20110523Post-hearing Brief.pdf

D. NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
Idaho State Bar No. 6864
RECEIVED
20U MAY 23 PH~: 52
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF TRACFONE WIRELESS, INC. FOR
DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARRER
)
) CASE NO. TFW-T-09-01
)
) POST-HEARING BRIEF
) OF COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attorney of record, D. Neil Price, Deputy Attorney General, and, pursuant to the Commission's
directive, does hereby submit Staffs Post-Hearing Brief regarding the Application of TracFone
Wireless, Inc. ("TracFone" or "Company") for Designation as an Eligible Telecommunications
Carier ("ETC") in Idaho.
i. PROCEDURAL HISTORY
On March 31, 2011, the Commission convened a technical hearing regarding
TracFone's Amended Application for designation as an ETC.
On April 21, 2011, the Commission issued Order No. 32231 outlining a post-hearing
briefing schedule and expressly limiting the scope of the paries' legal briefs to whether
TracFone is legally obligated to remit certain fees pursuant Idaho Emergency Communications
Act (IECA) or the Idaho Telecommunications Service Assistance Program (ITSAP).
POST-HEARIG BRIEF
OF COMMISSION STAFF 1
II. STATEMENT OF JURISDICTION
"The (Commission) is hereby vested with power and jurisdiction to supervise and
regulate every public utilty in the state." Idaho Code § 61-501. The Commission "has full
jurisdiction and authority to designate carriers as ETCs pursuant to the federal
Telecommunications Act of 1996. . . ." Order No. 29841 at 2.
In order to be designated an ETC, the telecommunications provider must: (1) be a
"common carier" as defined by 47 U.S.C. § 153(10); (2) offer throughout its proposed service
areas the universal services set forth in 47 C.F.R. § 54. 101(a) either by using its own facilities or
a combination of its own facilties and the resale of another carier s services; and (3) must
advertise the availability of its universal service offering and the charges therefore using media
of general distribution. 47 U.S.C. § 214(e)(1); Id. at 3. Additionally, TracFone hasthe burden of
demonstrating that the public interest would be served by granting its ETC Application. Id. at 8.
III. LEGAL ARGUMENT
1. Granting TracFone's Application for Designation as an ETC in Idaho is not in the
'public interest'
The Commission's decision regarding TracFone's Application for Designation as an
ETC in Idaho hinges upon whether granting the Application would be "consistent with the public
interest, convenience, and necessity. . .." Id. at 3. TracFone's Amended Application and
testimony at the technical hearing demonstrate that, unless it is compelled to do so by the
Commission, the Company has absolutely no intention of contributing to the ITSAP and the
E911 Service Fund. In state after state where the Company has fied applications for designation
as an ETC, TracFone has chosen a combative approach and fought against the payment of such
fees and assessments. Indeed, TracFone's legal counsel has candidly confirmed that it has
"contested the applicability of certain 911 tax laws in a number of jurisdictions. . .." Tr. at p.
110, 11. 3-6.
a. TracFone should be ordered to pay applicable ITSAP, TRS and E911 fees prior to
being designated an ETC in Idaho
The payment of applicable ITSAP, Telecommunications Relay Service (TRS) and
E911 fees, including past due amounts, should be a necessary pre-condition to granting
TracFone's Amended Application for designation as an ETC in Idaho. The Commission should
not grant ETC status to TracFone with the promise that it may pay applicable fees in the future.
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If TracFone's telecommunications services are truly in the public interest then the Company
should be required to make a good faith demonstration of its wilingness to provide critical
funding support for programs that wil ensure that its services wil reach all Idahoans in an
effective manner. The public interest inquiry is particularly relevant given TracFone's admission
that the nature and "the way the system is set up," duplicate enrollments of its subsidized
telecommunications services are inevitable and unavoidable. Tr. at p. 117, 11. 10-16.
i. The ITSAP Fund
TracFone does not dispute the Commission's authority to order the Company to pay
into the ITSAP Fund. TracFone concedes that the ITSAP fee falls under the Commission's
jurisdiction. See Tr. at p. 76, 1. 21; see also Idaho Code § 56-904.
The ITSAP was created in order to "maximize federal 'lifeline' and 'link-up'
contributions to Idaho's low-income consumers." Idaho Code § 56-901(1). The ITSAP is
dependent upon the support of telecommunications carriers) operating in Idaho, particularly
those cariers who, like TracFone, directly market their service offerings to low-income
consumers. Recipients of ITSAP funding must "meet narowly targeted eligibility criteria based
solely on income or factors directly related to income established by the department of health
and welfare." Idaho Code § 56-901(3).
Staff reiterates its strong belief that close scrutiny of TracFone's Amended
Application was particularly important because there wil be an enormous amount of overlap
between ITSAP funding recipients and TracFone's customer base. Without TracFone's
cooperation the program would effectively be denied the critical funding support it needs in
order to maintain its continued viability. Thus, if TracFone is unwiling to voluntarily contribute
to the ITSAP Fund then the Company's Amended Application should be denied.
ii. The TRS Fund
TracFone has also failed to contribute to the TRS Fund. Similar to ITSAP, the
Commission is vested with the authority to "promulgate such rules, policies and procedures as
may be necessary to govern administration of the program . . . including, but not limited to, ...
matters deemed necessary for the implementation ofTRS in Idaho." Idaho Code § 61-1306(7).
) A "telecommunications carrier" is defined by statute as any "telephone corporation providing . . . personal
communications services and mobile radio services for compensation." Idaho Code § 56-901(2).
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OF COMMISSION STAFF 3
"The commission shall contract with a qualified person to administer the program. . .." Idaho
Code § 61-1303(1)(a).
The TRS Fund offers essential services to a segment of Idaho's population, hearing-
impaired or speech impaired persons, which is disproportionately economically disadvantaged
and included within TracFone's targeted Idaho market.
. . . Telephone corporations providing interstate or intrastate telephone
services provide telecommunications relay services (TRS) for individuals who
are hearing-impaired or speech-impaired that wil allow them to engage in
telephone communication in a manner functionally equivalent to that of
individuals without hearing or speech impairments.
Idaho Code § 61-1301.
Obviously, Idaho is not the only state with a TRS Fund where TracFone has fied an
application seeking ETC status. Earlier in 2011, the Arizona Corporation Commission was
confronted with, inter alia, the issue of whether TracFone is obligated to pay into a similar fund
in the State of Arizona. In the Matter of the Application TracFone Wireless, Inc. for Designation
as an Eligible Telecommunications Carrier, 2011 WL 880791, Ariz. C.C. 2011, Docket No. T-
20664A-09-0148 at No. 64. TracFone argued that "such fees are not applicable to prepaid
wireless services such as those proposed by TracFone. . . ." Id. at _' In response, the Arizona
Corporation Commission ordered the following:
TracFone Wireless, Inc., shall, within 30 days of the effective date of this
Decision as a compliance item in this docket, fie an affdavit stating that it
has submitted letters (as well as attach to its filing such letters) to the Arizona
Department of Administration; the Arizona Commission on the Deaf and Hard
of Hearing (Telecommunications Relay Service); and the Arizona Corporation
Commission, seeking a determination as to whether the fees, over which the
agencies have jurisdiction, apply to TracFone Wireless, Inc.'s services as an
Eligible Telecommunications Carrier in Arizona.
Id. at _ (emphasis added). TracFone was then ordered to fie with the Commission any
response(s) received by the Company from the aforementioned agencies. Id.
Consistent with the Company's approach regarding all other state-based
telecommunications provider fees/assessments, Staff is unaware of any efforts by TracFone to
contact the TRS Program Administrator and ascertain whether the TRS fee is applicable.
POST-HEARING BRIEF
OF COMMISSION STAFF 4
ii. The E911 Fund
In its Amended Application, TracFone boasts that it wil provide access to emergency
services and that its customers wil receive an E911-compliant handset free of charge. See First
Amended Application at 24. Consistent with this assertion, Staff believes that it is not in the
public interest of Idaho customers to allow TracFone to be designated as an ETC without
requiring the Company to collect and remit applicable E911 fees, including any past due
amounts.
Unlike TracFone's concession that the Commission possesses the authority to
administer the ITSAP Fund, the Company asserts that "the 911 fee is subject to enforcement by
the Idaho Emergency Communications Commission (IECC), which is part of the Department of
Administration." Tr. at p. 76, 11. 22-23. TracFone witness Jose Fuentes testified that "with
regards to the 911 fee, it is the 911's Commission's jurisdiction to make that determination." Tr.
atp. 179,11. 16-18.
Fortunately, the Commission received correspondence from the IECC, the state
agency that TracF one concedes has jurisdiction over the payment of applicable E911 fees. In a
letter fied as a public comment and addressed to the IPUC Commissioners, IECC Chairman
Garett Nancolas asked the Commission to "deny the Application before them" and informed the
Commission that it is the IECC's official position that TracFone's failure to remit payment of
E911 fees constitutes a "violation of the Idaho Emergency Communications Act, Idaho Code
Section 31-4801..." Tr. atp. 104,11. 19-21.
The IECC letter is a clear and unequivocal declaration from an agency specifically
enacted by the Idaho State Legislature and vested with the authority to levy "an emergency
communications fee on the use of telephone lines, wireless, VoIP or other communications
services that connect an individual dialing 911 to an established public safety answering point."
Idaho Code § 31-4801(2)(a) (emphasis added). Nevertheless, TracFone continues to argue
against itself and state that it is not subject to such fees.
At the technical hearing, TracFone confessed that these fee issues "have come up
around the country." Tr. at p. 184, 11. 3-4. This candid admission suggests that it is TracFone
policy to contest and avoid payment of these fees if it can. Accordingly, the IPUC is not the only
Commission to hear TracFone's arguments. TracFone has contested the applicability of these
types of fees in the following states: Maine, Ohio, Arizona, Washington, Kentucky, California,
POST-HEARING BRIEF
OF COMMISSION STAFF 5
Colorado, Iowa and Indiana. Moreover, the Company has withdrawn its Application in the states
of California, Colorado and Oklahoma. Tr. at p. 195, 11. 3-4. In other states such as Florida,
Oregon and Minnesota, TracFone has "supported legislation to require retailers to collect and
remit the 911 fees." Tr. at p. 320,11. 3-5.
The Kentucky Public Service Commission "held that TracFone should be subject to
the conditions imposed by the Federal Communications Commission ("FCC") in granting
forbearance from facilties-based requirements of 47 C.F.R. § 214( e)(1)." In the Matter of
Petiion of TracFone Wireless, Inc. for Designation as an Eligible Communications Carrier in
the Commonwealth of Kentucky, 2010 WL 4894488, Ky. P.S.c. November 24, 2010, Case No.
2009-00100 (Slip Copy). In addition to "providing Lifeline customers with basic 911 and E911
access regardless of activation status and availability of prepaid minutes; . . . the Commission
also imposed four other conditions upon TracFone" including the obligation "to certify to the
Commission that it has complied with the obligations imposed by the U.S. District Court for the
Western District of Kentucky." Id. At the time of the issuance of Kentucky P.S.C. Order,
TracFone was in the midst of litigation before the federal District Court disputing its obligation
to pay certain retroactive fee amounts "for the period between 2002 and 2006." Id.
In another analogous proceeding, the Indiana Utilty Regulatory Commission (lURC)
granted a rehearing of its Order pertaining to TracFone's Petition for Designation as an ETC. In
the Matter of the Petition of TracFone Wireless, Inc. for Designation as an Eligible
Communications Carrier in the state of Indiana, 2010 WL 4499409, Ind. U.R.C. November 4,
2010, Cause No. 43732 (Slip Copy). The IURC agreed with the Office of Utility Consumer
Counselor that "TracFone's obligation to pay such fees is not left to TracFone's discretion." Id.
The IURC reiterated that "TracFone shall pay the fees listed in Paragraphs 4a - 4j (,
including E911, InTrac and USF,) in the CTA Order." Id. The IURC sternly wared TracFone
that if it failed to pay the applicable fees "(or any other fees the Commission determines to be
appropriate) under Indiana or Federal law from the date of the CT A Order (or from the date
deemed appropriate by the IUSF's third-pary administrator for IUSF fees), the Commission may
initiate a proceeding to inquire into such failure." Id.
Based on the foregoing, Staff requests that the Commission deny TracFone's
Application unless the Company can certify to the Commission that it has paid the appropriate
amounts owed by the Company to the ITSAP, TRS and E911 Funds.
POST-HEARING BRIEF
OF COMMISSION STAFF 6
CONCLUSION
"TracFone has been operating in Idaho for more than 12 years." Tr. at 105, 11. 7-9.
During that time, the Company has wilfully declined to contribute any monetary assistance to
the ITSAP, TRS and E911 Funds. Tr. at 105, 11. 10-14. TracFone should not be heard to
complain that its wireless service offerings are not amenable to the assessment of such fees. As
the Washington Supreme Court has determined, and TracFone witness Fuentes conceded at the
technical hearing, the Company has the abilty to track the usage rate of its customers and
"calculate the amount of tax due without any problem with uniformity." Tr. at p. 109, 11.1-7.
Thus, TracFone's refusal to contribute to these funds in numerous states across the
country canot be attributed to an inability to accurately assess its fiscal responsibilties to these
funds. Rather, it is evident from the testimony and supporting documentation presented in this
case that contesting the payment of these fees is an orchestrated and Company-wide business
decision. Therefore, Staff requests that the Commission deny TracF one's Amended Application
for designation as an ETC in Idaho.
Respectfully submitted this 23 rd day of May 2011.
Ð, IJ\V~~
D. Neil Price
Deputy Attorney General
N:TFW-T-09-01_np3_Post-Hearing Brief
POST-HEARING BRIEF
OF COMMISSION STAFF 7
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 23rd DAY OF MAY 2011, SERVED
THE FOREGOING POST -HEARING BRIEF OF COMMISSION STAFF, IN CASE
NO. TFW-T-09-01, BY E-MAILING AND MAILING A COPY THEREOF, POSTAGE
PREPAID, TO THE FOLLOWING:
MITCHELL F. BRECHER
DEBRA MCGUIRE MERCER
GREENBERG TRAURIG, LLP
2101 L STREET NW SUITE 1000
WASHINGTON DC 20037
E-mail: brecherm(fgtlaw.com
mercerdm(fgtlaw.com
RICHARD B. SALZMAN
TRACFONE WIRELESS INC
9700 NW 11 TH AVENUE
MIAMI, FL 33178
E-mail: rsalzmanritracfone.com
MOLLY O'LEARY
RICHARDSON & O'LEARY
PO BOX 7218
BOISE ID 83707
E-mail: molly(frichardsonandolear.com
CYNTHIA A MELILLO
GIVENS PURSLEY LLP
PO BOX 2720
BOISE ID 83701
E-mail: cam(igivenspursley.com
DEAN J MILLER
McDEVITT & MILLER
PO BOX 2564
BOISE ID 83701-2564
E-mail: joe(fmcdevitt-miler.com
/
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SECRETARY
CERTIFICATE OF SERVICE