiztions in identifying and rehing out to members of their communities who lack
telephone service and could benefit frm Lifeline and Lin Up. Moreover, we ar interestd in any data
regading wheter outach to low-income households results in increed telephone penetrtion ras.
231. Outreach to Non-English Speakg Popuations. The Commission has encourged states
and carer to use advertsing that can be re or accessed by any sizble non-English speaking
populations within the ETC's service ar.40S The Joint Board also emphasized the importce of
outrach to non-English speaking communities in its 2010 Recommended Decision.406 We seek comment
on whether curent outreach efforts to non-English speing communities by states and ETCs are
effective, or whether more should be done in this ara. As discussed in more detail below, we sek
infonnation on community-basd parerships or initiatives that have ben effective in educating non-
English speaking populations about the Lifeline/ink Up progr.
232. Role of the States an Outreach with Government Assistance Programs. Since 2004, the
Commission has urged sttes and caer to cordinate their outreach effort with governmental agencies
that administer any of the relevant goverent assistce progrs.407 The Commission's 2004 outrach
guidelines make clear that sttes play an importt role in working with ETCs to advertise the availabilty
of Lifeline supported services.408 Recently, the National Broadband Plan noted that requiring ETCs to
conduct Lifeline outreach may not be the most effective way to reach undersered, low-income
populations.409 Rather, the Broadband Plan suggested that state social service agencies should tae a
more active role in consumer outrach by making Lifeline and Link-Up' applications routinely available
when the agencies discuss other assistace progrs with consumers.4 0 A few ETCs have pointed out
that social service agencies ar in a much be poition than ETCs to approach potential consumers with
infonnation about Lifeline-assist prog.41
233. We seek comment on what steps this Commission could tae to encourage stte and
Tribal social service agencies to tae a more active role in reahing potential Lifeline-eligible consumers
going forward. For exaple, should we encourge the staes to distbute to low income consumers
compartive guides detailng the competitive Lifeline offerngs available in their statesr12 We seek
404 Id
40S Id. at 15618, par 57.
406 2010 Recommended Decision, 25 FCC Red at 15620-21, pa. 63.
407 2004 Lifeline and Link Up Order, 19 FCC Red. at 8328, pa 48.
408 2004 Lifeline and Link Up Order, 19 FCC Rcd. at 8326-8327, pa 45-46.
409 NATIONAL BROADBAN PLA at 172-173.
410 Id
411 Qwest Dec. 16,2010 Ex Pare Ler; Vern De. 14,2010 Ex Parte Letter.
4122010 Recommended Decision, 25 FCC Red at 15631-32 (statement of Commissioner Clybur).
72
Federa Communicatins Commin FCC 11-3%
comment on who should be the cost assoiated with st outch effor and wh ouh cost
should come out of the Univerl Service Fund. And we ask commte to idetify any be prace in
the ar of sta outrh. We also inquire whether cordinating outh wi govert asisce
progrs should be the prfer method of outrh, as oppo to impoing mada outrh
reuirments on ETCs.
234. Oueach by ETCs. As not above, the Commission ha not impose ma
outch obligaons on ETCs, but rather adopt outh guidelines in 200 deigned to encoge
states and caers to work together to educa consumers about Lifeline-asist pro.41 The Joint
Boa's 2010 Recommend Decision reommended that the Commission adopt madary outrh
reuirements for all ETCs that recive low-income support frm the Universl Service Fund.414 Loking
at the curnt Lifeline paricipation rate, the Joint Boa exprese coce tht ETCs may not be doing
enough to prmote their Lifeline offergs to low-income housholds.41 The Joint Bo also
recommended that the Commission seek comment on wheter ETCs should be reuire to submit a
mareting plan to the stte or Commission outlining thir outrh effort.
235. We sek comment on wheter we should impose spific outrh reuirements on
ETCs, as remmended by the Joint Boar. If the Commission were to adopt madatory reuirements
what should those reuirements be? Would a UDifonn natonal rule be effective in achieving progr
goals, and what burens would such a rule place on ETCs? In response to the Recmmended Decision,
Qwest argues that ETC advertsements do not necessly result in more custmers enrlling in the
progr, and that the better approach is for the state or social services agencies to promote the
progr.416 TraFone notes tht it spent $41 millon on advertising in 2010 to promote its Lifeline-
supportd SafeLink product, which included tageted marketing and advertsements in community
newspapers.41 We seek to develop a fuller rerd on this issue, as suggested by the Joint Boar. We ar
interested in understading what ar the most effective outrch methods to rech consumers, and how
the Commission could evaluate the impact of outrch methods over time.
236. Community-Based Outreach. In its 2010 Recommended Decision, the Joint Bod note
that community-bas outach may be an effective means to reach low-income housholds and
encourged the Commission to collect data on best pratices in this area.41 We ask ETCs, community-
based organizations, and other intere pares to highlight community-basd outh that has be
successful in educating low-income households about the Lifeline progr. For exaple, we sek
comment on the role of Tribal governents and other Tribal organizations in reaching low-income
households on Tribal lands.
237. Marketing and Uniform Language to Describe Lifeline. Some ETCs market their
Lifeline-supported products under a trde name. For example, TracFone offers Lifeline-supportd service
under the name SAFELINK WlRELESS~, while Virgin Mobile's competing offerig is Assurance
Wireless. Some eligible consumers may not undertad that these products ar Lifeline-supportd
offerigs, and therefore may not realize they ar violatng our prohibition against having more than one
Lifeline-support seice per household. To prevent consumer confsion and reuce the number of
413 2004 Life/ine and Link Up Order, 19 FCC Rcd. at 8326-8329, pa. 45-49.
4142010 Recommended Decision at 15619, pa 60.
4151d at 15618-19, pa. 59.
416 Qwest De. 16,2010 Ex Parte Leer
417 TraFone De. 7, 2010 Ex Parte Lett, at 6.
4182010 Recommended Decision, 25 FCC Rcd at 15621, par. 64.
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Federa Communications Commisn FCC 11-32
consumers reeiving duplicate support we sek comment on wheter we should reuir all ETCs to
include language in the name of their service offering or in description of the service to make clear tht
the offering is supported by Lifeline. Should ETCs be reuire to exprsly identify the service as a
Lifeline-support prouct in all adverising and outh to consumers? Would it inhibit effective
marketing by ETCs to require such lague on the pruct nae, potentially reucing competition for
Lifeline-support services? We sek comment on whther the other actions we propose in this Notice to
eliminate wase, frud, and abuse alleviat the nee to set policies relate to the mareting of Lifeline
services to consumers.
238. We also sek comment on whether ETCs should be reuired to include in all maeting
and advertising materials for Lifeline-support offerings clear and prominent languge explaining that
consumers ar entitled to only one Lifeline subsidy per household. Should the Commission develop
model langue that would be reuired for ETCs to use, or that would be a safe harr for ETCs to us?
If so, what should that language be? We reues that ETCs provide us with the languge they currently
use to describe their Lifeline and Link Up service offerngs.
IX MODERNING TH LOW INCOME PROGRA TO ALIGN wim CHAGES IN
TECHNOLOGY AN MAT DYNAMCS
A. The Current Lifeline Proram
1. Voice Servce Eligbl for Disunts
239. Background. The telecmmunications maretplace has changed dramatically since the
Commission created the current Lifeline progr in 1997. In contrt to 1997, toy incumbent
telephone companies tyically offer consumers pakages that combine both local and long distance
callng into a single plan. Some of these plans ar strctre so that a consumer pays a single rate
regadless of whether their call is to a local or long distace number. Over the last decade, the wireless
indust has migrted to packaes that offer a bucket of minutes for a set price, with no distinction
between local and long distace callng. Indee, many wireless ETCs offer plans eligible for the Lifeline
discount that also include nationwide callng.41 From the consumer's perspective, distinctions between
local and long distace callng are increingly disappeing.
240. Currntly, all ETCs must make available to qualifying low-income households certin
enumerated services as par oftheir Lifeline service offerings, as defined by section 54.401.420 These
Lifeline supported services consist of a "retail locl seice offering" with speific functionalities
including, for example, access to public switched networks, emergency services, operator services, and
directory assistance.421 Additionally, acording to the definitions of "universal service" and "Lifeline"
419 See, e.g., Assurce Wireless, htt://ww.assurcewirless.comlblic/MoreProgrs.aspx (stating tha
Assurce Wireless offers "(s)ervice within (a) naionwide covere area reahing more than 275 milion people")
(last visited Mar. 1,2011); Cellular One, Lifeline and Link Up, htt://ww.cellonenation.comlifeline.php (offenng
free in-state long distace for calls complete within the home callng area) (last visite Mar. 1,2011); U.S.
Cellular, Lifeline Plans, htt://ww.uscellular.com/plansnifeline/index.html(offerig fre nationwide calling to
subscnbers purchaing the Lifeline Tnbal landsOklahma Callng Plan) (last visited Mar. 1,2011).
420 47 C.F.R. § 54.405(a).
421 47 C.F.R. §§ 54.101, 54.40I(a). Ou rules reuire Lifeline-supported services to offer the following
fuctionalities:
(a) Voice grde access to the public switched network;
(b) Local usae;
(c) Dul tone multi-frequency signing or its fuctional equivalent;
(d) Single-par serice or its fuctional equivalent;
(continue....)
74
Fedra Commu.ietiDS CommÏS FCC 11-3%
adopte in the 1997 Universal Service First Report an Order, an ET prviding pr supprt to a
customer is curntli reimbursd only for discunts provided on the co of monthly baic, loc
telephone seice.42
241. On Febru 8, 2011, the Commission relea the USF/ICC Tranoron Notice,
which, among other things, sought comment on modifying the deniton of th sup serv in
setion 54.101.423 As the Notice explain, the Commission originally chos to define supprt services
in fuctona tenns, raer th as taed serice, in order to prmote competie neuity and prvide
grter flexibilit.424 However, due to maetplac changes, the USF/ICC Tranforion Notice sought
comment on simplifying how we describe the core fuctionalities and on derming them by a single tenn:
"voice telephony seice. ,,25
242. Discussion. In light of the maretplac changes note above, it is al an appropri
time to evaluate the definition of "Lifeline" to ensur it is keeping pac wit the baic connecvity nees
of low-income consumers. We question whether Lifeline should continue to be defined as "baic locl
service." As noted above, distinctions betwee locl and long distce callng ar beming irrlevant in
light of flat rae service offerigs that do not distnguish between local and toll calls. Is the "locl"
qualifier outte in light of maretplac changes? How should we define "basic" voice telephony for
purses of the Lifeline and Link Up progrs?
243. We propose, consistent with the USF/ICC Tranformion Notice, to amend the
definition of "Lifeline" in setion 54.401 to provide support for a set of defined fuctionalities known as
"voice telephony seice.,,26 This amended definition may provide simplicity for ETCs who provide and
adverise Lifeline services, and will ensur consistency across universl service support mechanisms.
244. We seek comment on this proposal. Should this definition of voice telephony service
encompass the nine fuctionalities curntly speified in setion 54.401? Is there any reasn to modify
the functionalities to be provided to ensur quality service for low-income customers? As noted by the
Commission in the USF/ICC Tranformation Notice, with respet to the perfonnance charristics for
voice telephony service, ''voice gre access" to the public switched netork is defined in setion 54.101
of the Commission's rules as "a functionality that enables a user of telecommunications serices to
(Contiued frm previous page)
(e) Access to emergency servces;
(f) Accss to opetor servces;
(g) Access to intexchange servce;
(h) Access to direcory assistace; and
(i) Access to toll limitation.
422 See 47 C.F.R. § 54.40
1 (a) (defiing "Lifeline" as "a retil local offenng" providing speified fuctonalities to
eligible low-income consumers); see also Universal Service First Report and Order, 12 FCC Red at 8780, 8952,
par. 2, 328 (sttig that in implementig the univerl servce progr the Commission's goas include a
commitment to "maita rates for basic residential seice at affordble levels" and that "that Lifeline consumer
should have the beefit of certin basic services and policies").
423 See USF/ICC Transormation NPRM FCC B-l3, at pa. 95-97 (citing 47 C.F.R. § 54.101(a)).
424 ld at pa 95.
425 See id at pa. 96-97.
426 See Appedi A, 47 C.F.R. § 54.401(a)(3). Becus we ar merely proposing to conslida all curtly
supprted seces for the Lifeline progr under one new term "voice telephony serice," we need not consider
whether these consolida servce should be par of the defiition of supported seces. 47 U.S.C. §
254( c)(l )(A)-).
75
Federa CommunicatioDS Comaiion FCC 11-32
trsinit voice communications, including signaling the netork that the caller wishes to plae a calL, and
to reive voice communications, including receiving a signal indicating ther is an incoming cali. For the
purses of this par badwidth for voice gre acss should be, at a minimum, 300 to 3,000 Hert.',427
Is this defiition appropriate for Lifeline households? How should we define services supported by
Lifeline in a way that is tehnologically neutrl and ca evolve over time as technologies usd to deliver
voice serice change in the yea ahea?
2. Support Amounts for Voic Servee
a. Background
245. The benefit frm the feder Lifeline progr ca var by houshold depending on a
number of factors. As note above, the amount of federl Lifeline support that a houshold reives
depends in par on the state and (if applicable) Tribal land in which the household is locate. Moreover,
the amount the household actually pays for phone service depends on the price chaged by the carer for
offerg the service and the ty of service plan the caer offer to which the discount is applied. The
net result is that households end up paying significantly different amounts for their Lifeline-supported
service depending on their chosen carer and the state in which they reside, and in some cases do not pay
for that service at all.
246. Under the currnt rules, there ar four tiers of federal Lifeline support, each of which
must be passed directly from the ETC to the qualifying low-income consumer in the fonn of discounts on
the consumer's monthly bil.428 All eligible subscribers reeive Tier i support which provides a monthly
discount equal to the incumbent locl exchange carer's Subscriber Line Charge, which today is cappe
at $6.50.429 Tier 2 support provides an additional $1.75 per month in federal support, available in all
states.430 Tier 3 support provides one-half of the subscriber's stte Lifeline support amount, up to a
maximum of $ 1.75 per month.43 i Only subscribers residing in a sta that has estblished its own Lifeline
program may receive Tier 3 support assuming that the ETC has all necessa approvals to pass on the full
amount of this total support in discounts to subscribers.43 Finally, Tier 4 support provides eligible
subscribe living on Tribal lands up to an additional $25 per month towards reducing basic local service
rates, but the rules specify that the discount canot bring the subscriber's rate for basic local service
below $1.433
427 USFIICC Transformation NPRM, FCC 11-13, at
par. 86 (citig 47 C.F.R. § 54.101(aX1)).
428 See 47 C.F.R. § 54.403; see also Universal Service First Report and Order, 12 FCC Rcd at 8971, par. 368.
429 See 47 C.F.R. § 54.403(aX1). The SLC is a flat monthly charge that incumbent local exchage carers assess
dirctly on end users of telecommunications service to recover a portion of their revenue assigned to the intertate
jurdicton. Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Furer Notice of Proposed
Rulemakg and Report and Order, 17 FCC Red. 3752, 3767, par. 35 n. 81 (2002). USAC, Ste 1: Lifeline
Support, htt://usac.orgi/telecom/step01I1ifeline.aspx (last visite Mar. 1,2011).
430 47 C.F.R. § 54.403(aX2). When adoptig Tier 2 support in 1997, the Commission sought to increase
subscbership in those states th previously did not parcipate in the progr. See Universal Serice First Report
and Order, 12 FCC Rcd at 8962-6, pa. 350-53.
43147 C.F,R. § 54.403(a)(3). When adoptig Tier 3 support in 1997, the Commission sought to incre
subscbehip and encourge staes to provide matchin discounts to eligible consumers. See Universal Service
First Report and Order, 12 FCC Rcd at 8963-6, par. 353. We ar aware that some states do not aclly provide
matching state discounts thugh explicit support but rather mandate that the carer reduce its rates by such
amounts to qualify for Tier 3 support.
432 See 47 C.F.R. § 54.403(a)(3).
433 47 C.F.R. § 54.403(aX4).
76
Federal Communictins Commission FCC 11-3%
247. Significat maretplace chages have ocurr since th Commission adpt the
Lifeline support tiers. Notably, most non-ILEC ETCs do not asss SLCs on their subscribe, and thir
rates ar not regulated by the Commission anor the stteS.434 Therfore, it is unclea whether an ILEC's
SLC continues to be an approprate metrc for detennining the amount of supp that should be prvid
to a non-ILEC ETC that serves a low-income houseold. Morver, to varing degrs, local rates for
incumbent wirline telephony compaies have ben degulat.43 Finally, th fact that numerus
carers ar seking designation as Lifeline-nly ETCs, including prepaid wireless carers and prpaid
wireline caers, suggests that the currnt stcte of the progr may prent an atttive busines
opportnity for fins that employ different business models th tritional wireline carers. As a reult,
it is unclear whethr the aggegate amount of suppo or the tie strct of support provide to an
ETC for serving a low-income household an for the provision of Lifeline support should remain the
sae as they were in the pat and whethr thy should remain the sae for all tys of carer. Raer
than just offsetting the rats paid by consumers subsidies in an unrgulated marketplac could reduc
price competition and benefit providers more th consumers.436 Similarly, providing the same level of
support for services offered over different tehnology platfonns may result in over-subsidizing some
technologies and under-subsidizing others.
b. Discusion
248. We seek comment on whethr there is a more appropriate reimbursment frework than
the current four-tier system for determining fedral support amounts for the progr that wil provide
support for low-income households that is suffcient, but not excessive, consistent with setion 254.43
Should the low-income tiers of support be modified in light of the marketplace chages that have
occured since the Universal Service First Report an Order? Such a change could be an importt step
toward reducing waste in the Lifeline progr. How can the Commission ensure that low-income
households can continue to benefit from the expaded ary of service offerings, including pre-paid
434 See 47 C.F.R. §§ 69.104, 69.152(d)(I), 69.l52(q). The Commission acknowledged this in the Universal Service
First Report and Order, but ultimately opted to requir that all ETCs pass Lifeline discounts in the amount ofthe
SLC through to eligible consumers. See Universal Service First Report and Order, 12 FCC Rcd at 8970-71, par.
366-67. The Commission "acknowledge( d) that the distrbution of support to non-ILEC carers canot be achieved
simply by waiving the SLC, as (c )arers other than fLECs do not paricipate in the formal separtions proess tht
our rules mandate for fLECs and hence do not charge SLCs nor distinguish between the interstate and intrtae
portion of their charges and costs." Id at 8970, para. 366. The Commission concluded, however, that "(t)he
interstae portion oflLECs' rates to recover loop costs is, almost without exception, greater th the amount of the
SLC cap for residential subscribers; we are therefore confident that this amount is a reasonable proxy for the
interstate portion of other eligible telecommunications carers' costs." Id at 8970-71, par. 367.
435 See, e.g., KA. STAT. ANN. § 66-2005 (200); Texa Vtil. Code An. § 52.201 (Vernon 2007); Ohio Substitue
Senate Bil No. 162 (Sept. 2010), available at htt://ww.1egislatu.state.oh.us/bils.cfm?ID=128 SB 162; Prss
Release, Virginia State Corpration Commission, SCC Approves Parial Deregulation ofVeri Local Telephone
Services (Dec. 14,2007), htt://ww.scc.virginia.gov/puc/comp/v exchlc verdereg 07.aspx.; Philip Rawls,
Alabama Phone Deregulation Increases Jan. J as PSC Loses Contol over 4 Companies, BIRMINGHAM NEWS, Dec.
31, 2010, htt://blog.al.comlwire/20 1O/12/alabama -"hone_deregulation _ inC.hoot.
436 See, e.g., Scott Wallsten, Technology Policy Institu, The DTV Coupon Program: A Boon to Retailers, not
Consumers, Sept. 15,2008, htt://ww.techpolicyinstitute.orglfiles/the dtv coupon progr.pdf(DTV Coupon
Program Paper) ("Because consumers pay $0 with the coupon for any box priced $40 or less, retailers have little
incentive to reduce the price below $40. An analysis of converter box prices at retailers arund the countr suggests
tht the coupon progr has increasd the price of converer boxes by $2 i - $34.").
437 See 47 U.S.C. § 254(b)(5) (universal servce suppo should be "suffcient" to presere and advance universal
service); see also Alenco Commc'ns., Inc. v. FCC, 201 F.3d 608, 620 (51b Cir. 2000) ("excessive fuding may itself
violate the suffciency requirments of the Act.").
77
Federa Communications Commisn FCC 11-3%
wireless service, while ensurng that univerl service fuds ar prmarly beefiting consumers, raer
than the carers that sere those consumers?
249. Given the growt of the progr in rent yea, it is vita th the Commission ensur
tht fuds are distrbuted in a tageted and meaningfl way. In paicula, we sek comment on whether it
makes sense to continue to tie Lifeline support amounts to the federal subscriber line chae, which may
not be the appropriate metrc of wheter service is afordable to a low-income household. Should we
adopt a different frework for caer tht do not chage a subsribe line chare, or that do not allocate
their costs beeen the intrte and interse jursdictons'r38 Is ther an amount tht would better
ensure afordable service for eligible housholds? Wh might be the apprpriat reimburement
strctu be in the futue, when voice service is provided as an application over broadband netork,
potentially at no additional cost to the consumers?
250. We also sek comment on wheter to mainta Tiers 2 and 3 of Lifeline support as
currntly set fort in the Commission's rules. Should consumer be entitled to a higher or lower baseline
federal support amount, justifying a change in the amount of available Tier 2 support? Similarly, should
the Commission raise or lower the amount of federal matching support that is available under Tier 3?
Finally, does $25 remain a reasnable additional reimbursement rate for consumers receiving enhance
Tribal support puruat to Tier 4? Does providing such a flat amount effectively create a price floor for
cariers serving Tribal lands, even though it may be possible in some instaces to serve eligible
households at a lower cost (i.e., for less than $25 pe month)'r39 We emphasize that in asking this
question we ar not seeking to limit benefits for low-income housholds, but rather looking at ways to
restrctue support levels to create incentives for caer effciency.
251. If the Commission wer to create a new reimburment strctue for caers providing
Lifeline service to low-income housholds, should the reimburement mechanism be different for
wireless and wireline ETCs, based on their potentially divergent costs for providing service? Would there
be any reason to adopt a different frework for pre-paid wirless providers as opposed to post-paid?
Should the Commission maintain a tier reimburment stctue? If so, what costs should be used as
the basis for setting a support amount? Would adoption of a single, unifonn flat discount amount without
438 We note that TracFone fied a peition for ruemaking and a waiver request in 2009 tht raised some of these
issues. In its petition for ruemaking, TracFone sougt to amend the defiition of Tier One Lifeline support as
dermed in section 54.403(a)(I). TracFone Wireless. Inc.'s Petition/or Waiver 0/47 C.F.R. § 54.403(aXi), CC
Docket No. 96-45, Petition (fied May 4,2009) (TracFone Tier 1 Petition). On March 30, 2009, the Commission
released a public notice seeking comment on TracFone's peiton for rulemaking. Public Notice, Report No. 2885,
RM-I 1526 (reI. March 30, 2009), htt://tjallfoss.fcc.gov/ecfsldocument/view?id=6520204555. TracFone requested
that the Commission detah Tier One suppo frm the SLC in effect for the ILEC and allow all ETCs to recive the
maximum available ($6.50 per household) in all serice ar. TracFone Tier 1 Petition at 7-10. Additionally,
TracFone requested tht the Commission requir ETCs claiing the maximum Tier One amount because of the rule
amendment to provide an additiona, unimbur $3.50 in Lifeline beefits pe month. Id Two paries
commented on the proceeding. YourTel, a small caer ba in Missour and a parcipant in the Lifeline progr,
concurwith TracFone that Tier One support should be disnneced frm the SLC. See YourTel TracFone Tier
One Petition Comments at I. YourTel contended th the curnt Tier One support system is "no longer valid in
tody's wirline environment where niche caers have higher costs." Id The Indepndent Telephone &
Telecommunicaons Allance (lIT A) disaged and stated that the Tier One support "is intended to be a proxy for
interste loop costs, and relies upn the detrmon that the SLC represents a fair approximation of that amount."
IITA TracFone Tier One Petition Comments at 4. We herby incorprae TraFone's peition into our instat
proeeding and sek fuer comment on these issues.
439 Cf DTV Coupon Program Paper, at i.
78
Federa COlBmunieatiDS Comla FCC 11-3%
tier be apprprat'f Would a peta discount ra subj to anoverl dolla ca be asist
low-income housholds in seurng the best reil rate offer by thir ch ETC? In th altve,
should we estblish national paretrs of a baic Lifeline seice, and reuir ETCs to spify th
minimum price per houshold they would acpt to provide such seice? We se coment on th
alterntives.
3. Minimum Serv Requiremeats for Voi Se
252. Backgrou. As pa of th ETC designon pr, a caer aplyJ for degnon
must show that it offers locl usage compable to tht offer by the in~umbet LEC. 1 In Jun 2010,
the Natonl Assiation of State Utilty Consumer Advocte (NASUCA) adopt a relution th
raise concerns about "f" Lifeline callng plans offere by varous wirless ETCs. In pacula,
NASUCA identified th area of concern: First, that such pla have reult in substi gr of
the Lifeline prgr, without a "necssa assurce of adequa value provided to the Lifeline
customer," or a demonstrtion that these plans make effcient us of Lifeline funds; send, that suh
plans include limited usage minutes and reuir subscbers neeing additional minute to puha th
minutes from the caer; and thir th it is not evident wheter such callng plans offer loc use
compable to available ILEC Lifeline callng plans.442 The NASUCA resolution remmended th the
Commission consider esblishing minimum stada of service for pre-paid wiles Lifeline seice to
ensure value for Lifeline consumers, as well as effcient us of universl service dollar.443 The Joint
Boar in its 2010 Recommended Decision, urged the Commission to investiga the impat of
designation of prepaid wireless providers on the progr noting that several commente have suggested
that minimum service reuirments should be imposed upon prepaid wirless ETCs.44
253. Discussion. We sek comment on the advantages and disavantages of adopting
minimum stdads for all ETCs offerig Lifeline service. In the section abve, we asked whether we
should estblish national pareters for a baic Lifeline seice. Accordingly, if we were to adopt
minimum service requirments for Lifeline-only ETCs, what should those reuireents be? Should we
establish a se minimum number of monthly minutes to be included in ETCs' Lifeline service offerings,
and if so, what would be an appropriate number of minutes'fs Should we estblish a minimum number
440 See, e.g., Leter frm Jamie M. Tan Director, Federal Reguatry, AT&T Service,s, Inc., to Marlene H. Dortch,
Secr, Federa Communications Commission, WC Docket No. 03-109 (fied Dec. 9, 2010) (AT&T De. 9, 2010
Ex Parte Lettr) (recommending that the Commission simplifY the curnt rules for providing Lifeline supprt
payments by providing a reimburment mechaism that is not tied to ILECs' SLC chages); AT&T's ETC
Proposal, infa note 533.
441 Federal-State Joint Board on Universal Service, CC Doket No. 96-45, Report and Order, 20 FCC Rcd 6371,
6380, par 20 (2005) (ETC Designation Order).
442 National Association of
Sta Utilty Consumer Advocats, Resolution 2010-02, Caling for Reform of the
Lifeline Progr, Including Reform for Prid Wirless Lifeline Services, at 2-3 (June 15,2010) (NASUCA
Resolution).
443 NASUCA Resolution at 4.
44 2010 Recommended Decision, 25 FCC Rcd at 15627, par. 80 (citig Consumer Grups Joint Boad Comments
at 37).
44S We note tht severa pre-pad wirless, Lifeline-nly ETCs, such as TracFone and Vir Mobile, include severa
hundrd miutes pe month in their Lifeline sece offeri. See SaeLin Wirless,
htt://ww.safelinwireless.com (last visite Mar. 2, 2011) (showing th TraFone, though its Lifeline seice
SafeLin Wirless, prvides 68 minutes at a minimum, with options for 125 and 250 minute); see also Assurce
Wirles, htt://ww.asurcewireless.com (last visite Mar. 2, 2011) (showing tht Vir Mobile, though its
(contiued....)
79
Federa CommunicatioDS Commisn FCC 11-3%
of fr long-distace calls? Is there a need for service quality stadars when consumers oftn have the
choice of several Lifeline prviders? We sek comment on wheter the Commission should impose
minimum service reuirments on all ETCs, as oppose to just wirless ETCs, and how we could impose
stadads that are technologically neutrl. We note tht wirles provider offer the beefits of mobilty
and often additional feat and fuctionality, such as voiceail, caler 10, and call waiting, at no ext
charge. Similarly, low-income households tht selec Lifeline offerigs frm wirless prviders may
have the ability to call distat family membe and frends without incurg toll chares. Can unifonn
minimum stadas be develope for all technologies, or is there a beefit to having stadars tailore to
different technologies? What ar the relevant atbutes or feats tht should be stadadize acoss
Lifeline offergs?
254. We also seek comment on the relevant cost and benefits associated with seting
minimum stadads of service. We note tht minimum stda of seice could incre the costs of
Lifeline service to ETCs and could thus provide a disincetive for additional carers to sek ETC sttus
for the progr. Would minimum stadads dete compaies from seking ETC designtion? Would
high minimum stadas make Lifeline offerngs more attive to low-income households, and thereby
increas demand for the progr?
4. Support for Bundled Servces
255. Backgroud As noted above, our rues provide for Lifeline discounts on "basic, local
service," but do not address whether such discounts may be applied to bundled offerigs that include
basic local voice service. As noted above, section 54.401 of the Commission's rules provides that
Lifeline supprted services consist of a "retal local service offerng" with specified functionalities.44 It
is not clear from the rule, however, wheter the consumer may apply his or her Lifeline discount to
reduce the cost of callng plans that include additional service components in addition to basic, local
calling. Similarly, section 54.403(b) of the Commission's rules sets out how Lifeline support discounts
are pase though to consumers.447 Puuat to that rule, ETCs that charge federl SLCs or equivalent
federa charges apply Tier 1 federal Lifeline support to waive the federal SLC for Lifeline consumers.448
Any additional support reeived (i.e., frm Tiers 2 thugh 4) is then applied to reduce the consumer's
intrte rate.449 ETCs that do not charge federal SLCs or equivalent federal charges must "apply the
Tier (l) federa Lifeline support amount, plus any additional support amount, to reduce their lowest
taffed (or otherwise generlly available) residential rae" for the serices they provide.450 Our rules,
however, do not define the pareters of a lowest-cost plan or specify the tys of service plans that are
eligible for Lifeline support.
256. Some states have enacte policies to clarfy whether Lifeline support may be used to
reduce the cost of expanded service voice offerngs that include optional featus or bundled
combinations of other services. Among these states, however, there is no unifonn approach.
451 Several
(Continued frm previous pae)
Lifeline serice Assurce Wirless, provides 250 minutes per month at a minimum, with options for 500 and 1000
minutes).
446
47 C.F.R. § 54.40 1 (a).
447 See 47 C.F.R. § 54.403(b).
448Id
449Id
450Id
451 See NRR STUY at 49, Table 30.
80
Federa CommuDicatiDS Co..hd FCC 11-3
sttes pennit consumers to apply their monthly discunts to the baic voce pla of thir choice inluding
enhance service plans. Orgon and Texa, for exaple, have policie mang th ETCs offer
Lifeline discots on all seice plans th inlude a baic voice coen 452 On the othr ha
accoding to an Octobe 2010 GAO rert ETCs in 14 sts do no cutly peit consu to aply
the Lifeline discunt to a bundled seice offerng or paka th inludes tele seice.
453
257. The National Broaband Pla observed a wide var in stde Lifeline
parcipation rates.454 Among other things, the Pla atbuted the vaed paèipatiOD raes to diffng
"restctions on consuers' abilit to apply the Lifeline discun to cein ty of seices...ss The Pla
remmended that the Commission and sts should penn it Lifeline cuser to apply their Lifeline
discounts on all caling plans with a loc voice component, including budle seice pakaes.4S6 By so
doing, the Plan state the Commission would make bundled offerngs, inluding those tht include
broadbad, more afordle for low-income households.4S
258. Discusion. We sek comment on amending the Commission's rules to adopt a unifon
federa reuirment that Lifeline and Link Up discunts may be us on any Lifeline calling pla offer
by an ETC with a voice component, including bundled service pakas combining voice and brobad,
or packages contaning optional callng featus. We note that seon 254(f) of the Act bar st fr
adopting regulations that ar inconsistnt with the rules established by the Commission to prerve and
advance universl servicé58
259. In a number of sttes where ETCs ar not preluded by stae reuirments frm allowing
consumers to apply their Lifeline discunts to the purhase of bundled packaes or optional seices,
many carers - including large caers like Sprint Nextel, Verin Wireless, and AT&T Mobilty -limit
Lifeline offergs to basic voice service.459 We sek comment on whether to adopt a national rule that
would reuire all ETCs to offer Lifeline and Link Up discounts on all of their service plan with a voice
component. Under such a rule, ETCs could be required to apply federa Lifeline support to reduce the
cost of any callng plan or package selected by an eligible low-income household tht allows locl callng,
rather than offering a discount only on the carer's lowest taffed or otherwse generally available
residential rate plan. However, eah eligible household's Lifeline discount would be cappe at the
452 Or. Admin. R. 860-033-0010 (200); Tex. Admin. Code tit. 16, § 26.412(e)(6)-7); see also Petition of Sprint
Spectrm L.P. for a Declaratory Ruling that the Kansas Corporation Commission's October 2, 2006 Order in
Docket 06-IMT-446-GIT Violates Federal Law, WC Docket Nos. 03-109 and 07-138 (filed June 8, 2007)
(chalengig an order of the Corporation Commission of the Sta of Kansa, which modified the stte's Lifeline
rules to requir th ETCs allow Lifeline customers to choose a calling plan and apply the Lifeline discount to the
plan selectd by the customer).
4532010 GAO REPORT at 13.
454 See NBP at 172 (Recommendaon 9. I) (notig that ."some states have paricipaon rates of more th 75% and
others have rates less th I OOJó").
455Id
456Id
457Id
458 See 47 U.S.C. § 254(t). States may, however, chooe to supplement the federl Lifeline rules by esblishing
their own state low-income universl seice progrs and reuirments tht do not conflict with federal universl
service regulatons. Id
459 See Lifelinesupportorg ww.lifelinesu¡rt.org(lastvisiteMar. 2, 201 I) (searhable da listig Lifeline
and Lin Up servces available by each ETC in a state).
81
Federa CommunicatioDS Commisn FCC 11-3%
amount the subscbe would have recived if it ha selec a baic voice plan. Additily, we sek
comment on requiring all ETCs to penn it eligible housholds to apply the Link Up disunt amounts se
fort in section 54.41 i (a) of the Commission's rules to any service plan with a voice component. As with
the Lifeline program, each eligible houshold's Link Up discunt could be cappe at the amount the
household would have reived pursuat to the Commission's rules if it had selec a baic voice plan.
260. We sek comment on whether amending our rules in this way would fuer the stto
principle that consumers have acss to qualit seices at "jus reasnable, and afordble rates.',4
Restrctions on use of Lifeline discounts, wheter impose unde st law or by an ETC, may preclude a
significant number of eligible low-income housholds frm the expded seice options available in the
marketplace, such as packages that include brobad or da seice. Furer, as compar to carers'
basic plans, bundled packages of serices may offer ber value for Lifeline and Lin Up consumers.461
261. We sek to develop a fuller re on currnt ETC praices regaing the provision of
Lifeline discounts on bundled offerings. To what extent do ETCs curntly offer Lifeline and/or Lin Up
discounts on plans that include bundles of services or optional callng featues? If so, what services ar
Lifeline and Link Up consumers pennitted to purchase? We also sek comment on the extent to which
specific states mandate that ETCs allow the application of Lifeline and/or Link Up discounts to expanded
service plans. Is there any evidence that Lifeline and Lin Up pacipation rates have been positively
affected by policies requiring the extnsion of progr discounts to the purchas of bundled packages and
optional services? Where available, commente ar encourged to submit supporting documentation of
ETC or state practices along with any wrttn submissions.
262. We sek comment on the potential adinisttive and practical conseuences of
amending our rules in this fashion. What changes to internal back offce systems (e.g., for ordering
service and biling) would be reuired to implement such a rule, and what costs would that impose on
ETCs? How long would it tae to implement such a change? If we were to adopt such a rule, should
ETCs be obligated to offer a Lifeline discount on all of their service plans, including premium plans and
packages? Conversely, are there certin service plans or packages that ETCs should not be reuird to
make available to consumers seeking to apply Lifeline discounts? Should consumers be prohibited from
applying a Lifeline discount to bundled offerings that contan a video component?
263. Would allowing consumer to choose frm an ary of expanded packages create a
grater likelihoo that Lifeline and Link Up consumers may be unable to pay for the remaining porton of
their chosen callng plan and therefore risk tennination of voice service? What are the options for
reducing that risk? If we were to adopt such a rule, one option would be to reuir ETCs to offer method
of managing usage (whether minutes of use or data) that otherwise would yield higher monthly charges
beyond the monthly fee. For instace, Lifeline consumers could elect to set maxum usage amounts for
themselves that may not be exceeded per biling cycle. 462 We sek comment on the feasibilty of this
460 47 U.S.C. § 254(b)(1).
461 For example, a recent Commission stdy found that consumer who receive broadband bundled with other
services pay an average ofS8.55 less pe month th those cusomer who purhae stad-alone broadband service.
See Broadband Adoption and Use in America at 15.
462 In October 20 I 0, the Commssion issued a Notice of Prpo Rulemakg proposing rules that would requi
mobile service provider to provide usge aler and informtion to consumer in avoidig unexpd chages on
their bils. See Empowering Consumers to Avoid Bill Shock, Consmer Information and Disclosure, CG Docket No.
10-207, CG Doket No. 09-158, Notice of Prposed Rulemag, 25 FCC Rcd 14625 (2010) (Bil Shock Notice).
The Commission noted tht approximately 10% of all wireless biling rate complaits filed at the Commission relate
to voice, text or data overes, along with overaes due to roaming. In addition, the U.S. Governent
Accountabilty Offce (GAO) found that 34% of wirless subscrbers had expeenced unexpected chaes on their
wirless bills. Bil Shock Notice, 25 FCC Red at 14626, par 2.
82
Federa Communicatins Commil FC 11-32
proposal. Wh cabilties exist toy, or ar anticipa in th nea te for caer to asis Lifin
consumers in maaging their service usageT63 Wh would be th adisve bu and co for a
caer if it wer reuir to offer this to Lifeline subscribe't
264. We sek comment on how we ca identitY an ~ the poti befits ofdiis
proposal. As residential brobad usa bees more common, ma compaies have begu offg
consumers the option to purha broadbad as pa of a "bundled pakae" th prvid a cobinon
of voice, da and video service to the custoer, deliver over a sha inft.465 As note
above, com~ to caers' baic plan, bundled pakaes of service may offer ber vaue for
consumers. Would this proposal, if adopte be likely to mae brobad more afle for low-
income housholds and stimulate brodbad adoption by low-income houholds?
265. We also seek comment on how we can identitY and mea the po cost of this
proposal. For exaple, would this propo rule change be likely to have an impat on th siz of the
univers service fud? What are the potentia costs to caer (e.g., administtive cost) in complying
with the propos rule? Finally, ar ther any potential cost to consumers assoiate with the propo
rule? To the extent that it is available, commenters ar encourged to submit supportng data along with
any wrttn submissions.
B. The Transition to Broadband
1. Background
266. Over the last dece, the communications landscpe ha ben trsfonned by the advent
of broadbad. Access to broadband is increingly importt for all Americas to actively paricipate in
our economy and our soiety. Brodband can serve as a platonn for educational, ecnomic and soial
opportities. It ca also minimize soioeonomic dispties. However, despite the potential
opportities available though broadband, may low-income Americans simply caot aford a home
broadbad connection. There is a broadband adoption gap in the United States, with low-income
households among those being left behind.467 Ou 2010 Broadband Consumer Surey found tht 93
percnt of households with incomes grater than $75,000 have broadbad at home, only 40 pecent of
adults with household incomes less than $20,000 have broadbad at home, and non-adopters cite cot as
the primar obstle to adoption.468
267. Researh suggests that increasing broadbad adoption could significatly incras
national prouctivity and grwt.46 Nearly 100 milion Americans have not adopte broadband, and
there is evidence that adoption is growing slowly.470 Cost appe to be the leading obstale to low-
463 See Bill Shock Notice, 25 FCC Rcd at 14634-35, par 20.
464 47 C.F.R. § 54.403(c).
465 See NATIONAL BROADBAND PLAN at 149.
46 See supra note 463 (citig Broadbnd Adoption and Use in America).
467 NATIONAL BROADBAN PLA at 167.
468 NATIONAL BROADBAN PLA at 172; Broadband Adoption and Use in America at 7; see supra pa 21, Char 1
(detailing the household income levels, ba on the Federal Povert Guidelines, suffcient to estalish eligibilty for
the Lifeline progr); see also NTI DIGITAL NATION at 5 (presentig a more upto, but less detled, anysis
of the reasns that consumers have not adopte brodband at home and fmding cost to be the most importt factor
as to why consumers do not have brod at home).
469NTIA DIGITAL NATION at 5.
470 The Pew Inteet Home Broadbad 2010 Rert fids tht the broadband adption in the United Stas has
(contiued....)
83
Federal Co.....nicatioDS Commisn FCC 11-32
incoe Americans adopting broadband;471 the lack of digital literacy is another major factor.47 Closing
the adoption ga and aclerating broadbad adoption, paicularly among low-income Amercas, wil
reuire significant effort primarly by the privat setor. But the Lifeline!ink Up progr may be able
to play an importt if limite role in this effort by enabling public-private parerships to help takle our
national adoption challenge. Utilzing Lifeline!ink Up to reuce the cost of broadbad for low-income
Americans could help increase broadbad adoption.
268. Closing the broadband adoption gap may be more diffcult th closing the gap in
telephone penetration because the barers to broadban adoption ar more complex. In addition to the
cost of service and the cost of acquiring a computer or other Internet-access device, which some reseh
suggests may be the leading barrer to adoption, the National Broadband Plan note that almost two-thirds
of non-adopters cite another reason, such as lack of digital skils, as the main reasn for not adopting
broadband at home.47 In contrt, consumers generally do not need any special skils to undersnd how
to make a phone call; a telephone is oftn much less expnsive than a computer, laptop, or other Internet
acess device; and monthly subscription fees for basic telephone service may be less tha the fees for
broadband.
269. The National Broadband Plan suggested that creating the conditions necessa to promote
broadband adoption and increase utilization would require a range of activities conducted by a variety of
staeholders. Among other things, the Plan recognized the nee to fonn parerships across staeholder
groups to increase broadband adoption and utilzation.47
270. There are some ongoing effort to addrss the broadband adoption gap at the federal,
state, and local leveL. 475 As pa of the Broadbad Technology Opportities Program (BTOP), the
National Telecommunications and Infonnation Administrion provided approximately $450 millon in
one-time grts to help develop sustinable broadband adoption initiatives and public computing centers
across the countr.476 Several private corprations and non-profits are also engaged in broadband
adoption efforts, either on their owi or in paerhip with other steholders. For example, in 2001,
Hewlett-Packad provided grt funding and other resources to the Southern California Tribal Chainnan's
(Continued from previous page)
slowed drmatically in the last year. See PEW RESEARCH CENTER, PEW INTRNET AND AMERICAN LIFE PROJECT,
HOME BROADBAND 20 i 0 REPORT 2 (2010) (HOME BROADBAND 20 I 0 REPORT) available at
htt://ww.pewinternet.orgleport/2010/Home-Broadband-2010.aspx.
471 NATIONAL BROADBAND PLAN AT 168; see also HOME BROADBAND 2010 REPORT at 10 (noting that a fifth of
non-adopters cite cost as a barer).
472 NATIONAL BROADBAND PLAN at 168.
473 NATIONAL BROADBAND PLAN at 170; see also Broadban Adoption and Use in America at 5.
474 NATIONAL BROADBAN PLAN at 171.
475 See Roundtable Discusion to Explore Broadband Pilot Programs for Low-Income Consumers, Public Notice,
WC Docket No. 03-109, 25 FCC Rcd 7305 (Wirline Compo Bur. 2010) (anouncing roundtable); see also Details
for Low-Income Pilot Program Roundtable Discusion, Public Notice, WC Doket No. 03-109, 25 FCC Rcd 7947
(Wireline Comp. Bur. 2010) (providing agenda) (Roundtable Agend Public Notice); Webcast of Wir line
Competition Bureau, Low-Income Pilot Pr Roundtable Discussion (Jun. 23, 2010),
htt://reboot.fcc.gov/video-archives(RoundtbleDiscussion)(identifyinggetconnectedtoy.com, the Cox Santa
Barara progr, and initiatives by LEAP/Cncket, Charr, and others).
476 As of Febru 201 1, NTIA had awaded approximately $200 milion in one-time grts to support public
computing centers, and $250 milion to help develop sustainable broadband adoption initiatives. See Grats
Awarded: Brobad USA - NTIA, htt://ww2.ntia.doc.gov/awards(lastvisited Mar. 2, 2011).
84
Federal Communications Commision FCC 11-3%
Assoiaton (SCTCA) to help launch the Tribal Digital Vilage (TOV). Th Triba Digita Villa
provides infrtrcture as well as trining and online content to i 5 Amca India Reation in Sa
Diego and souther Riverside counties.47 A BTOP grant awar to ZeroDivide in 2010 prvide
funding for additional equipment and support for community anchor institutions as well as computer
skils and awaress trining.47 We also not that, as a volunta comitment in its ret trsation
involving NBC Universl, Inc., Comcast Corpration agee to mae broba available to low-incme
households for less than $ 1 0 per month, and maing i:rsnal computers, netboks and other compute
equipment available at a purcha price below $150. 79
271. To help address the cost baer fac by many low-income housholds unale to aford
broadband, the National Broadband Plan remmended that Lifeline/Link Up be moerniz to support
broadbad.480 The Joint Board also recognize the importnce of brobad to low-income households in
its 2010 Recommended Decision.481 The Joint Bod propose that the Commission adopt an aditional
universal service principle pursuat to its authrity under setion 254(b )(7) of the Act, th "universl
service support should be direted where possible to netorks th provide advance service, as well as
voice services.',482 In the USF/ICC Tranformaion Notice, the Commission propose to adopt th Joint
Board's reommende principle and sought comment on whether to expad the definition of "universl
service" to make broadband a support seice.483
272. The National Broaband Plan and the Joint Board also identified several prtical issues
that the Commission should consider when assessing whether and how to include broadband as a
supported service under the progrm, including, among other things, how "broadbad" should be defined
and measured for universl service purpse, how best to ensur broadband availabilty in unseed and
undersrved ar, and how to strture a Lifeline discount for bradband services.484 The USF/ICC
Transformation Connect America Fund Notice sought comment on how to define broadband for purps
of the high-cost progr, but expressly resered the right to adopt different perfonnance requirements for
LifelinelLink Up.
273. Recgnizing the complexities of modernizing the low-income support mechanisms for
broadbad while ensuring that universl service funds are usd effciently, the National Broaband Plan
477 Tribal Digital Villae Brobad Adoption Prgrm, Executive Sumar, available at
htt://ww.zerodivide.orglsites/defaultlfiles/5507 TDV.pdf(las visite Mar. 3, 201 I); see also Tribal Digital
Vilage, htt://www.sctdv.netl(last visited Mar. 2, 201 I)
478 See BroadbandUSA, Connecting America's Communities, ZeroDivide Fact Sheet, available at
htt://ww2.ntia.doc.gov/files/grtees/fact sheet - zerodivide trbaL.pdf(last visite Mar. 3, 201 I); Press
Releas, ZeroDivide, ZeroDivide Receives Stimulus Funding to Increas Broadbad in Native American
Communities (Aug. IS, 2010), available at
htt://ww.zerodivide.orglntia/zerodivide funding native american trbal communities (last visited Mar. 3, 201 I).
479 See Applications of
Com cast Corporation, General Electric Company and NBC Universal. Inc.; For Consent to
Assign Licenses and Transfer Contol of Licensees, MB Docket No. 10-56, Memoradum Opinion and Orer, FCC
11-4, at par. 233 (reI. Jan. IS, 201 I).
480 NATIONAL BROADBAN PLAN at 172.
481 See NATIONAL BROADBAND PLAN at 169, Box 9. I ("Broadband Mean Opportity"); 20/0 Recommended
Decision at 15624-25, pa. 74-75.
482 See 20/0 Recommended Decision at 15625, par. 75; see also 2007 Recommended Decision, 22 FCC Rcd at
20477 (discussing the reefinition of supported services to include broaband and mobilty services).
483 See USF/ICC Tranformation NPRM, FCC i 1-13, at par. 63, 65.
48 20/0 Recommendd Decision at 15625-26, par. 77.
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Federa CommunicatioDS CommisB FCC 11-32
recommended that the Commission begin trsitioninp Lifeline to support broba by faciltang pilot
progrs to tes different progr design elements.48 More rently, in its review of the Lifeline and
Link Up progr, the GAO highlighted the importce of developing a nees assment for the design
of any new.trogrs and to detennine wheter existng pros ar meeing the nee of the taete
population. 86 The GAO also noted that agencies should develop implementaion and evaluaion plas
when conducting pilot progrs to incre confdece in the reults of such progrS.48
274. The Commission host a roundtle discusion las summer to solicit input on pilot
progrs to integr broadbad as a suprt seice under the ptogr.488 Paricipats discuss a
number of critical issues, including goals for supportg brobad thugh the low-income progr the
importce of addrssing baer in addition to the cost of seice, what existig data and infonnation is
available on broadband service and adoption for low-income individuals, and pilot progr mechanics
and operation.489 Paricipants in the roundtble discussion and other steholders have suggeste that
they ar explorig ways to conduct low-income broadband pilot projects.490
%. Support for Broband
275. The Commission seks comment on revising the defmition of "Lifeline" to ensur it is
keeping pace with the needs of low-income households, consistent with the sttutory principle that
"consumers in all regions of the countr, including low-income consumers. . . should have access to
telecommunications and infonnation serviceS.',491 Lifeline/Lin Up does not curtly support
broadbad. We seek comment on whether the Commission should amend the definition of Lifeline to
explicitly allow support for broadband.
276. As noted above, the Commission has sought comment in the USF/ICC Transformation
Notice on whether to make broadband a support seice and has sought comment on extending
universal service support to broadband. If the Commission does not make broadband a supported service,
what would be the legal basis for our authority to support brband in the Lifeline and Link Up
progr? Ifthe Commission makes broabad a supprt seice, what are the assoiated pratical and
operational chalenges that we would need to address when expanding Lifeline support to broadband?
For exaple, how should a broadbad Lifeline service be defined and meaurd? Should Lifeline support
be available on services that do not meet whatever spe thshold the Commission ultimately adopts for
485 NATIONAL BROADBAND PLAN at 173.
486 2010 GAO REPORT at 30. See Letter from Julius Genachowski, Chairan, Federal Communications
Commission to the Honorable Joseph 1. Lieberman, Chairan Committe on Homeland Securty and Governental
Affai, United States Senate (Feb. 2, 2011) (ageing with the GAO recommendation to conduct a needs
assessmentXCommission Senate Lettr).
4872010 GAO REPORT at 30-31.
488 See Roundtable Discussion.
489 See Roundtable Agenda Public Notice; Roundtle Diussion.
490 See Lettr frm Jonathan Ban, Senior Vice Prident, Law and Policy, United States Telecom Association, to
Marlene H. Dortch, Secrta, Federa Communications Commission, GN Docket Nos. 09-47, 09-51, 09-137 (fied
Jan. 25, 2010) (USTA Jan. 25, 2010 Ex Parte Letter); Lett from Kelley Dune, CEO, One Economy Corporation,
and Ken Eisner, Manging Director, OE Ventu, to Hon. Julius Genachowski, Chair, Federal Communications
Commission, Docket No. 03-109 (filed Feb. 10,2011) (One Economy Broadband Pilot Proposal); see also Nort
Carlin Economic Development Center, E-NC Lite-Up Prgr htt://ww.e-nc.orglpublic/nc lite up (last
visited Mar. 2, 2011).
491 See 47 U.S.C. § 254(bXl),(3); see also 47 U.S.C. § 151.
86
Fedra Co..unitins Commisn FCC 11-32
pus of seng infrtrctu deployment reuireents under th Connec America Fund? For
instace, some paies have suggeste tht for purpse of Lifeline, consumers should be fr to choose to
use discunts on services that prvide 768 kb~ or 1.S Mbps downst, raer than being forc to use
the discunt only on higher-spe offerings.4 2 ShOuld ther be any minimum perfonnance reuirements
for Lifeline brband offerngs?
277. What would be the appropriat frework for detining supp levels for brbad
services, given that the price of the retail service is not regulate at eithr the fedl or state level? We
ar mindful of the nee to ensur tht contrbutions to our universl service suppo mechanisms do not
jeopaiz our abilty to promote quality services at afordable raes for all cosumers. How should we
balan these competing goals as we consider modrnizing Lifeline and Linkup to suppo broaband?
278. Ifbroabad is mae a supprt service, should we impose any tenns and conditions on
the Lifeline support th is available for broabad? For exale, should there be any limitations on the
tys of services that are offere as pa of a Lifeline plan? We sought comment abve on whethr low-
income hoseolds should be able to use their Lifeline discounts on any plan with a voice component;
should ETCs similarly be reuir to offer Lifeline discunts on all broaband plans, or just some? We
note th severl wireless ETCs currently offer text messaging services as pa of their Lifeline callng
plans.493 Shold consumers be peitt to select "da only" Lifeline plans? Is there a risk tht low-
income houselds might incur excessive chages for data plans, absent some fonn of data or usa ca?
We no th some Lifeline consumer alre subscribe to broadband services.494 We ask that ETCs
provide any data they may have regading broabad subscribership among curt Lifeline reipients.
We also regnize that our analysis of these questions may depend, in par on what we lear from the
broadbad pilots describe below.
3. Broband Pilot
279. We propose to se aside a discrete amount of universal service funds relaimed fr
eliminating ineffciencies and/or waste, frud, and abuse to crete a pilot progr to evaluate wheter and
how Lifeline/LinkUp can effectively support broadbad adoption by low-income households. A
broabad pilot progr could help us gather comprehensive and staistically significat data about the
effectiveness of different approaches in making broadband more affordable for low-income Americas
and providing support that is suffcient but not excessive.495 This data could assist th Commission in
considering the costs and benefits of varous approahes prior to using Lifeline to support broadba on a
pennanent basis. We reognize that the ultimate succss of using Lifeline fuds to support bradband
may hinge on the suffciency and effectiveness of preliminar testing conducted though a pilot progr.
As identified by the GAO, the Commission has recognize the importce of developing an assessment
492 See, e.g., Cox Communications Comments, GN Doket Nos. 09-47, 09-51, 09-137, at 12 (filed Dec. 7, 200);
AT&T's ETC proposal, infra note 533; Hugs Network Systems, LLC and WildBlue Communications, Inc., Joint
Reply Comments, GN Doket No. 09-51, at 7 (fied July 21,200).
493 See, e.g., GCI, Lifeline Rurl Wirless Service, htt://wireless.gci.comlcatalog/ifeline-rural-p-154.html(offers
unlimite text messaging with all calling plas) (last visited Mar. 2, 201 I); SafeLin Wireless Raises the Lifeline
Offerg: New York htt://ww.cell-phone-plans.netllog/cell-phones/safelin-wireless-raises-the-lifeline-
offering-new-york! (detailing TraFone's new Lifeline plans that include one text message in exchange for one
minut of provide voice service) (last visite Mar. 2, 2011).
494 Cl Broadand Adoption and Use in America at 7 (stating that 40 percent of low-income Amercans with anual
houshold incomes at $20,000 or below have broadbad).
495 See supra pa. 37-41 (propoing, as a performance goal, to ensur that Lifeline/Link Up provides suppo tht
is suffcient, but not excessive).
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Federa Communications Commin FCC 11-32
of the telecmmunications nees of low-income housholds to infonn the design and implementation of
broadbad pilot prgrS.496
280. Scope o/the Pilot Program. We propose using the pilot progr to fund a series of
projects that would test differet approaches to providing support for brobad to low-income
consumers across different geographic ar. The projects could also tr to tae into acunt unique
barers faced by certin grups of low-income non-adopter such as Tribal communities or Americas
for whom English may be a second langue. While individua projects might involve only one tye of
provider or technology, the overal objecve would be to design a pilot progr tht would be
competitively and tehnologically neut.
281. We propose stctung the pilot prgr as a joint effort among the Commission, one or
more broadbad providers, and/or one or more non-profit intuions or independent resehers with
experience in progr design and evaluation.49 The pilot also could include paricipation from other
staeholders such as private foundations; non-profits experience in outrh and digita literacy trining;
desktop computer, laptop, or mobile device manufacts or retilers; and stte social service or ecnomic
development agencies. We seek comment on these proposals to strctu the pilot progr as ajoint
effort among a varety of staeholders focused on conducting a series of project to test different
approahes to providing support. We expct that the projects would test severa vartions on program
design, including experimenting with diferet techniques to combine discounts on service and/or
hardware with efforts to address other barers to broaband adoption such as digital literacy.
282. Consistent with our historic role in providing support for services and not equipment,49
we seek comment on fuding projects that would test varations in the monthly discount for broadband
services, including varations on the discunt amount, the duration of the discunt (limited or unlimited,
phased- down over time or constat), and the trtment of bundled services. We also propose to test
variations in Linkup-like discounts to reuce or eliminate instllation fees, acivation fees, or similar
upfront charges associated with the initiation of service. We seek comment on these proposals.
283. We prpose to requir at leat some pilot paricipants to either offer hardwar dirtly or
parer with other entities to provide the necessa devices as a condition of parcipating in the pilot
progr. The cost of customer equipment necssa to access the Internet (including computers or other
devices) has been shown to be a major baer to adoption, paicularly for low-income households.499
Some staeholders have suggested that the cost of Internet-enabled devices poses a significant burden on
an ETC's ability to provide affordble broaband to low-income consumers.soo It would be valuable for
pilot projects to test varations in discounts to reuce the cost of hardwar, including discounts for air
cards or modems. Because we intend to evaluate the impact of ETCs' providing different tyes of
discounts on hardwar versus not providing any discount, some consumers would not be offered
496 Commission Senate Lett.
497 The National Broand Plan highlighted the importce of forming parerships across multiple staeholder
groups and simultaeously addressing multiple baers to adoption which may include cost of service, cost of
hadwar, digital liter and many other. NATIONAL BROADBAN PLA at 170-71.
498 See 47 C.F.R. §§ 54.101(a), 54.401(a)(3).
499 See Robert D. Atkn, The Informion Technology and Inovation Foundation, Policies to Increase
Broadband Adoption at Home (Nov. 2009), available at htm:/Iww.itif.orgfies/009-demand-side-policies.pdf
(Broadband Adoption Repor).
so Lettr frm David Cohen, Vice Presiden Policy, US Telecom, to Marlene H. Dorth, Secr, Federa
Communcations Commission, CC Docket No. 96-45, WC Doket No. 03-109, at 2 (Febru 23,201 I) (US
Telecom Broadband Pilot Prposal).
88
Federa CommuDitiDS Commin FCC 11-3%
discunte harwar. If we reuire some applicats for pilot pr fuing to offer discunte
harwa, should all applicats be reuire to ag to do so even though we do not expt al consuers
to reeive discounts? We sek comment on thes propols.
284. We propo tht applicants for pilot pr fuing shuld be pr to expemet
with differet appraches to overcoming digital lite baers, ot no-c baer to adoption, and
varations in oth progr design elements that may help the Commission implement a pennent
support mechanism. The National Broadbad Plan and subsequet reh idetified the lak of digital
literay among low-income Americas as a major baer to brobad adion.soi Skills such as being
able to us a computer or other Internet-enabled device to retreve and intre infonnaton or to
communicate and collaborate with other us, and even such fudaenta sts as navigating a websit
and creng a usame and password may pose significant difculties for may consumers. Any
progr seking to effecively incre adption of brbad may nee to addr this baer. We
speifically sek comment on what subst of the following additional progr design elements should be
tested:
. Training methods;
. Outrch methods;
. Contrt ters;
. Pruct offerngsservice rections or reuirments (such as esblishing minimum or
maimum spe offerings for consumers pacipating in the pilot); and/or
. Administtion/enrllment metod such as automated enrllment though low-income
housing facilties or other social service entities.
We also sek comment on how the Commission should tae into account elements beyond its contrl,
such as progrs or services provided by the private setor, other governental agencies, or non-profits
in conjunction with support provided as pa of a broadband Lifeline and Lin Up progr.
285. We intend for the pilot progr as a whole to test the impact of these varng factors; we
ar not suggesting that each project funded through the pilot test every variable of interest to the
Commission. We seek comment on this proposal. We also ask commenters to consider how may
settings of key varables should be tested for each progr design element (e.g. discount amount, durion
of the discount). How may households should paricipate to test eah element and varation in a way
suitale for generalizing to a lare sce progr? Should all elements be tested simultaeously, or
should they be sequenced in some maner?
286. We note that the goal of the pilot progr is to conduct expements to collect
informtion that would help infonn futu policy decisions. The pilot is not inteded to have an
immediate impact on low-income consumers on a lare-scle. Similarly, the stct and rules
govering pilot projects may differ in importt ways frm rules that the Commission may ultimately
adopt to expand Lifeline to support broadbad.
287. Pilot Program Funing. We sek comment on how much money should be alloc to
support discunts on broadband and adinisttive costs assoiated with the pilot projects. Because th
goal of the pilot progr is to conduct test projects that would produce meaningfl data by exprimenting
with different progr design elements, we believe that only a relatively small saple size is needed to
SOl NATIONAL BROADBAN PLAN at 174; see NT DIGITAL NATION, at 9 (noting tht level of education is a stng
preictor of bradd us among adults).
89
Federa Communications Commisn FCC 11-3%
develop sttisticaly valid results.502 Dending on the paeters assesse by difft pilot prgrs,
the progr may be able to gather sttistcally valid data from a smaller numbe of paicipating
households.
288. Consistnt with our over-arhing objective of ensurng fisc reponsibilty, we propo
to fud the pilot projects by utilizng at lea some of the savings frm the proposal to eliminte
reimbursement for Toll Limitation Services, as well as some of the savings relize by eliminating was,
frud, and abuse from the progr.503 USAC's most ret projections forecat total anua 201 1 TLS
support of approximately $23 milion.50 Ar ther other fuding sours available that we should
consider in implementing these pilot progrs? Should we reuire entities applying for pilot progr
fuding to contrbute some sort of matching fuds or in-kind contrbuon?
289. Duation of Pilot Program. Commenters have remmended pilot progrs raging
frm six months to multiple yea.505 USTelecom suggest, for instace, th a period of 18 to 24
months would be needed to produce "meaingfl da that would peit the Commission to thoughtflly
design a pennanent progr.,,506 We sek comment on the appropriate durion of a pilot progr.
Commenters who suggest schedules should explain the relative advantages and disadvantages of speific
lengts oftime.507
290. At the Commission's broadbad pilot roundtable, several paies suggested that it might
be appropriate to provide subsidies onl~ for a limited period of time to address the initial adoption hurdle
of realizing the benefit of broadband.
50 If some of the varables tested include variations on the lengt of
time that a subsidy is available or a reduction in the amount of subsidy over time, for how long would
researhers need to follow subscribers af the reucton to test whether adoption outcomes sty the
same, or whether consumers drop service when the subsidy is eliminate or reduce?
291. Role of the States. We sek comment on the role that sttes should play in any pilot
program integrating broadbad service into the low-income progr. For instace, could states assist in
identifying taget populations or assist in administtion? Ar there services or fuding support that states
ar uniquely situted to provide in a brobad pilot progr? How should low-income universal service
support for broadband be integrted into other federl, state, regional, private, or non-profit progrs that
help addrss barers to broadband adoption?
292. Consumer Eligibilty To Participte in Pilot Projects. We propose using the Lifelin
502 See US Telecom Broband Pilot Prposal at 3; see also e-NC Authority, htt://ww.e-nc.orgpublic/nc lite up
(describing pilot progr taeting only 270 housholds).
503 See supra Section iv (Imediate Reforms to Eliminate Was, Fraud and Abuse).
504 USAC 2Q 20 i 1 FILING, at 17.
505 See, e.g., Letr from Chrstopher Savage, Counl, Nexus Communications, to Marlene H. Dorth, Secreta,
Federal Communicatons Commission, WC Docket 03- 1 09; CC 96-45 at 2 (Nexus Communicatons Broadband
Pilot Prposal) (proposin a 6 month pilot); Michigan Public Service Commission Comments, WC Docket No. 03-
109, at 5 (filed Nov. 26, 2008) (encourng the Commission to extnd by 2 years a pilot progr originlly
proposed for 3 year if the pilot is successful).
506 USTelecom Broadband Pilot Propsa at 1.
507 Some staeholder have expresse concern abut delaying a wide-scale launch of a low-income support
mechanm for broadand while the Commission conducts fuer anlysis by failtating pilot progr or though
other mean. At the same time, others have wared abut the dagers of impatience and sugested that it would
tae at leas two to the year to evaluate th results of a well-ru pilot. See Roundtable Discussion.
508 See Roundtle Disussion.
90
Federa CommunicatioDS Commisn FCC 11-32
eligibilty rules curtly in effect in fedra default stes as a unifon se of consumer eligibilty
reuiments to be use in all pilot projec. We believe unifonn eligibilit rules wil lower
administve cost asiate with the pilots and help the Commission more easily compa re frm
differt pilot projec. Is there any ren to allow some pilot projec to deviat frm the feder default
rules? For exaple, should the Commission consider funding a pilot prject th test th impact of
more stngent or more lenient eligibilty reuirents to help ass the potential impa such
reuirements might have? Alternatively, ar th rens that the Commission should consider pilot
projects that limit eligibilty to a more narwly defined grup of housholds curntly eligible under the
federl default rules, such as housholds with childr pacipating in the National School LunhProgr'f
293. Eligibüity To Apply for Funingfor Proposed Pilot Projects. We seek comment on
whether fuding for the pilot progr should be limite to ETCs or wheter non-ETCs could be eligible
to receive fuding durng the pilot. Several commenters have suggeste eligibility for fuding for
broabad pilots, or any broadbad Lifeline support should be indepedet frm the tritional ETC
reuirments established under seion 214 of the Act.S10 Could we forb frm our curnt ETC
requirements to allow non-ETCs (e.g, broband providers who ar not ETCs or non-providers) to
paricipat in the pilot? Forbarce frm our ETC reuirements may encoure paricipation by a
grter number of brobad providers. Wh are the advantaes and disavantaes of having a larger
number of providers sek fuding for pilot projects?
294. We propose to allow non-ETCs (e.g., non-providers) to submit applications for pilot
funding provided they have identified ETCs, which would reive the support disbursents, as paers.
We believe allowing non-ETCs to apply for fuding may incree paricipation by allowing ETCs to rely
on other entities to help with pilot progr administrtion. This approch may also encourge more
multi-staeholder parerships designed to simultaeously addrss multiple baer to adoption. We seek
comment on this proposal.
295. We also seek comment on limiting progr pacipation to ETCs that paer with
entities approved by the NTIA's State Broadband Data & Development (SBDD) Prgr. The SBDn
progr, led by state entities or non-profit orgaizations working at their diretion, faciltates the
integration of broadband and infonnation technology into sta and local ecnomies.si The progr
awared a total of $293 millon to 56 grtees or their designees and the grtees use this funding to
support the use of broadband technology.Sl2 Among other objectives, these stte-creted projects use the
grts to researh and investigate barers to broadband adoption and created stte and local tak forcs to
expand broadband access and adoption. ETCs could work with the SBDD grtees and other
staeholders to develop pilot projects that integrte federal universl service support into a ste's existing
or planned adoption effort. The potential benefits of encourging ETCs to paer with these SBDD
grtees to parcipate in this pilot progr are numerous: Eah of the grantees was selected by a state
S09 Ler frm Steven F. Morrs, National Cable & Telecommunications Association, GN Docket No. 09-51, WC
Docket No. 05-337, CC Doket No. 96-5 (filed Dec. 4, 2009).
S10 See, e.g., AT&T's ETC Prposal, infra note 533; Supporting Broadbnd Accessfor Users of Video and IP-Based
Communications who are Deaf Hard of Hearing, Late-Deafened, or DeafBlind, or who have a Speech Disabilty,
WC Doket No. 03-109, CC Doket No. 96-45, at 23 (filed Oct. 30,2008); AT&T Comments, WC Doket No. 96-
45, WC Doket No. 03-109, at 53 (fied Nov. 26, 2008); Qwest Communications Comments GN Doket Nos. 09-
47,09-51,09-137, at ii-ii (filed Dec. 7,2009).
S11 State Broadbad Data & Development Prgr: BroadbadUSA - NTIA, htt://ww2.ntia.doc.gov/SBDD (lat
viited Febru 28, 201 I).
S12Id
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Federa CommunicatiDS Commin FCC 11-32
governent that may be well poitioned to develop ta stte-specific adoption aphes; may of
the grtes have expeence with trining, outreah, and sunounting baer to adopton; and such a
pilot could leverae the work alredy conducte by NTIA such as the due dilgence it peonned on the
grtees and ongoing progr oversight over those grte. We sek comment on limiting eligibilty in
the pilot progr only to ETCs tht ar paerig with SBDD grtes. Is there another group of federl
or state progr grtes that we should consider including in the pilot?
296. Proposals. We prpoe to reuire entities intested in applying for pilot progr
fuding to submit specific infonntion about the propo project, such as applicat infonnation,
including any and all private or corpra paer or invesors; a detailed description of the progr,
including lengt of opetion; prouct offerigs and seice restctons; discount or disunts provided,
the durtion of the discunts; trtment of bundled services; whether discounts would reuce or eliminate
instllation fees, activation fees, or other upfront cost; how to addrs (if at all) the cost of hardwar,
including aircds, modems, laptops, desktops, or other mobile devices;513 trining and outrach; testing;
identification of costs associatd with implementing the progr, including equipment and trining costs;
how the project complies with relevant program rules, adequaly protects against waste, frud, and
abuse, and achieves the goals of the progr discusse above. We also propose to require applicants to
provide a brief description of how their progr would help infonn the Commission's futue decision-
making relate to providing low-income support to broadband on a nationwide basis. We seek comment
on this process for submission of pilot prposals.
297. Pilot Evaluation. We sek comment on how to evaluae the results of pilot projects and
what reporting requirements should be adopte for pilot parcipants. How could the Commission
evaluate wheter approaches tested durng the pilot progr fuer the proposed goal of providing
affordable broadband service? Should one goal of the pilot be to test the impact of the project's approh
on increasing adoption? For instace, should we assess the total number of new adopters; new adopters
as a percntage of eligible progr paricipants; the number of progr paricipants as a percentage of
eligible paricipants; average percentage of paicipats' discretionar income spent on discounte
broadbad service though the pilot relative to the national average percentage of household discreionar
income spent on broadband? How could we evaluate the relative impact of the service discount compared
to other potential factors that may be test, such as the provision of trining or equipment? We propose
that the Commission also seek to develop infonnation about the cost pe parcipant and cost per new
adopter thugh the pilot progrm. This infonnation could asist the Commission in assessing the costs
and benefits of paricular approaches to wheter broadband should be supportd, and if so, how. We sek
comment on this proposal and whether there ar other tys of da that the Commission should review to
evaluate whether a given approach would provide support that is suffcient but not excessive.
298. We seek comment on other tyes of information the Commission should consider when
assessing projects fuded though the pilot progr. For instce, how best can the Commission evaluate
progr adinistrtion costs and the feaibilty of expading any given test project to a national scale?
299. Delegation of Authority. We propose to delegate authority to the Wireline Competition
Burau to select pilot parcipants and tae other necessa steps to implement the proposed progr. We
seek comment on this proposal.
300. Previously Submitted Proposals. A number of entities have develope and submitt
ideas for different tys of broadbad low-income pilots.Sl For instace, US Telecom explains that an
effcient broadband pilot progr design should include thee components: researh; progr design and
S1 See Roundtable Disussion.
514 US Telecom Brodband Pilot Proposa; Nexus Communications Broadband Pilot Prposal; One Economy
Broadand Pilot Prsal.
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Federa Communictions Co.1U FCC 11-3%
implementation; and evaluation.sis Nexus Communications pr tht a br pilot be couc
in four differt cities using "smar phones" that would enable th Comissio to obt re-wor da
with rega to community response to four different pricing an se argements.Sl6 On Ecnomy
proposes two disct pilot progrs, one involving a 4G public prvat pahip an an on
involving a revers auction design.sl7
301. We sek comment on thes proposas. We ask coente to identify how th
proposals could be improved or altere and to explain how any meaur tht they sugst ar cosist
with our propo goals of ensurng just renable, and afordle seice and prviding supp that is
suffcient but not excessive.
302. Finly, as discuss abve, a number of oter brbad adopton prs ar
currntly underway, and other staeholder have suggest th they may conduct their own prjects on
these issues. We ar interested in leaing more about the st of these prjects and what da we ca
gather from those effort. Is there infonnation or data tht the Commission is uniquely positined to
gather? What da ca the Commission rely on outside soures to collec and how could it design pilots
to complement any private ser researh effort? Can the Commission gaer suffcient infonnon
from existing adoption progrs to inform its policies suffciently to implement a long-te low-income
support for broadbad progr without launching Lifeline and Lin Up pilots? We welcome infonnaton
frm indust, acemic institutions, governmental agencies, and other steholders that could asist in
our evaluation of stregies to extnd Lifeline to brobad.
C. Eligible Telecmmunicatins Carrer Requirements
303. Background Section 254(e) of the Act limits universl service sUllsrt including
Lifeline and Link Up support to ETCs designated under setion 2l4(e) ofthe Act. 8 Section 214 of the
Act, in tu, reuires that ETCs use their own facilties, at least in par to provide services support by
universl service and requires caer to engage in a two-stae "redefinition" procs before caers may
serve certin rul service aras. Sl When Congress first adopte-and the Commission first
interprete-tese requireents, the focus was on paricipaion by ETCs in the Commission's high-cost
progr and the nee to encourage ETCs to invest in infrtrctu to cover new aras and reduce the risk
of cre skimming. S20 In this setion, we sek comment on wheter those requirments remain necssa
and in the public interest for parcipants in the Commission's progr. We also consider wheter thes
requirments should be modified if we moderniz the progr to support broadband.
304. Since 2005, the Commission has grted forbce eight times to carers seking to
paicipate in the Lifeline progr without using their own facilties to provide service.S21 In each ca,
SIS US Telecom Broadbad Pilot Prposa.
S16 Nexus Communicaons Broadband Pilot Prposal.
S17 One Economy Broadbad Pilot Prposal.
S18 47 U.S.C. § 2S4(e).
S1947 U.S.C. § 214(e)(l)(A) (requirg an ETC to "offer the seices that ar supported by Fedral univerl serce
support mechaisms. . . either using its own failties or a combintion of its own facilties and resae of another
carer's serices"), 214 (e)(S) (defiing seice aras for ETCs); 47 C.F.R. § 54.207 (estlishing the procs
carers must use to redefie a rul seice ar).
S20 See, e.g., Universal Serice First Report and Orde, 12 FCC Red at 8861-76,8880-3, pa. IS0-0, 186-91.
S21 See TracFone Forbearance Order; Virgin Mobile Forbearance Order; i-wireless Forbearance Order; Global
Forbearance Order; Telecommunications Cariers Eligible for Universal Service Support,' Federal-State Joint
(continued....)
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Federa Communicatins Comaiion FCC 11-32
the Commission ha concluded that the use of a caer's own facilties when pacipag in the Lifeline
progr is not necesa to ensur just and reasonable rate or to protet consumers and is in the public
interet so long as the caer grte forbce fulfills ce conditions. S22 And in eah ca, the
reseller seeking to pacipate in the Commission's Lifeline prgr has gone thugh the sae prss:
filing a forbece petition with the Commission and respnding to comments and concerns abot that
petition; filing a compliance plan with the Wireline Competition Buru and responding to comments and
conces about that plan; and filing ETC designation petitions with the Commission or th states and
responding to anoter round of comments and conce. This multi-ste procss may tae yea to
complete, costing companies time and money and placing a not insignificant burden on Commission
resours.
305. The National Broadbad Plan remmended that any broadbad provider meeing critera
established by the Commission - wheter wi or wireles fixed or mobile, terrstral or satellte -
should be eligible to paicipate in Lifeline/ink Up.S23 In the Connect America Fun Notice, we sought
comment on whether the Commission should esblish Lifeline-nly ETCs, in the event it extends support
to broadband.
306. Discussion. We sek comment on whether the Commission should forbear from
applying the Act's facilties requirement to all carers that seek limited ETC designation to paricipate in
the Lifeline progr.S24 Should every wireless reseller be eligible to become an ETC so long as it fulfills
the conditions we have previously impose as conditions of forbearancer2s If so, should the Commission
adopt rules codifying the conditions rater than imposing them on a case-by-cas basis?
307. Some of those conditions previously impose on reseller may have some benefit even if
applied to facilities-basd caers that paicipate in the Lifeline progr such as the condition that
carier dirctly deal with their customers (raer than us a thir-par intennediar, like a retailer).s26
Should the Commission adopt any of these conditions as rules tht would apply to all ETCs that
paricipate in the Lifeline progr? Oter conditions-uch as the reuirement to provide appropriate
(Continued from previous pae)
Board on Universal Service; Conexions Petition/or Forbearance, WC Docket No. 09-197, CC Docket No. 96-45,
Order, 25 FCC Rcd 13866 (2010) (Conexions Forbearance Order).
S22 See, e.g., Conexions Forbearance Order, 25 FCC Rcd at 13868-72, par. 8-20.
S23 NATIONAL BROADBAN PLAN at 173.
S24 47 U.S.C. § 160(a) ("(T)he Commission shall forb frm applying any regulation or any provision of this Act
to a telecommunications carer. . . or class of telecommunicaons carers" in certin circumstaces.").
S2S See, e.g., i-wireless Forbearance Order, 25 FCC Rcd at 8788,8790, par. 11, 16 (conditioning forbearce on i-
wirless (1) providing its Lifeline customer with 911 and enhce 911 (E911) access regardless of actvation
sttus and availabilty of prepaid minutes; (2) providig its Lifeline customers with E911-compliant hadsets and
replacing, at no additional chage to the cusmer, noncompliant hadsets of existig customers who obtain Lifeline-
supported servce; (3) complying with conditions (1) and (2) as of the date it provides Lifeline serice; (4) obtaining
a cerfication frm each public safet answerig point (PSAP) wher the carer seeks to provide Lifeline servce
confiing that the carer provides its customer with 911 and E911 acssorself-crtifYingthat it does so if
certin conditions ar met; (5) requirg eah customer to self-crtfY at tie of service activaton and anually
thereafr that he or she is the head of household and reives Lifeline-supportd seice only frm tht carer; (6)
estalishing safegu to prevent its customers frm receiving multiple Lifeline subsidies from tht carer at the
sae address; (7) dealing dirctly with the customer to certifY and verfY the customer's Lifeline eligibilty; and (8)
submittg to the Wirline Competition Burau a compliance plan outlining the measures the carer wil tae to
implement these conditions).
S26 See, e.g., i-wireles Forbearance Order, 25 FCC Red at 8790, pa. 16.
94
Federa Coamunicati Com...FC 11-3%
accs to 91 1 an E91 1 -my be applicale to failtiesba ca th us th own failit on in
pa.527 Should the Commission adopt such conditions as rules th would aply to ETs th us otcaers' failties to offer access to emergency seices? In shor wh ru shld th Coisio
adopt if it for frm the failties reuirt for a class of caer~
308. More broly, should the Commission conside ising bla fo fo ot
purses? For exaple, several carer have reuest forb fr th failites reuirt for
purses of pacipating in the Commission's Link Up progr but the Coission ha thus fa foun
that no caer ha shown tht such forbce would be in the public inte.529 Wou bla
forbece fr the failties reuirent for this purse, tag into acunt th diffce between
the Lifeline an Link Up progrs, be in th public intest? Wh rule would be nec to ensur
that any such forbce prtects consumers is in the public inte and would not enure wa,
frud, and abus of universl service fuds?
309. Oter caers have reuest forbe from the Act's refiit pross as applied
to low-income-only ETCs.530 Should the Commission consider forbarg frm this prss for a clas of
carers, and if so, what rules and conditions would be necss to protec the public interest?
310. AT&T has propose that the Commission adopt an entily new ETC regulatory
frework. Speifically, AT&T ares that we should allow all provider of voice and broadbad
services to provide Lifeline discunts on a compeitively neutrl bais wher they offer service.S3 Under
this propol, we would estblish a "Lifeline Prvidet' registrtion process wherby provider
paicipation is not tied to the existing section 214 reuirements or ETC designtions, and not necessaly
mandatory. Under this frework, each provider of eligible voice and broadband Inteet acess service,
including resellers and wirless providers, would be eligible to provide Lifeline discounts to qualifying
households in the aras where the provider offer the service.532
31 1. Consistnt with this alternatve approach, AT&T proposes that the Commission ablish
the curnt Lifeline tier support strctre set fort in setion 54.403 of our rules and replace it with a flat,
fixed-dollar discount amount that could be applied to the retal price of one eligible voice service and one
eligible broadband service.S3 Similarly, AT&T proposes a flat discount approach to Link-Up. AT&T's
ETC proposal also includes a recommendation tht we automate progr eligibilty and verification
processe and procedurs, which is discussed in more detail above in the Dataas seon of this Notice.
527 See, e.g., id at 8788, par. n.
528 For example, the Wirline Competition Buru reently conditioned Virgi Mobile's designtion as a Lifeline-
only ETC in cein stas on volunta commitments Virgin Mobile made to implement produrs to gu agst
waste, frud, and abuse of its Lifeline seice. See Virgin Mobile 2010 ETC Order, 25 FCC Red at 17805, par. 24.
Should any of the conditions imposed in th order beme rules for all carers th receive forbarce?
529 See, e.g., i-wireless Forbearance Order, 25 FCC Red at 8791-92, pa. 21.
530 See, e.g., NTCH, Inc. Petitionfor Forbearancefrom 47 U.S.c. § 214(e)(5) and 47 C.F.R. § 54.207(b), WC
Docket No. 09-197 (filed Mar. 5, 2010); Criclct Communications, Inc. Petition for Forbearance, WC Doket No.
09-197 (filed Jun. 21,2010).
531 Lettr frm Jamie M. Tan AT&T, to Marlene Doh, Se, FCC, WC Docket No. 03-109, ON Doket Nos.
09-51,09-47,09-137 (filed De. 22, 2009) (AT&T's ETC Prpol).
532id.
533 Id See supra pa. 245-47 for a dission on lifeline support amounts and th curt tier Lifeline support
strct.
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Federa CommunicatioDS Commion FCC 11-3%
312. We sek comment on AT&T's prposal, which would enable all prvider of voice an
broadband seices to offer Lifeline discunts to eligible low-income households. In paricular, we ask
commenters to addrss: (1) Wheter the curnt ETC designtion pros should be revise for Lifeline
providers and, if so, how; (2) wheter curnt ETCs should be able to opt out of providing Lifeline
serices; (3) whether it should be mandaory or optional for ETCs to paicipae in the Lifeline progr;
(4) whether consumers should be entitled to a single discunt off of a single seice or wheter consumers
should be allowed to reeive multiple Lifeline discunts on multiple seices, (e.g. voice and broadbad);
(5) how this new regulatory frework would be adinist (6) what processes and procurs would
be necssa to support this new frework; (7) wha additional sts the Commission should tae to
guard against waste, frud, and abus in the progr if additionl providers offerig multiple services
were to parcipate in the progr; (8) the legal bais for adoptng such a proposa; (9) wheter ther ar
any issues we would nee to account for in tes of trsition to this ty of model, such as service
contrcts; and (10) how this proposal would impact the states, including their curent roles assoiated with
grting ETCs autorit to opera in their states and overseeing their perfonnance.
X. OTHR MATTRS
313. We propose to eliminate setion 54.418 of our rules, which require ETCs to notify low-
income consumers of the DTV transition. This rule is now obsolete given the completion of the DTV
trsition. We seek comment on this proposal.
XI. PROCEDUR MATTERS
314. The proposed rules ar atthed as Appendix A. In addition to the chages discussed
above, the proposed rules include non-substtive changes to the rules applicable to the progr. We
seek comment on such changes.
A. Paperwork Reduction Act Analis
315. This document contans proposed new infonnation collection requirements. The
Commission, as pa of its continuing effort to reduce paperwork burdens, invites the general public and
the Offce of Management and Budget (OMB) to comment on the infonnation collection requirements
contaned in this document, as requird by the Paperwork Reduction Act of 1995.534 In addition, pursuant
to the Small Business Papeork Relief Act of 2002,53 we seek specific comment on how we might
"further reduce the infonnation collecion burden for small business concerns with fewer than 25
employees. ,,536
B. Initial Regulatory FlexibiHty Analysis
316. As require by the Regulatory Flexibilty Act of 1980, the Commission has prepaed an
Initial Regulatory Flexibilty Analysis (IRA) of the possible significant economic impact on small
entities of the policies and rules addrsse in this document.537 The IR A is set fort in Appendix E.
Written public comments are requested on this IR A. Comments must be identified as responses to the
IRF A and must be fied by the deadlines for comments on the Notice provided on or before the dates
indicated on the firs page of this Notice. The Commission wil send a copy of the Notice, including this
IRF A, to the Chief Counsel for Advocy of the Small Business Administrtion.538 In addition, the
534 Paperork Reducton Act of 1995, Pub. L. No. 10413, 109 Sta. 163 (1995).
535 Small Business Paperwork Relief Act of2002, Pu. L. No. 107-198,116 Stat. 729 (2002).
536 See 44 U.S.C. § 3506(c)(4).
537 See 5 U.S.C. § 603.
538 See 5 U.S.C. § 603(a).
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Federa Communictins Commi FCC 11-32
Notice and IRFA (or summares theret) wil be published in the Fedl Rest.S39
C. Ex Ptu PretatiDS
317. The rulemaing this Notice initiates shall be tr as a "pit-bt-disclo"
proing in acrdace with the Commission's ex pae rules. S40 Per maing orl ex pae
presentations ar reminded that memorada summarzing the prntaions mus cotan sum of th
substce of the prentaions and not merely a listing ofthe subje discus. Mor th a one or two-
sentence description of the views and aruments presente generally is reuire.541 Otr reuirets
pertining to or and wrtt prentations ar set fort in seon 1. 1206) of the Comission's rule.542
D. Comment Filing Proure
318. Pursuat to setions 1.415 and 1.419 of the Commission's rules, 47 CFR §§ 1.415, 1.419,
interested paies may fie comments and reply comments on or befor the dates indica on the first
page of this document. Comments may be fied using: (I) the Commission's Electronic Comment Filng
System (ECFS), (2) the Federal Governent's eRulemaking Portl, or (3) by fiing par copies. See
Electronic Filng of Documnts in Ruemang Proceedings, 63 FR 24121 (1998).
. Electronic Filers: Comments may be fied electonically using the Internet by acssing the
ECFS: htt://fiallfoss.fcc.gov/ecfs2/ or the Federal eRulemaing Portl:
htt://ww.regulations.gov.
. Paper Filers: Paries who choose to fie by paper must fie an original and four copies of eah
filing. If more than one docket or rulemaking number appeas in the caption of this procing,
filers must submit two additional copies for each additional docket or rulemaking number.
Filings ca be sent by hand or messenger delivery, by commercial overight courer, or by first-
class or overnight U.S. Postal Service maiL. All filings must be addresse to the Commission's
Secret, Offce of th Secreta, Federl Communications Commission.
. All hand-delivered or messenger-deliverd papr filings for the Commission's Sereta
must be delivered to FCC Heauars at 445 12th St., SW, Room TW-A325,
Washingtn, DC 20554. The fiing hours are 8:00 a.m. to 7:00 p.m. All had deliveries
must be held together with rubbe bands or fasteners. Any envelopes must be dispse of
before entering the building.
. Commercial overnight mail (other than U.S. Postal Service Express Mail and Priorty
Mail) must be set to 9300 East Hampton Drive, Capitol Heights, MD 20743.
. U.S. Posta Service first-class, Express, and Priority mail must be addresse to 445 12th
Strt, SW, Washington DC 20554.
319. In addition, one copy of eah pap filing must be sent to eah of the following: (i) The
Commission's duplicatng contror, Best Copy and Prnting, Inc., 445 12th Street, SW., Room CY-
539Id
540 47 C.F.R. §§ 1.200U216.
54\47 C.F.R. § 1.206X2).
542 47 C.F.R. § 1.206).
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Federa Communicatins Commision FCC 11-32
B402, Washingtn, DC 20554; Web site: ww.bcpiweb.com; phone: [phone]; (ii) Kimberly
Scardino, Telecommunications Access Policy Division, Wire line Competition Burau, 445 12th Str
SW., Rom 5-848, Washington, DC 20554; e-mail: Kimberly.Scardino(gfcc.gov; and (ii) Charles
Tyler, Telecommunications, Accss Policy Division, Wireline Competition Bureu, 445 12th Strt, SW.,
Room 5-A452, Washingtn, DC 20554, e-mail: Charles.Tyler(gfcc.gov.
320. People with Disabilities: To reuest marials in acessible fonnats for peple with
disabilties (braile, large print, electronic fies, audio fonnat), send an e-mail to fcc504(gfcc.gov or call
the Consumer & Governental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tt).
321. Filngs and comments ar also available for public inspetion and copying during regular
business hours at the FCC Reference Infonnation Center, Portls 11,445 12th Street, S.W., Room CY-
A257, Washingtn, D.C., 20554. Copies may also be purha frm the Commission's duplicating
contractor, BCPI, 445 12th Strt, S.W., Room CY-B402, Washington, D.C. 20554. Customers may
contat BCPI through its website: ww.bcpiweb.com, bye-mail at fcc(gbcpiweb.com, by telephone at
[phone] or [phone], or by facsimile at [phone].
322. Comments and reply comments must include a short and concise summar ofthe
substtive arguments raise in the pleading. Comments and reply comments must also comply with
section 1.49 and all other applicable sections of the Commission's rules.543 We direct all interested
parties to include the name of the filing par and the date of the filing on each page of their comments
and reply comments. All paries ar encouraged to utilize a tale of contents, regadless of the lengt of
their submission. We also strongly encourge paies to trk the orgaization set fort in the NPRM in
order to facilitate our internal review process.
323. For furter infonnation, contat Kimberly Scardino at [phone] in the
Telecommunications Accss Policy Division~ Wireline Competition Bureau.
xu. ORDERIG CLAUSES
324. Accordingly, IT IS ORDERED that, pursuat to the authority contained in sections 1,2,
4(i), 201-205, 214, 254, 403, and 410(c) of the Communications Act of 1934, as amended, 47 U.S.C. §§
151, 152, 154(i), 201-205, 214, 254, 403, 410(c), this Notice of Propose Rulemaking is ADOPTED.
325. IT is FURTHER ORDERED that the Commission's Consumer and Governmental
Affairs Bureau, Reference Informtion Center, SHAL SEND a copy of this Notice of Proposed
Rulemaing, including the Initial Regulatory Flexibilty Analysis, to the Chief Counsel for Advocacy of
the Small Business Administrtion.
FEDERAL COMMUICATIONS COMMISSION
Marlene H. DortchSere
543 See 47 C.F.R. § 1.49.
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Federa COImunitiDS Commin FCC 11-3%
APPENDIX A
Propo Rule
For the reasns discus in the prble, the Federl Communication Commission pr to amen
47 C.F.R. Par 54 as follows:
PART 54 - UNRSAL SERVICE
1. The auority citaion for Par 54 contiues to read as follows:
Authority: 47 U.S.C. §§ 1, 4(i), 201, 205,214, and 254 unless otherise note.
2. Amend § 54.101 by removing subseion (a)(9), to re as follows:
§ 54.101 SupPOrt servce for rural, iDSalr and high cot are.
(a) Service designted for support. The following services or fuctionalities shall be supported by
federl univers supprt mechanisms:
(1) *****
(2) *****
(3) *****
(4) *****
(5) *****
(6) *****
(7) *****
(8) *****
(9) (Reserved)
3. Amend § 54.400 by revising subsction (e), adding new subsetions (b) and (e), eliminating
substions (b), (c), and (d), and resignting (b), (c), (d), and (e), to re as follows:
§ 54.400 Term and Definitions.
(a) Quifing low-income consumer. A "qualifying low-income consumer" is a consumer who me the
qualifications for Lifeline, as speified in § 54.409, and complies with the one-per-residence limitation, as
speified in § 54.402.
Federa Communicatins Commision FCC 11-32
(b) Duplicate support. Duplicate support exist when (1) two or more ETCs ar reiving Lifeline or
Lin Up support for the same residential addrss at the same time; or (2) an ETC is receiving two or more
Lifeline or Link Up support reimburments for the sae residece at the sae tie.
(c) Eligible resident ofTriballan. An "eligible residet of Triba lands" is a "qualifying low-income
consumer," as defined in pargrph (a) of this seon, living on a rervation or on Tribal lands
designate as such by the Commission. A "rseation" is defied as any federlly regnized Indian
trbe's reservation, pueblo, or colony, including fonner reseations in Oklahoma Alaska Native regions
established puruat to the Alaska Native Claims Settlement Act (85 Sta. 688), and Indian allotments.
"Tnbal lands" also shall mean any land designate as Tribal lands by the Commission for puroses of this
subpar puruat to the designation process in §54.402.
(d) Income. *****
(e) Customar charge for commencing telecommunications service. A "customar chare for
commencing telecommunications service" is the ordina chage an ETC routiely imposes on all
customers within a state to initiate service. Such a charge is limited to an actual charge assessed on all
customers to initiate service with that ETC. A charge impose only on Lifeline and/or Link Up customers
to initiate service is not a customar charge for commencing telecommunicatons service. Activation
charges waived, reduced, or eliminate with the purchase of additional proucts, services, or minutes ar
not customar charges eligible for univeral service support.
4. Amend § 54.401 by removing subsection (c), revising subsections (a)(3), to read as follows:
§ 54.401 Lifeline defined.
(a) As used in this subpar Lifeline means a retail local serice offerig:
(1) *****
(2) *****
(3) That provides voice telephony service as specified in § 54.l0l(a);
(b) (Reseed)
(c) (Reserved)
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Federa CommuDitins Com-..FCC 11-3%
(d) .....
(e) .....
5. Add new § 54.402, to re as follows:
§ 54.40 Triba lands designation pro The Commission may design spific ar as Tribal
lands for pur of this subp for ar or communities th fal ouide the bodaes of a
designate reseation, but which maitain the sae chacs as those defi. A reuest for
designaton must be fonnally reues by an offcial of a federly regnize Tribe wh ha prper
jursdiction and must be fied puruat to the Commission's rules. Goo caus for the designation
may be shown by: (1) providing evidence of a nexus between the ara or community and the Tribe,
such as identifyng an ar in which the federl governent delivers services to Triba citizens; (2)
detailng how program support to the ar would aid the Tribe in serving the nee and interests of its
citizens in that community and fuer the Commission's goals of providing Tribal support. The
region or community area associated with the Tribe, as outlined and desribe in a grt of
designation reuest shall be considere Tribal lands for the purposes of this Subpa.
6. Amend Section 54.403 by removing subsetion (c), revising subsetions (a) and (b), and adding a
new subsection (c), to read as follows:
§ 54.403 Lifeline supPOrt amount.
(a) The federl Lifeline support amount for all eligible telecommunications carers shall equal:
(1) .....
(2) .....
(3) .....
(4) Tier Four. Additional federal Lifeline support of up to $25 per month wil be made available to an
eligible telecommunications carer providing Lifeline service to an eligible resident of Tribal lands, as
defined in § 54.400(c), to the extent that the eligible telecommunications caer certfies to the
Administrtor tht it wil pas thugh the full Tier-Four amount to qualifying eligible residents of Tribal
lands and that it has received any non-federal regulatory approvals necessa to implement the reuire
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Federa CommunicatiDS Commis FCC 11-32
rate reuction, to the extt that: *****
*****
(b) Maximum Lifeline Support Amoun.
(l) For a qualifying low-income consumer who is not an eligible reidet of
Tribal lands as defied
in §54.400(c), the federal Lifeline support amount shall not exce $3.50 plus the taffed ra in
effect for the primary residential End User Common Line chare of the incumbent local exchange
carer serving the ar in which the qualifying low-income consumer reives service, as detennined
in accordance with §69.104 or §69.l52(d) and (q) of this chapter, whichever is applicable.
(2) For an eligible resident of Tribal lands, the federl Lifeline support amount shall not exceed
$28.50 plus that same End User Common Line charge.
(3) For a qualifying low-income consumer who purhass a bundled service packae or a service plan
that includes optional calling featues, the federal Lifeline support amount shall not exceed the
maximum Lifeline support amount as detennined in accrdance with § 54.403(b)( 1) or (b )(2) of this
subpar whichever is applicable.
(c) Application of Discount Amount. Eligible telecommunications carer that charge federal End User
Common Line charges or equivalent federl chages shall apply Tier-Oe federal Lifeline support to
waive the federal End-User Common Line charges for Lifeline consumers. Such caers shall apply any
additional federal support amount to a qualifying low-income consumer's intrtate rate, ifthe carer has
received the non-federal regulatory approvals necessa to implement the require rate reduction. Oter
eligible telecommunications carers shall apply the Tier-One federal Lifeline support amount, plus any
additional support amount, to reuce the cost of any eligible residential Lifeline seice plan or package
selected by a qualified low-income consumer that provides voice telephony service with the perfonnance
charctristics listed in § 54.l0l(a), an charge Lifeline consumers the resulting amount.
7. Amend § 54.405 by adding subsetions (e), and revising subsection (c), to read as follows:
§ 54.405 Carrer obliatin to offer Lifeline.
*****
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Federa Communitions Commi FCC 11-3%
(c) Termonfor Ineligibilty......
.....
(e) De-enroll for disqualifcaion. Notwthtading § 54.405( c) of this seon nofy Lifeline subsbe
of impeding tenninaton of Lifeline seice if the subsbe fals (1) to re to notificaon
regaring duplica support (2) to repond to ETC verification atpt ma puruat to § 54.4 i 0( d) or
(3) to us the supported service durng a 60-dy period. ETCs shall provide th subsbe 30 days
following the date of the impending teinaton letr in which to demonst tht Lifeline seice shall
not be tenninate. ETCs shall terinate the Lifeline seice if the subsbe fails to demonstr that
Lifeline service shall not be tenninatd. ETCs shall not sek Lifeline reimburment for the subsriber
during the 3o-ay peiod.
8. Amend § 54.407 by revising subsetion (b) and (d), to read as follows:
§ 54.407 Reimbursment for offering Lifeline.
(a) .....
(b) The eligible telecmmunications carer may receive universl serice support reimburment for eah
qualifyng low-income consumer who has us the supportd service to initiate or reive a voice cali
within the la 60 days.
(c) .....
(d) The eligible telecommunicaons caer seeking support must report parial or pro rata dollar when
claiming reimbursement for discounted services to low-income consumers who reive service for less
than a month.
9. Add new § 54.408, to red as follows:
§ 54.40 One-per-reidenee.
(a) Lifeline and Link Up support is limited to one Lifeline discunt and/or one Link Up discount pe
billng reidential addres.
(1) Billing Residential adess. For purp of the Lifeline and Link Up progrs, a "biling
residential address" is a unique residential addrs reogniz by the U.S. Postl Serice address.
103
Federa CommunicatioDS Commisn FCC 11-3%
(2) Lifeline and Lin Up support is available only to eslish service at the quaifyg low-income
consumer's prima residential addrs. The consumer mus initally certfy at enrllment tht the
consumer's biling residential addrss of re is his or her prima reidential addrss.
(b) To be considere an eligible consumer for th purse of Lifeline and Link Up support a
consumer mus meet the criteria set fort in seon §54.409 of the rules.
10. Amend § 54.409 by adding subsetion (cX3) and (d), revising substions (a), (c) and (d),
eliminating subsections (b) and (d), and reesignatig subsetions (b), (c), (cX3) and (d), to re
as follows:
§ 54.409 CODSumer qualification for Lieline.
(a) To qualify to reeive Lifeline seice, a consumer's household income, as defined in § 54.400(d), must
be at or below 135% of the Federal Povert Guidelines, or a consumer must paricipate in one of the
following federal assistace progrs: Medicaid; Supplemental Nutrtion Assistace Progr;
Supplemental Securty Income; Federa Public Housing Assistace (Secion 8); Low-Income Home
Energy Assistce Progr; National School Lunch Prgr's fre lunch progr; or Tempora
Assistace for Needy Familes.
(b) A consumer that is an eligible resident of Tribal lands, as defined by § 54.400( c) or § 54.402, shall be
a "qualifying low-income consumer," as defined by 54.400(a), and shall qualify to receive Tiers One,
Two, and Four Lifeline support if the consumer's residence: (1) has income that meets the theshold
estblished in § 54.409(a) or parcipates in one of the federal assistace programs identified in §
54.409(a); or (2) parcipates in one of the following Tribal-speific federal assistace progrs: Bureu
of Indian Affairs general assistace, Tribaly adinist Tempora Assistace for Need Familes
(T AN); Hea Sta (but only those households meeting its income qualifying stadard); or Food
Distrbution Progr on Indian Reservations (FDPIR). Such qualifying low-income consumer shall also
qualify for Tier Th Lifeline support if the carer offerng the Lifeline service is not subject to the
regulations ofthe state and provides carer-matching funds, as described in § 54.403(a)(3).
(c) Eah eligible telecmmunicatons carer providing Lifeline service to a qualifying low-income
104
Federa CommuDitioDS Com.ÏIn FCC 11-32
consumer puruat to pahs (a) or (b) of this seion must obn th co's signat on a
document cefying under penalty of peui that:
(1) The consumer's residence reives benefts frm one of the prs list in § 54.409 (a) or (b) of
this setion, and that the consumer prente documentation of prgr pacipaon, as desribe in
54.41O(), which acurtely reprets the progr parcipatin of the consumer's reidence; or the
consumer's reidence mee the income reuirment of § 54.40 (a) of this seion and that the consumer
presented documentation of income, as descbe in §§ 54.400(f), 54.410(a), which accurly reprents
the consumer's income; and
(2) If an eligible resident of Tribal lands, that the consumer lives on a reseaton or Tribal lands, as
defined in §54.400c) and § 54.402; and
(3) The consumer wil notify the carer within 30 days if that consumer ceass to pacipa in the
progr or progrs, if the consumer's income exceed 135% of the Federl Povert Guidelines, or if the
consumer otherise ceases to meet the criteria for reeiving progr support.
1 1. Amend § 54.410 by revising subsections (a) and (c), adding new subseions (b), (d), and (e),
eliminating subsctions (aXl), (aX2), (c)(I), and (c)(2), and reesignting subsetions (b), (c),
(cXl) and (cX2), to re as follows:
§ 54.410 Certfication and Verification ofCoDSumer Qualification for Lieline.
(a) Certifcation of income qualifcation. Pror to enrllment in Lifeline, consumers qualifying for
Lifeline under an income-bas criterion must presnt documentation of their income and certfy that they
wil be receiving support for only one Lifeline discount per residence. By six months frm the effective
date of these rules, eligible telecommunications carers in all states must implement cerfication
proedurs to document consumer-income-bas eligibilty for Lifeline prior to a consumer's enrollment
if the consumer is quaifying under the income-based criterion specified in §54.409(a). Acceptable
documentation of income eligibilty includes the prior year's ste or federl ta rern, curnt income
statement frm an employer or paycheck stub, a Social Securty stment of benefits, a Vetera
Administrtion stement of beefits, a retirement/pension stment of beefits, an
105
Federa CommunicatiDS Commis.FCC 11-32
UnemploymentIorkers' Compensation stateent ofbeefi feder notice letr of pacipaon in/
Genera Assistce, a divorce decre, child support or other offcia document. If the consumer prets
documentation of income that does not cover a full yea, such as curt pay stubs, the consumer must
present the same ty of documentation coverng th conseutve months within that calenda yea.
States that mandate state Lifeline support may impose additional stdas on eligible
telecommunications carers operating in their stes to ensur compliace with the state Lifeline progr.
(b) Certification of program qualifcation. Consumers quaifying for Lifeline under a progr-bas
criterion must present documentation of their household paicipaion in a qualifying progr and certfy
that they will be receiving support for only one Lifeline discunt per reidence prior to enrollment in
Lifeline. By six months from the effective date of these rules, eligible telecommunications carers in all
sttes must implement certification procedurs to document consumer-progrm-based eligibilty for
Lifeline prior to a consumer's enrllment if the consumer is quaifying under the progr-basd criterion
specified in §54.409(a) and (b). Accepble documentation of progr eligibilty includes the prior
year's statement of benefits from the progr, progr paicipation documents, federal notice letter of
parcipation in the progr, or other offcial document. If the consumer presents documentaion of
progr parcipation that does not cover a full year, such as curnt program benefits, the consumer must
present the sae tye of documentation coverg th conseutive months within that calenda yea.
States that mandate state Lifeline support may impose additional stadas on eligible
telecommunications carers operatig in their sttes to ensur compliance with the state Lifeline progr.
(c) Self-certifcations. After income and prgr bas certfication proedures ar implemented, eligible
telecommunications carers ar reuir to make and obtain certin self-certifications, under penalty of
perjur, related to the Lifeline progr. Eligible telecommunications caers must retain rerds of all
self -certifications.
(1) An offcer of the eligible telecommunications carer must cerify that the eligible telecommunications
carer has proedurs in place to review income and prgr documentation and that, to the best of his
or her knowledge, the carer was presented with documentation of the consumer's income qualification
106
Federa CODlmUltiu Comll FCC 11-3%
or progr pacipaon.
(2) Lifeline and Lin Up subscribe must initially cefy at enllmet an dur contiue verica
that they ar reiving support for only one line pe reidence, coisnt with the onpe-ridece
limitation as speified in § 54.408.
(3) Consumers quaifying for Lifeline under an income-ba cron must certify the number of
individuals in their reidence on the document reuir in § 54.409c).
(d) Verifcation o/Continued Eligibility. Consumer qualifying for Lifeline shall be reuir to verify
continued eligibilty on an anua basis. By six month frm the effecive dae of thes rules, eligible
telecommunications carers in all sttes shall implement prurs to verify anualy the cotinued
eligibilty of a statistically valid saple (TD) of their Lifeline subscribers for continued eligibilty.
(1) Eligible telecommunications carers shall reuir eah customer to certfy th they ar reeiving
support for only one line per residence. Eligible telecommunications caers may verify dirly with a
state that paricular customers contiue to be eligible by virte of paricipation in a qualifyng progr or
income leveL. To the extent eligible telecommunications caers caot obtain the necss informtion
from the stte, they may verify dirtly with the customers.
(2) All eligible telecommunications caer wil be reuire to provide the reults of their verfication
effort to the Commission and the Administrtor on the Anual Lifeline Certfication and Verfication
Fonn (currntly OMB 3060-0819) by August 31 eah yea. Eligible telecmmunications caers shall
submit data to the Commission and Administor regading consumer qualifications for eligibilty,
including progr-bas and income-based eligibilty, the number of customers tht qualify bas on
income and progr paicipation, the number of subscbers that qualify for eah eligible progr, the
numbe of non-responders, and the number of cusmers de-lled and in the pross of being
tenninated or de-enrolled. Eligible telecommunications carers shall submit each customer nae,
address, and number of individuals in the customer's reidence for those customers qualifying bas on
income criterion.
(e) Preventing an Resolving Duplicate Support. ETCs shall provide the Administor with their Lifeline
107
Federa CommunietioDS Commisn FCC 11-3%
and Link Up customer names, addrsses, soial seur numbers, and/or other unique residence-
identifying information as spified in the form and fonnat reuested on the Fonn 497 for the purse of
preventing and resolving situtions involving duplica support.
12. Amend Section 54.413 by revising subseon (b), to re as follows:
§ 54.413 Reimbursement for revenue forgone i. offerig a Link Up prora.
(a) *****
(b) In order to reive univers service support reimburent for prviding Link Up, eligible
telecommunications carers must keep accure rerds of the revenues they forgo in reucing their
customar charge for commencing telecommunications service, as defined in § 54.400( e), and for
providing a deferred schedule for payment of the charges assessed for commencing service for which the
consumer does not pay interst in confonnity with § 54.411. *****
13. Amend Section 54.415 by revising subsetions (a) and (c), eliminating subsetion (b), and re-
designatig subsections (a) and (b), to re as follows:
§ 54.415 Consumer qualfication for Link Up.
(a) The consumer qualification criteria for Link Up shall be the criteria set fort in § 54.409(a).
(b) Notwthstading pargrph (a) of this seion, the consumer qualification criteria for an eligible
resident of Tribal lands, as defied in § 54.400(c) and § 54.402, shall qualify to reeive Link Up support.
14. Amend Section 54.416 to re as follows:
§ 54.416 Certfication of consumer qualificatio. for Link Up.
Consumer qualifying under income-based or progr-baed critea must present documentation of their
qualification prior to enrllment in Link Up consistent with the requireents set fort in §§ 54.410(a) and
(b).
15. Amend Section 54.417 by revising subsetions (a) and (b), to read as follows:
§ 54.417 Reeordkeeping reuirements.
(a) ***** eligible telecommunications carer must maintain the documentation reuired in §§ 54.409c)
and 54.410(c) for as long as the consumer reeives Lifeline service *****
108
Fedra CommunieatioDS COIID FCCU-32
(b) ..... To the extet such a reseller prvides discunte service to low-incoe cons, it is
obligate to comply with the eligible telecmmunications caer reuirts lis in this Subpa.
i 6. Amend Section 54.4 18 by eliminating this subson as moot.
§ 54.418 (Resrved)
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Federa CommunicatioDS Commisio.FCC 11-3%
APPENDIXB
Current VerilCtion Methodolo
Statitica Vald Sample
Eligible Telecmmunications Carers (ETCs) subjec to the fedra default criterion wil be reuir to
verify the continued eligibilty of a statistcally valid saple of their Lifeline cusmer. The size of a
staistically valid saple, however, vares ba upon many facors, including the number of Lifeline
subscribers (N) and the previously estimated proporton of Lifeline subscbe inappropriately taing
Lifeline service (P).
For the first yea tht ETCs verify subscribe' continue eligibilty, all ETCs should assume that the
proporton P of subscribers inappropriately taing Lifeline service is .01, if ther is no evidence to assume
a different proporton. In subsequent yea, ETCs should us the results of saples frm previous year
to detennine this estimated proporton. In all instces, the estimated proporton P should never be less
than .01 or more than .06.
For ETCs with large numbers of Lifeline subscribers (more than 400,000), a sttistically valid sample size
must be calculated puruat to the following fonnula:l
Sample Size = 2.706 * P*(I- P) / .000625.
For ETCs with 400,000 Lifeline subscrbers or les, the above fonnula could yield a sample size that is
larger than needed to be statistically valid.2 To simplify the calculation of a staistcally valid sample, a
table of saple sizes basd on two varables N (number of Lifeline subscribers) and P (previously
estimated proportion of Lifeline subscribers inappropriately taing Lifeline service) is provided below.
Varous numbers of Lifeline subscribers N ar listed in the left-most column. Varous previously
estimated proportions P ar lised on the firt row. To detennine the saple size, find the box that
matches your number of Lifeline subscribers N and proporton P.
If the number of Lifeline subscribers is not list and/or the proportion is not listed, ETCs should use the
next higher number for Nand/or P that is in the table, i.e. always round up to the next higher value for N
and/or P. For exaple, if3.8 percent of 9,500 Lifeline subscribers inappropriately took Lifeline service,
the ETC would use a sample size of 164 (value using 10,000 customers and proportion .04). Because the
adjustment for the number of Lifeline subscribers is de minimus above 400,000 Lifeline subscribers,
ETCs with more than 400,000 Lifeline subscribers must use the above fonnula to calculate the sample
size.
All ETCs must provide the estimate proportion for their samples to the Administrtor, i.e., the
proportion of sampled subscribers inppropriatly tag Lifeline service.
1 The values 2.706 and .000625 in this formula ar mandad by OMB. See Offce of Management and Budget,
Memordum M-Q3-13 (May 21, 2003).
2 Saple sizs for ETCs with 400,00 Lifeline subbe or less ar calculated puruat to the following formula:
sample siz = N/(1+t(N-l)/nl). N is the numbe of Lifeline subscrbers and n = 2.706 * P*(1- P) / .000625, where
P is the previously estimate proporton of Lifeline subscbers inappropriately tang Lifeline service. ETCs may
choose to calculate their saple sizs using these formulas.
110
Federa ComlDuuitioDS Commi FCC 11-3%
Saple Siz Tabl
Preously Esllte Proporta of SBbsriben
Inappropritely Taking Lifelne Serv (p)3
(N) Number of Lifeline
Subsriben 0.01 0.015 0.0%0.0%5 0.03 0.035 0.04 0.045 0.05 0.05 0.06
40,00 43 64 85 106 126 146 166 186 206 225 244
100,004 43 64 85 105 126 146 166 186 206 225 244
90.00 43 64 85 105 126 146 166 186 205 224 244
70,0 43 64 85 105 126 146 166 186 205 224 243
60,00 43 64 85 105 126 146 166 185 205 224 243
30,00 43 64 85 105 125 146 165 185 204 223 242
%0.00 43 64 85 105 125 145 165 184 204 223 241
15,00 43 64 84 105 125 145 164 184 203 222 240
10,00 43 64 84 104 124 144 164 183 202 220 238
9.00 43 64 84 104 124 144 163 182 201 220 238
8,00 43 63 84 104 124 144 163 182 201 219 237
7,00 43 63 84 104 124 143 162 181 200 218 236
6,00 43 63 84 104 123 143 162 180 199 217 235
5,00 43 63 83 103 123 142 161 179 198 215 233
4,00 42 63 83 103 122 141 160 178 196 213 230
3,00 42 63 83 102 121 139 158 175 193 209 226
%,00 42 62 81 100 119 136 154 170 187 202 218
1,s 42 61 80 99 116 133 150 166 181 196 210
1,00 41 60 78 96 112 128 142 157 171 184 196
900 41 60 78 95 111 126 140 154 168 180 192
800 41 59 77 94 109 124 138 151 164 176 187
700 41 59 76 92 107 121 134 147 159 170 181
600 40 58 74 90 104 118 130 142 154 164 174
500 40 57 73 88 101 113 125 136 146 155 164
40 39 55 70 84 96 107 118 127 136 144 152
3 For the fit yea of
verficaton, ETCs should assume that this pentage is .01, if there is no evidence to assume
a different percntage. In subsequent year, ETCs should use the results of saples frm previous year to
determine this estiatd percentae.
4 Sample sizs for ETCs with less than 400,000 Lifeline subscbers ar caculated puruat to the followig
formula: saple siz = N/(1+((N-I)/n)). N is the numbe of Lifeline subscbers; n is (2.706 * P*(l- P)) /
.000625, where P is the estiated percentage of Lifeline subscber inppropriately tag Lifeline servce. ETCs
may choo to caculate their saple sizs using these formulas.
11 i
Federa CommunicatiDS Commisn FCC 11-3%
(N) Number of Lifeline
Subscribers
(cont'd)0.01 0.015 '0.0%0.0%5 0.03 0.035 0.04 0.045 0.05 0.055 0.06
300 38 53 66 79 89 98 107 115 122 129 135
200 36 49 60 70 78 85 91 97 102 106 110
158 34 45 54 62 69 74 79 83 87 90 93
UO 32 42 50 57 62 66 70 73 76 78 81
100 30 39 46 52 56 60 63 65 68 69 71
90 29 38 44 49 53 56 59 61 63 64 66
80 28 36 41 46 49 52 54 56 58 59 60
70 27 34 39 42 45 48 49 51 52 54 55
60 25 31 35 39 41 43 44 46 47 48 48
50 23 28 32 34 36 37 39 40 40 41 42
40 21 25 27 29 31 32 32 33 34 34 34
35 20 23 25 27 28 28 29 30 30 30 31
30 18 21 22 24 24 25 26 26 26 27 27
%5 16 18 19 20 21 21 22 22 22 23 23
20 14 15 16 17 17 18 18 18 18 18 19
17 12 14 14 15 15 15 16 16 16 16 16
15 11 12 13 13 13 14 14 14 14 14 14
13 10 11 11 12 12 12 12 12 12 12 12
11 9 10 10 10 10 10 10 10 10 11 11
10 8 9 9 9 9 9 9 10 10 10 10
9 8 8 8 8 8 9 9 9 9 9 9
8 7 7 7 8 8 8 8 8 8 8 8
7 6 6 7 7 7 7 7 7 7 7 7
6 5 6 6 6 6 6 6 6 6 6 6
5 5 5 5 5 5 5 5 5 5 5 5
4 4 4 4 4 4 4 4 4 4 4 4
3 3 3 3 3 3 3 3 3 3 3 3
2 2 2 2 2 2 2 2 2 2 2 2
1 1 1 1 1 1 1 1 1 1 1 1
112
Federa Com.unitions Commisn FCC 11-3%
APPENDIXC
Propo Verifition Metliolo
The following char identify the numbe of responde and magins of err ba on an
estimate ineligibilty percntage (e.g. of the preious year). The char have be calcula using a
95% confidence intervaL. The white portons of the table identify our propose thshold rule an the
shaded portions of the tables provide the infonnation for alterntive thholds, on which we sek
comment.
SAM SIZ)
Ineli ibil
5%10%15%20%25%35%40010 45%50%
1825 3458 4899 6147 7203 8740 9220 9508 960
457 865 1225 1537 1801 2185 2305 2377 2401
203 385 545 683 801 972 1025 1057 1068
115 217 307 385 451 547 577 595 601
73 139 196 246 289 350 369 381 385
MAGIN OF ERROR)
r'''\f_'''~ :t~""/,',~ :"....~:4~, \"l':,~"';;:':t¡"~)l~~-ã~ì&",Lll.~,,."~(,~,. ,: _~i~., .,\,~"'''''~.' .~)' 'f.""',':I~~\i¡,:- "s.' i ,¡~l -'~'~"~ ~'i: ..
;¿ ::H~~t,~k\lf~~J~ï~~~;i.~~;N+;~.t;¡~,- tJ~:"~R~V~¡"~7~~~;-~i~9'\~~~"'~J' )f~i,t,"#~i:;¿¡:~1,, ,~t.~t'd:j, ~';~lJ",~~~_,:;",~;~?p~~,, l\l':. ~~~¡~~:;,-~,.i-J~'-) 't~ ~ ':"~.;~'~ii: tb,.~.i)Î!1.i~~~~~~~'Ø~~~.~~.iù,~~;;J:i~_-.-..~ ~t'~""~~~"~"M~W~' ~",,_,-.~)l...;-~~~ ..,~:t:ß:_';Á'¿~"~.'iJ'Ç~~; ~':rnA",t .Ji'¡""i~¡¡~
_.. .100
:
. ~
~
. $00
15%
7.001c
4.9%
4.0%
3.5%
3.1%
Ineli~ibil~ Percenta~ e20% 25% 30010
7.8% 8.5% 9.0%
5.5% 6.0% 6.4%
4.5% 4.9% 5.2%
3.9% 4.2% 4.5%
3.5% 3.8% 4.0%
5%
4.3%
3.0%
2.5%
2.1%
1.9%
10%
5.9%
4.2%
3.4%
2.9%
2.6%
35%
9.3%
6.6%
5.4%
4.7%
4.2%
40010
9.6%
6.8%
5.5%
4.8%
4.3%
...45%
9.8%
6.9%
5.6%
4.9%
4.4%
50%
9.8%
6.9%
5.7%
4.9%
4.4%
_.. Of..., .
i This cha provides the number of responde requird bas on a designated ineligibilty peentage and marin of
errr. For example, if the Commission wanted to ensure that the ineligibilty rate does not exceed 5%, with the
marin of errr no more than i %, the ETC would need to obtain i ,825 eligible responders.
2 We note tht these chas ar baed on the number of acl responder durg verfication and not the number
sureyed. If the number surveyed does not result in the number of actul responders shown in the char more
customers would nee to be sureyed until the correct number of respnders was reched.
3 This char provides the marin of errr tht would exist ba on a designted ineligibilit percentage and the
number of responders. For example, if an ETC had an estimated ineligibilty peentae of 5%, and reived 300
responders from a surey, this would represent a 2.5% magin of eror in its verification surey.
113
Federa CommunicatiDS Commisn FCC 11-32
APPENDIXD
List of Commenters
Comments aDd Reply Commeats ia Reponse to the
TracFone Petn for Declry Rul on Univent Servic Issues
WC Doket Nos. 09-197, 03-109
(TraFone Link Up Pettion)
Commenter
AT&T, Inc.
Budget Prepay, Inc.
and GretCall, Inc.
Compeitive Eligible Telecmmunications Carers
Nexus Communications, Inc.
Ohio Public Utilties Commission of Ohio
Abbreviation
AT&T
Budget PrePay
GratCall
CETCs
Nexus
Ohio
Reply Commenter
National Association of Stae Utility Consumer
Advocates
Nexus Communications Inc.
TracFone Wireless, Inc.
Abbrevition
NASUCA
Nexus Communications
TraFone
Comments and Reply Comments in Response to the
Federal-State Joint Board on Unival Servic, Lifeline and Link Up Refe"al Order
CC Docket No. 96-45; WC Docket No. 03-109
(Joint Boa)
Commenter
Advocates for Basic Legal Equality, Inc.,
Community Voice Mail National Crossroads Urban Center
Disabilty Rights Advocates
The Low Income Utility Advoccy Prject
Minnesota Legal Services Advocacy Prject
The National Consumer Law Center, On Behalf of Our
Low-Income Clients
New Jersey Shares
Ohio Povert Law Center
Pr Seniors
Salt Lae Community Action Progr
Texa Legal Serices Center
The Utilty Refonn Network
Twin Cities Community Voiceil
AT&T Services, Inc.
Benton Foundation, et al.
California Public Utilties Commission
Community Voice Mail National Offce
Public Serice Commission of the Distct of Columbia
Florida Public Serice Commission
Leap Wireless International, Inc.
and Cricket Communications, Inc.
Media Action Grasroots Network
Missur Public Serice Commission
Abbreviation
Consumer Groups
AT&T
Benton
CPUC
CVM
DCPSC
FPSC
Cricket
MAG-Net
MoPSC
Fedra Communications Commin FCC 11-32
Nationa Asiaion of Sta Utility Consumer Advocte
Natona Hiic Media Colition
Nebra Public Seice Comission
Nexus Communicatons, Inc.
Public Utilties Commission of Ohio
PR Wirles, Inc.
Smith Bagey, Inc.
TraFone Wirles, Inc.
Unite Sta Telecm Assiaton
Vern and Vern Wirless
YourTel Amerca Inc.
Reply Commenter
Advoctes for Baic Legal Equality, Inc.,
Community Voice Mail National Crossro Urb Center
Disailty Rights Advoc
The Low Income Utility Advocacy Prjec
Minnesota Legal Service Advoccy Prject
The National Consumer Law Center, On Behalf of Our
Low-Income Clients
New Jersy Shars
Ohio Povert Law Center
Pr Seniors
Salt Lae Community Action Progr
Texa Legal Services Center
The Utility Refonn Network
Twi Cities Community Voicemail
AT&T, Inc.
CTIA- The Wireless Association
Consumer Advisory Committee
GCI Communication, Inc.
Leaderhip Conference on Civil and Human Rights
Massachus Deparent of Telecommunications and Cable
National Association of Stae Utilty Consumer Advoctes
National Hispaic Media Coalition
Media Action Grasroots Network
Offce of Communication of the Unite Church of Chrst, Inc.,
Benton Foundaon, and Access Humboldt
Nexus Communications, Inc.
Nonna J. Torrs
Pennsylvania Public Utility Commission
PR Wirless, Inc.
Qwest Communications Internional Inc.
Smith Bagley, Inc.
Sprint Nextel Corpration
TracFone Wirless, Inc.
Verizn and Verizon Wirless
YourTel Amerca Inc.
115
NASUCA
NHCNP
Nexus
Oho PUC
PR Wirles
Smith Baley
TraFone
USTelecVern
YourTel
Abbretin
Consumer Grups
AT&T
CTI
GCI
MDTC
NASUCA
Public Interest Commenters
Nexus
PaPUC
PR Wireless
Qwest
Smith Bagley
Sprint
TracFone
Vern Compaies
YourTel
Federa CommunictioDS Commisn FCC 11-3%
Comme.ts and Reply Comments in Repons to ti
TracFone Wireles, Inc. 's Petitn for Wair of 47 C.F oR § S4.40a)(i)
CC Doket No. 96-5
(TraFone Tier 1 Pettion)
Commenter
Independent Telephone & Telecmmunications Allance
National Assn. of State Utility Consumer Advocats
Oregon Public Utility Commission
Sprint Nextel Corpration
YourTel Amerca Inc.
Abbrevitin
ITIA
NASUCA
Orgon PUC
Sprint
Yourl
Reply Commenter
National Association of State Utility Consumer
Advocates
Pennsylvania Public Utilty Commission
TraFone Wireless, Inc.
Abbretion
NASUCA
PaPUC
TraFone
Comments and Reply Comments in Response to the
TracFone Request for Clarifcation of Universal Service Lifeline Program "One-Per-Household" Rule
as Aplied to Group Living Facilitie
WC Docket No. 03- 1 09
(TraFone One-Per-Houshold Claficaon)
Commenter
American Public Communications Council
AT&T Inc.
City of Cambridge, MA & Cambridge Continuum of Car
Eat Side SRO Legal Services Project
Florida Public Service Commission and Florida
Offce of Public Counsel
Genera Communication, Inc.
Homeless Advocacy Projec
Manatt Legal Serices NYC
Miriam's Kitchen
MFY Legal Services
National Assn. of State Utilty consumer Advocte
National Consumer Law Cente
Par of the Solution, Inc.
Public Utilities Commission of Ohio
Smith Bagley, Inc.
Washingtn Legal Clinic for the Homeless, Inc.
Abbreviation
APCC
AT&T
City of Cambridge - CoC
Florida PSC & OPC
GCI
HA
NASUCA
NCLC
POTS
Ohio Commission
SBI
Reply Commenter
GCI Communication, Inc. d//a
GCI Communication Corp and GCI
Massachuset Deparent of Telecommunications and Cable
National Consumer Law Cente and
Greater Boston Legal Seices
National Network to End Domestic Violence
Abbreviation
GCI
MDTC
NCLC/GBLS
NNDV
116
Federa CommunitiDS C........FCC 11-3%
Public Utility Commission of Oron
TraFone Wireles, Inc.
OPC
TraFon
117
Federa Commuuications Commin FCC 11-32
APPENDIXE
Initi Reglatory Flexibilty Anysis
1. Puuant to the Regulatory Flexibilty Act (RF A), the Commission ha pr this Initil
Regulatory Flexibilty Analysis (IRA) of the possible significat ecnomic impac on small entities by
the policies and rules propose in this Notice of Prse Rulemaking.l Writt public comments ar
reueste on this IR A. Comments must be idetified as respons to the IR A and mus be filed on or
before the dates indicated on the fi pae of this NPRM. The Commission will send a copy of the
NPRM, including the IRA, to the Chief Coul for Advocy of the Small Business Administtion.2
In addition, the NPRM and IR A (or sumares thert) wil be published in the Federl Register.3
A. Nee for, and Objeces of, the Notice ofPl"po Rulemaking:
2. The Commission is reuir by setion 254 of the Act to promulgae rules to implement
the universl service provisions of setion 254.4 On May 8, 1997, the Commission adopte rules that
refonned its system of universl service support mechanisms so tht universl service is preserved and
advanced as markets move toward competition.s Among other prgrs, the Commission adopte a
progr to provide discounts that make basic, local telephone service affordble for low-income
consumers.
3. This Notice of Proposed Ru/emaking (NRM is one in a sees of rulemaking
proceedings designed to implement the National Broaband Plan's (NP) vision of improving and
modernizing the universal service progr.7 In this NPRM we propose and sek comment on
comprehensive reforms to the univers service low-income support mechanism. We propose and seek
comment on a package of refonns tht addrss eah of the major remmendations by the Universl
Service Joint Board regarding the low-income progr.8 We also propose a sees of reommendations in
accordance with a report on the progr by the Goverent Accuntabilty Ofce (GAO).9
4. Speifically, we propose and seek comment on the following refonns and moderniztions
that may be implemented in funding yea 201 1 (Janua 1,2011 to Decmber 31,2011): (1) stngthening
the Commission's rules to ensure that the low-income progr subsidizes no more than one service per
eligible residential address; (2) reducing wase, frud, and abuse by addressing duplicate claims,
subscriber reporting, and de-enrollment procedurs; (3) strlining and improving program
15 U.S.C. § 603. The RFA, 5 U.S.C. §§ 601-612 ha be amended by the Contr With Amerca Advancement
Act of 1996, Public Law No. 104-121, 110 Sta 847 (1996) ("CWAA"). Title 11 of the CWAA is the Small
Business Regulatory Enforcement Fairess Act of 1996 ("SBREF A").
2 5 U.S.C. § 603(a).
3 ¡d.
4 47 U.S.C. § 254.
S Federal-State Joint Board on Universal Serice, CC Doket No. 96-45, Report and Orde, 12 FCC Rcd 8776,
par. 326-328 (1997).
6 See id.
7 See NATIONAL BROADBAN PLAN.
8 20/0 Recommended Decision.
9 See U.S. GOVERN ACCOUNABILIT OFFICE, RERT TO CONGRESSIONAL REQUESTERS, GAO 11-11,
TELECOMMICATIONS: IMROVED MAAGEME CAN ENCE FCC DECISION MAKG FOR TH UNIVRSAL
SERVICE Fu LoW-INCOME PROORA (2010).
118
Federa CommunitiDS Commison FCC 11-3%
administrtion thug the esblishment of unifon eligibilty, verificaon, an ceficaon
reuireents; and (4) estalishing a cetrizd da for reportng.
B. Le Bais:
5. Ths Notice of Proposed Ruemang, including publicon of pr rules, is
authori under sections 1,2, 4(i)-), 201(b), 254, 257, 303(r), and 503 of the Comunicaion Act of
1934, as amende and seon 706 of the Telecommunicatons Act of 1996, as amded 47 U.S.C. §§
151, 152, l54(i)-), 201(b), 254, 257, 303(r), 503, 1302:0
C. Decription and Estimate oftli Number of Smal Enti to whieh the Propo
Rules Win Apply:
6. The RF A direts agencies to provide a descripton of and, where feaible, an estate of
the number of small entities that may be afec by the propo rules, if adopt. lITh RF A generally
defines the te "smal entity" as having the sae meing as the tes "small busin," "small
organization," and "small governentaljursdiction.,,12 In addition, the te "smal business" ha the
same meaing as the tenn "small business concer" under the Small Business Act.13 A small business
concer is one that: (1) is indepedently owned an opeted; (2) is not domint in its field of operation;
and (3) satisfies any additional critea estblished by the Small Business Administion (SBA).1
Nationwide, there ar a total of approximately 29.6 milion small businesse, acrding to the SBA.ls A
"small orgization" is generaly "any not-for-profit enterprise which is independently owned and
operated and is not dominant in its field.,,16 Natonwide, as of 2002, ther wer approximately 1.6 millon
small orgaizations. 1 7 The ter "small governmenta jurisdiction" is defined generaly as "governents
of cities, towns, townships, vilages, school distcts or speial distrcts, with a population of less than
fift thousad.,,18 Census Burau data for 2002 indicate that there were 87,525 locl governmental
jurisdictions in the United States.19 We estimate tht, of this total, 84,377 entities were "small
governental jursdictions.,,20 Thus, we estimate that most governental jursdictions ar small.
1047 U.S.C. §§ 151, 152, 154(i)-), 201(b), 254, 257, 303(r), 503, 1302.
11 5 U.S.C. § 603(bX3).
12 5 U.S.C. § 601(6).
13 5 U.S.C. § 601(3) (incorprag by referce the defiition of "small business concern" in 15 U.S.C. § 632).
Puuat to the RF A, the statory defmition of a small business applies ''uless an agency, aftr consultation with
the Offce of Advocacy of the Small Business Administrtion and aft opportity for public comment, establishes
one or more defiitions of such te which ar approprate to the actvities of the agency and publishes such
defiition(s) in the Feder Register." 5 U.S.C. § 601(3).
14 Small Business Act 15 U.S.C. § 632.
is See Small Business Administrtion, Ofce of Advocy, Freuently Asked Questons,
htt://ww.sba.gov/advoccyI7495 (last visite Marh 2, 2011).
16 5 U.S.C. § 601(4).
17 Indepedent Setor, The New Nonprfit Alm & Desk Reference (2002).
18 5 U.S.C. § 601(5).
19 U.S. Census Bur Statiscal Abstrct of the Unite Staes: 200, Secon 8, page 272, Table 415.
20 We assume that the villages, school discts, and speial distrct ar small, and total 48,558. See U.S. Ceus
Buru, Stastical Abst of the United States: 200, seion 8, pae 273, Table 417. For 2002, Census Bur
(contiued....)
119
Federa Communications CO....isn FCC 11-32
1. Wireoe Providers
7. Incumbent Loal Exchage Cariers (Incumbe LEes). Neith the Commission nor the
SBA has develope a small business size st speifically for incumbent locl exchage services.
The appropriat size stada under SBA rules is for the cagory Wire Telecmunications Carers.
Under tha size stda such a business is small if it ha 1,500 or fewer employees.21 Census Bureu
data for 2007, which now supers da frm the 200 Census, show that thre were 3,188 finns in this
category tht operaed for the entire year. Of this total, 3,144 had employment of 99 or fewer and 44
firms had ha employment of 1000 or more. Accodin~ to Commission da 1,307 carers report that
they were incumbent locál exchange seice provider. 2 Of the 1,307 caiers, an estimate 1,006 have
1,500 or fewer employees and 301 have more th 1,500 employees.23 Conseuently, the Commission
estimates that most providers of local exchage seice ar small entities that may be affecte by the rules
and policies propse in th Notice. Thus under this category and the assoiate small business size
standad, the majority of thes incumbent locl exchange service providers ca be considere small~~~ /
8. Competitive Local Exchage Cariers (Competitive LECs), Competitive Access Providers
(CAPs), Shaed-Tenant Service Providers, an Other Loal Service Providers. Neither the Commission
nor the SBA has develope a small business size stdad specifically for these service providers. The
appropriate size stadad under SBA rules is for the caegory Wired Telecmmunications Cariers. Under
tht size stadad, such a business is small if it has 1,500 or fewer employees.25 Census Bureau data for
2007, which now supersde data from the 2002 Census, show that there were 3,188 finns in this category
that operate for the entire yea. Of this total, 3,144 ha employment of99 or fewer and 44 finns had
had employment of 1,00 employees or more. Thus under this category and the associated small business
size standard, the majority ofthese Competitive LECs, CAPs, Shar-Tenat Service Providers, and
Oter Local Service Providers ca be considere small entities.26 According to Commission data 1,442
carers reportd that they were engaed in the provision of either competitive local exchange services or
competitive access provider services.27 Of these 1,442 caer, an estimated 1,256 have 1,500 or fewer
(Continued from previous pae)
data indica that the total number of county, municipal, and township governents nationwide was 38,967, of
which 35,819 were small. Id
21 13 C.F.R. § 121.201, NAICS co 517110.
22 See Trends in Telephone Service, Federl Communications Commission, Wireline Competition Bureau, Industr
Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trend in Telephone Service).
23 See id.
24 U.S. CENSUS BURAU, AMRICAN FACTFINER, 2007 EcONOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get da" Then, under "Ecnomic Census data sets by sector...," choose
"Informion." Under "Subjec Series," choose "EC075ISSSZ5: Employment Siz ofFins for the US: 2007."
Click "Next" and find data related to NAICS coe 517 I lOin the left colum for "Wired telecommunications
carers") (last visite Marh 2,201 i).
25 13 C.F.R. § 121.201, NAICS code 517110.
26 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 EcONOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get data." Then, under "Economic Census data sets by sector...," choose
"Informtion." Under "Subject Series," choose "EC075i SSSZ5: Employment Size of Fins for the US: 2007."
Click "Next" and fid data relat to NAICS code 5 i 7 i i 0 in the left colum for "Wird telecommunications
carers") (last visite Marh 2, 20 i i).
27 See Trends in Telephone Service at Table 5.3.
120
Federa Comma.ictias Comll FCC 11-32
employee and 186 have more than 1,500 employees.28 In adition, 17 ca have re th th
ar Sha-Tent Service Prviders, and all 17 are esima to have 1,500 or fewr employs.29 In
addition, 72 cars have rert th they ar Oter Lol Seice Prvid.30 Seenty of which have
1,500 or fewer employees an two have more tha 1,500 employee.31 Conuently, th Comission
estimates tht most provider of competitive locl exchage seice, copetive acss prvid
Shard-Tenat Seice Providers, and Otr Loal Service Prvide ar small entities th may be
affecte by rules adopt pursuat to the Notice.
9. Intere:xhage Cariers. Neither the Commission no the SBA ha deelop a smll
business size stdad speifically for provider of intexchage service. Th apprat siz stda
under SBA rules is for the cagory Wir Telecmmunicaios Caer. Unde th siz st such a
business is small if it ha 1,500 or fewer employees.32 Census Bur da for 2007, which now
superse da frm the 2002 Census, show that there were 3,188 finns in this cagory that op for
the entire yea. Ofthis tota, 3,144 had employment of99 or fewer, an 44 finns ha ha employment
of 1,00 employees or more. Thus under this cagoiy and th assoiat small business siz st
the majority of these Interexchange caer ca be consider small entities.33 Accding to Commission
data 359 copaies re~rt that their prmar telecmmunicaions seice activity was the prvision of
interexchange seice. 4 Of these 359 compaies, an estima 317 have 1,500 or fewer employee an
42 have more th 1,500 employees.35 Conseuently, the Comission estmas that the majority of
interexchange service providers ar small entities that may be affected by rules adopte pursuat to th
Notice.
10. Operator Service Providers (OSPs). Neither the Commission nor the SBA has develope
a small business size stad specifically for operator service provider. The appropriat size sta
under SBA rules is the category Wired Telecmmunicaions Carers. Under that size stadad, such a
business is small if it has 1,500 or fewer employees.36 Under that size stadad, such a business is small if
it has 1,500 or fewer employees.37 Census Buru da for 2007, which now supersde 2002 Census da
show that ther were 3,188 finns in this category that opera for the entire year. Of the total, 3,144 had
employment of99 or fewer, and 44 finns ha ha employment of 1,00 employees or more.38 Thus
28 See id.
29id.
30 See id.
31 See id.
3213 C.F.R. § 121.201, NAICS code 517110.
33 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 EcONOMIC CENSUS, htt://factfnder.census.gov, (find
"Economic Census" and choo "get da." Then, under "Ecoomic Census data ses by sec...," choo
"Informtion." Under "Subject Senes," choo "EC0751SSSZ5: Employment Siz of Fins for the US: 2007."
Click "Next" and find da relat to NAICS code 5171 i 0 in the left colum for "Wired telecommunications
caers") (last visite Marh 2, 20 i 1).
34 See Trend in Telephone Service at Table 5.3.
35 See id.
3613 C.F.R. § 121.201, NAICS coe 517110.
37Id.
38 U.S. CENSUS BURAU, AMRICAN F ACTFINDER, 2007 EcONOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get da." Then, under "Economic Census data se by secr...," cho
"Informtion." Under "Subject Senes," choose "EC0751SSSZ5: Employment Size of Firs for the US: 2007."
(continued.. ..)
121
Federa Communications Commisn FCC 11-32
under this category and the assoiate small business siz stda the majority of these intexchage
carers can be considere small entities.39 Accrding to Commission da 33 carers have report tht
they ar engaged in the provision of opetor seices. Of these, an estimate 3 I have 1,500 or fewer
employees and 2 have more than 1,500 employee.40 Conseuently, the Commission estimates that th
majority of OSPs ar small entities that may be affecte by our propose action.
1 I. Local Resellers. The SBA ha develope a small business size stadad for the category
of Telecommunications Resellers. Under that size stada such a business is small if it has 1,500 or
fewer employees.41 Census data for 2007 show that 1,523 finns provided resale services during that year.
Oftha number, 1,522 operated with fewer than 1000 employees and one operated with more than
1,000.42 Thus under this category and the asiat small business size stadad, the majority of these
local resellers can be considered small entities. Accrding to Commission data 213 carers have reportd
tht they are engaged in the provision of locl rele seices.43 Of these, an estimated 2 I I have 1,500 or
fewer employees and two have more than 1,500 employees.44 Conseuently, the Commission estimates
that the majority of local resellers are small entities that may be affected by rules adopted pursuat to the
Notice.
12. Toll Resellers. The SBA ha develope a small business size stadad for the category of
Telecommunications Resellers. Under that size stadad, such a business is small if it has i ,500 or fewer
employees.45 Census data for 2007 show that 1,523 firms provided resale services during that year. Of
that number, 1,522 operated with fewer than i 000 employees and one operated with more than 1,000.46
Thus under this category and the assoiated small business size stadad, the majority of these resellers
can be considered small entities. Accrding to Commission data 47 881 carers have reportd that they are
engaged in the provision oftoll resale services. Of thes, an estima 857 have 1,500 or fewer
employees and 24 have more than 1,500 employees. Conseuently, the Commission estimates that the
majority of toll resellers are small entities that may be afecte by our action.
(Continued from previous page)
Click "Next" and find data related to NAICS code 5171 lOin the left colum for "Wired telecommunications
caers") (last visited Marh 2, 201 1 ).
39 ¡d.
40 Trends in Telephone Service at Table 5.3.
41 13 C.F.R. § 121.201, NAICS code 517911.
42 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 EcONOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get data." Then, under "Economic Census data sets by sector...," choose
"Infonntion." Under "Subject Series," choose "EC0751SSSZ5: Employment Size of Firms for the US: 2007."
Click "Next" and find data related to NAICS code 517911 in the left colum for "Telecommunications Resellers")
(last visited March 2,2011).
43 See Trends in Telephone Service at Table 5.3.
44 ¡d.
4513 C.F.R. § 121.201, NAICS code 517911.
46 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 EcONOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get data." Then, under "Economic Census data sets by sector...," choose
"Information." Under "Subject Series," choose "EC0751SSSZ5: Employment Size of Firs for the US: 2007."
Click "Next" and fid data related to NAICS code 517911 in the left column for "Telecommunications Resellers")
(last visited March 2, 201 1).
47 See Trends in Telephone Service at Table 5.3.
122
Fedra COBmunitioDS Commison FCCU-3%
13. Pre-paid Callng Card Proiders. Neither the Commission nor the SBA ha develo a
small business size stada speifically for prpaid callng ca providers. The approprte size
stada under SBA rules is for th caegory Telecmunications Reller. Under th siz sta
such a business is small if it has 1,500 or fewer employees.48 Census da for 2007 show tht 1,523 fars
provided rele services during th yea. Of tht number, 1,522 opera with fewer th 100 employees
and one opete with more th 1,00.49 Thus under this cagory and th assoiat small busines siz
stadad, the majority of these pr-paid callng ca providers can be cosidere small entities. Accing
to Commission da 193 caiers have rerted that they ar engaed in the provision of pre-paid calling
ca.50 Of thes, an estimate all 193 have 1,500 or fewer employees and none have more th 1,500
employees.51 Conseuently, the Commission estima that the majority of pre-paid caling cad
providers ar small entities that may be affecte by rules adopte puruat to the Notice.
14. BOO and BOO-Like Service Subscribers.52 Neither the Commission nor the SBA ha
develope a small business size stada speifically for 800 and 800-like service (''til fr")
subsribers. The appropriate siz stada under SBA rules is for the category Telecmmunications
Resellers. Under that size stdad, such a business is small if it has 1,500 or fewer employee.53 Census
da for 2007 show tht 1,523 finns provided resale seices durng that year. Of that number, 1,522
opera with fewer than 100 employees and one opete with more than 1,000.54 Thus under this
category and the assoiat small business size stadad, the majority of resellers in this classification ca
be considere small entities. To focus specifically on the number of subscribers tha on those finns which
make subscription service available, the most reliable source of infonnation regading the number of
these service subscribers appe to be data the Commission collects on the 800, 888, 877, and 866
numbers in us.55 Accrding to our data at of Septmber 2009, the number of 800 numbers assigned was
7,860,00; the number of 888 numbers assigned was 5,888,687; the number of 877 numbers assigned was
4,72 1 ,866; and the number of 866 numbers assigned was 7,867,736. The Commission does not have data
speifying the number of these subscribers that ar not independently owned and operad or have more
than 1,500 employees, and thus are unable at this time to estimate with grter precision the number of
toll free subscribers that would qualify as small businesses under the SBA size stdad. Conseuently,
the Commission estimates that there ar 7,860,00 or fewer small entity 800 subscribe; 5,888,687 or
fewer small entity 888 subscribers; 4,721,866 or fewer small entity 877 subscribers; an 7,867,736 or
48 13 C.F.R. § 121.201, NAICS code 517911.
49 U.S. CENSUS BUREU, AMERICAN FACTFINDER, 2007 EcONOMIC CENSUS, htt://factnder.census.gov, (find
"Economic Census" and choose "get data." Then, under "Economic Census data sets by sector...," choo
"Informtion." Under "Subject Series," choose "EC075 I SSSZ5: Employment Size of Firs for the US: 2007."
Click "Next" and find data related to NAICS code 5 i 79 i i in the left colum for "Telecommunications Resellers")
(last visited Marh 2, 20 i i).
50 See Trends in Telephone Service at Table 5.3.
51 See id.
52 We include all toll-fr number subsribers in this cagory, including those for 888 numbe.
53 13 C.F.R. § 121.201, NAICS coe 517911.
54 U.S. CENSUS BUREAU, AMERICAN FACTFINER, 2007 EcONOMIC CENSUS, htt://facnder.census.gov, (find
..Ecnomic Census" and choose ..get da." Then, under "Economic Census data sets by sectr...," choose
.'Inforation." Under '.Subjec Series," choose .'EC075i SSSZ5: Employment Size of Firs for the US: 2007."
Click "Next" and find da relat to NAICS code 5 i 791 i in the left colum for "Telecommunicatons Rellers")
(last visite Mah 2, 20 i 1).
55 Trend in Telephone Service at Tables 18.4, 18.5, 18.6, 18.7.
123
Federa CommunicatioDS Commis FCC 11-32
fewer small entity 866 subscribers. We do not believe 800 an 800Like Service Subsribe will be
effecte by our proposed rules, however we choose to include this catgory and sek comment on
whether there wil be an effect on small entities within this catgory.
2. Wireles Carrien and Serv Providen
15. Below, for those services subject to auctions, th Commission notes that as a genral
mattr, the number of winning bidder tht qualify as small businesse at the close of an auction does not
necessaly represent the number of small businesses curtly in seice. Also, the Commission does not
generally trk subsequent business size unless, in th context of assignents or trsfers, unjust
enrichment issues ar implicated.
16. Wireless Telecommunications Cariers (except Saellte). Since 2007, the Census Bureu
has placed wireless finns within this new, bro economic census category.56 Prior to that time, such
finns were within the now-supersded categories of Paging and Cellular and Oter Wireless
Telecommunications.57 Under the present and prior categories, the SBA has deemed a wireless business
to be small if it has 1,500 or fewer employees.58 For the category of Wireless Telecommunications
Carers (except Satellte), Census data for 2007, which supersede da contained in the 2002 Census,
show that there were 1,383 finns that operate tht yea.
59 Ofthose 1,383, 1,368 had fewer than 100
employees, and 15 finns had more than i 00 employees. Thus under this category and the associated
small business size standad, the majority offinns can be considered smalL. Similarly, according to
Commission data 413 carers report that they were engaged in the provision of wireless telephony,
including cellular service, Personal Communications Service, and Speialized Mobile Raio Telephony
services.6o Of these, an estimated 261 have i ,500 or fewer employees and 152 have more than 1,500
employees.61 Conseuently, the Commission estimates that approximately half or more of these fins can
be considered small. Thus, using available da we estimate that the majority of wireless firms can be
considere small.
17. Wireless Communications Services. This service can be used for fixed, mobile,
radio location, and digital audio broadcating satellte uses. The Commission defined "small business" for
the wireless communications services (WCS) auction as an entity with average gross revenues of $40
milion for eah of the three preceding years, and a "very small business" as an entity with average gross
revenues of$15 milion for each ofthe three preceding year.62 The SBA has approved these
56 U.S. Census Bureau, 2007 NAICS Defiitions: Wirless Telecmmunications Categories (except Satellte),
htt://ww.census.gov/naics/2007/defID517210.HTM (last visited March 2, 201 1).
57 U.S. Census Burau, 2002 NAICS Defiitions: Paging, htt://ww.census.gov/epcd/naics02/defIDEF517.HTM
(last visited March 2, 2011); U.S. Census Bureau, 2002 NAICS Defmitions: Other Wireless Telecommunications,
htt://ww.census.gov/epcd/naics02/defIDEF517.HTM (last visited Marh 2, 2011).
5813 C.F.R. § 121.201, NAICS code 517210 (2007 NAICS). The now-superseded, pre-2007 C.F.R. citations were
13 C.F.R. § 121.201, NAICS codes 517211 and 517212 (referrg to the 2002 NAICS).
59 U.S. CENSUS BUREAU, AMERICAN FACTFINDER. 2007 EcONOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get data." Then, under "Ecnomic Census da sets by sector...," choose
"Information." Under "Subject Series," chooe "EC0751SSSZ5: Employment Siz of Firs for the US: 2007."
Click "Next" and find data related to NAICS code 5172 lOin the left colum for "Wirless Telecommunications
Carer (except Satellte)") (last visited Marh 2, 201 1).
60 See Trends in Telephone Service at Table 5.3.
61 See id.
62 Amendment of the Commission's Rules to Establish Part 27, the Wireless Communications Service, GN Docket
No. 96-228, Report and Order, 12 FCC Rcd 10785, 10879, pa. 194 (1997).
124
Federa CommunicatiDS Commision FCC 11-32
defmitions.63 Th Commission auctioned geogrphic ar liceses in the WCS service. In the aucion,
which commence on April 15, 1997 and close on Aprl 25, 1997, seven bidders won 31 licese th
qualified as ver small business entities, and one bidder won one licens that qualified as a small buines
entity.
18. Satellte Telecommunications Providers. Two ecnomic cesus cagories adss th
satellte indus. The first category ha a small business size stdad of $ 15 milion or less in averae
anual reeipts, under SBA mles.64 Th sed has a size stad of $25 milion or less in anual
receipt.6s
19. The catgory of Satllte Telecmmunications "comprises estblishments prmaly
engaed in providing telecmmunicaions seices to otr estblishments in th telecommunicaions an
broadcaing industres by forwarding and reiving communications signals via a system of satellte or
resellng sallte telecmmunicaions.'06 Census Buru data for 2007 show th 512 Satellte
Telecmmunicaions firs that opera for that entir yea.67 Of this total, 464 finns had annual reipts
of under $10 milion, and 18 finns ha reipts of$IO milion to $24,999,99.68 Conseuently, the
Commission esmates tht the majority of Sallte Telecmmunications finns ar small entities tht
might be affecte by our action.
20. The seond cagory, i.e., All Otr Telecmmunications, comprises "estalishments
primarly engaed in providing speializ telecmmunicaions services, such as satellte trking,
communications telemetr, and ra station operation. This industr also includes establishments
primaly engaed in providing satellte tenninal stations and assoiated facilties connected with one or
more terrstral systems and capable of trsmittng telecmmunications to, and reeiving
telecommunications from, satellte systems. Establishents providing Internet services or voice over
Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in
this indust.'06 For this category, Census Bureau data for 2007 show that there were a total of 2,383
finns that operated for the entire year.70 Of this total, 2,347 finns had annual recipts of under $25
63 See Ler frm Aida Alvarez, Administtor, SBA, to Amy Zoslov, Chief, Aucions and Industr Analysis
Division, Wireless Telecommunications Bur FCC (filed De. 2, 1998) (Alvarez Letter 1998).
64 13 C.F.R. § 121.201, NAICS code 517410.
6S 13 C.F.R. § 121.201, NAICS code 517919.
66 U.S. Cesus Burau, 2007 NAICS Defiitions, Sallte Telecommunications,
htt://ww.census.gov/naics/2007/defI517410.HTM (last visited March 2, 201 I).
67 U.S. CENSUS BUREAU, AMERICAN FACTFINDER, 2007 EcONOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get da." Thn, unr "Ecnomic Census data se by sectr...," choose
"Informion." Under "Subject Senes," choose "EC075 1 SSSZ4: Receipts Siz of Firs for the US: 2007." Click
"Next' and find data relate to NAICS coe 5172 lOin the left column for "Satellte Telecmmunicatons") (last
visited March 2, 201 1 ).
68 ¡d.
69 U.S. Census Buru, 2007 NAICS Defiitions, All Oter Telecmmunications,
htt://ww.census.gov/naics/2007/def/DSI7919.HTM(last visite Marh 2,2011).
70 U.S. CENSUS BUREU, AMRICAN FACTFINDER, 2007 EcONOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get data." Then, under "Economic Census data sets by secor...," choose
"Informaton." Under "Subject Senes," choose "EC075 1 SSSZ4: Receipts Size of Firs for the US: 2007." Click
''Next'' and find da relatd to NAICS co 517919 in the left column for "All Oter Telecommunicatons") (lat
visited Marh 2, 201 1).
125
Federa Communications Commisn FCC 11-32
milion and 12 finns had anual receipts of $25 milion to $49, 99,99.71 Conseuently, the Commission
estimate that the majority of All Other Telecommunications fins are small entities that might be
affecte by our action.
21. Common Carier Paging. The SBA considers paging to be a wireless
telecommunications service and classifies it under the industr classifiction Wirless
Telecommunications Carers (except satellte). Under th clasificaon, the applicable size stadad is
that a business is small if it has 1,500 or fewer employees. For the general category of Wireless
Telecommunications Carers (except Satellte), Census data for 2007, which superse data contained in
the 2002 Census, show that there were 1,383 finns that operate tht year.72 Ofthose 1,383, 1,368 had
fewer than i 00 employees, and 15 finns had more than i 00 employees. Thus under this category and the
associated small business siz stadad, the majority offins can be considered smali.73 The 2007 census
also contains data for the specific catgory of Paging "that is classified under the seven-number Nort
American Industr Classification System (NAICS) code 5172101.74 According to Commission data, 291
carers have reportd that they are engaged in paging or messaging service. Of these, an estimated 289
have 1,500 or fewer employees, and 2 have more than 1,500 employees.75 Consequently, the
Commission estimates that the majority of paging providers are small entities that may be affected by our
action. In addition, in the Paging Third Report and Order, the Commission developed a small business
size stadad for "small businesses" and "very small businesses" for purpses of determining their
eligibilty for special provisions such as bidding credits and installment payments.76 A "small business" is
an entity that, together with its affliates and contrllng principals, has average gross revenues not
exceeding $15 milion for the preceding three year. Additionally, a ''very small business" is an entity
that, together with its affliates and controllng principals, has average gross revenues that are not more
than $3 milion for the precding thee years.77 The SBA has approved these small business size
71 ¡d.
72 u.s. CENSUS BUREAU, AMRICAN FACTFINDER, 2007 EcONOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get data." Then, under "Economic Census data sets by sector...," choose
"Information." Under "Subject Series," choose "EC075 I SSSZ5: Employment Size of Fins for the US: 2007."
Click "Next" and find data related to NAICS code 5 172 lOin the left colum for "Wireless Telecommunications
Carers (except Satellte)") (last visited Marh 2, 201 I).
73 13 C.F.R. § 121.201, NAICS code 517210.
74 U.S. CENSUS BURAU, AMERICAN FACTFINDER, 2007 EcÒNOMIC CENSUS, htt://factfinder.census.gov, (find
"Economic Census" and choose "get data." Then, under "Economic Census data sets by sector...," choose
"Information." Under "Subject Series," choose "EC075I SSSZ5: Employment Size of Firms for the US: 2007."
Click "Next" and find data relate to NAICS code 5 172 101 in the left colum for "Paging") (last visited March 2,
201 I). In this specific category, there were 248 fis tht operad for the entire year in 2007. Of that number 247
operated with fewer than i 00 employees and one operate with more than 100 employees. Based on this
classification and the assoiated siz stada the majonty of paing fis must be considered smalL.
75 See Trends in Telephone Service at Table 5.3.
76 Amendment of Part 90 of the Commission's Rules to Provide for the Use of the 220-222 MHz Band by the Private
Land Mobile Radio Service, PR Docket No. 89-552, GN Docket No. 93-252, PP Docket No. 93-253, Third Report
and Order and Fift Notice of Prposed Rulemaking, 12 FCC Rcd 10943, 11068-70, par. 291-295 (1997).
77 See Lettr to Amy Zoslov, Chief, Auctions and Indus Analysis Division, Wireless Telecommunications
Bureau, FCC, from A. Alvarez, Administrtor, Small Business Administrtion (Dec. 2, 1998).
126
Federa Coamu.ictiDS Commison FCC 11-32
stda.78 An auction of Metropolita Ecomic Ar licenses commece on Febr 24,200, and
close on Marh 2, 200.79 Of the 985 licese aucone 440 wer sold. Fift-seven copanies
claiming small business sts won.
22. Wireless Telephony. Wireless telephoy include cellula, pel counicaons
services, and speialize mobile raio telephny caer. As no th SBA ha develo a small
business siz stada for Wireless Telecmmunicans Carers (exce Sallte).80 Under the SBA
small business size stada a business is smil if it ha 1,500 or fewer employee.81 Accding to the
2008 Trend Report, 434 caers reprt that they were engaed in wirless telepony.82 Of thes, an
estimate 222 have 1,500 or fewer employees and 212 have more than 1,500 employee.83 We have
estimat that 222 of thse are small under the SBA smil business siz st.
3. Interut Serv Providers
23. The 2007 Ecnomic Census plac these finns, whose service might include voice over
Internet protol (VoIP), in either of two cagories, depending on whether the service is provided over
the provider's own telecmmunications facilties (e.g., cable and DSL ISPs), or over client-supplied
telecommunications connections (e.g., dial-up ISPs). The former are within the categor of Wir
Telecmmunicaions Carers,84 which has an SBA small business size stdad of 1,500 or fewer
employees.8s The latr ar within the category of All Oter Telecommunicaions,86 which has a size
stadad of annual reipt of $25 milion or less.87 The most currnt Census Bur data for all such
finns, however, are the 2002 data for the previous census category called Internt Service Provider.88
That category had a small business size stdad of $2 1 milion or less in annual recipt, which was
revised in late 2005 to $23 milion. The 2002 da show that there were 2,529 such finns that opeted
for the entire yea.89 Of thos, 2,437 finns had annual rei~s of under $10 milion, and an additional 47
finns had receipts of between $10 milion and $24,99,99. Consequently, we estimate that the
78 Revision of Part 22 and Part 90 of the Commission's Rules to Faciltate Future Development of Paging Systems,
WT Doket No. 96- I 8, PR Doket No. 93-253, Memoradum Opinion and Order on Reconsiderion an Third
Report and Order, 14 FCC Rcd 10030, par. 98-107 (199).
79 Id at 10085, par. 98.
8013 C.F.R. § 121.201, NAICS code 517210.
81 Id.
82 See Trends in Telephone Service at Table 5.3.
83 Id.
84 U.S. Census Bureau, 2007 NAICS Definitions: Wird Telecommunications Carers,
htt://ww.census.gov/naics/2007/det7D517110.HTM (last visite March 2, 20 II).
8513 C.F.R. § 121.201, NAICS code 517110 (up for inflaton in 2008).
86 U.S. Census Bur 2007 NAICS Defiitions: All Oter Telemmunications,
htt://ww.census.gov/naics/2007/det7D517919.HTM(lasvisited Marh 2, 201 I).
8713 C.F.R. § 121.201, NAICS code 517919 (upte for inflation in 2008).
88 U.S. Census Burau, 2002 NAICS Defmitions: Inteet Seice Prvider, Web Seh Ports, and Dat
Pressing Services, htt://ww.census.gov/epcdlnaics02/det7DEF518.HTM (las visited Marh 2, 201 I).
89 U.S. Census Burea 2002 Ecnomic Census, Subjec Sees: Information, "Establishment and Fir Siz
(Including Legal Form of Organizion)," at Table 4, NAICS code 5181 I I (issued Nov. 2005).
90 An additional 45 fis ha receipts of$25 milion or more.
127
Federa Communications Comaion FCC 11-3%
majority of ISP finns ar sml entities.
D. Desription of Projecte Reportng, Recrdkepia, and Other Compliance
Requirements
24. The rertg and rerdkeeping reuirents in this NPRM could have an impa on
both small and large entities. Though the impat may be more ficially burnsome for smaller
entities, we believe the impact of such reuirments is outweighed by their corrponding benefits to
entities and consumers. Furer, these reuirments ar nec to ensur tht the sttury goals of
section 254 of the Telecommunications Act of 1996 ar met without was, frud, or abus.
25. The Commission proposes several reporting, rerdeeping, and compliance
requirements for the low-income progr. We propose that Eligible Telecmmunications Carers
(ETCs) seeking support would extnd their reporting to the Universl Serice Administrtive Company
(USAC) to include reporting of subscribers' parial paicipaton. Furer, we propose de-enrollment
proceurs to reuce waste in the progr. We also propose to retain the existing verification
reuirements for federal default states and extnd thes reuirements to the remainder of sttes.
26. Duplicate Claims and One-Per-Residential Addess. The Commission proposes several
reporting and recordkeeping requireents to reuce the likelihoo that a residential adss wil reive
more than one subsidiz service thug the low-income progr. Speifically, we propose an
infonnation solicitation and submission pross to enable USAC to identify duplicate claims of support
and violations of the proposed rules, which, if adopted wil help USAC detennine whether two or more
ETCs ar providing Lifeline-supportd service to the sae residential addrsS.91 ETCs would be reuir
to solicit identifying residential address infonnation and cerification from Lifeline subscribers. ETCs
would then submit this data to USAC. Under the proposal, USAC would then notify ETCs of any
duplicate claims of support. ETCs would also be reuird to notify customers with duplicate Lifeline
service by phone and in wrting when possible that the subscriber must select one Lifeline provider or
face teination frm the progr. The selected ETC would then notify USAC as well as any other ETC
providing Lifeline service to the customer.
27. Line 9 Reporting. To help ensur that ETCs seek reimbursement only for active Lifeline
subscribers, the Commission proposes to require ETCs to report parial or pro rata dollar when claiming
reimburement on Fonn 497. Compliance with the proposed rule would reuir ETCs to report the
number of subscribers begining or tenninating Lifeline seice mid-month as well as the lengt of
service provided during that month to each parial-month subscriber, which is similar to ETCs' billng of
parial-month service to non-Lifeline consumers.
28. De-Enrollment Procedures an Customer Usage Requirements. As pa of the effort to
reduce waste in the progr and in accordace with the proposed one-per-residential addrss
codification, the Commission proposes to requir ETCs to de-enroll their Lifeline subscribers who: (l)
select another ETC after .being notified of a duplicat claim; and (2) subscribers who do not use their
phone for 60 days. Compliance with the proposed de-enllment proceurs would requir ETCs to
monitor wheter a Lifeline phone was used durg any 60-dy period. Aftr de-enrllment, the ETC
would need to notify USAC of the de-enrllment. USAC could then pursue reovery actions against the
ETC for past inappropriate support.
29. Verifcation. The Commission's rules curtly reuir ETCs in federal default staes to
implement proedurs to verify anually the continued eligibilty of a sttistcally-valid radom sample of
Lifeline subscribers and to provide the results to USAC. We propose to extend these stadas to all
91 See Appedi A for Prpoed Rules.
128
Federa COlBlBUDitiDS ComlBis FC 11-3
st. Furenore, in acrd with the pr one-pe-reideti ad reuir we
propo to reuir ETCs to verify consumer ceficaons upon enllmt and anualy ther.
30. Service Deposit or Mmimum Service Fee. Though we do no pr any role on a
seice depoit for commencing Lifeline service or a minimum seice fee for mantning se, we
sek comment on wheter such rues would balace the copeting ne of pr effca wi
prgr effciency. Speificaly, we seek comment as to wheter reuirg ETCs to bil co
would po a dispportonate bu upon small entites, esially th, like prpad wirele
resellers, tht do not curtly bil their consumer on a monthly bais.
31. Daabase. We prpose a comprehensive refonn to the low-income pro: we
reommend the cretion of a centrlized data for online ceficaon an verificaon of low-in
subscribers. In the NPRM, we sek comment on which entity or entities would be best suite to cr
and maintain such a databa. Compliance with reuireents asia wi a cetriz da
would include reportng of infonnation solicite frm Lifeline subscbers for th purse of cefyng
and verifying their eligibilty.
E. Steps Takn to Mimiz Signifnt Economic Impact on Small Entities, and
Signifnt Alternatives Considere
32. The RF A reuire an agency to desbe any significat alteratives that it has conside
in reching its approach, which may include the following four alteatives, among others: (1) the
establishment of differig compliance or reporting reuirents or timetables tht tae into account the
resoures available to small entities; (2) the clarfication, consolidation, or simplification of compliance or
reportng requirements under the role for small entities; (3) the us of perfonnance, rather than design,
stdads; and (4) an exemption frm coverae of the role, or any par theref, for small entities.92
33. In this NPRM, we make a number of proposals that may have an economic impa on
small entities that paicipate in the universl service low-income support mechanism. Speificaly, as
addressed above, we sek comment on: (1) mitigating duplicate claims of serice though incre
reporting to USAC, in accordce with the propose one-per-residential addrss rule; (2) requirg the
reportng of consumers' paial-month Lifeline paicipation; (3) esblishing clea de-enrollment
procedurs; and (4) establishing a unifonn verification regime. Ifadopte these proposals will help
USAC and ETCs reuce waste, frud, and abuse in the low-income support mechaism.
34. In seking to minimiz the burdens impose on small entities where doing so does not
compromise the goals of the universl serice mechanism, we have invited comment on how these
proposals might be made less burdensome for small entities.93 We agin invite commenters to discuss the
benefits of such changes on small entities and wheter these benefits ar outweighed by resulting costs to
ETCs that might also be small entities. We anticipate that the record wil reflect whether the overall
benefits of such progratic chages would outweigh the burdens on small entities, and if so,
commenters wil suggest alternative ways in which the Commission could lessen the overall burens on
small entities. We encoure small entities to comment.
35. We have taen the following steps to minimiz the impact on small entities. Firt, to eae
the administrive buren on applicats, we propose an approh that minimizs reortng reuiments
by appropriating Fonn 497 for fuer infonnation collection raer than creting an additional fonn. In
accordace with the E-Sign Act,94 we propose to allow consumers to sign their certfications
92 5 U.S.C. § 603.
93 See supra pa. 315.
94 15 U.S.C. §§ 7001-700 (200).
129
Federa Communications Comll FCC 11-3%
electrnically, elimining significat rerting and maling burens curtly plac on all enti. In
order to minimize the impat on ETCs, including smal entities, we have pla the bu of cheking
addrses for duplicate clais upon USAC, rather th ETCs. Furerre, in an effor to mae
verification simpler for all ETCs, we have pr unifor rules of eligibilit and verfication. Most
significatly, however, we contemplat a phas stct for reg to a cetriz daba: large
entities would begin populating the propose databa initially, wi smil entities following suit after a
period of time during which the procs wil be mae less burensome when possible.
F. Federa Rules that May Duplicate, or Co_ßiet wih Propo Rules:
36. None.
130
Federa Communitias Commin FCC 11-3%
STATEME OFCH JUS GENACBOWSKI
Re: Fedra-Sate Joint Boa on Universal Serice, CC Doket No. 965, Lifline an Lin-Up,
WC Doke No. 03-109, Lifeline an Link-Up Reform an Modernizion, WC Doket No. 11-18
Tody we propo to refonn and moderniz the Lifelinink-Up pro - to mae it more
effcient and effive, and to detine how best to mee our nationa goa of brband adopton by all
Amerca.
Since Lifeline was crat in 1985 and Congrss coifi it in the Telemmunicaon Act of
1996, the progr has drwn broad biparisa support and helpe milions of low-income hoholds
aford phone seice.
But the world has chaged considerably since then, an the Lifeline/ink-Up progr ha not
kept pace. Major tehnological, maret and regulatoiy changes - including the Commission's deision
in 2005 to allow prepaid wirless resellers to offer Lifeline seice - have cre new challenges and
pressurs on the prgr as well as new opportites for consumers.
Yet the Commission has not comprehensively rexained the prgr, or implemented clea
perfonnance goals or suffciently robust protecions aginst wase, frud, and abus. Every Lifeline/Link-
Up dollar that tody gets spet on duplicate service, ineligible paicipats, or other waste or
ineffciencies is a dollar that could go to helping more low-income American connect.
And Lifeline/ink-Up has grown more rapidly over the pas few year, increaing the
contrbution buren on consumers and businesses throughout the countr, which can undennine our
universal service goals. Increass in the contrbution burden ar pacularly concerning for the tens of
milions of Americas at or nea the pover line who pay for phone service but don't paricipate in
Lifeline.
That's why we asked the Federal-State Joint Board on Universal Service to exaine the
Lifeline/ink-Up progr and evaluate a host of issues related to the progr's perfonnance and
administrion. Lae las yea, the Joint Boar report bak with a sees of importt and thoughtfl
recommendations for refonn and modernization.
The NPRM we adopt toy puts forward these remmendations, as well as proposals frm the
Government Accountabilty Offce, frm the National Broadband Pla, and from a number of private-
setor staeholders.
The NPRM proposes th main tys of refonns:
First, we propo immediate refonns to eliminate waste, frud, abuse, and other misspeding in
the progr - including proposals to eliminate duplicate support to a single household and prventing
carers frm obtaining supprt for consumers that haven't use their seice in months. We also propose
to estblish a National Accountabilty Databas, administere by an independent thir pa, to ensur
that multiple caers ar not getg LifelinelLink-Up support to sere the same houshold, and that only
eligible households ar paicipatig in the progr.
Second, we propose to mae the progr more accuntable - that means accountabilty for
consumers who benefit frm the progr caers tht reive support and governent. To do this, we
propose refonns like estblishing concre perfonnance goals for the progrm, and stepping up oversight.
131
Federa CommuDitins Commison FCC 11-32
Third, we sek comment on measur - includg capping the siz of the prgr - to prvent
over-burdening the consumers and businesses that contrbute to the Universl Serce Fund.
These refonns wil provide Lifeline/ink-Up clea goals and robus safeguds, and put the
program on a sound footing.
And in the interi while we're sekig comment on these reform we wil work to ensur that
consumers ar not misusing the progr and th the companies tht reive Lifeline/in-Up support ar
living up to their responsibilties to combat wase, frud, and abuse, including taing adequate preautons
to prevent duplicate support.
As we refonn Lifeline/Link-Up to be a leaer, more effcient, and more effective progr, we're
also making sure the progr meets consumer nees in the broband age.
Broadband is at leas as crucial to full paicipation in our economy and societ in the 21st centu as
telephone service was in the 20t. We know that incring broaband adoption is essential for
generating economic growt and improving our globa competitiveness; a 2009 McKinsey study suggests
that a 10% increas in broaband penetration could incr anual GDP by more than $200 bilion in a
countr with an economy the siz of ours in the United States.
Broadband is also crucial for advancing national priorities like education - think of online courses
and digital textboks, and health ca - think of two-way video consultaons with medical specialists.
It's crucial for finding a job, as job postings have moved online, and for landing a job, as companies
increasingly reuire basic digita skils.
Despite the importce of broadbad for everyone, more than half oflow-income Americas -
about 60% - don't have broabad in their homes. Fewer th half of Afrcan Americans, Latinos, and
Americans without a high school diploma have brobad. And as we hear this morning, fewer than
10% of Native Americans households are online. Especially at a tie when countres like South Kore
boast broadband adoption rates higher than 90 percent, that's simply not good enough.
Acceleraing broadbad adoption is one of our grat national challenges. But it's not an easy
problem to solve. The National Broabad Plan identified a number of major barers. Many non-
adopters lack the digital litercy neeed to adopt and us broaband - they don't know how to use a
computer or how to navigate a webpage. Many non-adopters don't think broadband is relevant to them or
can improve their lives. And affordbilty is a core obstle, paicularly for low-income Americans. The
FCC has been working on a number of initiatives to overcome these barers and increase broadband
adoption and use.
Tody, we propose an importt step towar this goal: Pilot progrs, fuded with savings from
refonns, to detnnine how Lifeline/Link-Up ca best be used to incras broadbad adoption and use
among low-income consumers. We'll be looking broadly for the bet idea for accountable, effcient,
metrcs-bas initiatives tht wil move the neele on broadband adoption.
As we move forwar we should be realistic. Lifeline/Lin-Up won't solve the adoption
challenge by itself. We nee to haress e-governent, and think cretively about how different pars of
the public sector - federl, state, and local- ca be par of the solution.
Governent cannot, and should not, meet this challenge alone. Success is going to requir
sustained attntion and effort from bradband providers, technology companies, nonprofit grups,
educators, and pants, as well as policymakers.
132
Federa CommunitiDS Commis FCC 11-3
I'd like to acknowledge and prase existg private effort an chalen copaies to do mor in
this ar. This is as much a win-win as anyting I've sen. Ever new bro subsber helps tht
subsber, the compay offerng seice, and our ecnomy and globl compeitivenes. I loo forwar to
working with a broad rage of staeholders to meet our broband adion chalenge.
I'd like to th my fellow Commissioners, who worked tor to improve and shape the
Notice. I also want to th the st paicularly the st of the Wireline Competion Buru, for their
outstding work prepag this item.
133
Federa Communications Commi.FCC 11-3%
STATEME OF
COMMSSIONER MICHL J. COPPS
Re: Federal-State Joint Boad on Universal Serice, CC Doket No. 965, Lifeline an Link-Up,
WC Docket No. 03- 1 09, Lifeline an Link-Up Reform an Modrnization, WC Doket No. 11-18
Connecting low income consumers is a cetrl pilar of this Commission's Universl Service
mission. AN our peple nee acss to the wonders of communicaons-d I always underline that
word "all." We can no longer aford to have digita divides beee the haves and have-nots. Until eah
and every citizn of this grt countr is connec or rul, living on trba lands or in distsed
inner cities, whether they ar rich or por, wheter or not they ar members of our disabilties
communities-ur work remains unfinished.
Our Lifeline and Linkp progrs help ensur that Americas who need it most have afordable
access to the nation's communications network. Tody, that has to mea support for affordble
broadband access. The Commission has rightly begu to trsition our Universl Service focus across all
our programs to the advanced communications seices th the digita age reuirs. Whether it's
applying for a job or accessing a public assistce progr, doing homework or carg for our health
broadband beomes with each passing day more essential-a baic pruisite for paricipation in the
social and economic life our nation. Low-income consumers simply caot afford to wait for the benefits
of broadband. As this item points out, only 40% of households earing less than $20,000 a year have
broadband - compared to a 93% adoption rate for households makng more than $75,000 anually. And
we know that cost is a primar barer to broband adoption. Dispaties that dramatic cry out for
immediate action.
At the same time, we must acknowledge tht ther is stll work to be done to ensur that all
Americans have access to baic voice service. Almost i 0% of low-income households nationally lack
telephone service. And I would had that many of our distinguished guests from Indian countr today
could tell us first-hand how much remains to be done on this score. The low-income programs have been
historically undertilzed and although there has been recent grwt in the progr, in 2009 only 36% of
eligible consumers paricipated in Lifeline. So I'm pleas that this item builds on the recommendations
of the Federal-State Joint Board on Universl Service with regad to outrch and coordinated enrollment
when consumers ar signing up for other assistace programs. These proposals ca potentially expand
the reach of the low-income support progrs, which is critical as long as telephone penetrtion rates for
low-income households consistently lag behind the rest of the nation.
I certinly support looking for progr savings and action to ensur tht carers that ar
receiving support are doing so in compliance wit our rules to prevent wase, frud and abuse. This item
also identifies ars where the progr nees to be modernize such as by updtig the rules on toll
limitation services reimburment. I appreiate that as we ask how to enforc the one-per-household rule
designed to prevent duplicative support we acknowledge that some low-income consumers have living
situtions where a residential addrss is not a goo prxy for a houshold. I hope any duplicative support
or outdted support we do reover is use to expad the benefits of advanced communications to low-
income consumers. These savings should be used to provide funding for the proposed broadband pilot
progrs, which ca be an importt fit step on what I hope is an acceleraed trsition to a low-income
progr that helps all Americans reach our national broadbad goals.
Ou challenge is to close the stubborn and persistnt gap of low-income Americans who remain
without even basic voice serice while trsfonning the progr to provide support for the advanced
telecommunications services that all Amercans need in order to compete in the 21st centu economy.
That's a tall order-and tht is why I am concerned that this item contemplates capping low-income
134
Federa CommuBitiDS Commisn FCC 11-3%
support. As we tee up propols about how to prvide support for brbad, capping toy's prgr
would be at be impreise. How can we intellgently cap a progr when we don't know how much
meeting the challenge is going to co? At worst, we rik compromising th futu of low-income
Americas who may never be connete wiout Lifeline.
My than to all the st in the Bur whose effort went into toy's ite. I als want to
acknowledge the Federl-Sta Joint Boa membe and stwhose work infonned this NPRM. I look
forwar to working with all these goo folks, with my colleas here, and wi all steholders in the
months ahea.
135
Federa Communications Commision FCC 11-3%
STATEMENT OF
COMMSIONER ROBERT M. MeDOWELL
RE: Federal-State Joint Boad on Universal Seice, CC Doket No. 96-5, Lifeline an Link-Up,
WC Doket No. 03- 109, Lifeline an Link-Up Reform an Modernization, WC Doket No. 1 1-18
If I've leaed one thing in my nearly five yea on the Commission, it is tht our work on
universl service refonn is a bit like painting the Golden Gate Bridge: a projec tht is always underay
and never sems to end. During my time here, I have advocated for a comprehensive review of all of the
progrs with a primar goal being curbing the growt of expenditus. As such, today's initiation to
revamp the Lifeline/Linp progr is a criical par of our overal refonn effort, and I commend the
Chainnan for launching this Notice of Proposed Ruleming.
The original goal of the Lifeline/Linkp progr was a noble one: to provide an opportnity for
Americans with limited means to stay connec to the rest of the world though basic phone serice.
This progr has improved many lives by not only allowing for everyday communications, but it has also
helped save lives by allowing consumers to place emergency calls.
Nonetheless, we canot ignore the fact that the size of the Lifeline/Linup program has steadily
and dratically increase. In 1997, the tota support for the progr was $ 1 62 milion, and in 2010 it
had risen to $ 1.3 bilion. This trnd is unsustainable. It is encourging to see that this proceeing
attmpts to exaine and address waste, frud and abuse within this progr. It seems that policymakers
often speak of ''waste, frud and abuse" when attmptig to crete effciencies in governent progrs to
the point where that tenn has become hackneyed and virtly meaningless. Tody, however, the FCC is
actully doing something speific to revers some trubling trnds. For instace, the Notice: seeks
comment on ways to ensur duplicate support is not provided; explores ways to prevent companies frm
receiving fuds for inactive customers; and asks for the public's advice on possibly imposing a uniform
federal stdad as a minimum threshold for verifying continued eligibilty. Also, regarding duplicate
claims, I am supportive of efforts the Chainnan may have to find ways to curb excess and inappropriate
spending.
I thank the hard-working staff in the Wir line Competition Buru for their dedication to this
Notice, and I look forward to discussing these issues with all of my colleagues and the varous
staeholders. It is my hope that we can move forwar in a fisclly prudent and thoughtfl way.
136
Federa Communitins Commis.FCC 11-3%
STATEMENT OF
COMMSSIONER MIGNON L CLYBUR
RE: Federal-State Joint Boa on Unival Service, CC Doke No. 965, Liflin an Lin-Up,
WC Doket No. 03-109, Lifeline an Link-Up Reform an Modernizn, WC Doke No.1 1-18
For may yea, fulfillng the baic communications ne of low-inco cons ha be a
priority for our nation. Since 1985, the Lifeline and Link Up pro have en milions of low-
income Americas access to affordable telephone serice. This not only peits thes consers th
means to sty connecd to frends and family, it also offer them the àbilit to mae doctor's
appointments and call 911 in an emerency. By ensurng that low-income consumers have acs to a
phone in their homes, our nation has provide ever American-no matt their fincial cirumstace
the lifeline thy nee to communicate with the rest of the world. For thos consumers who ar strgging
to meet basic needs, such as foo and shelte, these progr trly ar makng a differnce. May would
go without phone seice, but for thes progrs. And given the ecnomic downturn over the las several
year, it is not surprising that the fud ha grwn.
We have sen numerous chages in the maetplace since the implementaion of the Lifeline and
Link Up progrs. Notably, mobile wireless service has grwn significatly, and competitive Lifeline
proucts are now available, allowing low-income consumers the abilty to choose from various phone
options. Tody, access to high-speed Internet service ha beme essntial for Americans to
communicate with one another. As a result, it is appropriate for the Commission to revisit the curnt
stctu of the Lifeline and Link Up programs. We must ensur that they ar effcient, effective, and
addres the modem communications nees of our nation's low-income citizens.
While these progrs have helpe many consumers afford telephone service, not all nee have
ben addresse. As my frends from the Triba Natons are fully aware, basic phone service stil lag
significantly on Tribal Lads as compard to the rest of the countr. Tody's NPRM builds upon the
recommendations made by the Federal-State Joint Boad on Univers Serice las November, as well as
the National Broband Plan las Marh. The Commission's considertion of these recmmendations is
essential for modernizing and improving the progrs. By ensurng that only eligible consumers
paricipate in the progrs, that the annual verification reuirements ar effecive, and that we minimize
duplicave services to households, we likely can ext some effciencies in the progrs that could be
used to fuer address the voice and broadband needs of low-income consumers.
I am encouraged by our full exploration in this Notice of the use of an electrnic databas that
would peit real-time checks on consumer eligibilty and paicipation in the Lifeline and Link Up
prgrs. Such a databas has the potential to offer us savings in the long run-vings that could be
used to fuer addrss the nees of low-income consumers. It is very appropriate that this Commission
work towards a broadband-based soluton that all Lifeline and Link Up providers could rely upon to mae
these progr more effcient and effective.
I am also pleaed that we ar asking some veiy baic questions in this Notice, such as how much
support trly is reuire for both the initiation of voice seice thugh Link Up, and the monthly benefit
that Lifeline provides. Where we can identif savings, those funds could be usd to begin addrssing and
supportng the broadbad needs of low-income consumer which we know ar significant. Les than half
of low-income Americas have subscribe to broadband, and one-third of Americas who have not
purhas broaband, say they have not done so due to the expense of obtaining such seice.
We also know that for those consumer who ar stggling to pay for their baic needs, ther is
very little discreionar income left to aford broadband service. One analyst reently noted that 40% of
137
Federa Communications Commion FCC 11-3%
U.S. households have just $100 of disposable income, aft paying for their foo shelte, and
trsporttion. Yet broadbad service is just as much a necsity tody, as phone service was when the
Commission estblished the Lifeline and Link Up programs 26 year ago. Without broadbad at home, it
is more diffcult for citizens to look for a new job and interact with governent services. Indee, some
governent agencies only offer their services to consumers via the Internet.
For these rens, over the las yea, I have rey sted th we must fully focus on our
nation's broadband adoption ga. I believe that we wil not succssfully bridge this ga for low-income
consumers if we don't addrss the afordilty issue. Given the expanive modem communications
needs of low-income Americas, we would be on a fool's erd if we think that we can address both
voice and broadbad reuirments, while simultaeously caping the fud. To be clear, I don't subscribe
to the belief that the Fund wil meet all of these nee, even if it is not cappe. I believe it wil tae both
the public and private sectors to addrss these issues. I am hopeful that with the discounts providers
already offer to low-income consumers, along with the broadbad pilot projects propose herin, and with
the flexibilty of consumers to use their Lifeline discunt for bundled voice and broadband services, we
can find effective solutions to bridge the digitl divide for most low-income Americans.
This is not an easy tak, but I challenge every Lifeline and Link Up provider, every broadband
provider, and all other interested steholders, including Congress, the states, consumer advocates, and
public interest groups, to help us fmd the most effective solutions for improving the curent Lifeline and
Link Up progrs for voice service, and to stretch the progrs' dollar even fuer, so that we can
cover broadband services. I also wish to praise those broadbad providers that have recognized the
significant need of low-income consumers and have st their own adoption progrs, and I hope that
they continue to share their work with us. By learing what has and has not been successful, we can
better addrss the modem communications needs of all Americans.
138
Federa Communicatins CommisB FCC 11-3%
STATEMENT OF
COMMIONER MEREDIT ATTLL BAKR
RE: Federal-State Joint Boa on Universal Service, CC Doket No. 965, Lifelin an Linl-Up,
WC Doket No. 03-109, Lifeline an Linl-Up Reform an Modizon, WC Doket No. 11-18
The Commission's low-income progrs prvide the meas for 8.6 milion Amca to afford baic
telephone seice, and the abilty to reh public safet, schools, and employer. I suppo our efort to
refonn thse importt progrs to enur their long-tenn sustinabilty. This ite is an appropriate and
timely follow-up to las month's review of our high-cst progrs, and an imprtt stp forwar in
implementing the Joint Boa's Novembe Recmmended Deision.
The themes her mirrr closely the challenges and opportities we fac with the high-cst fud.
To put thes prgr on a strnger foundaion both operaonally and finanially, we nee to tae a
comprehensive look at these progrs to evaluate wheter they ar effective, fiscly responsible, as well
as wheter they propely reflect tody's consumer demands and maret realities.
Opraonally, I believe the Commission has let criica questons about progr eligibilty linger too
long, and I am happy to see us tae afnnative steps to updte these progrs and curb was, frud, and
abuse. As we work together collectively on refonn, we nee caers receiving low-income support today
to act as responsible paers in the interim minimizing any wasful or duplicative expenditus.
Our refonns must also reflect the need for grat fiscal discipline in acomplishing our mission. Much
like the high-cost fud, the low-income progrs have grown significantly. In the pas ten yea, these
progrs have more than doubled frm $577 millon to over $1.3 billon tody. I support our effort to
address the need for real cost containment, and to regnize tht-in diffcult ecnomic times-scalating
contribution burens on consumers can create their own afordabilty challenges undennining our effort.
We are also beginning our dialogue on how to updte these prgrs to support brobad. Iappreiate
that we ar looking before leaping on broadband funding. By all metrcs, adoption of broadbad for low-
income Americans lies well below the national average, and this poses an importt challenge for all of
us. The promising news is that the gap is beginning to shrnk. Broadbad adoption for those making
betwee $ 1 5,000 and $25,000 a year ha jumpe from 24 percnt in October 2007 to over 42 percent last
year. There is obviously stil much to do, and our low-income progrs ar a potentially untappe
resour to help. Moving forwar with brobad pilot progrs appe to be the right next step.
Adoption is not a one-size-fits-all challenge and afordabilty is but one of the core challenges we must
face. Indeed, those making between $15,000 and $25,000 a year identify relevance as the primar
impediment to adoption (44.3 percent), affordabilty is a distat send (27 perct). More money alone
wil not solve this problem.
139
GAO
Unite State Governent Accountailty Ofce
Report to Congressional Requesters
October 2010 TELECOMMUNICATIONS
Improved
Management Can
Enhance FCC
Decision Making for
the Universal Service
Fund Low-Income
Program
GAO
Accountbility * Integrit * Reliabilit
GAO-II-II
!.. .GAOtl..~.!n.-~-
HiøfGAQ-11-11, a rert tocorel ~rs
Wh GAO'OidThis Study.
The Federa Communcaons
Common's (FC) Low-Income
Pr ad by theUlUers Servce Adve
Comy (USAC) and suport by
th Uni Sece Fud (USF),
pres IQw-mcohousoldwi dits on inon co
for new telephone servce and
monthy ches for bac teephone
servce. In th red report GAOexaed (1) how pro
paon.ad suport pants
have cha over the.Ja 5 yea
(20020), and fars th ma
have afected pacion; (2) th
extnt to Whch goa and meaar us to mae the pro and
(3) the extnt to which mecar in pla to evua pro riks
and monitor contls over
complice with pro rues. GAO
sureyed st public utty
conuons; reviewed key policies
procur, and rues; and
intervewed agency offcia and
steholders
What GAO Recommends
FCC shuld (1) cleay defie
perfonnce goa and developquale me th ca be
usd to detenne the progr's
succes (2) conduct a need
asent an develop
implementaon and evauaon pla
for the proos low-incoe pilot
pro (3) conduct a robus ri
asent, and (4) imlement a
syma proes to coder audt
rests. FCC ag with GAO'srecmmendons.
View GAO- 11-11 .orkeyc:.. Vi th .
results of the GAO sur onli at GAQ-11-13SP. For mor informat, co Lor
st.!Jain,(214) .777..5719.St.JamesOga.go.
October 201lJ
TELECOMMUNICATIONS
Improved Management Can Enhance FCC Deision
Making for the Universal Service Fund Low-Income
Program
Low-Income Prgr parcipaon and support payments have increas
since 2005 due to many factors. Prgr parcipaton was stle frm 2005 to
2008, frm 6.9 mion to 7.1 mion parcipants but increas to 8.6 mion in
2009. Liewi, support payments were relatively stle from 2005 to 2008,
frO~ ~802. mion to $~23 mion anualy, before increasing to approxiatly
$1 bilon in 200. The increass in 200 were priy due to the addition of a
pre~~d wieless servce option in cert stas, wluch alows progr
parcipants to obta a free wieless hadset and an alotment of free miute
each month The Low-Income Progr has no fudi cap and USAC offcia
project its support payments to reach $1.4 bilon in 2010. They said
parcipaton and payments wi liely contiue to increase beyond 2010 as
prepaid wiles servce options become avable in additiona sta.
FCC ha taen lited stps to develop performance goals and measures for
the Low-Income Progr, however, these steps do not fuy algn with usefu
pracces for developing succesfu goal and measures. Wle performce
goal and meaurs spcifc to the Low-Income Progr would enable FCC to
more effectively mae the progr and determe its succes FCC ha not
mae ~eveloping such measures a priority and, as a result, ha liited inight
o~ the intent of the progr and what it is accomplihig. FCC might conduct
pilot progr as it consders expandig the Low-Income Progr to include
broadband servce (hgh-speed Internet access), as proposed by the Natona
~roadband Pla. For the broband pilot progr, if conductd, it is
importt th FCC develop a needs asessment and implementaon and
evauation pla to increase confdence in the reults. If implemented
properly, the pilot progr would enable FCC to improve its da collection
for low-income households and could help faciltate progr and policy
decisions for the Low-Income Progr in the futue.
Although FCC and USAC have some mechanms in place to identi and
evaua riks and monitor compliance with progr rues, the Low-Income
Prgr laks key feates of effective intern controls. FCC and USAC
priary us audit fidigs to monitor complice with progr rues.
However, the number and scope of USAC's audits have been lite and there
is no systematic process in plae to review the fidigs of those audits th
ar conduct. Fuer, FCC and USAC have not conducted a rik asssment
spcifc to the Low-Income Prgr tht includes consideration of al
pr~gr vuerabilties, such as the possibilty that multiple carers may
cla support for the sae telephone lie and that households may receive
more than one diount, contr to progr rues. Accordig to GAO
sta~, FCC should identi al riks to meetig the progr's goal and
obJec~ves and have a process to systematicay consider audit fidigs when
asing the effectveness of its internal controls. Without thes mechams,
FCC and USAC may not be catug and addressing progratc riks and
collectig inormtion that could be leveraed to assess complice with
progr rues and stngten intern controls.
Unit sta Government Accuntabilit Of
Contents
Lettr 1Bakgund 5
Prgr Parcipaton and Support Payments Have Incr
Pry Due to the Addition of Prpad Wireless as an ElbleServce, but Barer.to Parcipation Rema 13
FCC Laks Perfonnce Data to Mae the Progr, but Piot
Prgr, if Prperly Implemented, Could Prvide Improved
Data to Make Critical Prgr and Policy Decisons in theFutu 24
The Low-Income Prgr Has Estblihed Some Mecha to
Identi and Evua Riks and Monitor Complice; However
the Prgr Laks Two Key Featues of Effecve InternControls 32Co~lwnoM 41RecommendatioM for Executive Acton 42
Agency Comments and Ou Evauation 43
Appendi I Scope and Methodology 46
Appendi II Lielie Elibilty Criteri and Admitrtive
Processes and Responsibilties 50
Appendi III Estited Lielie Parcipation Rates AmongElible Households by State in 2009 53
Appendi IV Alent of FCC Outreach Guidelies with Our KeyPractices for Consumer Education 54
Appendi V Comments from the Federa CommuncationsCommion 58
P-el GAO-H-H FCC's Lo-lDeo Pr
Appendi VI Comments from the Univers Servce AdmtrtiveCompany 63
Appendi VI GAO Contact and Sta Acknowledgments 67
Related GAO Products 68
Tables
Table 1: Genera Rensbilties of Entities Involved in Low-Income Prgr Admon 12
Table 2: Selectd Advertg and Outrach Actvities by States WeViste 18
Table 3: Advertg and Outrach Methods Used by States andETCs 18
Table 4: Alent of FCC Effort with Usefu Pracces for
Developin Succes Perfonnce Goal and Measures 27Table 5: Individua and Orgons Intervewed 48
Table 6: Lielie Admve Prcesses in States that ProvideIntr Lielie Support 51
Table 7: Lielie Prgr Admve Responsibilties in Stateth Prvide Intrte Lielie Support 51
Table 8: Algnent of FCC Outrach Guidelies with Key Prticesfor Consumer Education 55
Figues
Figue 1: Tota Number of Low-Income Support Payments and
Lielie Parcipants, Calenda Year 2005 - 2010 15
Figue 2: State Public Utity Commion Views on the Barers to
Enll Elle Housholds in Lielie 23
Figu 3: Telephone Subsribership of Low-Income Households
Compared to Al Households, 1984 - 2009 25Figue 4: Rik Maagement Frework 38
Figue 5: Anysi of ETC Support Payments and Audit Coverage,2002 - 2007 40
PaieH GAO-ll-ll FCC's Low-Income Prgr
Figu 6: Es Lielie Parcipaton Ra Among ElbleHousholds by Sta in 20 53
Abbrevitions
199 Act
APA
Commion
E911
ETC
FCCFF
IPIA
Joint Boar
OMB
PSAP
TL
USAC
USF
Telecommuncations Ac of 199Admve Predur Act
Federa Communcaons Commion
Enhced 911
eligile telecommuncations caer
Federa Communcaons Common
Federa Maers' Fici Integrty Act of 1982
Improper Payments Inormtion Act of 200
Federa-8tate Joint Board on Univers Servce
Ofce of Maement and Budget
Public Saety Anwerig Point
Toll Litaon Servce
Univers Servce Admitrtive Company
Univers Servce Fud
Teleommuniations: Survey of State Public UtUity Commiions
(GA0-11-13SP), an e-Bupplement to GAO-11-11
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PaøW GAO-ll-ll FCC's Lo-Income Pr
J-SiLQ~..Unite State Governent Accountabilty Ofce
Washin, DC 20548
Ocber 28, 2010
The Honorale Henr A WaxCha
The Honorale John D. DiellCha Emeritu
The Honorale Joe Barn
Ra Member
Commttee on Energ and Commerce
Hous of Representatives
The Honorale Ba StupaCha
The Honorale Michal Buress
Rag Membe
Subcommtt on Overst and Investatons
Commttee on Energ and Commerce
House of Representatives
The Honorable Greg Walden
Hous of Representatives
For may deces, federa policy has caled for makg afordable
residenti telephone servce avable to the gratest possible number of
Arericaa policy known as "unvers servce." Th policy is cared
out thugh the Federa Communcation Coinion's (FC or the
Coinion) unver serce progr which are fuded thugh the
Univers Servce Fud (USF), and include the Low-Income Prgr. i
Th progr was created in the rnd-1980s to promote telephone
The other progr support by the USF ar: (1) the Hi-Cos Prgr, wluch asists
cume li in li ru or remote ar thug ficia support to
telecommuncations carers th opera in such ar; (2) the Schools and Libraes
Prgr (commonl referr to as "E-ra"), which as elible schools and libraes in
prour telemmuncaons and Internet servces, as well as intern connecons and
basc matece for such servces; and (3) the Rur Health Care Prgr which as
heath car providers loc in ru ar thug diowits for telecommuncaons and
In ac servce. Combin the four USF progr provided about $7 bilon in
support paents in 20. Wh th report focu on the Low-Income Prgr, we alo
hae an ongoin reew of the Ru Health Car Pr. Se rela GAO product at the
end of the report
Pagel GAo-ii-ii FCC's Low-Income Prgr
subsbers among low-icome housolds. In 20, the Low-Income
Prgr provided approxiy $1 bilon in suport payents.
Trtiona, unvers servce policy and acces to teeconuuncations
servces for low-income subsrirs ha centere on ladle reidenti
telephone servce thughout the Uiute Sta. However,
telecommuncaons teology ha adced and new was to acces
teleconuuncaons servce have ben develope. For exaple,
consumers toy have more options to acces teephone servce th in
the pas includi cale, wiles, and brobad.2 To expand the
availty of Lielie, which diounts local servce, and to provide
additiona consumer choice, FCC ha alowed cert prepaid wiles
providers,3 to be grted lited designtion as elible
telecommuncatons carers (ETC)4 for the Low-Income Progr in their
licensd servce aras. As new technologies contiue to develop, the
unvers servce policy wi be chaenged to defie "access" to
telecommuncaons servces for low-income consumers. In parcul, in
200, FCC was madad to develop a broadband pla th would "ens
th al people of the Uiuted Sta have acces to broadband
caabilty..."5 An FCC tak force isued the pla in Mah 2010, with
reconuendatons, among may other thgs, on how to refonn the USF
and modi the Low-Income Prgr to support broadband servce.6 FCC
~e tenn "brobad" commonl refers to hi Internet aces. Broba enales
consumers to reeive inonntion much far th a di-up connecon and prodes an
"alway on" connecon to the Internet Consumers ca reive a brobad connon
thug a varety of techologies such as cable modem, dita subscr li servce,
fiber, and sate.
3ppaid wiles servce is an wiles telecmmuncaons servce th is acvate in
adce by payment for a fite doll amout of servce or for a fite numer of miute
th tenn eiter upon us by an persn or with a cert penod of tie followi
th inti pur or acvaon, unes an additiona paent is ma.
4oe Communcaon Act of 193, as amende, provide th onl an entity des as
an ET sh be elible for unver sece low-income support. An ET is a
teecommuncaons carer th is elible to receive unvers servce support thughout
the sece ar for which the deson is reived. ETCs mus offer the servce
supportd by unve servce usin thir own facties or a combinon of thir own
facties and resae of another caets servces to eac cusmer in its deste servce
ara. 47 U.S.C. § 214(e)(l)¡ 47 C.F.R. § 54.201(d)(1).
5 Amenca Revery and Reinesent Act of 20, Pub. L. No. 111-5, 123 St 115, §
601(k) (coded at 47 U.S.C. § 130(k)).
~edera Communcations Commion, Conneti1l Ame Th Natio Brnd
Pln (ret Ma. 16,2010) (Natona Brd Pla).
Pqe2 GAO-ll-ll FCC's Low-Ineome Pr
ha al intite effort to identi the legal approah tht wi bes
support its efort to ense unvers access to afordable, hi qualty
broadand servces.7
We hae previous reportd on oversght and internal control
mecha us by FCC to overse other USF progr. For exaple, in
our reviews of the USF E-rate program, we found weakesses in the
adon and operaona frework and have recommended
corrctve acons to reuce frud, was, and abuse in the progr.8 To
begi addr these and other concern, FCC has taen preliar
steps, such as intiat a Univers Seivce Workig Group, to asis in
FCC's effort to moderne and reform al unvers seivce progr.
Given the importce of the USF to the naton's telecommuncations
policy, sicat advaces in telecommuncations technology, and
potenti USF reform effort, you asked us to review ises suroundig al
the USF progr. Th report focuss on the Low-Income Prgr and
our objectves were to reew (1) how program parcipation and support
payments have chged in the la 5 caenda year (2005-2009) and what
facrs may have afecd progr parcipaton, (2) the extent to which
FCC uss perfonnce goal and measures to maage the program, and
(3) the extnt to which the program ha mechans in place to evaluate
progr riks and monitor controls over compliance with program rues.
To resond to these objectives, we reviewed key orders, report, and
progr asessents frm FCC and the Universal Seivce Adntive
Compan (USAC), the not-for-profit coiporation that adters the Low-
Income Prgr under a Memoradum of Understadig with FCC,9 and
intervewed offcia frm both organtions and other steholders with
knowledge of the progr. The steholders were identied from a
vaety of sources and include acemicia and th taks,
7Se Frmefor Brond Intet Se, Notice of Inqu, 25 FCC Red 786
(2010).
SS GAO, Telmunicat: Grte Involvet Nee by FCC in Ow Manaement
and Ovight of Ow E-Rate Prm, GAO-5-151 (Washin, D.C.: Feb. 9,200); GAO,Telmunic: Lo- Tem Strte Vis Wou Help Ensre Targeting of E-rate
Fund to Highet-Prty Use, GAD-253 (Washin, D.C.: Ma. 27, 200); and GAO,
Telommunicti: FCC Sh Assess Ow Desgn of E-Rat Prgrm's Inte Cootr
Strture, GAQ.10- (Washin, D.C.: Sept. 29, 2010).
~emoradum of Undersdi Beeen the Federa Communcations Common and
the Unier Servce Ad Compa, (September 200). '
Page 3 GAO-ll-ll FCC's Low-Income Pram
telecommuncations providers, th pares contr to adr the
progr and relad commtt, and tre and indus grups. To
develop an undersdi of how the progr works in specic loctions,
we conduct site vits in Caorn the Dict of Columbia Florida,
and Iowa. We chose these locations based on critea such as the
telephone subscribership rae of low-income housholds and the
parcipation rate of elible low-income housholds. Dug the vits, we
intervewed offcia frm ste public utty comnions, ETs (wilie
and wiless), conser advocate, and other entities as applicale, as
well as obtaed pertent documentaon. In addition, we analyzd
parcipaon and diburement data frm USAC and identied key trnds.
We conduct teg to ensure the reliilty of the data and reviewed the
methodology used by USAC to ese progr parcipaton rate. As a
ret, we detenned th the dat were suciently reliable for the
puios of th report. We al conducted a Web-based surey to gater
inonnon frm stte public utity comnions on how, if at al, roles
and respnsbilties va by ste; barers to progr parcipation, if any;
adverting and outrh acvities by state public utity commons and
ETCs; and intern contrl proedurs. The suey was avale onle to
offcia in the 50 state and the Distrct of Columbia on a sec Web site
and our repons rate was 100 percent. Th report doe not conta al the
resuts frm the surey. The surey and a more complete tabulon of the
rests can be viewed at GAO-ll-13SP.
Fi, we reviewed the progr's performce goa and measurs and
the mechams usd by FCC and USAC to evauate rik and monitor
compliance with progr rues. We compar th inonnon agt our
gudace on usefu praces for developing success goal and measurs
and our stdar for intern controls in the feder governent, as well
as Ofce of Manement and Budget (OMB) gudace on internal
contrls. 10
We conductd th performce audit frm Octber 200 thug Ocber
2010 in accordace with genera accepted governent auditig
stadar. Those stda reui tht we pla and perform the audit to
obta sucient, approprite evidence to provide a reasnale bas for
10GAO, Age Petornc Plns: Exampl of Prtices Th Can Impr Useftnes to
Dema, GGD/Aß (Wason, D.C.: Feb. 26, 199); GAO, StandrdforInte Contro in th Fed Govmet, GAO/Al2L.3.1 (Wasn, D.C.:
November 199); and Ofce of Maement and Budget, Mana's Reityfor
Inte Contr, Cir No. A-123 (Wasn, D.C., De. 21,200).
Page 4 GAO.ll-ll FCC's Low-Income Pram
our fidi and conclusons bas on our audit objectives. We believe
that the evidence obtaed provides a reasonable basis for our fidigs
and conclusions baed on our audit objectves. See appendi I for more
inormation abut our scope and methodology.
Background
The Nation's Universal
Servce Policy and the
Low-Income Progr
Developed Over Tie
The idea th communcation servces should be avaable "so far as
posible, to al the people of the United States," - has been a goal of
telecommuncaons reguaton sice Congres enacted the
Communcations Act of 1934.11 Effort by FCC, state regutors, and
indus to promote unvers servce generay began in the 19508.
Trtionay, unvers servce ha meant providig residential cusomers
with afordable acces nationwide to basic telephone servce.
In the mid-1980, FCC chaed the way loca telephone companes
recovere fied cos and implemented a federa fee for telephone servce
paid by the subscber. Thoug FCC found no evidence th fee would
ca low-income consumers to cancel telephone servce, it was
neverteles concerned about the below-average telephone subscribership
rates of low-income housholds0 percent compared to 92 percent for
al households in 1984d their abilty to aford telephone servce.
12 As a
resut, FCC intiat two progr to make telephone servce afordable
for low-income households: Lielie, which diounts monthy servce, and
Li Up, which dicounts the connection chaes associated with
telephone servce intaaton.
Congss coded the naon's commtment to unversal servce and mae
sigcant changes to unvers servce policy though the
telecommuncations Act of 1996 (1996 Act).
13 The 1996 Act provided
1147 U.S.C. § 151.
1Zoe fit Liele pro wa intitute because of the concern th the new fee mit
drve low-income subsrs to cancel seivce. However, the focus of the progr son
chaed to an empha on acve expanion, raer th mere prervaton, of telephone
servce among low-inme housholds. See Common Carer Burau, FCC, Praratiofor
Addresing Univeal Se Issu: A Re of Currt Intetate Suppor Mechais
(199).
13pb. L. No. 104104, no Stat. 56 (199).
Pageõ GAO-n.ii FCC's Low.Income Pr
explicit sttory support for federa unvers seivce policy and dict
FCC to eslih a Federa-8ta Joint Bo on Univers Seivce (Joint
Bo) to mae reommendaons to FCC on implementi unvers
seivce provions of the 199 Act.14 The 199 Act al desribed unvers
seivce as an evoMng level of telecommuncaons seivces the
Commion should periodcay review, tag into account adances in
telecommuncaons and inormaton tehnologies and seivces.15 il
accordce with its defition of unvers servce, FCC found tht basc
telephone seivce must include, among other thgs, loc use, access to
emergency seivce such as 911, acces to oper seivces, acces to long
ditace seivce, acces to diectory assisce, and toll litation for
qua low-income conswners.16
Fuer, the 1996 Act std that every telecommuncations caer
providig inters telecommuncaons seivces was requied to
contrbute to federa unvers servce, unes exempted by FCC. The
contrbutions were to be equitale, nondiriatory, and explicit. il
addition, FCC was authoried to ree any other providers of interstate
telecommuncaons to contrbute if the public interet so reuied. 17
Contrbutions ar depoted into the USF, which was eslihed by FCC
in 1997 to meet the speifc objectves and priciples contaed in the 199
Act.18 Eac quar, FCC calcultes a contrbution ra for al contrbutors
basd on the needs of the unvers seivce progr and ass it as a
percentae of the caers' interste revenue. il the second quaer of
2010,19 the contrbution ra was a hitoricay high 15.3 percent of
1447 U.S.C. § 254.
1547 U.S.C. § 254c).
16Se Fed-Sta Joint Bord on Univeal Se, Report and Orer, 12 FCC Red 8776
(1997) (1997 Univers Seivce Orer); 47 C.F.R. § 54.101(a).
1747 U.S.C. § 25 (d).
I~CC ha ori crat a Univers Servce Fud in 198 to help keep telephone rate
reasnale in hi-c aras. Se MT and WA1S Markt Struture, Th Report and
Orer, 93 FCC 2d 241 (1983).
iii the th qur of 2010, the contrbution ra was 13.6 percent and it is projeced to be
12.9 percent in the four qur of 2010. See Fed Univeal See SupporMechanis Fund Size Prjectio for th Third Qurter 2010, avable at
htt://w.unversivce.orgovervew/fi (fied Apri 30, 2010) (USAC Fig for
Thd Quar 2010 Prjectons) and Fed Univeal Sere Supp Mechnis FundSize Prectionfor th Fourt Qurt 2010, availe at
htt://w.unversce.orgoveivew/fi (fied Augut 2, 2010) (USAC Fi for
Four Qur 2010 Prjectons).
Page 6 GAO-ll-ll FCC's Low-Income Pr
caer' inters end usr revenue. Carers generay pas the cos of
the USF contrution on to their cumers, tyicay in the form of a lie
item on the month telephone bil The Low-Income Progr is one of
two sigcat par of the USF that rema uncapped, meag that
there is no lit to its grwt.
Specic to the Low-Income Progr the 1996 Act expressed the priciple
that telephone rate should be afordable and tht access should be
provided to "low-income consers" in al regions of the nation.2O As a
resut, in its 1997 Univers Servce Order, FCC mae Lielie and Lik Up
avale in al sts regaess of whether the sttes provided mat
fuds, red al ETs to offer Lielie servce, and included toll
litaon servce.
21
Since the pae of the 1996 Act, FCC ha taen acons aied at
incrasing parcipation in the Low-Income Progr.
· In June 200, FCC released the Trbal Order, which enhced the feder
Lielie and Li Up progr to better serve residents livig on or near
federay recogned trbal lads and reservatons. 22
· With its Apri 200 order, and consnt with the Joint Board's
recommendations, FCC aied to increase parcipation in the Low-Income
Prgr by expandi the federa default elibilty to include an income-
based criterion of 135 percent of the federa povert gudelies and
:i the 1996 Act, Cong arcuted a nationa goa th consers in al regions of the
naon, includi low-income consumers, should have acess to telecommuncatons and
inonnon servces at ra tht are reasnably comparble to ra chaed for simar
servce in uran areas. 47 U.S.C. § 254 (b )(2), (3). Se al 1997 Univeal Sere Or,
12 FCC Red 8776, 8955, pa 335 (1997).
21Pior to 199, the Lielie diount wa onl avale to reidents of stas th provided
an intr diount th wa then intched by a federa adre diount. Toll
litaon wa added to addr the Joint Boar obsivaton th studies demonsd th
a pri reasn sub los acces to teecmmuncaons servces is faiur to pay
long dice bil. Se 1997 Univeal See Or, 12 FCC Re 8776, 8980, pa 38
(1997). The U.S. Cour of Appeal for the Fi Circut foun th the Commion lakedjurcton to proluit ETCs frm diomiec Lieli cutomers for faiur to pay toll
chaes. Tex Off of Public Utüity Counsel v. FCC, 183 F.3d 393, 421-25 (5th Cir.
199).
~ FedSta Joint Bord on Univeral See; Prmoting Deloent and
Subscrberhip in Unsered and Under Areas, Incuding Trba and Insr Areas,
Twelf Reort and Orer, Mem. Op. and Orer, and Fuer Notice of Propose
Rulema, 15 FCC Re 12208 (200) (Trba Or).
Page 7 GAO-ll-ll FCC's Low.Ineome Pr
additiona mea te progr.23 Accrd to FCC, at th tie onl
one-th of elible housholds were enlled in Lielie. In a st
anysi, included as an appendi to the order, FCC esd th addi
the income-as crterion could incre parcition in Liele by
approxi 1.2 mion to 1.3 mion housolds The order alincluded outrac gudelies and revid vericaon and certcaon
proedurs.24
· In 2005, FCC grte TrFone forbce frm the facties rement
for ETC destion for Lielie support only.25 TrFone is a nonfties
bas, commercia mobile rao servces (wiles) provider offerig
preaid servce. Whe FCC found tht Trone's unvers servce
Lielie offeri (mown as SafeLi Wirless) would provide a vaety of
beefits to Lielie-lible consers includig increased conser
choice, progr parcipation, hi-qualty servce offeri, and mobilty,
FCC did not quti or estiate potenti increas in parcipaon and
support payments for the Low-Income Prgr.25
The Common reed TrFone to meet several conditions regadi
access to 911 and enhced 911 (E911). In addition, TraFone ha to
reqe its cusomers to self-cert at the tie of servce acvaon and
anuay thereafr th they are the head of household and receive
Lielie-pport servce only from TrFone; esli saegu to
preent its cusmers from reeivig multiple TrFone Lielie sudies
:i Lifeline and Link Up, Report and Orer and Fuer Notice of Prd Rulema,
19 FCC Red 832 (200).
~e order reui al consers in al st qu under an income-bas elibilty
to prode suport docmnenton and se-cer by si a sttement, uner penaty
of peijur, the nmnbe of individua in the household and th th prent
docentaon actely reprnts their anua houshold income. Elble comnersin federa default sta ar re to self-crt by sig a stment, under penaty ofpeijur, th they ar elible for the Liele and Li Up progr bas on theiparcion in a qu public asce progr. Sts th provide in
support for the Liele progr ar alowed to devi stctr measur as they dem
appropna. Se 19 FCC Re at 8317, 8319-, pa. 23, 27-31 (20).
~orbce is relief frm a provion of the 199 Act or a common nie if cert
sttory criteri ar met. Se 47 U.S.C. § 160(c). Secon 214(e) of the 199 Act res
th ETs offer servce us its own facties or a combinon of its own failes and
ree of another caers servces.
~ Fedta Joint Board on Unive See, Petitio ofTmFon Wire, Inc.
for Formncjr 47 U.S.C. § 214(e)(l)(A) and 47 C.F.R. § 54.201(i), Orer, 20 FCCRed 1505 (20) (Tmon Formnce Or).
PageS GAO.ll.ll FCC's Low.lDeome Pr
at the sae addr; and fie wi the Commion a pla outl the
meas TrFone would tae to implement these conditions.?:
. In 200, Trone subßUtt its pla to meet the conditions for ETC
desigtion st and was approved by FCC as an ETC in its licensed
servce ar for the pwpse of receivi Lielie support.28 FCC latr
moded a condition impose on TrFone regarg certcation
requiments to conf th it provides cusmers with acces to basc
and E911 servce.29
. In a May 2010 order, the Commion asked the Joint Boar to review the
Commsion's eligibilty, venfcation, and outreach rues for the Lielie
and Li Up uivers servce progr, given among other th, the
?:Speca, FCC re TrFone to: (1) provide its Lielie cutomers with 911 andE911 acce rees of acvaon st and availty of miute; (2) provide itsLielie cumers with E911-cmplit hadsts and replae, at no additiona che to
the cumer, noncmplit hads of exi cusmers who obta Lielie-upportd
servce; (3) comply wi conditions (1) and (2) as of the date it provides Lielie servce;
(4) obta a certcaton frm each public-sety aneri point (pSAP) where the carer
provides Lielie servce conf th the carer provides its customers with 911 and
E911 acce or self-crt th it does so if cert conditions ar met; (5) requi each
cutomer to self-cer at tie of servce acvaon and anua thereafr that he or she
is the head of houshold and reeives Lielie-upportd servce onl frm tht carer; (6)esli saeg to preent its cumers frm reeivi multiple Lielie subsidies
frm th caer at the sae addr; (1) deal di with the cutomer to cert and
ver the cusmets Lielie eliilty and (8) submit to the Wirlie Competition Burau
a complice pla out the measur the caer wi tae to implement these
conditions. Se Tron Forrance Or, 20 FCC Red at 1508-99, 15104, par. 6, 19.
28e servce aras were Alam Connectcut Delawae, the Ditrct of Columbia
Mahustt, New Haps, New York, Nort Carli Pennylvan Tenness, andVir Accord to FCC, the releva stte commions in thes st laked the
jurcton to des TrFone as an ETC. Se FedState Joint Board on Univeral
Sere, TrFon Wireles, Inc. Petti for Deigntion as an Eligibl
Telmunicatio Carr in Ut State of New Yor et al., Or, 23 FCC Red 6206
(200) (TrFon ETC Deigtion Or). In sttes tht have the jurcton todes TrFone as an ET, Trone must fie petitions for ETC desigon with the
relevt sta commons an is re to meet an of thei conditions.
æi Mah 200, FCC moded a forbarce condition imposed on TrcFone. Specifcal,
TrFone mus rees a cecaon frm eac PSAP where it provides Lielie servce
conf th TrFone provides its cumers with acces to basc and E911 servce;
however, if, with 90 day of TrFone's reuest a PSAP ha not provided the certcation
and th PS ha not mae an afve fidi tht TrFone doe not provide its
customers with acce to 911 and E911 servce with the PSAPs servce ara, TrFone
ma se-cert th it meets th bac an E911 reuiments. See Tron Forberance
Modiftio Or, 24 FCC Re 3375 (20).
Page 9 GAO-ll-ll FCC's Low-Income Pr
potenti exon of the Low-Income Pr to bro as
remmended in the Natona Brod Pl.lI
Low-Income Progr is
Implemente Though
Thee Mechanms
The Low-Income Prgr provides support for low-income consers
thug th mec: (1) Lielie, (2) Li Up, and (3) Toll
Litation Servce.
· Liele reimburs ETCs for diountig elible cumers' monthy bil
for basc telephone servce. The diount is avale for onl one
teephone connection per houshold.31 Lielie support is ditrbutd in
four tiers with va diounts.32 Accordig to our suey renss, in
2010, the maum monthy Lielie diount avaiable to consumers
federa and intrta dicount combined-raned frm $7 to $3.50 per
month the averae maum diount was $14.43 per month. 33
· Li Up rebur ETCs for diountig either wilie or wiles
servce connecon chaes incurd when an eligible conser st
servce for the fi tie or at a new addres.34 An elble conser may
lISe FedSta JcYnt Board on Univeral Ser Lifeline and Link Up, Orer, 25 FCC
Re 5079 (2010) (Reer Or). The Joint Bo ha sougt comments on th quesonsprented in th Refemi Orer. Se Fedta JcYnt Board on Unive See Se
Commets on Lifeline and Link Up Eligiility Verictio and Outr Iss
Refer to JcYnt Board, Public Notce, 25 FCC Red 7551(2010).
31Se 47 C.F.R. § 54.40; se al Lifeline and Link Up, 19 FCC Red at 83, pa 4 (20)
(speci th support for Lielie subscbel' is for "a sine telephone lie in thei
pricipal redence); 1997 Univeal8ece Or, 12 FCC Red at 897, par 341.
S?er 1 support is avale to al elible Lielie subsnbel' and is equa to the incubentET's ac federa taed subsrir lie che. The subser lie che and,
thereore, Tier 1 support is caped at $6.50. Tier 2 support is eq to $1.75 per month andis avale if the caer certes tht it wi pas the fu amount to its qua low-
income consumel' and if the caer ha reeived an nonfedera regutory approva
nees to implement the re ra reduction. Tier 3 support is equa to one- the
amount of an in proded support or one-ha the amount of an support provided
by th caer. Tier 3 support is cap at $1.5 per mont Tier 4 suport is avale to
elble redents of trbal lads and ma not exceed $25 or bri the loca reidenti
telepone ra beow $1 per mont 47 C.F.R. § 54.403.
~ with tr populons included the trba subdy when rert for th question.At th sa tie, some stte prode more th the $3.50, which would ma the Tier
3 "mhe" porton of the diunt.
:M Up diunts caot be applied to the cot of pur a wiles phone, prepaid
wies phone, or wi inde a home.
PqelO GAo-ii-ii FCC's Low-lDeome Pr
only receive the Li Up diount once, unes tht consuer moves to a
new redence; constive diounts at the sae addrss ar not alowed.
Eligile consers pay one-ha of the cumar telephone connecûon
chare with a maum diount amount of $30; an additiona diount is
avale to eligible reidents of trbal lads. Fuer, al eligible
consumers ca pay the balce of the connection fee on a deferred
payment schedule.35
. Toll Litation Servce (T) reimbures ETCs for providig toll blockig
or toll contrl to eligible consumers at no cost to the cusomer. Toll
blocki alows consers to order a servce that prevents the completion
of outgoing toll ca. Toll contrl alows consers to speci a lit on
the amount of toll ches th ca be incued per bilg cycle.36
To provide Lielie and Lik Up, caers must be desigted as ETCs by
their stte commons or FCC.37 Staes have the priar resnsibilty
for desgn1i ETCs. In a situaton where the telecommuncations carer
is not subject to the judicûon of a st common, FCC may designate
the carer as an ETC. In the sttes tha do not have or choose not to asert
jurcüon over wiles caers, FCC has the authority to desigate
wiless caers as ETCs.
Low-Income Program
Admtration and
Eligibilty
FCC, USAC, stte public uülty commsions, and ETCs al have
responsibilties in the adtrtion of the Low-Income Progr. Table 1
sums the genera reponsibilty of each entity.
3547 C.F.R. § 54.411.
3647 C.F.R. § 54.403(c).
37See 47 U.S.C. § 214(e); 47 C.F.R. § 54.201.
Page 11 GAo-11-11 FCC's Low.Ineome Pr
Table 1: Geral Rensibilites of Enti Involve In Lonc Proram Adminis
USAC
Deription
se poicy
Make and interpre rule
Provi ovrsht and outach for th prora
Conduc an ove audit of compies reing mony frm th USF
In the stte wih no intte Lielin supprt, set eligibilit cntena and develo cetion and
venfcation procures
Designate caers as ETC
Day-to-ay adminisratin of the fedl USF
Bill and collec contrbutions frm cars
Disbur payments
Conduc audit of contbutor and recipients
Repo to FCC at reular intervls with financial and programmatic information
Designate carrers as ETCs
In the sttes that proe intrate Lifeline supprt, set eligibilty cntena and develo certification
and venftin proures
Submit forms for reimbursment of discunts offre to Low-Incme Proram repient
Advertise the availability of the proram
Certif applicant eligibility in some sttes
Verify th cotinued eligibilit of Lieline subsnbers
En
FCC
State public utlity commission
ETC
Sorç: GA -i of FC an USA intion.
States tht choose not to provide intrte Lielie support mus adere
to elibilty criteri and adtive proesss developed by FCC and
ar referred to as "federa defaut stteS.,,38 FCC authori st tht
provide intr support to develop their own eligibilty criteri andadve proess-includig reviewi applicaons, cert
elibilty, and verig reipients' contiued elibilty for the Lielie
progr.39 As a reult, eligibilty criteri and the entity resnsble forhadl the adve processs va acro st. (See app. n for
more deta on Lielie elibilty criteri and adve processes and
rensbilties.)
~ th provide in Lielie support but choo to us the elibilty crteri and
adve proes develope by FCC ar al referrd to as "federa default st."
39Se e.g., 47 C.F.R. §§ 54.40 (conser qucaton for Lielie), 54.410 (certcati and
vercaon of consumer qucaon for Lielie), 54.415 (conser qucaon for Li
Up), 54.416 (certcan of consumer quacaon for Li Up ).St must ba
eliil crteri solely on income or facrs dict rela to inome. 47 C.F.R. §§
54.40(á),54.415(a).
Page 12 GAo-ii-ii FCC's Lo-Income Pi
Lielie Seivce Options
and Restrctions
Lielie servce options for low-income housholds va across sts.
Accord to our surey, as of June 2010, wieles ETCs were elible to
offer Lielie dicounts in 48 st. However, in 13 of the 48 sttes with
wiless ETCs, the st only provides the intrtate fuded benefit to
wilie cusmers, mea that wiless cusmers in those sttes may
receive a smaler diount th wilie cusmers. Additiona, at least
one prepaid Lielie option is avaible in 25 of the 48 sts where
wiles ETCs ar eligible to parcipat in Lielie.
Rectons rega the application of the Lielie dicount alo va
acro st. For ince, in some sts, recipients of Lielie support
may not purhae additiona telecommuncations featues, such as cal-
waitig or voicema servce, and contiue to receive the Lielie
dicounts. In addition, accordg to our surey, Lielie reipients in 14
state may not apply the Lielie dicount to a bundled servce offerig40 or
other packae th includes telephone sece.
Program Paricipation
and Support
Payments Have
Increased Prmary
Due to the Addition of
Prepaid Wireless as an
Eligible Servce, but
Banersto
Paricipation Remai
~or the puioss of th report a bundled servce offeri is one tht alows consumers to
subse to pakaes tht combine telephone servce with internet aces and/or
televion servce.
Page 13 GAo-ii-ii FCC's Low.Income Pr
Whe Progr
Parcipation and
Payments Were Relatively
Stale from 2005 to 2008,
both Increased in 2009
Both parcipation in Lielie (which we us as an indicar of overa
parcipaon in the Low-Income Prgr),41 and support payments to
ETCs increas in 200. As shown in figue 1, from caenda year 2005
thugh 200, the tota number of Lielie parcipants was relavely
stale-etween 6.9 and 7.1 mion anualy-but increas to 8.6 mion
in 200.42 Likewi, Low-Income support payments to ETCs were relavely
stale frm 2005 to 200tween approxitely $82 and $823 mion
anuay.43 However, due to increas progr parcipaton, support
payments in 2009 incre to approxitely $1.025 bilon, or 25 percent
more th 2008 (se fig. 1). USAC projects Low-Income support payments
to reah approxiatly $1.4 bilon in 2010; ths would result in a sie-
year 36 percent increas.44 Accordg to USAC, the Low-Income Pr
is curently the faste grwig unvers seivce support progr.
41We usd Lielie as an indicar of overa parcipaton because it is th laes of the
thee Low-Income Prgr mechams and recurs on a month basis.
42For progr pacipaon da for year 205-200, see Universal Se Monitong
Re, prepar for the Federa-8 Joint Boar on Univers (Dat thugh Aug200), (Washin, D.C., 2(). Availe at
htt://hunos.fcc.gov/edoc..ubliclath/C-29542AL.pdf(Sept. 10,2010). For
200 da se Univers Servce Admtrve Compa, FCC Füings 2010, Third
Qumr Appenices, LI08 - Lifeline Subscrbehip by State or Juridiction.
~or support payments for year 205-20, se Univeal Sece Monitng Reort,
Prpard for the Federa-8ta Joint Bo on Univers (Dat thugh Aug 200),
(Washigtn, D.C., 2(). Availe athtt://hunos.fcc.gov/edoc..ubliclathmtcli29542AL.pd. (Set. 10, 2010) For
yea 200-2008, see Univers Servce Admtrtive Company, FCC Füings 2010, Fourt
Qurt Appic, LI07 - Lo-Ince Supp Ditributed by State.
'"or 20 support payent, se Univers Servce Admtrtie Compan, FCC Füings2010, Fourt Qurt Appic, LI07 - Lo-Inc Supp Ditriute by State. Forthe 2010 projecion, se Univers Servce Admtrtive Compan, First Qurt, Se
Qurt, Third Qurt, and Fourt Qurt Appenices, LI01 - Lo.Incom Supp
Precte by Sta by Stuy Area 4'12010.
Page 14 GAo-U-U FCC's Low-Ineome P1
Figure 1: Totl Numbe of Loncome Supprt Payments and Lifeline Partcipant,
calenr Years 20 - 2010"
Lonc sup pi (miUi of do)
1,6
Participants (millons)
12
11
1,40
-----------------""
10
9
8
7
6
5
4
3
2
1,2
1,0
80
60
40
20
o 20
Yesr
- - - - Paicpats
- Loincme supprt payments
Sorc: GA anlyss 01 USA data.
20 20 20 20 o
2010
"Suppo payments proed by USAC lor 2010; partcipation data were not available for 2010.
The es parcipation ra, or the percentae of elible housholds
believd to be receivig Lielie SUpport,46 al increased frm 28.6
percent in 200 to 31.9 percent in 200.46 Durg tht year, the estted
parcipation rate increasd in 31 sttes and the Disct of Columbia The
followig 11 stte and the Disct of Columbia had increass of greatr
th 10 percent: Alam Alka Florida Georgia, Louiiaa,
Mahusett, Michian, New Jersy, Nort Caroli Tennessee, and
Virgi 47
~SAC us ceus da and other publicly availe da to es the number of
elible housholds in each st, basd on the sta's elibilty cnteri
~nca, pacipaon ra have vaed acro sta. See app. il for parcipaton
ra ac st in 20.
47Converly, est parcipaon rate declied in 19 sta.
Page 1$GAO-ll-ll FCC'. Low-Incoae Prgram
The Addition of Prpaid
Wireless as an EligibleServce Was the Pr
Factor to Increased
Parcipation and
Payments in 2009
Accordg to USAC and FCC offci and other steholders, such as the
Florida Public Servce Commion, incrass in Lielie in 20 were
pri due to the addition of fre, prepaid wiless cell servce by
TrFone. Inte of dicounti a monthy telephone bil for Liele
servce, TrFone's Lielie servce (SafeLik Wirles) convert the tota
amount of the USF subsdy into an alotment of fre miutes each month.
The compan provides a fr hadst and offer an option of th calg
pla th provide frm 68 to 250 use miutes per month with no
contr, recur fees, or month ches.48 Consumers may purha
additiona use miute for $0.20 per miute. 49
In 2009, TrFone provided Lielie servce in 19 sttes and the Disct of
Columbia al of which experienced an increas in their esti Lielie
parcipation rate. In addition, TrFone served 9 of the 12 st
(includi the Dict of Columbia) th ha a more th 10 percentincre in their estatd Lielie parcipation rae. Du 200,
TrFone reeived $189.7 mion in Low-Income support payments,
accounti for approxily 18 percent of tota Low-Income support
payments and more th 90 percent of the increas in diburments frm
200 to 200.50 Accordi to TrFone offcia, the company ha always
consdere low-income consumers its cumer bas and, thus, ha
experience advert and maketi to th popultion. They al told us
th whie other ETCs may advert the availty of Lielie servces to
comply with the progr's requiments, TrFone's parcipation in the
Lielie progr is an integr par of the compan's busines model and
48Fone's SafeLi progr offers elible consumers a choice of thr month pla:
(1) 68 miut per month with canover, short messe seivce, and inteona long
di to more th 80 countres; (2) 125 miute with caver, short mese servce,
an no internona long ditace; or (3) 25 miute, short mese servce, no carover
and no internona long ditace. Some steholders sad prepad wiles offer for
Lieli prvide a vile option for elible low.income housholds. Oter staeholdersexpre concern th beus prepaid wiles offeri for Lieli have a fite
number of miute, they do not provide the sae quty of seivce as wili and other
wiles Lielie offeri with unte minute.
~Fone ha commtt to provide additiona miuts for $0.10 per miute to SaeL
cumers in Sout Cali and Wasn D.C., when seivce is launched in thos
st The number of additiona miute purha by SaeLi Wirles cutomers is not
trked by FCC or USAC.
5Oniver Seivce Adme Compan, FCC Füing 2010, Fourt Qurt Appix,
U05-Annua Lu-Inc Supp Amont by State and Company-2007 throh 1Q
2010.
Pag 16 GAo-ii-ii FCC's Lo-Income Pram
enrllg low-income cumers is in the company's interest.
51 Therefore,
the compa agely adert SaeLi Wireless. Accordig to
TracFone offci, the company spnt approxiatly $2.4 mion to
aderte its Lielie servce in Januar 2010.
Overa, USAC offcia expect Low-Income Prgram parcipation and
support payments to contiue to increase beyond 2010 because (1)
TracFone is acvely seekig ETC desigtion in additional states52 and (2)
other companes, such as Vir Mobile Wirless, ar followig the
TrFone model and seeki regutory authority from FCC and sts to
become elible to parcipate in the Low-Income Program.
53
State Ofcials Attributed
Some Parcipation
Increases to Targeted
Adverting and Outreach
Effort
Sta offcia atbute some of the increase in program parcipation to
their state's taete adertin and outreach. Of the locatons we viited,
the stte public utity commions in Calorn Washigton, D.C., and
Florida tae an active role in adverting and conductg outreach
acvities for the progr. Calorn offcial attbuted the state's high
Lielie parcipaton, in par, to taeted outreach to low-income
housholds. Accord to Florida offcial, its outreach effort are havi a
positive impac on progr parcipation. Table 2 lits selectd activities
in each st we vited.
51FCC re caers to publici the availty of Lielie servce in a maner
renaly desiged to re thos liely to qu for the servce. See 47 C.F.R. §§
54.405(b); 54.411(d). Se al 47 U.S.C. § 214(e)(1)(B).
52 As of Jul 2010, Trone ha obtaed ETC sttu to provide Lielie in 25 state.
~ 200 FCC forbre frm apply the facilties rement to Vir Mobile and grted
Vir Mobile lite deson as an ET to reeive unvers servce Lielie support inits licens aras in New York, Nort Carli Tennes, and Vir Se Virgn Mobil
Forearance and Limite ETC Detion Or, 24 FCC Red 331 (200). In 2010, FCC
forbre frm apply the facties reuiment to i-wies; Head St Telecom;
Consumer Cellul, Inc.; Lie Up, LL; and Midwestern Telecommuncations (FC denied
Midwestern's reqes to extnd forbarce to Li Up). See, i-wre Forberrnce
Order, 25 FCC Red 8784 (2010); Hea Start Telcom; Conme CeUulr, Inc.; Line Up,
LL; and Midweste Telemunic Forbearance Or, 25 FCC Red 10510
(2010); Ccm Forearanc Orer, FCC 10-178,2010 FCC LEXI 59 (reI. Oct 1,2010)
(FC denied Conexions reue to extnd forbeace to Li-Up).
Page 17 GAO-n-n FCC's Low-Income Pr
Table 2: S8 Advesing and Outrech Acit by St We Visit
District of Columbia
sele adrtsing and oureh ac
Califomia require ETCs to sed all cuomers an annua notic that contans infotin ab Ufline.
Since 20, the stae ha hire a cotrctr to do mar and out for the lifline prora, which
includes print, radio, and televisio adveriseent fo th prram.
Distri of Coumbia reuire ETCs to provide outreach information. In additon, the D.C. Depant of th
Environment is givn a total of $4,00 frm the D.C. Universl serv Trust Fund to advrtse th
availabilit of lifline an thre other utlit disunt prorams.
Florida reuires ETCs to advert Ufline in telephone direores and an annual bil suppement. In
addition, ETCs must provide broure, pamphlets, or other materials to each stte and feeral agenc
providing benefits to persns eligible for lifline.
As a stte that doe not proide matching suppo (feeral default stte), Iowa is not heavily involved in
advertsing or outrach for the proram.
State
Califomia
Florida
Iowa
Sorc GA ans 01 st prora inli.
Accord to our surey of st public utity commons, sttes and
ETCs advert in vaous ways, as shown in tale 3.
Table 3: Advertising and Outh Methods Use by States and ETCs
Advertising and ourechmetho
Print advertments
(pamphlets, bill inserts,poters, bilbo)
Press releases
Outreach to comunity
groups
Parnersips with nonprofi
organizaons
Newsap
Radio
Televisin
Other
Number of st that
report using the
advertsing or
outrech mehod
28
Number of st that
rert ETCs using theadvertising or
outreh metho
44
26
25
24
32
19 26
12
9
7
11
36
28
25
8
So GA suiv.
In addition to the effort of states and ETCs, FCC and USAC al provide
advert and outrach asce for the Low-Income Prgr. FCC
developed outreac gudelies for sttes and ETs to help improveprogr pacipaon. To fuer addrss low estted parcipaton
. rate, USAC developed outh acvities tht ar taete to st and
ETCs and include spea and exhbiti at indus events; inormtion
Page 18 GAo-H.ll FCC's Lo.lncome Pr
in Web site po; tr seions for ETCs; newslettrs, brohur,
outrh lettrs, and e-ma updat; and site vits to stte.
Some Program
Characteritics, Such as
Automatic Enrollent,
Expanded Eligibilty
Criteria, and Higher
Discounts May Have
Increased Parcipation
Some st and other steholders reportd that automatic enrollent
incre pacipaton in Lielie. Automac enrollent uses an
electoiuc interface between a stte agency and a caer to automaticaly
enrll low-income individua in Lielie followig enrllent in a
qua public asce progr such as Medicaid or Supplementa
Securty Income. Accord to the research of one steholder we
intervewed, automatic enrllent procedures are effective ways to
increase progr parcipation. 54 Though our surey, nie sttes reportd
using automatic enrllent for their Lielie progr and two reported
that plan were under way to develop an automatic enrollent systm.
Accordig to Florida offcia, implementation of the automatic enrllent
proes ha ha a sicat impact on increased enrollent and provides
the ponti to reach grr numbers of eligible cusomers. In its 2004
order, FCC declied to re st to adopt automatic enrollent, in
par, beaue of potenti adtrtive, technological, and ficial
burens on st and ETCs.56 FCC is reviitig th isue and has asked
the Joint Boar whether automatc enrollent should be requid in al
sttes. 56 Fuer, the Nationa Broadband Plan recommends FCC should
encourge state agencies responsible for Lielie and Li Up program to
coordiat with other low-income support progr to steame
enrllent for benefits usin proceses such as automatic enrollent.
Fuer, exanded eliilty criteri for Lielie can potenti increase
parcipation. For exaple, The Patient Protecton and Afordable Care
Act expands Medicad in 2014 to a new naonwide eligibilty theshold of
133 percent of the povert leveL. 57 Th is liely to expand the number of
elible conser in some st, such as Montaa, that have more
restctve criteri and us Medicad as a qual progr. In al states,
54anel Ackerbrg, Michal Riord, Gregory Roon, Braey Wimer, Lo-Inc
Demndfw Loca Telho Se: Efects of Lifeline and Link Up, Augu 200.
56Se Lifeline and Link Up, Re and Or and Furt Notice of Prosed
Rulng, 19 FCC Re at 8318-19, pa. 25-26 (200).
~ Fedtate Joint Board on Univeal Sere Lifeline and Link Up, Orer, 25 FCCRed at 50, pa 19 (2010) (Reer Or).
57Pub. L. No. 111-148, 124 St 119 (2010).
Page 19 GAO-H-H FCC's Low.Income Prgr
elibilty is liked to parcipaon in one or more progr such as
Medcad or the Supplementa Nutron Asce Pr. Some
rearchers found th stte th us a hier numbe of qual
progrmea they provide more options for consers to qu
for the progr-have hier parciaton in Lielie.58 FCC ha asked the
Joint Boa to review and recommend any neces chanes to the
combintion of federa and stte rues th govern which consers ar
elible to receive Lielie and Li Up diounts. 59
Higher diounts may al incras pacipaton in the Lielie progr.
Accord to FCC, sta th have provided a relavely hi level of
Lielie support60 for telephone servce for low-income consers
experienced an averae increas in subsribership of 4.6 percentae
points for low-income housholds from Mar 1997 to Ma 200.61 In
contrt, sts th provided a relavely low level of Lielie support
exprienced an averae incras of 2.9 percentae points in telephone
subscribership rate for low-income households over the sae tie
period.62 Additiona, the Public Utity Reseach Center at the Universty
of Florida found that greater Lielie support led to hier parcipation
rates. 63
~k Buin, Jeffy Maer, and John Mao, "Undersdi Parcipaon in SociPrgr: Wh Don't Housholds Pick up the Liele?" Th B.E. Jquma of Ecoic
Anaysis and Polic, voL 7, no. 1, (2007).
59Se 25 FCC Re 5079 (2010) (Rter Or).
~C defied "fu or hi asisce" sts as thos th provided at least $3.00 of st
support to get federa matchi support of at lea $1.50 per lie pe month. "Intennedte
asisce" states were defied as thos th proded between $0.50 and $3.00 of st
support and receivi between $0.25 and $1.50 federa mahi support per lie pe
month Fial, "basc or low asisce" sta were defied at thos th provide les
th $0.50 of stte support, and receivi les th $0.25 federa mahi suport per lie
pe month.
6is Indus Ai and Tecolog Divon, Wirlie Competition Bureau, FCC,
Telho Pentr By Inc By State (Da throh March 20(), (Wasn,
D.C., 2010).
&i Indus Anis an Technology Divion, Wirlie Competition Buau, FCC,Telho Pentrtion By Inc By State (Da throh Marc 2009), (Wasn,
D.C., 2010).
63e Holt and Mak Jamn, Making Telho See Afor for Lo-IncHouelld: An Anaysis of Lifeline and Link Up Telho Prms in Jí,
Universty of Florida Deparent of Economics, Public Utity Rearh Center Worki
Paper, (200).
Pae 20 GAo-U-U FCC's Low.lncome Pr
FCC's Proposed Addition
of Broadband Servce
Could Increase Futue
Parcipation and
Payments
Advantges ánd Disadvantages
to FCC's Propsed Addition ofBroaband Service to the
Low,:lncome Program. .
Mos st . . .. to qur survindiea . . glow-incoeconsumrs broba wold
proe s . as improd acsto th fo. .
· educti . ortniie;
· employnt oprtunies an· sol Servic. .
Hor, . reponding to obr SÙfW
and othr dd we inení alsinicased . .Lo-Inc ce, mos
st an oter stakehol repoed that
the fo addonal co to the prora
or coumers Would be a dinte.
. Carrier cotrtions to the USF, whic
are e Oy paed on to consumers,are to ircrèe. .· . ic chars to CoeÌ'ár higher copa to
If broband servce were added to the Low-Income Progr,
parcipaton and support payments mit increase fuer. An FCC tak
forc, thug the Natona Broadband Pla, recommended extendi low-
income unvers servce suport to broadband. Most staes and other
steholders, such as tre and indus grups, that we inteIVewed told
us th the proposed addition of diounted broadband to the Low-Income
Prgr may increase parcipation by mag broadband more afordable
for low-income households. However, an importt consideration is tht
with no fudi ca, Low-Income Prgr support payments can grw
indefitely.
of
Page 21 GAO-ll-11 FCC's Low-Income Prgr
FCC, USAC, and StatesAl Identied Facrs
That May Have Created
Barers to Parcipaton
Desite the advert and outrach effort in pla, accord to FCC,
USAC, and st, some elible households ma not be awa of the Low-
Income Prgr. Accord to FCC offci, th is in par due to the
trtory liestle of some of the taet populon and the lak of spifc
advertin roes for ETs to follow. Whe ETCs ar re to advert
the progr FCC, as reommended by the Joint Boar, electd not to
requ specc advertg and outrh proedur so st and ETCs
could adopt specc stdar and enge in outr as they see fiL
USAC offci told us tht they ar awa of inces in which some
ETCs do not comply with FCC's gener reqement to adrt the
progr.64 In resonse to our surey of 51 stte public utity commions,
39 commons report lack of awarnes as a baer to enrll
eligible households in the progr. Calorn offci told us th even
though inormtion about the progr is avale in seven laages, thestte has dicuty reachi and enga some non-En-sak
popultions.
Fuer, whie FCC developed adverting gudelies for state and ETCs,
the gudelies are not always algned with our key praces for consumer
education (see app. IV for more deta). For exaple, the gudelies do not
addres defig the goa and objectives of outrach effort or
estlihi proes and outome metres to meas the succes of the
effort. FCC ha reognd the importce of effecvely publicig the
progr and isued an order in 2010 askig the Joint Board to review
Lielie and Li Up, includi the appropnanes of vaous outr
and enrllent progr.65 However, the extnt to whch fuer FCC
gudelies would have an effect on the progr is unclear becaus whie
ETCs ar reed to comply with FCC's genera reement to adert
the program, stte and ETCs ar not requied to follow FCC's adverting
gudelies and the degre to which they us the gudelies is unown.
In addition to the lak of progr awarness, in resns to our surey
the stae public utity commions al report other barers, though
the extnt vaed, as shown in fi 2. Overa, the other steholders we
64 Accrd to FCC offci when USC lear th caers ar not adert the
pro, it genera conta th caer to red it of FCC's adrtin reent andinude an arcle in a month newlett to tr and reinorce to al ETCs the reentfor caers to adert the Lielie and li Up progr.
~ 25 FCC Red 5079, (2010) (Refer Or).
Pq22 GAO.ll-ll FCC's Low.lneoe Pr
intervewed gener cite the sae barers as the state public utity
commons.
Figure 2: Sta Public Utilit Commission Views on the Barriers to Enrolling Eligible
Houseolds In Lifline
Number of repo-
25
5
20
15
10
o Eligibl coumrsar UIl of uiprram
Eligibl cosumersfind th ceificationandfor veficaionprur todiffult
8e fo liinesu repi arifmit an eligiblecome fo thbe to acaditonl sece
urine su is noavil fo wise an eICO fo lI.:~
Barr to enrollmet
c: Ver great to great exent
l\;:~"J)"1 Modrate to some exnt
.. Utile or no exent
_ Do not kn or no reponse
So: GA an 01 surw repo
"Addital rens undr "oter" included pri and stgma wih receivng govemment assistnce.
'Wirees an preid wirees servic are eligibie for Lieline support is some states, but not in
others.
Page 23 GAO-11-11 FCC's Low-Income Prgr
FCC Lacks
Perfonnance Data to
Manage the Progr,
but Piot Progr, if
Properly
Implemented, Could
Provide Improved
Data to Make Critical
Program and Policy
Decisions in the
Future
FCC Has Taen Lited
Steps to Develop
Peifornance Goal and
Measures for the Low-
Income Program
FCC's overachi goa for the Low-Income Progr is to increas
telephone subscribership among low-income consumers, but it ha not
quatied th goal.66 As did in the followi, FCC has taen some
lited stps towar developing performance meases for its overhig
goal and the progr.
· FCC's anua report on telephone penetrtion by income, by stte, which
was fi ised in 199, alo includes a related performce mease. To
help evaua the effect of federa and stte Lielie support mechams,
the report includes telephone subscribership levels on a stteby-stte
basis for varous income categories. The report is basd on data frm the
Curnt Populon SUley, which is conducted by the United State
Commerc Deparent's Bureau of the Cens. Accord to FCC,
subsribership among low-income housholds ha grown from
approxitely 80 percent in 1984, the year before FCC fi eslihed
~ Fedta Joint Bord on Univeal Se, Comprheive Rev ofUiUnive Ser Fund Manent, Administrtin, and Ovht Reort and Orer,
22 FCC Red 16372, 1631635, pa 50. (207 Comprheve Re Ch).
Pag 24 GAo-ii-ii FCC'. Low-Iieome Prgr
Lielie, to 90 percnt in 200, as shown in figu 3.67 However, th
meas is not lied to a qutitative goal regarg low-income
subscriberslup and there is no undersdig of how the Low-Income
Progr ha contrbuted to the increas.
Figure 3: Telephone Subscrlbershlp of Low-lncome Housholds Copared to All Households, 198 - 2009
Subriip (peta)
100
95 ~~
85
--- .-"--.,- -"---/"." -- -- .- -- - ~---90 ---80----
75
70
~
o
198 198 198 198 198 198 199 199 199 199 199 199 199 199 199 199 20 200 20 20 20 200 20 207 20 20
Year
- AU ho
- - Low-ie ti
So: GA -i of FC da".
. In June 2005, FCC ised a Notice of Proposed Rulemakig in wluch it
sought comment on estli usefu outcome, output, and effciency
meass for eah of the unvers servce program, includig the Low-
Income Progr.68 In the Augt 2007 Report and Order, FCC developed
67Low_income housholds were defed as thos housholds with an income below $10,00
in Mar 198 doll. Se hidus An and Technology Diviion, Wirlie
Competition Buru, FCC, Telho Pentrtion By Incom By State (Data through
March 200), (Wasn, D.C., 2010). In addition, one rearch report estid tht
low-income telephone subscbership would be 4.1 percentae points lower without
Lielie and Li Up. See Ackerberg, Riord Rossn, and Wimer.
mi Comprive Re of Univeal Serce Fund Manaent, Administrtio,and Ovight Notie of Prosed Rulng and Furt Notic of Prosed
Rulng, 20 FCC Rcd 1130 (205).
Page2li GAO-ll.ll FCC's Low-Income Prgram
output and emciency meas for the progr which it collect frm
USAC on a qurly bais, such as the number of connectons support
(progr pacipaton).69 FCC omci report th it would contiue to
review th ara and evalua the effecenes of the meas adopted
However, as of Augu 2010, FCC ha not developed outcome meaes or
taen any acon to review and evauate the effecveness of the output and
emciency meas because it note th it did not have sufcient
hirical data frm the mea to estalih goa for them.
. FCC's Fical Year 2009 Annual Pørornce Rep1O and Fical Year
200 Summary of Pørornce and Financ Re71 include
accomplihments, such as tag stps to reduce improper payments,relad to improvi the adon and operation of the fud.
Neverteles, these accomplihments do not specifcal addr the Low-
Income Prgr or how they have impacted the provion of unvers
servce.
FCC's Effort Provide
Lited Inight to the Low-
Income Progr's
Performance
Althoug FCC ha a sine overachi goal and ha mae effort to
develop measurs, it ha not developed and implemented specc
outcome-basd peifonnce goa and measures for the progr. Such
peifonnce goal and measur would be very beneficia to FCC in that
they would enale FCC to as chages, such as the addition of prepaid
wiless, and more effecvely mae the cuent and futu dion of
the progr. FCC's Cha says modern unvers servce
progr to brig the benefits of broadband to al America is one of
FCC's top priorities, but developin clea peifonnce goa and meas
for the Low-Income Prgr does not appear to be a priority.
Fuennore, tale 4 demons tht, to date, FCC's effort generay do
not al with usefu pracces we have identied for developin
succesfu peifonnce goal and measur.
iie output and effciency measur include number of progr beneficies (EC);
number of low-inme cumers for eac ETC reeivi low-income supprt; numer of
connectons support; tie to proes support payents and authonze diurments;
averae doll amount awared and medi doll amount awared per caer Low.
Income Prgr da on a qurly bais, in Excel fonn, with tota amounts rolled up;
and to amount dibur Se 2007 Com¡yheve Re Or, 22 FCC Red 16372(20.
~C, Fi Year 20 Annua Perornc Reor (Octobe 1, 200 - Seteer 30,
2009), (Wasn, D.C., 2010).
71FCC, Fica Year 200 Summary of Perornce and Financ Re, (Washi,
D.C., 2010).
Page 26 GAO.ll.ll FCC's Low.Income Pr
Table 4: Alignment of FCC Effrts with Useful Practices for Developing Succful Performance Goals and Measure
Practces to enhance performance goals
Create a set of performance goals and
measures that address important
dimensions of a prora's performanc
and balance competing priorities.
Use intermediate goals and measures to
show progress or contrbution to intended
results.
Include explanatory information on the
goals and measures.
Develop performance goals to address
mission-critical management problems.
Show baseline and trend data for past
perforance.
Identify projected target levels of
performance for multiyear goals.
Link the goals of component organizations
to departmental strategic goals.
FCC's efrt
An overarching goal for the Low-Incme
Proram existso incas subsbership
among low-inco coumers explicit
performance goals and measures for how this
is to be achieved and measured have not
been eslished.
FCC has begun to collec outut data to
develop performance meaure for the Low-
Income Proram, such as the number of
connecons supportd (proram participation)
and total amounts disburs, but it has not yet
determined the speific outcome-based goals
of the program. Therefore, it is unclear how
these output data wil ilustrate progress in
meeting performance goals.
No effrt reported.
FCC isued a Report and Order in August
2007 which adopted measures to improve the
management, administtion, and oversght of
the USF, including actons spific to the Low.
Income Program, such as the number of
connecons supprted (program partipation)
and totl amounts disburs. However, no
performance goals were developed.
While FCC began collecing quarterly data in
August 2007, to estalish a baseline for
performance measure, because the Low-
Income Program is in its 25th year, it is
unclear if this data collecion wil adequately
demonstrate past perfrmnce trends.
No targets reported.
FCC's Fiscal Year 20 Annual Performance
Report and Fisca Year 200 Summary of
Perfance and Financl Result include
accmplisments relate to enhancing
universl servce, suh as taking steps to
reduce impropr payments, but does not
specifilly address the Low-Income Proram,
or how it has impacted the provision of
universal service.
How FCC's effort align with practice
FCC's efforts do not align with this
practice.
FCC's effort do not align with this
practice.
FCC's efforts do not align with this
practice.
FCC's effort somewhat align with this
practice.
FCC's effort somewhat align with this
practice.
FCC's efforts do not align with this
practice.
FCC's effort somewhat align with this
practice.
Sorc: GAO anas of FC af rnra ag ka pra we Mil prousl idtifiad (GAOI/AlMD-99).
Page 27 GAO-ll-ll FCC's Low-Income Prgram
FCC is consideri rect the USF and expandi the Low-Income
Prgr to include brobad servce, as reommended by the Natona
Broaband Pla. In the pla the FCC tak force acknowleded tht "tere
is a lak of adeq da to mae critical policy decisions rega how
to bettr uti fudi to promote unvers servce objectives...as it
moves forwar on reform in the pla, it should enhce its da
collecon (rega unvers servce objeces) and report to ensure
that the nation's fuds ar bein usd effecvely to adce defied
progrc goal.,,72 Fuer, FCC has acknowledged th as ches
such as expandi the Low-Income Prgr to include broband seivce
ar made to the USF, it may be neces to develop new metres for
measg the succes of unversal seivce policies.73 Clearly arculted
performce goa and meaures are importt to help ensur the Low-Income Progr meets the gudig priciples set fort by the Congr.
These gudig priciples include acces to telecommuncations and
inormon seivce for al consers. Outcome-basd performce goa
and measur wi help iluste to what extnt, if an, the Low-Income
Prgr is fug the gudig priciples set fort by the Congess.
Becaue ther is 1ited inormtion avale on what the Low-Income
Prgr in its curnt form is intended to accomplih, what it is
accomplilu, and how well it is doin so, it rema unclea how FCC
wi be able to mae inormed decisions about the futue of the progr
without th inormation. Moreover, as new technologies ar developed
and "access and statgies for afordilty" ar contiuay redefied, the
performce and effecveness of exig program is importt so that
decision maers can desgn and taet futu progr to effectively
incoiporate new technologies, if appropriate.
72FCC, Conneing Ame Th Natio Brnd Pln, (Washin, D.C., 2010), p.
144.
ni Indus Anis and Technology Divion, Wirlie Competition Buru, FCC,
Tel Pentrti By l1W By Sta (Data throh March 200), (Wasn,
D.C., 2010) p. 2.
Page 28 GAo-ii-ii FCC'. Low-Income Prgr
FCC Might Conduct
Broadband Piot Progrs
to Help Faciltate Futue
Decisions
The Natona Broand Pla reommended extendig low-income
uivers seivce support to broband.74 The plan al recommended tht
FCC facilta pilot progr for low-income consumers tht wi "produce
actionale inonntion to imlement the most effcient and effectve long-
term broband support mecha. "76 The pla suggested that upon
completion of the pilot pro, FCC should "report to Congress on such
isues as whether hawar (such as computers) subsidies ar a cost-
effectve way to increas adoption. Afr evauati the results by lookig
at outputs such as tota cos per subscriber, subscriber increases, and
subscriber chur ra, FCC should begi fu-scale implementation of a
Low-Income Progr for broadband."76
FCC's effort to develop the proposed pilot progr are in the begig
stages.
. In support of the Nationa Broadband Pla, an FCC tak force conducted a
SUey of 5,005 America in October and November 2009 in an effort to
undersd the st of broband adoption and use, as well as barers
fac thos who do not have broadband at home.77 The subsequent report
includes reults and an spcic to nonaopters among low-income
housholds. Th inormon was used in the Nationa Broadband Pla to
help support the recommendation to extend low-income uiversal servce
support to broaband.
. In June 2010, FCC's Wirelie Competition Bureau hostd a roundtale
dicusion to enale interestd paes to dicus the design of pilot
progr that would provide subsdies for broadband acces to low-
income conser. Dicuon topics included long-term goal for Lielie
7"Fcc, Conneing America: Th Natio Brond Plan, Recommendation 9.1
(Wasn, D.C., 2010) p. 172. Some intere pares have quesoned the need to
subsidi brod For exaple the Pew Rearh Centets biternet & Amencan Lie
Prjec report th by a 53 percent to 41 percent man, Amenca do not believe tht
the spread of afordle broand should be a major pnonty and th non-bitemet usrs
ar les liely th curnt usrs to say th the governent should plae a high pnonty on
the spread of hipe connectons. Se Aan Smith, Hom Broadnd 2010, Pewbiternet & Amenca Lie Prject (Wasn, D.C., Augut, 2010).
7TeC, Conneting Ame: Th Natio Broadband Pln, Recommendation 9.1
(Washin, D.C., 2010). p. 172.
76 FCC, Conneting Amera: Th Nation Bradand Pln (Wasgtn, D.C., 2010) p.
173.
77John Horr Brnd Adoti and Use in Amer (OBI Worng Paper Seres No.
1).
Page 29 GAO-ll-ll FCC's Low-Income Prgram
and Li Up for broadband, exi da and inonnon soures, and
scope and duron of the pilot progr.
. FCC asked the Joint Boar to consder how the potenti exon of the
Low-Income Prgr to broband would afec any of its potenti
recommendaons regag progm elibilty, vericaon, and
outrh.78 The review is to be completed by November 2010.
It is too early to as FCC's effort to develop the propose pilot
progr for low-income consumers. However, it is not to ea to foc
on two fudamenta tols relate to leadg praces th we and other
have identied as key to developin succesfu progr.
Fi, a need asssent is importt to both the desig of new progr
and the asent of exig progrs.79 A pri puise of a needs
asessment is to identi seivces tht may be lakig relative to some
genera accepted stda. By eslig meas of comparn,
progr adtors ca more accutely determe how well their
progr are doin in meeti the needs of the taeted popultion of the
progr. We have previously reportd tht needs asments should
include the followig charics:
. benchks to determe whether needs have changed or emerged,
. a frework to inteipret the meag of the needs asment reults,
. a pla to determe how needs asessment resuts wi be prioritied in
support resoure alocation decisions, and
. integrtion of inormtion on other resources avale to help address the
need. so
Second, when conducti pilot progr, our pas work ha shown th
agencies should develop sound implementation and evaluaon pla.
These plan should include data needs as par of the desig of the pilot
~ 25 FCC Red 5079 (2010) (Reer Or).
'I.H. Roi, M. W. Liy, and H.E. Frman Evauatio: A Systetic Apph,
(Tousd Oa, Cal., 20).
soGAO, Military Peroone Actio Nee to Achiev Grte Rets fr Air Fore
Family Nee Asses, GAO-l-S, (Washin, D.C.: Ma. 8, 201).
Page 30 GAo-U-ll FCC's Low-Income Prgram
itslf and before implementaon to incree confdence in results and
facilta decon ma abut broader application of the pilot progr. 81
Speccay, we have report th well-developed implementation and
evauation pla include, at a mium, the followig key featues
· identicaon of the neces reurces, includi the responsble
pares;
· well-defied, clea, and measurle objectives;
· criteri or stdards for determ pilot program performance;
· clearly arculted methodology and a stratgy for comparg the pilot
results with other effort;
· a clea pla th deta the tye and soure of data necessa to evaluate
the pilot, method for data collecton, and the tig and frequency of dat
collecon;
· benchmks to as pilot success;
· detaed evauation tie frames, roles and responsibilties, and reportplang;
· a detaed data-anysis pla to trk the program's performance and
evauate the fi results of the progr; and
· data reliilty pla to ensur the integrty of data collection, entr, and
strae. 82
The broadband pilot progr, if conducted, provide FCC with an
opportty to improve its inormon on the telecommuncation needs of
and data collection for low-income housholds. Data on cost-
effectivenes, such as cost per subscriber, wil be especialy importt as
81GAO, Limitation in DOD's Evauatio Pln for EEO Complaint Pit Prgrm HindDeteinatio of Pit Rets, GAo-7R (Washion, D.C.: Februar 2008).
82Se GAO, Equa Emplt Opunity Commission, Shring Prising Prtices
anå Fuy Impling Strte Human Capita Plnning Can Impre Management
of Gring Worad, GAO- (Washin, D.C.: June 23,208), GAO, Equal
Emplt Opnity: DOD's EEO Pit Prgrm Und Way, but Improvemts
Nee to DOD's Evauaio Pln, GAü-, (Washin, D.C.: May 5, 200), andGAQ.7R.
Page 31 GAO.ll.ll FCC's Low.Income Prgram
the Low-Income Prgr is not cape and progr pacion and
support payments ar expct to contiue to in. A well-dveope
an docuente evauaon pla would help FCC evua the
telecommuieaon nee of low-income housolds and ens th its
evauaons wi yield methodologica sound rets to suport effecve
progr and policy deciions as FCC consders trtionig the progr
to brobad.
The Low-IncomeProgrHa
Established Some
Mechanms to
Identi and Evaluate
Risks and Monitor
Compliance; However
the Progr Lacks
Two Key Features of
Effective Internal
Controls
The Low-Income Progr
Has Some Mechanms to
Identi and Evaluate
Risks and Monitor
Complice
USAC ha asesed some of the riks and monitors complice with some
of the intern contrls of the USF's four progr, includig the Low-
Income Progr. These effort ar for the puroses of providig FCC and
USAC maement with inonnon on the desgn and effecvenes of
intern contrls relatd to the balces and acvities reportd in its
anua fici stments and include consderaon of contrls over
progrc operations and regutory report and complice. The
rik asents th have been perfonned and other contrl proess,
such as reews of ea cla for reimburment before payment is mae,
provide importt inonntion on wlerailties that exi in the intern
contrl over progr acvities as well as opportties for desig and
implementi counteeaurs to the identied rik.
In 20, USAC hied an independent public accounti fi to review its
intern contrl proceses to comply with FCC's dictve th it
Page 32 GAo-lI.lI FCC's Lo-Ineome Prgr
implement an inte contrl stct constent with the stdads and
gudace contaed in OMB Cirul A-123, Maagement Responsibilty forIntern Contrl. 83 The reew focusd priy on USAC's intern
contr rela to fici reportg for the USF. In September 2010,
USAC offci told us th an intern team recently completed a revew of
key contrls with reect to the Low-Income Prgr. These offci
stated th a report on the reults of th work was expected to be
provided to maagement for review in the fal of 2010. In addition, since
2007, as par of their anua fiancia stement audit process, FCC and
USAC have completed an anua rik asssment to identi areas of
vuerailty to fici sttement mitatement due to frud and
consder whether additiona frd countermeasur ar requed. In 2010,
FCC identied 17 contrl meas to address the followig rik
catgories rela to the Low-Income Progr: beneficiar frud and
diburment and invoici errrs.
Accordi to FCC offci, progr riks ar alo identied and ased
though the ruemag process under the Admtive Procedure Act.84
When developin, modig, or deletig a rue, FCC. relies on public input
collected dur the ruemag process. Accordig to FCC offcia, it
was though th process tht FCC identied and addressed the progr
riks asciated with ETCs' faiur to collect and preserve certcation
documents for Lielie support recipients.
USAC alo monitors progr riks though vaous other processes and
contrl acvities, includi review of each ETC cla submion and
anis of monthy payment data For example, USAC reviews each ETC
s:e OMB Circul No. A-I23 provides gudace to exective agencies on evaluati and
report on their sytems of internal contrls, consnt with the reuiments of secton
3512(c), (d) of title 31, U.S. Code (commonl referr to as the Federa Maers' FiciaInte~ Act of 198 (F), which re agencies to estalih and mata effectve
inrn contrl. The agncy hea mus anua evuae and report on the contrl and
fici syms th prote the integrty of it federa progr. Circul No. A-I23 relies
on GAO's stda for in contrl in the federa governent, which ar promulgad
pur to FF Ofæ of Maement and Budget, Managemt's Rebility for
Inte Cuntrl, Cir No. A-I23 (Washigtn, D.C., Dec. 21, 200).
STc implemen policy intives thug the rue ma proes, a governentwde
proes for crat rues or reguons th implement, interpret, or presbe law or
policy. The Admtive Predur Act (APA) is the pnncipalaw govern how
agencies make rues. Mos federa rues ar promul under the APA-estlihedinorn rue mak proes, which re agencies to provide public notice of proposd
rue chs, as well as to provide a period for interestd pares to coirent on the
notices 5 U.S.C. § 551 et seq.
Page 33 GAO-ll-ll FCC's Low-Income Prgram
cla submion and compa the inonnon sulltt to inonnon
provided with preous cl to identi pole errrs th impac the
cla payent. USAC al prepar memorada ea month frmproes cl submions that su and an paent da to,
among other th, identi ETCs with substi month-ove-month
chaes in the amount of reimburment rees.8õ
In addition, USAC relies on audits as a key maagement tol to review
carer proess for complice with progr rues and to review the
dat underlyig the caets reimburment cl to te whether the
caer cled the corrct amount. 86 For exaple, though audits, USAC
identied inces where ETCs were claig the incorrect amount fOr
providig toll litation servces. From 2003 to 200, 41 perfonnce
audits were complete specc to the Low-Income Prgr. tr Al, 60
audits were conduct in 200 and 200786 tht were usd to develop a
sttica est of error ra under the Improper Payments
Inonnaton Act of 200 (lIA).89
Sõ its Ocber 14, 2010, rense to a dr of th report, USAC st th it alconduct da vadaons of ETC's reeiv progr support in whch sta obta and
reew support docentaon for amounts pad to selec cael'. In our subsuent
diussons with USAC, we were told th th pro was fi completed in 20 and is
contiui in 201o-with 30 reews uner way however, no reews were conduc in
2007 or 200
8I the Seteber 20 Memoradu of Undersdi beteen FCC and USAC, FCC
di USAC to imlement a comprehensve audit progr (1) to en th USF
moiues were us for their intended puros; (2) to veri th al USF contrbutol' mae
the approprite contbutons; and (3) to detec and deter waste, frd, and abus. To th
end, with rega to the Low-Income Prgr, USAC conduct performce audits ofETCs
th receive moiues frm the Low-Income Pr. Audits ar conductd by USAC's
Inma Audi Dion.
trTles aud exclude four th were lited scope audits and th th as the
ETC's complie with FCC's Hurcae Ka Orer, Fedte Joint Bord on
Unive See, Ordr, 20 FCC Red 168 (20).
sses audts exclude one audit where the auditor wa unale to reac a concluson on theET's complice with pro rues
89b. L. No. 107-3 116 St 23 (Nov. 26, 200), as amended by the Improper Payments
Elon and Recoery Ac of 2010, Pub. L. No. 111-20, 124 St 2224 (Jul 22, 2010).
The IPIA re federa agencies to reew progr and acvies thy adter and
identi thos th ma be sustible to sicant improper paent. For thos
progr or acties deteed to be susptble to sicat improper payments, the
agncy mus conduct an es, report the es to Cong, and, for pro and
acvities with es impror paents exceedig $10 nuon, report on corrve
acons taen to addr the improper paents.
Page 34 GAO-ll-ll FCC's Low-meome Pram
The Low-hicome Progr
Lacks a Risk Assessment
that Considers Al Progr
Vulerabilties and a
Systematic Process for
Considerig Audit Results
When Assessing hiternal
Controls
Althoug the asents and acvities desribed abve provided
mecha to identi some nsks rela to the Low-Income Prgr,
FCC and USAC have not conductd a nsk asment specifc to the Low-.
Income Progr that includes consderation of al progr vuerabilties
and asciate consquences that could help identi opportties to
mitigat thos riks. For exaple, FCC has not addressed a number of
riks to the Low-Income Progr four of which ar desribed below.
. In comments to FCC, USAC ha std that the curent version of the form
used by ETCs to mae reimburment cla from the USF does not
provide USAC with enough inormaton to perform valdations crucia topreventi mies and abus.1l In rag th isue, it cited inces
where both the wholeser and reeller of a telephone connection made a
cla for reimburment frm the USF, at which point, the USF is payig
two companes for the sae cumer. Curntly, USAC considers the
exi progr saeguards as inufcient to identi duplicate
reimburements. Conseqently, to determe if th is occurg, USAC
would have to audit the record of the two companes.
. Another nsk is th consumers may be simultaeously receivig Lielie
dicounts on a wilie and wiless phone, which is contrar to the
program rues that specif one diount per household.91 In 2008, durg a
Low-Income Progr-relaed performce audit of a wiless company,
USAC for the fi tie compared the wieless carer's subscriber li to
the maor wielie ETs servg the area. USAC found severa hundred
inces of consers receivig Lielie support for both wieles and
wielie accounts. USAC has sought gudance from FCC regadi how to
recover the related diburements and hadle these fidigs. However, as
of September 2010, FCC has not provided gudance on th isue.92 To
determe the extnt to which th is occurg on an ongoing basis, USAC
would have to audit the record of the two companes because the ETCs
do not have such inormtion. Accordg to our suey, 8 sttes have
access to inormtion that could help ense th the household is
receivig onl one Lielie subsidy. Representatives frm 21 states
IlSee Coents of the Uni Servce Admtrve Compa in WC Docket No. 05-
195 (Comprve.R of th Unive8e Fum Managemt Administrtin,
Notice of Inui, 20 FCC 1358 (dated Nov. 13,2008)), pp. 106107.
91Se 1997 Univeal See Or, 12 FCC Red at 8957, pa 341.
~C refer the isue of duplicate cl for support to the Joint Boa in May 2010, and
wi await reommendaons frm the Joint Boa before decdi how best to addr the
ise. Se 25 FCC Red 5079 (2010) (Reer Or).
Page 35 GA()ll-ll FCC's Low-Income Pr
indica tht they were somewha or very concerned abut consumer
frd in the Lielie progr. In comments, severa st indica that
there were lited contrls in plae to enforc the progr rement
th households only reeive one Lielie diount.
FCC ha asked the Joint Boa to reommend chaes rega efecve
and effcient vericaon of cusmer elibilty, both at intial siup and
penodcal therer.93 Fuer, The Natona Broaband Pla
recommended th FCC consder the creaton of a naona centred
dat as a mecha to mi frd, wa, and abus in the Low-
Income Prgr Five of the 8 sts in which the entity tht veries
consers' contiued elibilty have acces to inormtion to help ensur
tht the household is only receivig one Lielie dicount use a dataase.
· In comments to the FCC, the Flonda Public Servce Common reportd
tht the incluson of prepaid wieles options in the Lielie progr
presents the rik th thes companes, which do not bil their cumers
month, ca cla support for al subsribers without cont th the
persn is st in posion of and is usg the phone.94 For exple, in
June 2010, there were severa po on Cragst, the electnic buleti
boar known for fre local claifed li, advert the sale of
SafeLi productsthe Lielie servce offered by TrFone. One ste we
viited is atmpti to addres th rik. In Flonda the st common
intuted a 6Oy invity policy in which the prepaid wiles caer in
the stte mus conta the cumer, vi text messe, voicema, or letter,
to conf tht the cusmer is st acve and elible for Lielie support.
If no rens is received, the account mus be deativad In the th
qur of 200, one year afr the prepaid wiles company was certed
as an ETC in the state, approxitely 8 percent or 33,00 cusmer
accounts were deacvated due to 6Oay invity. Whe a goo fi stp,
th mech sti does not prevent the phone or miute alotment frm
being sold to inelible consumers. As preously mentioned, FCC has
asked the Joint Boar to reommend chaes regardig effective and
effcient vericaon of cumer elibilty. 95
~ FedState Joint Board on Univeral Sere; Lifeline and Link Up, Orer, 25 FCC
Re 5079, (2010) (Refer Or).
~ Comment of the Florida Public Servce Common in CC Docket No. 96 and WC
Doket No. 03109 (Fedta Joint Bord on Unive Sere, Public Notice, 25 FCC
Re 7551 (2010)), (da Jul 15, 2010).
DS Fedta Joint Board on Univeal Se; Lifeline and Link Up, Orr, 25 FCC
Red 5079, (2010) (Refer Or) p. 9.
Page 36 GAo.n.n FCC's Low-Income Pr
. Another rik is th the rets of ETC audits may not be adequately
consdered in as intern contrls. FCC offcia told us th
completion in 200 of the inti OMB Circul A- 123 basd intern control
review of USAC's contrls of the USF's four progr, includig the Low-
Income Prgr was the eqvaent to a comprehensive rik asent.
The 2008 review wa foc priy on ficia reportg contrls, and
consdere some ascts of programtic operations and regutory
report and complice of the four USF progr. However, the inti
review was not specifc to the Low-Income Program and was not designed
to identi al riks to meeti the progr's objectes. The update that is
expd to be report on in the fal of 2010 was alo not desied to
consider al asts of the progr's internal controls. For exaple, the
report on the rets of the 200 review acknowledged that there ar
progr riks asciated with ETCs' self-eertcation of key inormation,
such as subscnber eligibilty and the accury of amounts claied for
reimburment tht were not addressed in the internal control review. The
report alo std th ET audits were the mechanm usd by the USF
progr, includig the Low-Income Prgram, to mitigate these riks.
Fuer, USAC's upda of the 200 review did not, among other th,
consder the natu, scope, and extnt of ETC audits or the results frm
thes audits in asesing intern contrl.
Accordi to our stdads for internal control, FCC should identi al
riks to meeti the progr's objectves and should consider al
signcat interaons between itself and other pares as well as internal
factors at both the entity and activity leveL. 96 Without a rik asessment
spcic to the Low-Income Progr that considers al vuerabilties and
consequences, some progrtic riks may not be identied, anyzed,
and addressd. Moreover, mag riks can help taet lited
resources. We have previousy descnbed the purose of rik mangement
as identi potential problems before they occur to mitigate advers
impats.97 Figu 4 depict a rik maement cycle representig a senes
of anca and maen stps, which are sequenti, tht can be used
to as rik, as alternves for reducin riks, choose among those
alternves, implement the alteatves, monitor their implementation,
and contiua us new inormtion to adust and revie the assessments
OOAO/Al21.3.L.
97GAO, Dita Tel Trnstion: Incased Fed Plnning and Risk Manaement
Cuu Furt Facitte th D7V Trnsti, GA() (Washin, D.C.: Nov. 19,
2(07).
Page 37 GAQ-ll-ll FCC's Lo.Income Prgram
and acons as neeed. The appro is dync and ca be applied at
vaous orgona levels.
Figure 4: Ris Manaem Frameor
Son:: GA.
The litaons identied above increas the importce of the periodc
audits of ETCs to provide afer-the-fa deteon inormtion on ETC
complice with progr rues and the effectveness of USAC's intern
contrls. Audits conductd on ETCs have identied inces of
noncomplice with progr rues, includig improper payents when
ETCs sougt reimburment for diounts tht were either cacud
incorrect, could not be adequately supported, or were provided to
potentiy inelible subsbers. For exaple, we found th 76 percent
Pae 38 GAO-n.n FCC's Low.lDeome Pr
of the 41 perfonnce audits reportd fidi of more th one cl for
low-income suport per houshold, which is contr to progr rues.
We aned report audit fidi and identied inces of repeat
audit fidi at ETs th ha been audited more th once frm 2003
thug 200. Accord to USAC offcia, each audit report is reviewed
and th extt and ca of audit fidi ar anyzd.98 However, USAC
offcia st tht they do not have a symatic process for consderig
the rets of ETC audits when asssin the progr's internal contrls.
As desbed above, eac of the intern control reviews performed have,
by des, excluded consideration of ETC audits in asessin internal
control. A symac proces that considers ETC audits could help
identi opportties for improvig internal controls. For exaple,
improvements to contrls could include modicatons to the proces used
to identi quesonale support cla; modications to the natue,
extnt, or scope of ETC audits; and changes to the inormation red
frm ETCs for reew prior to payment of cla.
We alo an payent data by state/terrtory and ETC to determe
the scope of audit coverae accomplied by the audits performed99 (see
Figu 5). For our anysis we us support payments claed by ETCs
from 2002 to 2007-the perod covered by the ETC audits tht were
performed.1°O We found th, considerig the relice plaed on ETC
audits and the results of those audits conductd to date, the number and
scope of the ETC audits ha been lited. For exaple, the 97 ETCs that
have been audite represent approxitely 5 percent of the more th
1,80 ETCs th parcipad in the Low-Income Progr from 2002 to
2007.101 Fuer, the payments th were audited repreented about 10
percent of the $4.6 bilon in payments durg th 6-year period. In fact,
more th 90 percent of the payments audited were made to only 14 of the
!MSAC sum and an the re of the 60 audits conducted in 200 and 2007
th were us to devlop a stcal este of errr rate under the Improper Payments
Inormtion Act of 200, but did not do the sae for the other 41 peñonnce audi
conduct frm 200 thug 208.
9!cluded in our sty-s anis ar the followi U.S. tenitones: Amenca Saoa,
Dict of Columbia Gua, Nortern Ma Islads, Puert Rico, and the U.S. Vir
Islads.
l00SAC peñorned 101 audits on 97 ETCs frm 200 to 2008.
IOIo number of unque ETCs tht paicipat in the Low-Income Prgr between 202
and 2007 wa 1,826; the numr of ETCs pacipat in an single year dun th penod
raed frm 1,418 to 1,80.
Page 39 GAo-l1-l1 FCC's Low-Income Prgram
97 ETCs audited. lOl Morever, 19 st and terrtories with approxily
22 ETCs have never be audited 103
Figure 5: Analyss of ETC Support Paymnts and Audit Coerge, 20 .207
Overall audit
Numbr of ETCs
Out of 1,826
tota ETCs,
5.3 (97 ETCs)we audite
Audit brekdow by states
91.5 of th supo pant auded ($421,83,90 of $4,83,977 we
disbu to ETCs in 3 sttes (caifrnia, Ne York, and Texs) whee 14A% of ETC
audit (14 of 97) ocrr
Dolar amount
10.0%
Doar amount
Out of $4,83,9n
in audited disbursment
91.5% ($41,8,90)
we In CA NY, andTX
Numb of ETCs
Ou of 97
audit ETCs,
14.4% (14 ETCs)
we In CA, NY, and TX
Ou of $4,587,817,98
in totl supprt paent,
10.0% (46,83,97
we audi
Son:: GA ans of USAC da.
Accord to our internal contrl stda, audit fidi should be
consdered when asss the effectveness of intern contrls,
includig: determg the extnt to which the contiued efectveness of
the intern control is being monitored; ases if appropri policies
and procedur exi; and asing if they ar properly mataed and
perodcal update. Fuer, consderation should be given to potenti
progr riks when esbli the scope and frency of audits.
Without a symac proces to anyz fidigs frm audits tht are of
sufcient quatity and scope and appropritely taeted bas on rik,
FCC and USAC may not have inonnon th could be leveraed to
adequately asss complice with progr rues and stngten the
progr's intern contrls. As desribed in th report, there are
vuerailties at the ET, stte, and progr level for which a symac
proces for conduct audits and consderi audit rets could help to
identi. .
iG' 14 ETCs were in th th st with th laest amount of suport payents for
th penod--alomi New York, and Texa.
i~ ETCs reeived paents tota approxiatly 8 percnt of to Low-Income
support payments du th penod
Pae 40 GAO-ll-ll FCC's Low-Inme Pr
As of July 2010, USAC wa in the proess of implementig a new audit and
improper payment asent approach for al of the USF progr. The
new approh is desed to include separ progr for compliance
audits and improper payment asesents. Accord to USAC otñcia,
the complice audits wi be desiged solely to evauate USF benefici
complice with FCC rues and a separte process wi be implemente
for improper payment asents to estate the rate of improper
payment asoc with eah of the USF progr. Whe we have not
asd the new approh, accordg to FCC otñcia, it wi contiue to
enable FCC and USAC to identi progr riks basd on random
selections of beneficies and payments stratied based on the amount of
payments. However, it wi be importt for USAC to have a process for
consderig the resuts of these audits and asessments to identi
opportties for mod the progr's internal controls, includig
modg the na, extnt, and scope of audits and improper paymentasesents.
Conclusions Clear and consnt progr goal and performance measures, rik
asssents, and the symic consderation of audit results ar key
maagement tols to effectvely mae any progr, including the Low-
Income Progr. These tools help ensure tht collective program fuds
are effectively taeted to meet the need of the intended recipients. In the
case of the Low-Income Prgram, effective use of the fuds is parcularly
importt given the raid increases in technology th ar redefig the
options that consers have to acces telecommuncation servces. Not
identig the mos cos-effectve option may leave less fudig tht could
be usd to increas acces for other low-income consers, which is the
underlyig intent of unvers servce. Moreover, without key management
inormation, FCC may be mak cuent and futu policy decisions
without being fuy inormed on the performce of curnt program and
without inormtion on the potential performce of broadband and futue
technologies as they become avable. Lakig inormation on
performance goal and meases may alo lit FCC's abilty to
demonse th the progr is helping to provide access to afordable
telecommuncaon and inonnon servces to low-income consumers in
al regions of the nation, one of the priciples for unvers servce
arculd in the 199 Act Fuermore, without settg performce
goal and meases, parcuarly as new technologies are developed to
access telephone servces, FCC wi not have inormation to judge the
impac of these options on telephone subscbership rates for low-income
housholds.
Page 41 GAo-U-U FCC's Low-Income Prgr
The Natona Brobad Pl reommended the addition of broand as
an elile sece for the Low-Income Prgr. FCC ha inti a
Univers Servce Worki Group to asis in its effort to modern and
reform al unvers servce progr to bettr support brobad and ha
taen iiti stps to develop potenti low-income pilot progr A needs
asent and imlementation and evauation pla ar crtica elements
for the proper development of pilot progr. Such asents and pla
wi provide iionnon on the telecommuncation nee of low-income
housholds, identi the mos cot-effecve options for low-income
consers, and help FCC effecely taet fuds bad on dat-dven
iiormon. The Low-Income Prgr ha no fudi ca and the
addition of broadbad and other futu telecommuncations tehnology
without key manement iionnon ànd evauation tools ha the
potential to fuer incree the cost to consumers who pay for the
progr thug their telecommuncaons bil.
Recommendations for
Executive Action
To improve the maement and oversigt of the Low-Income Prgr,
we recommend that the Cha of the FCC tae the followig thee
acons:
. clearly defie spifc perfonnce goal of the progr and subseently
develop quatile meas that ca be used by Cong and FCC in
determ the progr's success in meeti its goa,
. conduct a robus rik asent of the Low-Income Prgr and
. implement a SYmac process for consderi the results of ETC audits
and improper payment asesents in evauatig internal contrls of the
Low-Income Prgr.
If FCC conduct pilot progr as it consders addig broadba to the
Low-Income Prgr, we reommend tht the Chai of the FCC tae
the followi two acons:
. conduct an asent of the telecommuncation needs of low-income
housholds to iiorm the desgn and implementation of the pilot
progr, and
. develop implementation and evauaon pla for the pilot progr.
Pagl2 GAO.ll-ll FCC's Low.Income Pr
Agency Comments
and Our Evaluation
We provided a dr of th report to FCC and USAC for their review and
comment. Thei fu comments ar repnnte in appendi V and appendi
VI, reely. In it wnttn comments, FCC aged with our
recommendaons. Speca, FCC ageed tht more work is needed to
defie spcic perfonnce goa of the program and develop quatile
mea th ca be us in detenn the progr's success. FCC
recgnd th the potenti modication of the Low-Income Progr to
include broabad would be a sicant chae to the exig progr
and st th the 20 Perfonnce Meases Notice of InquilOl reord
may need to be upda so th quatile perfonnce measures related
to broadband-supportd servces under the Low-Income Progr could be
exaed consnt with praces for developin successfu perfonnce
goal and measures. With repect to the proposed Low-Income pilot
progr, FCC recognd the importce of conductig an appropriate
needs asent accompaied by a sound implementation and evaluation
pla consnt with the criteri we identied. FCC alo stted that the
Low-Income Prgr's intern controls would benefit from a rik
asessent in which al vuerailties and consequences are consdered
and tht it is commttd to developing a symatic approach for
consderi the reults of ETC audits and improper payment assessments
in evauat the progr's intern contrls. FCC stted that it intends to
work closely with USAC to implement a rik asessment, as we
recommended, and ensure that clear policies and procedures addrssing a
systematic review of intern controls based on audit fidigs ar
incorporated into USAC's wrttn audit policies, procedures, and
procurment.
In its wnttn comments, USAC noted that it appreciated our recogntion of
the intern contrls it ha in plae and tht it wi work with FCC to
implement any orders or dictves it may ise to implement our
recommendaons. USAC al provided additiona inonntion-that we
reflectd in our report-on processs usd to vadate, on a test basis,
cert inormation provided by selectd carers.
USAC did not fu concur with our concluson tht FCC and USAC have
not conduct a rik asent specifc to the Low-Income Progr tht
consders al vuerailties. Among other thgs, USAC stted tht the
IOlComprve Re of th Univeal Sere Fund Manaement, Administmtion,and 0rht Notice of In, 23 FCC Red 1358 (200) (200 Peornc Measre
NOl).
Page 43 GAO-ll-ll FCC's Low-Income Prgr
reew peormed by an independent public accountig fi in 200 did
as and te spc intern con1rls for the Low-Income Prgr. We
ag th some Low-Income Pr intern con1rls were, in fa,
as and ted; however, we determed th the review focusd on
the riks asia with ficia report and not the Low-Income
Prgr or i1B progrc as. With rect to the intern contrl
asent tht is bein conduct by USAC's own sta and is in proes
as of Ocober 2010, as std in our report th asment al wa not
desiged to identi and addr specc Low-Income Prgr riks and
vuerailties. No rik asent tht USAC has underten to date ha
ben the tye of rik asment th we envion under the relate
recommendaon we mae in th report. Such an asssent would
consider the exiti des of the Low-Income progr as a whole,
includig the roles of FCC, USAC, beneficiares, and servce providers;
whether the design and mi of preventive and detecve con1rls alady in
plae for the Low-Income Prgr are appropri; and whether there
may be intern controls that ar neeed but not curntly in plae.
USAC al sted tht it does not believe that the fac viewed in their fu
context support the concluson th audit fidigs have not ben used
effecvely by FCC and USAC to asss and modi intern controls usd
by USAC in adrig the Low-Income Progr. We di; and as
stte in our report, we found tht USAC doe not have a fonn symic
proces in plae to consder the resul1B of audi1B when asssin the
progr's intern contrls. We contiue to believe th there ar
vuerailties at the ETC, stte, and progr level for which a systmac
process for conduct audi1B and consderi audit resul1B could help
identi. A systematic proces to consder audit resu1B is consisnt with
the objectves of intern controls in the federa governent and FCC's
and USAC's responsibilties to estalih and mata intern controls
that appropri saegu progr fudig and resources. It wi be
importt th effort to implement the new audit approac tht is now
under way include proces for systatcal consideri the rets of
audi1B and asssmen1B to identi opportties for modi the
progr's intern contrls, includi modig the na, extnt, or
scope of audi1B.
As aged with your offces, unes you publicly anounce the conten1B of
th report earlier, we pla no fuer dibution unti 30 days from the
report da. At that tie, we wi send copies to the appropriate
congonal commtts, the Cha of the Federa Communcaons
Common, and the Actg Chief Executive Ofcer of the Univers
Page"GAO-ll-ll FCC's Low-lDme Prgr
Servce Adme Compay. In addition, the report wi be avale
at no che on the GAO Web sit at htt://ww.gao.gov.
If you have an quesons abut th report, pleas conta me at 214-777-
5719 or stamesCW.gov. Conta points for our Offces of Congriona
Relaons and Public Af may be found on the lat page of th report
Maor contrbutors to th report ar lid in appendi VI.
gì . erLl~t71&vPI-r OtT
Lorelei St. James
Actig Dirctr, Physca Incte Isues
Page4S.GAO-ll-ll FCC's Low-Income Prgr
Appendi I: Scope and Methodology
To obta backgund inonon on the adon of the progr,
we reviewed key orders, rert, and progr asents frm the
Federa Communcaons Common (FC) and the progr's
adr, the Uniers Servce Admtive Compa (USAC), andintervewed offci frm both orgons reg progr and
operaona produr; conducte a Web-bas suy to gaer
inonnon frm each st public utity common, includig the
Dict of Columbia intervewed other steholders; and conducted site
vits. The suey wa avale onle to offci in the 50 sttes and the
Disct of Columbia on a secur Web site and our reons rate was 100
percent. Th report does not conta al the rets frm the surey. The
suey and a more complete taultion of the reults ca be viewed at
GAO-ll-13SP. The steholders, lied in table 5, were identied frm a
vaety of source, includig our preous work and by other exprt in
telecommuncations. The site viits Calorn the Disct of
Columbia Florida and Iowa-were chosen to provide detaed anyse of
progr with va charics. We chose these locons basd on
criteri such as the telephone subscbersp ra of low-income
housholds and the pacipaton rae of elible low-income households.
Du the site viits, we intervewed offci frm the stte public utitycommon, the stte consumer adocate, ETCs (wilie and wiles),
and other entities as applicale. We alo obtaed pertent support
documentation.
Becaus th was not a saple surey, it has no sali errrs. However,
the pratical dicuties of conduct any surey may intrduce errrs,
commonl referred to as nonsplig errrs. For exaple, dicuties in
interpretig a parcu queston, sources of inormation avaable to
respondents, or da entr and anysis can intruce unwante vailty
into the suey reults. We tok steps in developin the questonne,collecg da and an these data to mi such nonspli
errrs. For exaple, prior to adrig the suey, a GAO surey
specia desied the questonn in colloration with GAO subject
mar exprt. We al preted the questonne with members of the
Public Utities Common of the sttes and the Disct of Columbia
On the bas of the fidi frm prete, we modied our questonn
to ens th the quesons were relevat, clearly stad, and eas to
comprehend. To ens adeqte resns raes, we sent e-mai remiders
and conductd follow-up telephone ca with nonrpondents. When the
dat were anyzd, a second independent da ant checked al
computer progr for accur. Since th was a Web-basd suey,
respndents ente thei aners dicty into the electnic
Page 46 GAo-n.n FCC's Low-IB.e Prgn
Appe I: Sepe an Metodol
quesonn, eli the nee to key data into a daas, therebymi errs.
To detenne the extnt to which progr parcipation and expenditus
have chaged in the la 5 yea and what facrs may have afectd
progr pacipaton and suport payments, we analyzed parcipation
and diburment da frm USAC and identied key trends includi
projections for 2010. We conducte testig to ens the reliilty of the
data and reviewed the methodology used by USAC to estat progr
paciaton ra. As a ret, we detenned tht the data were
sucientl relile for the puiose of th report. In addition, we
intervewed FCC and USAC offci, as well as other staeholders. We
conductd site vits, as desnbed abve, to obta opinons regar
progr elements as with parcipation and barers to
parcipation, if an. We al obtaed opinons regardig the effect, if an,
of prepad wiles options on progr parcipation. In addition, we
conductd a Web-basd surey of state public utity commons, as
descbed above, to gather inormtion about barers to program
parcipaton, if any, and advertin and marketig activities by state
comnons and ETCs. Fiy, we compared FCC's gudelies for
adverting the progr and asessed them agait our key praces for
consumer educaton plag.
To detenne FCC's performance goal and measurs used to maage the
progr, we reviewed the Telecommuncations Act of 1996 and other
relevat legilaon as well as FCC documentation, includig rues, orders,
sttegic pla, performce and accountailty report, and FCC's
Memoradum of Undersdig with USAC. In addition, we intervewed
FCC and USAC offcia to detenne how these goal and measures were
developed. Fialy, we reviewed FCC's performce goal and meaures
for the progr and compard them with our gudance on key attbutes
of succes perormce goal and meases.
To identi the mec FCC and USAC used to identi and evaua
rik and monitor complice with progr rues, we reviewed relevant
FCC and USAC docuents, includi comments for the record, frud rik
asssents, and audit report, and intervewed offcial from both
entities. Du our site vits and thug our Web-based surey, we
identied related progr riks and processes usd at the stte level to
cert and veri consumer elibilty and concern. Fiy, we compared
FCC's and USAC's mechan to asess and evaluate rik and monitori
complice with progr rues agt our internal contrl stdards and
Ofce of Maement and Budget gudace on intern contrls.
Pag 47 GAO-H-H FCC's Low-Income Pr
Appedi I: Sepe an Ketl
We conduct th performce audit frm Ocber 200 thug Ocber
2010 in accordce with gener acepte governent auditi
stda. Those stda re th we pla and perfonn the audit to
obta sucient, appropri evidence to provide a reasnale bas for
our fidi and conclusons ba on our audit objecves. We believe
th the evdence obtaed provides a reonale basis for our fidi
and conclusons ba on our audit objeves.
Table 5: Individuals and Organiztions Intervie
cateor
Academicians and think taks
Name
John Mayo, Profer of Economics, Business and Public Polic
Public Utlit Resrch Center, University of Florida
Stanfrd Instute for Ecoomic Polic Research
Technolog Policy Inste
California Division of Ratepayer Advocte
California Public Utilitie Commission
D.C. Department of th Environment, Energ Ofce
D.C. Ofce of People's Counsel
D.C. Public Servic Commision
Federal Communications Commission
Florida Deprtment of Children and Familes
Floria Office of Public Counsel
Florida Public Servic Commisson
Iowa Ofic of Public Counsel
Iowa Public Utilit Commission
AT&T
AT&T - California
Fort Mojave Telecmmunications, Inc.
Gila River Telecmmunictions, Inc.
Iowa Telecom (Windstam)
Meler Apche Telemmunications, Inc.
Owes Communications
Sebati Corpration (holding company for Kerman Telephon and Foret Hil
Telephone companies in caiforia)
So Slop Coopeative Communications Company
Sprintlextel
TracFone Wirele
Verizon Communications
Federal and state entities
Telecmmunication providers
Piie48 GAo-ll-l1 FCC's Lo-Ineome Prgr
Appendi I: Sepe an Methocoloø
caory Nam
Verzon Comuniction Floa-egulatory Affairs
Third part administrators and related committees Rollca Loube satzer Asociates
Solix (previouly known as NECA)
Univerl Serv Administrative Company
USAC High Cost and Low Income Commitee, Low Income Representative (EllsJaco)
USAC High Co and Low Incme Committee, State Consumer Advoctes
(Wayne Jortr)
USAC High Co an Lo Incme Committee, State Telecommunications
Regulators Repesntatie (Anne C. Boyle)
Trade and industry groups CTIA - The Wirees Assiation
National Asation of Regulatory Utilty Commissions
National Telecommunications Coerative Assoiation
National Tribal Telecmmunications Assoiation
Organization for the Promotion and Advancement of Small Telecommunications
Compaies (OPASTCO)
Sorc GAO.
Page 49 GAo-ii-ii FCC's Low-Income Pr
Appendix II: Lieline Eligibilty Criteria and
Admistrative Processes and
Responsibilties
FCC authori stte th provide intr Lielie suport to devlop
thei own elibilty criteri and adve proes for the
progr-includi reviewi applicaons, cert elibilty, and
veri reients' contiued elibilty for the Lielie progr As aret, elibilty and adve proes va ac st th
provide intr Lielie support. 1
Of the 39 stte th provide intr Lielie support, 36 alow
consers to qu for the Lielie progr bas on parcion in a
low-income asce progr; the number of progr th confer
eligibilty for the Liele progr vaes by st. For ince, in
Monta the only progr tht confers elibilty for the Lielie progr
is Medcaid. In Alka 10 progr confer eligibilty, includi Federa
Public Hous Asisce, Supplementa Nutrtion Asce Prgr
(formerly Food Staps), Low Income Home Energ Asce Prgr,
Alaska Adult Pulic Asisce, and Head Sta (under the income
qua provion).
Stas tht provide intrte Lielie support can al set the income
eligibilty thhold. Twenty-two of the 39 states th provide intr
Lielie support alow consers to qu for the progr basd on
income alone.2 In 8 sttes, households may ear up to 135 percent of the
federa povert gudelie and be eligile for the Lielie progr 3 In 2
sta the income elibilty thhold is les than 135 percent of the
federa povert gudelies, and in 11 stte it is gratr. 4
Fuer, FCC determed th staes that provide intr support al
have the dicretion to determe their own adve proes,
which al va across sts (see tale 6).
lSe e.g., 47 C.F.R. §§ 54.40 (consumer qualcaon for Liele), 54.410 (cecaon an
vercaon of consumer qualifcaon for Liele), 54.415 (conser qucaon for Li
Up), 54.416 (certcan of consumer qucaon for Li Up). St mus ba
elibil crteri solely on income or facis di rela to income. 47 C.F.R. §§
54.40a), 54.415(a).
ii New Jersy, onl consumeis 65 or over may qu for the progr ba on income
alone.
=i 20, the feder povert gudele for a fa of th was $18,310.
4ün st rert th it did not know the income elbilty thhold
Pii50 GAO.ll.ll FCC'. Low.lnme Prgr
Appe II Lie1e Elbity Criteri aDAde Pi aD ReDSbiltles
Table 6: Lifline Administrative Process In Sta th Provide Intrate LIfeline Support
Administraive proces
Proess in place to certify eligibility base on program partcipati
Self.certification under penalty of pe~ury
Presentation of documentation of enrolment in a qualifng low.incme assistanc
program
Automatic enrollment of eligible consumers
Process in place to certfy eligibility based on incoe
Self-certification under penalty of pe~ury
Presentation of documentation of income
Automatic enrollment of eligible consumers
Veriing continued eligibility of Lifeline support recipients
Random audits of Lifeline support reipients
Periodic submission of supporting documents (annual rertifca or
reverification)
Annual self-certification
Online verification system using databases of public assistance proram
participants or income reports
Verification of a statistically valid sample of Lieline supp recpients
Conduct Lifeline-related audits of eligible telecmmunictions carrers (ETC)
Number of states.
32
16
25
9
19
6
19
3
14
20
12
13
17
10
Sorc: GAO SUNe.
"Numbers do not sum to 39 because some states do not have a proess in place and some states
have mor than one procss in place.
In addition, for the sae reason, the entity responsible for executig the
proes alo vaes acss sttes as seen in table 7.
Table 7: Lifeline Program Administrative Responsibilties In Staes that Provide Intrastate Lifeline Support
Responsible entit
Other stateETC agency23 12Administrative proces
Prossing Lifeline applications
Certifying applicants' eligibilty on the basis of
program participation
Certifying applicants' eligibilty on the basis of
income
Sta Public Utlit
Commison
7
Third-part
admlnlstratol
4
6 13 13 2
2 10 7 4
Verifying that recipients continue to be
eligible for the Lifeline program 4 26 10 4
Sorc: GAO SUNe.
Page 51 GAO-H-H FCC's Low-Income Prgram
Ap U: LiUne Elity Crte _dAdtive PIelilieø 8D Beti
"N do no sum to 39 beus so st do no have a pr in pl an so st
ha mo th on en resibl for a gi pr.
"Se sts cont with thirdrt adminitors to perfrm ce adminti pr ofth prra.
For thos st th choos not to provide intr Lielie suport,
FCC devloped elibilty cnteii and adve proess for the
Lielie progr to which thes st mus adere. Thes st ar
referrd to as "feder defat st.,,5 To be elible for the Lielie
progr in these st, consers mus parcipat in one of seven low-
income asce progrFedera Public Housin Asce,
Supplementa Nutrtion Asce Prgr (fonnerly Food Stps), Low
Income Home Energ Asce Prgr, Medicaid, Natona School
Lunch Prgr's fre lunch progr, Supplementa Secunty Income, and
Tempora Asce for Needy Famesr have houshold income at
or below 135 percent of the federa povert gudelies.6 Housholds livi
in trbal aras have an expanded li of trbal-based progr th al
confer eligibilty for the Lielie progr.
In federa default st, the ETC is responsble for procesing
applicaons, cert applicants' ellbilty for the progr based onprogr and income criteri and verig the reciients' contiued
eligibilty for the progr.
SSta th provide intr Lielie support but choo to us the elibilty cnteri andadve pro develope by FCC ar al referrd to as "fedra default stte"
&s 47 C.F.R. § 54.409.
Pag 152 GAo-U-U FCC'1i Low-lDeome Pr
Appendi III: Estimated Lifelie Parcipation
Rates Among Eligible Households by State in
2009
Figure 6: Estimate Lifeline Participation Rats Among Eligible Households by Stae In 200
i= Les than 10%
1)(.110% to les thn 20
.. 20% to les thn 50
.. 50 or more
Sorc: USA. Ma Resrcs (ma).
Page 53 GAO.H.H FCC's Low.Income Pr
Appendi IV: Algnment of FCC Outreach
Guidelies with Our Key Practices for
Consumer Education
FCC re ETs to publici the availty of Liel servce in a
maer renaly desed to reh thos liely to qu for the
servce. In its 200 Order, FCC adopte a reommendaon frm the
Federa-8ta Joint Boar on UlUvers Servce1 to provide outrh
gudelies to st and ETCs to help improve pro pacipaon.
Below is a suar of the gudelies:
· sttes and ETCs should uti outrach materi and methods desed
to re housholds th do not cuntl have telephone sece;
· stte and ETC should develop outr adert th can be rea or
accesd by any sile non-Englh sp popultion with a
carets servce area; and
· stte and ETCs should coordiate their outreach effort with governent
agenciesbes that ader any of the relevat governent asisceprogr.
Whe FCC ha developed advert gudelies for sta and ETCs, the
gudelies ar not always algned with our key praces for conser
educaon, as shown in tale 8.
180 Lielie and Li Up, Re and Or and Furt Noti of Prsed Rung,
19 FCC Red 83 (20) (20 Lifeline and Link Up Or); Federa-8ta Joint Bo onUnier Servce, Reme De, 18 FCC Red 65 (20) (RemeDec).
P..elW GAo-n-n FCC's Lo-Ineo.e Pr
Appe IV: A1t of FCC Oa
GuieJies with Ou Ke Pr tor
COD811er Edueti
Table 8: Alignment of FCC Outreach Guideline wi Key Praice for Consumer Educaion
How FCC's guideline align withprce
FCC's guidelines do not align with this
practic.
FCC's guidelines do not address defining
the goals and objectives of outreach effort
of states and ETCs.
FCC's guidelines somewhat align with this
practice.
The guidelines are based on and include
lesons learned that were identifed by the
Joint Board when it sought comment on
whether more extensive consumer
education and outreach effort were
necry to increase participation in
LifelinelLink Up. However the guidelines do
not suggest that states and ETCs analyze
the situation, including any competing
voices or messages, related market
conditions, and key dates or timing
constraints.
FCC's guidelines somewhat align with this
practice.
At the time FCC established its outreach
guidelines, it identified several entities with
which state commissions and ETCs should
cordinate their outreach efforts, including
social service agencies, communit
centers, public schools, and private
organizations that may serve low-income
individuals. However, the guidelines do not
address clanfing the roles and
responsibilities of each stakeholder,
including which entities wil lead overall
efforts.
FCC's guidelines do not align with this
practice.
In its guidelines, FCC did not direct state
commissons or ETCs to identif available
short- and long-term budgetary and other
reurc available for outreach effort.
Key practce
Define goals and objeives
Analyze the situation
Identif stakeholders
Identify resources
Decripti
Define the goas of the comunicn capagn,
e.g., to increa awarenes or motate a change in
behavior. Define the objecive that will help the
capaign meet those goals.
Analyze the situation, including any competing
voices or messges, related maret conditions, and
key dates or timing constrints. Review relevant
past experience and examples to ident
applicale "lessons leamed that may help guideeffort.
Identify and engage all the key stakeholders who
will be involved in communications effort. Clarify
the roles and responsibilties of each stakeholder,
including which entities will lead overall efforts.
Identify available short- and long-term budgetary
and other resources.
Page 65 GAO.ll.ll FCC's Low-Income Prgram
Append IV: AJnt of FCC OuGu with Ou Key Pn forCoII Edtin
Key pract
Reserch taet audiencs
Develop consistent, clearmessges
Identify credible messenger(s)
Design media mix
Derition
Conuc audienc re, such as divding the
audienc into smaller group of pele who have
relevant needs, prfernc, an cherstcs, as
well as measuring audience awarne, beliefs,
competing behaviors, and motators. Als, identi
any potential audiencespcic obtacles, such as
access to information.
Determine what mesges to develop based on
budget, goals, and audience research findings.
Develop clear and consistent audience mesages;
test and refine them.
Identi who wil be delivering the mesages and
ensure that the sourc is crible with audiencs.
Plan the media mix to optimize eared media (such
as news stories or opinion editorals) and paid
media (su as brodcst, print, or Internet
advertising). Identify throgh which methods (e.g.,
advertising in newsprint ads), how often (e.g.,
weekl or monthly), and over what duration (e.g., 1
year) mesges wil reach audiences.
How FCC's guidine align wipra
FCC's guidelines somewhat align wih thepra.
FCC iemend tht sttes and ETCs
develop ouch materials that can be
acc by a sieale no.English
sping poulatin within the caerssece are and establish a toll.fr cal
center where quesions cold be answers
in the consumer' native lanuage. It alremend that thes mater and
othr outeach eff be acssibe to
cosumers with sight, hearing, an sph
disilities. However, in its guidline, FCCdid not suggest that state comis or
ETCs to undertake effrt to measure the
taet poulation's awarenes of th
proram or to identify the beliefs,competing behaviors, or motivator of the
target poulation.
FCC's guidelines do not align with this
practice.
The guidelines do not addre the
development of clear and consistent
messges baed on budget, gols, and
audience rerch findings nor testing and
refining of the messages.
FCC's effrt align with this pric.
FCC's guidelines suggest that sttes and
ETCs cordinate their outrach effrts wi
governmental agencbes that
administer any of the relevant government
asistnce prorams. Furter, the
guidelines state that coperative outreach
among thos most likely to have infuential
conta wit low.income individuals wil help
target messages ab th prram to the
low.incme communit.
FCC's effort somewhat align wih this
practic.
In it guidelines, FCC identified th various
outrch meths and materials tht could
be use to reach househlds that do not
currntly have phone serv. Howver,
FCC did not suggest designing a plan of
the approriate media mix ovr an given
period of time that would dicate when and
how thes method would be usd.
PagelS GAO.ll-ll FCC'. Low.lncome Pr
Appe IV: AUnt of FCC Outr
Guideles with Ou Ke Pr for
Consuier Educatn
Key practce
Establish metres to measuresuccss
Deription
Estblish both prss an outcme metr to
measure succss in acieving objecves of the
outreach campaign. Pro metres asure the
quality, quantity, and timeliness of the cotractors
work. Outcome metries evaluate how well the
campaign influenced the attitudes and behaviors of
the target audience(s) that it set out to influence.
How FCC's guidelines align with
practce
FCC's effort do not align with this practic.
FCC's guidelines do not address
estblishing process and outcome metries
to measure success in achieving objecties
of an outreach campaign.
Sorc: GAO an 01 FC's ouh guidene mere aganst ke pras we have presl identí.(GA).
Page 67 GAO-H-H FCC's Low-Income Prgram
Appendi V: Comments from the Federal
Communcations Commssion
Fedra Communcations Commission
Washington D.C. 20554
Octobe 14, 2010
Lolei Sl James
Acng Diretor, Phicallnfrre
U.S. Govemmer-AccuniltyOfce
Dalla Field Ofce
199 Bry Str Suit 2200
Dalla, TX 75201
De Ms. Sl James:
Th you for the oppnity to reiew th dra Goernment Accotability Ofce (GAO)
Report regaing asent of th maaget of th Univerl Seice Fund Low-Incoe progr.
The LoIne pr is deigned to pro the gos of setion 254 of the Communications Act of
1934, as amed by the Telecmunicaons Act of 1996 (th Act), tht telephone serice be afforble
to low-incme cors by providing univel seic fids to reuce the prce consume pay for
baic telephon seice.' The Low-Incoe prgr acmplishes this in primarily tw ways. First, the
Comission's Lifeline progr lowe the cost of monthly seice for eligible coumers by providing
support dire to servic prider on bef of consumer housolds.' Send, the Link Up progrm
provid a one-time disct on the initial insllation fee for telephone service.' As a reult of this
funding, the Low.lncome prgr ha helpe incras low-income telephone subsribership frm 80.1
pent in 1984 te 89.7 peent in 2008.' The Low-Incoe progrm continues to impve in reching andasisng cosume who are unable to affor acce to telehone serice. In paicular, t1e Commission
expe to diSlbuæ aproximately $ 1.29 bilion in low.income suppo during calenda year 20 I 0, which
wil asist over 9.5 milion low-ine consumer - an incr of almos 3 milion in three yes - in
obtining acces to telephon seice.'
The Comision is dedicate to achieving the univerl seice goals of seon 254 of th Act,
and thor welcomes suggons on maing aditional improveents to the Low-Income program. In
it drft rert the GAO offer four remmendations to improve the Low-Income progr. Firs the
GAO reends that the Commission cleay define speific perfonnan goals of the program and
subseuetly develop quantifiable meaur that can be used in detnnining the progr's succ in
meing it gols.' Next the GAO remmends the Commission conduct a robust rik assesment of the
I Su 47 U.S.C. § 2S4)(1) ("ality seice should be avalable atjnst, minable and afforle ra").
2 Genly, th Lifeline pr provide eligible consmer wi a discnt on monthly chaes for basic lol
laine or wirles telehoe serice. See 47 C.F.R. § 54.40 l.
, Gey, th Lin Up prgrm prvide a reuction in th ci for initiating telecommunications sece at a
coer's principal pla of residence. Se 47 C.F.R. § 54.41 i.
J Su Fedem-8aie Joint BOld on Uniersal Seice. 1009 Univsm SerlC4 Monitoring Repo, CC Do Nos.
96-45. 98 at 2.2, avalable at htt://ww.fc.govlDly_ReIeIYßusines010ldb8301D_
29S42A4.pdf.
· Se Univerl Servce Admisve Compy, Low-Ince ReC4lpt and Disbursement Reprt (Set. 20(0);
Univel Se Adminisive Compay, Univrsal Serice Fund PerformWlC4 Measurements (July 30, 2010).
· Govent Accuntailty Offce, Improv Managemeni Can Enhance FCC DecislOl Making/or ihe Univsal
Seic Fwr LoInco Program, ai40 (Oct 2010) (GAO Drft Report).
Page 18 GAo-U-U FCC's Low-Income Prgr
Append V: Comients frm the FederaComiuncations COIOD
Low-Incme pr.7 Third, th GAO remmends tht the Comission implement a sytematic
pro for considerng the reult of eligible telecommunicions caer (ETC) audits and improper
payment asssment in evaluang intel contrls of the Low-Income progrm.s In addition to these
reommendations, the GAO also remmds that, if the Commission esblishe any pilot programs to
exain funding broba unde th Lo-Income progr, the Commission firt conduct a nees
asmen and delop implemtaon and evluaio plan.'
We appreia GAO's reit of the Commission's effort to date in developing pefonnce
meaur fo th Lo-Incme pr an agr more work is neeed to define speific pernnnce
goals of the pro and delop quafile mea th ca be use in detrmining the progm's
succs.'o To buil upon its effor, in 200g, th Commission relead a Notice of Inquiry (2008
Perfmt Meaur NOI) sekig coment on whether th Commission should tae steps to more
clearly define the goals of the USF prgr, including th Low-Income progr." In so doing, the
Commissio sought coment on whe it should deelop speifc quantifiable goals beond the
policies enumerat in seion 254 of the Act 12 In addition, the Commission sought comment on
estblising long-te peormance gols and whether such meaures should be tied to implicit social
welfa objective."
Since th re clo in re to the 2008 Peifonce Measures NOI, other developments
have ocur coing potil chge in th policies and rules for the Low-Income progr. which
may wat updg this pring. Speifically, in 2009, Congrs direte the Comission to
develo a Natinal Broba Plan to ensure ever Amercan has "aces to broadbad capability.""
Cogr al reii th this pla include a detailed stte for achieving affordability and
maxizg us of brodbad to advance "cosumer welfar civic participation, public safety and
homland seur, comunity deeloent, helt car delivery, energy independence and effciency,
educaion employee trning, privat setor investment, entrepreneurial activity,job cretion and
ecnomic grwt, an oter natonal puross."" The National Broadband Plan, relea in March 20 I 0,
makes a varet of remmendations to change the Low-Income progr, including modifYing the Low-
7 GAO Dr Re at 40.
'Id. øi41.
· /d.
10 Se id. at 24-27. For exle, in the Comission's Memordum ofUnderstding with the Universal Service
Adminie Compay (USAC), gr clariy in administron and management of the USF were esblished.
See Memordum ofUndg Between the Federal Communications Commission and the Universal Service
Adminisve Copany. at I (Se 2008) (FCCIUSC MOll. As part of this, the Commission established
pean meaure and goals for tle USF an USAC. For exaple, USAC is reuire to submit quarerly datacoceing th numbe of Low-Incme prom beneficiaries, number of conntions supportd. average time it
taes to pross supprt paymnts, and average (mea) monthly dollar amount disbui per eligible carrier.
FCCIUSAC MOU at 53.
II In th Mter of Comiv Reliew of th Univrsal Service Fund Management. Administration. and
Orer.ig Nalice oflnqiry, WC Dk No. 05-195. 23 FCC Red 13583. 13590. pa 22 (2008 Performance
Measre NO/)
.. 200 PÐlmane M6 NOl, 23 FCC Re at 13590, pa. 22.
" 200 Peromane Me_ NOI, 23 FCC Re at 13591. pa 25.
i. See Cmmin America: Th NtJiOlal Broad Pion, at xi (reI. Ma. 16, 2010) (National Broadband Plan).
availablò at ht://w.brndgovldownload.plani.IS Seeid "
2
Page 69 GAO-H-ll FCC's Low-InCOe Prgr
Ap v: Commeats fr th FedCoUD Cooa
Incoe pr to fud bradba seice in oner to ma th seice mo affordable for low-
inco housolds. "
Recgnizg, among oier things that the potetial moificaon of th LoInc prgrm to
include brbad would be a significt chage to th exng pr, in May 20 I 0, the Commission
asked the Fed-St Joit Boa on Univer Sece (Joint Bord) to re th Comission's
eligiilty, veon, an outi rules for th Lifeline an Link Up univer seic pro. It
Speiflly, th Coission aske th Joint Bo to remmend any change to th as of the
Lifeine an Li Up progrs th may be nec, give significt tehnologcal and marketlac
change sinc th currt rules we adop, ba on consideron of: (I) th cobination of feeral
an stte rules that gover which custmers ar eligible to reive discunts though th Lifeline and Link
Up pro (2) best praic among state for effecive and effcient verification of customer
eligibilit, bo at initial customer sig-up and peiodically there (3) appriatene of various
outch and enrllment progr; and (4) the potial modifieion of the Low-Income program to
support brba, as reende in the Nation Broabad Plan. II In it May 20 i 0 Referral Orer,
th Commission al ased the Joint Bo to conside how th potetial modifcaon of the low-inome
prgr to sup broaba would afec any of its remmenda rerding chan to th
Comiion's eligibilit, verifcatin, and ou rule for the Lifeline an Link Up univerl seice
prgr. Th Comisson aske the Joint Bo to submit its recmmended decision within 6 month,
by Novembe 4, 2010."
Accngl, we believe the 200 Per/om/once MeQSes HOI rerd may nee to be refr in
re to any fu modificaon of the Low-Income prgrs to include broband; the Joint Boad's
fortcoin redatins to the Commission; and the Coission's actions in rens to the Joint
Boa's remmendaons. In doing so, quantifiable performce measure rela to brbad
support seice uner the Low-Income progrm should be exained consistet with the "praclice to
enhance peforce goals," as prvide by GAO.'.
We also welcome GAO's regnition of the Commission's conscientious effort to date in
developing inteal contrl sture to saegar the integrty of the Low-Income program."
Spefically, as GAO st, progrss ha ben made in asseing risk in the progr related to financial
repoing puruant to Olfic of Maagent and Budget Circular No. A-123, compliance with progrm
rules key progr cotrls rela to disbrsmen an invoicing, and Low-Incomc certificatio
douments." Deite thes effor GAO ha regniz tht th inteal contrl structu of the Low-
Income progrm ca be furter imprve. We ag. In paicula, as GAO's recmendation suggests.
the Low-Income program's internl cotrls would beefit fr a holistic risk assment in which the
"Id. at 172.173.
17 S. Federal-Se Joint B_d on Unrva/ Seice Lifeline an Link Up, CC Die. No. 965, Orer, 25 FCC Re
5079,5080, pa 3p (ià Orer); Nationa Broadd Pla at 172-17.
"Id.
.. Th Feder-5 Joint Bo on Univerl Se established punt to th 1996 Act, prvidereen to imlemen t1e univ seice provisions an contiues to prvide reendation
rein unive seic at t1e Commision's discron. Th Joint Boa is compis of FCC Commiioner.
Stae Utility Comissionrs an a coumer advoce rereentative. Su 47 U.S.C. § 410(c), 2SaXI)'
io GAO Dr Re at 40.
"See ¡d at 18.19.
"Seeidat31.32
Pae 60 GAo-n-n FCC'. Low-Iime Pr
Appe v: CoDUentø fr the FederComa11catioDS CoOD
Commission coide all vulnbilties an cose!' Súch a ns assesmt should be designed
to pro a critica exination of th enre Low-Income progrm to deterine if modificaions to
business praice and internal cotrls ar necar to cost-effectively addre prgrmatic risks." As
in th pas the Commission intds to wo closly with the Universal Service Administtive Company
(USAC) and prvide the apprprite diives coing th implementation of this risk asssment.
Further, the Commision is committ to use this risk asesment to exmine ways to improve the Low-
Income disbursent an invoicing procse. For exple, a robust ns assesment wil provide the
opprtnit to ensur USAC is disbursing one discunt per low-income household, as reauire unde
progr niles..' The assesment could also prvid an opprtunity to improve progrm forms to ensure
th both a whlesller an reeller do not mae dual claims for reimbursement for th same supportedcutoer..i
As GAO remeds th Coision is also coit to developing a systetic apprch
for considering th relt of eligible teleunicons caer (ETC) audits an improper payment
as in .,ua inteal cos of the Low-Incme progr.2' Consistnt with this
remmendaon, th Ofce of Mag Dir (OMO) regulaly reviews beeficiar audit findings
pe guidce se for in th Off ofMaement and Budge Cirla A-50 and the Commission's own
int diretive:" This pr inlude: (I) reiewing USAC's mangement reponse to an audit; (2)
revieg USAC's pl c:ve acon and imlementaion plan; and (3) prviding an OMO
repo an Wirline Copeti Bure rense wher nec!9 Also, in orer fo OMO to
cosider a fiing clo, USAC prvides OMD with supporting documentation 10 prove acton has be
taen. Th corrve acons ar summaze and monitor on a monthly basis and USAC provides
OMD wit a sts up of all open findings and recommendaions. Going forw, GAO's
remmenations will support the Commission's effort to make additionl improvements in'this ara and
to provid opportnities for modifying th prgr's internal contrl sttures, including modifying the
natue, extt, and scope of audits an imprope payments.'" OMD wil work with USAC to ensure that
clea polices and proceure addressing a syematic reew of inte contrls bas on benefciary
audit findings are incorprate into USAC's written audit policies. proceures. and prourement. Further,
OMO wil reew its efrt to see that meaingfl perormance meas are develope for USAC's
senior exive that reflec USAC leaerhip's reponsibility for effectively and effciently targeting
and addring ris in the Lo.lnco and other progrms.
Finally, the National Bro Pla remmended that the Commission faciltate Low-Income
pilot prgrs to dermine which paeter most effectively increas bradband adoption among low-
income coum.)1 As identified by GAO, the Commission is still conteplating this
n Seld at 36.
" Ofce of Maei an Budge MtJements.Rupomibility for Internal Control. Circular No. A-123 (Dec.
2t.200).
,. Se FeiaJ-8t.Joil Bo OI UniaJ Senlee Ok! No. 96-45, Re and Or. 12 FCC Red 8776, at
8947, pa 341 (199 (Unial Seice First Reprt an Orde); GAO Draft Report at 33.
26 Se GAO Dr Re at 33.
2'S..idat41.
2l S.. oirie ofMangeenl and Budt, Audit FoIICTup, CinuJar A-SO (Sept. 29, 1982); FCC Directive,
FCC/NT 1013.1 C.
"'Seid
30 Se GAO Dr Repo at 39.
" Se Natonl Brod Pl at 173.
4
PageS!GAO-ll-ll FCC's Low-Income Prgram
Appendi V: Co_ts fr th FederCountl Coon
reomndaio.12 As coer of ti renion evolve the Comssi reize ihe
importce of conducg an appr ne asl accanied by a so impleon and
evaluaon pla cosist wit th cr idfied by GAO.33
One ag we apiaie GAO's remendation and loo ford 10 woing with yo on....... ~
~anRokel
Mang Direto
32 Su GAO Drft Reprt at 28.
" See Id at 28.29.
hg62 GAO.ll.ll FCC's Lo.lneome Pr
Appendi VI: Comments from the Universal
Servce Administrative Company
:\"",,-,'¡""-";' -\.j,
Kare Majcher
Vice Prllidet
High Cost and l.ow Income Division
USAC
Via Electroni Moil
Ocbe 14.2010
LOlci SL Jam
Ac Direr, l'hysiea Iii IsuiU.S. Govemet Accunlity Offcc
Dalla Held Off
199 Br Stnt, Suit 2200
Dalla, TX 7520 I
Rc: Rt: to Dratì Reprt to Conion Requestors on Manement of the
Univer St'lice Fwi I.ow 1!!1l Prgrdl
De Ms. St. James:
"Ibis letter reponds to thc draft Governent Accountabilty Offcc's (GAO's) Rcport.
daed Seembe 23, 2010. to Congssional Requestors. titled: "Imprved Management
Can Enhnce FCC Deision Making for the Univer Service Fund Low-Income
Pro." The Univers Service Administtive Compay (LJSAC) would like to
reogiæ the profes~ional wo of the GAO stat on this prject. USAC submits this
rens to the GAO draft rert
The federl Universl Servce Low Income Prgr is administere by LJSAC. The
Federa Communcaions Commission (FCC or the Comission) is responsible for th
overl magement, oversight an adinisttion of the Low Incomc Prgr and the
Univcrs Sevice Fun (USF). including all policy decisions. i The GAO's draft report
focuses on the following issues: (i) th need for perfonnance goals and measures for the
Low Incme Pr; (2) a needs assment and implementation plans for Low Incme
brodband pilot progrs; (3) a robust risk assessment for the Low Income Progrm; and
(4) a systmatic process for evaluating Low lncomc Prgr audit resulis. The GAO
found that its recommendatons we necssary to ensure the integrity of the I.ow IncomeProgr.
Low Itlome Prrom Performnce Gools and Meosures
GAO's firs remmention is th th Commission should clearly detine pconnance
goas for the Low incme Pro an develop quafiable measure that can be usd by
Cogr an th fCC to deteinc th prgra's suss in meeting ilS goals. USAC.
i S",47 C.F.R. § 54.702.
2CtiG L. Sa~t .~ -~"V Swte iee '/ii~S;'I"W;;:' D,~ ind5 Vf)iC€ b::¡ /"llf'J¿0fl Foil 20;i 111) GCU::1 ....-,..W T;:)'~ (,T'
Page 63 GAO-ll-ll FCC's Low-Income Prgr
Ap VI Cots fr ti UDServ Adtr eo.pa
as th adinior of th Low Incme Pr, will work ""ith th FCC to implement
any orer or directive it ma issue concering Lo Income Progrm perfurmance goalsan mere
L_I,,_ 8r Pi Prms
GAO's se remmetion is that th Commision should conduct a nee
assmt of ti telecmmunat nee oflow incme households to utilize in thc
design an impcmentation of any brband pilot progrs focus towad low income
houlds. Th GAO also remmen th tCC develop implemcntation and
evaluan plan for suh prd pilot pros tha may be use 10 develop future
policy deision for th Low Incoc Prgr. USAC, as the administtor ofth I.ow
Inc Pro. will work with the FCC 10 implemi any ordrs or diretive it may
isse cog Low Incoe broadba pilot prgrs).
Rik ÃssøslMl!or tile Low 1"_ Prrøm
GAO's third remendon is that th ConuSäion should conduct a robusl risk
asnt spfic to th Low Incme Prgr that conside all progr
vulnerabilties The GAO's draft rert sts thi the Commission and USAC have not
conducte suc a risk asmen an explains that such an asent could help
identify risks to th I.ow Income Prgr an provide opprtnities for mitigating thos
risks. USAC paially cour with this conclusion. USAC, as th administror of the
Low Income Prgr. wil work with th FCC to implement to implement any order or
direves il may issue for a foml risk assessent of the Low Incme Program.
USAC apia th GAO's reition of the intern cotrls USAC ha in pla.
USAC op coistent with an extive set of intern contrls thai are desiged to
safeguard th I.ow Inme Prgr an the USF, promote administative effciency. and
reuc th possibility of err tht could result in wae, fr or abus in the Low
Ince Progr or th llSF. It is impont to note that USAC's intem contrls
prmarily gover tli inte predur use by USAC to adinister the Low Income
Pr. For exple, lJSAC review each Low Income Program support claim fied onthe FCC Form 497. USAC compa an liTe's currnt suprt claim to the informtion
th eompay previouly submitt to idetify posible errs and substaial changes in
the ETC's monthly support clas. USAC stff follows its intern procedures in
reviewng an proing Low Income Progr supprt claims. Howeer, givcn th
limite am of da colle frm ETCs on the curi FCC Form 497, USAC's
inter pr cai deteine whthr the ETC has claimed supp for the
apte nwnbe of Lifeline subsbers or whether multiple ETCs have concurrntlyclai Lo Incme Progr suport for thc same subsriber. One way to verfy ihis
infrmon wold be to reise th FCC Fonn 497 to authori7.e USAC to collcct
addition infortion frm ETCs.
USAC also believes th th GAO's conclusion tha USAC has not conducted any riskas spfic to th Low Inc Prgr is to narw. In 200. th indent
Page 64 GAO-ll-ll FCC's Low-lDeo.e Prgr
Appedi VI: Comments fr the UnirsServce Adtr Compa
public acnting linn Gri lbolon, LLP (Grai Thorton) completed an extenivc
reiew of USAC's int contrs. Grat Thornton rcviewe USAC's financial
reporting în contrls 10 ensu compliane with OMB Circular A-123, Managecnt
Repoibiliy for Interal Contrl, an asssed and tesd speific Low Income
Prgr contrls asciated with ihe adinistrion of the prgram. Grant Thornton
ideniified only onc cotrl deficiency in USAC adminislraion of ihc Low Income
Prgr? lJSAC's intem cotrls te retly complete (in 20 I 0) an assessment of
Low Incme Pi in contls. The drft n: is a1mosl finaized and idenlifies
no majo contrl deficienies in th Low Incme Prgram.
lJSAC's role as administror and auilor of the Low Income Program makc it uniquely
situed 10 ideniify signifcat nsk.o; suh as those ciled in ihc GAO's dra report (e.g.,
duplica support claims madc by wholesale an resalc ETCs. duplicate support claims
made by wireline an wiless ETCs), which were revealed as ihc rcsuti of USAC-
conduced beficiar audts. USAC ha also conducte risk assessnlt..nts 10 taei risk
facor asiate with beficiar complian with Low Income Program rules. lJSAC
an ihe FCC wil work together to coniinuc to ideniify and miligaic risks 10 the Low
Incoe Prgra. As not abovc. YSAC wil work with the FCC to implcment any
orders or directives ii may issue for tJndueling a formal risk assment for Ihe Low
Income Prgr.
Syselle Allt Revw
The GAO's fina reommendtion ~.s ihai the Commission should implement a systmatic
pross for consideng th reults 0 ETC audts an impr payment asessmenls in
~aluang internl contrls ofthc I w Income Program. USAC paially concurs with
this remmendaton. USAC, as the adminisircilor of the I.ow Ineomc Progra, wil
work with th fCC 10 implemnt an orers or diretives il may issue for conducling a
sysiemc review of audii findings d reults.
USAC doe nol believc that ihe facls viewed in iheir full contcxt support Ihe conclusion
ihal audii findings havc noi been us effectively by FCC and USAC to asess and
modify intern conlrols us by US C in adminisiering the Low Income lrogram.
USAC cafuly reviewed an any cd the audit findings after the conclusion of Round
I of th FCC Ofce oflnspectr crl (OIG) USF audit program. The resuli~ ofihe
anyss ofthc 60 FCC 010 USF au it program Round I Low Income Progr
beficia audits denstrte that 51 of the non-compliani auditee findings were nol
ihe reli of deficiencies in USAC's Iernal contrls.
While the Low Income Progr wait includ in Rounds 2 or 3 ofihe FCC OIG USf
aut pr USAC's Int A t Division (lAD) ha continued 10 eonducllargetedauits of Low Inc Pr be eiares as it ha don sinc 2003. Beginng in
201 I, Low Inc Pro befi' . ar sculed 10 be included in USAC's new
, Gra TI fo th th wa li1= of reiow of th quy High Cosiand Low Income
pr USAC his refied i1i. by iag a checklis ti shws lhlhe prjecons have bereviwe.
Page 65 GAO.ll.ll FCC's Low-Income Prgr
Appe VI Comii fi ti UDhSe Adti Co
Beficiary Compianc Audit Pr (BCAP). BCAP. develop in conjwition with
the FCC, w,ii be the next liie scle aut initiative of benefic:iaes reiving Low
Inco Pr suprt. To coplemt neAP, USAC also develop in c:oiunon
with th Commission's Offce of Manging Director a new I'aymei Quality Assure
(I'A) prgr. I'A is de to ~iew th aey ofreent USi: disburts.
Ths reviL'W idees imprope paymets an is complL'l mor exitiously th th
pror FCC 010 USF prom auts. In adition, USAC relarly c:uc in-dpt datavalidaon (IDVs) of ETCs reiving Low Income Prgr suport in whic:h staff
obtans an reiews a caer's unyin doumtation to vaidate sup c:lams
submitt on th fCC form 497.
Siii 200, all audit finding and follow-up actions (such as monetry recover.
adonishent. refe to the Commission, ur appl) ar rerd in USAC's intl
auit tring system. USAC prvide the Comission with report on a relar bas so
th th Comission is awa of aut findings an the action USAC took in reponse to
th findings. USAC also c:fully re findings identified in audits and the IDVs to
deerine common issues relate to beficiary c:omplianee with the Commission's rules.
USAC uses this informtion 10 ta its education an outreh effort. For example,
USAC reularly addre'l l.ow Income Prgr c:ommon audit findings in its monthly
High Cost and Low Income New..leller. its qiir1y High Cost and Low Inc:ome regional
trning seions in ..,iebinars and on USAC"s website. In this manner. USAC attempts
to mae ETCs awar of the common errs and complian iSSOL'S that ar identified
throug audits and IDVs and prvides best prtiees and other tips to assist ETC, in
avoiding thes audit finding. Once the first yea of ReAP audits are completed. USAC
will conduc an ast of the auit findings simila to the asSS\1"It perfored on
the FCC OIG USF audit pro ronds and wil us th da to further target its
educon an outh effort adng befieia copliance.
USAC appmiates th opportity to submit its respns to GAO's draft repo on the
Low Iiime Prgr.
Sincly...,/ .7/' /,? '
/l~ - 1-1- JL
Ka Maeher
Vic Prnt High Co an Low Inc Divion
Page 66 GAO-H-H FCC'. Low-Ineome Pr
Appendi VII: GAO Contact and Sta
Acknowledgments
GAO Contact Lorelei St. James, (214)77-5719 or stjamesl(gga.gov
Staf
Acknowledgments
In addition to the conta naed above, Sal Moino and Robert Owens
(Ast Dirs), Joa Cha, Derrck Coll, Benjam Gant,
Nat Guer Stu Ka, Scott McNulty, Sa AI Moessbauer,
Josh Orond, Am Rosewame, Midi Weisnbloom, and Jessica Wintfeld
mae key contrbutions to th report
Page 67 GAo-n.n FCC's Low-Inme Prgr
Related GAO Products
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(5432M)Pag 68 GAo-ii-ii FCC's Low-Income Pr
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