20151020Application.pdf

Lance J.M. Steinhart, P.C.
Attomeys At Law
1 725 Windward Concourse
Suite 150
Alpharetta, Georgia 30005
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Telephone: [phone]
Facsimile: (7 7 0) 232-9208
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Also Admitted in New York
Email : info@telecomcounsel. com
VIA OVERNIGHT DELIVERY
Jean Jewell, Commission Secretary
Idaho Public Utilities Commission
472West Washington
Boise,Idaho 83702
October 19,2015
i-wireless, LLC Application for Limited Designation as an Eligible Telecommunications
Carrier
Dear Ms. Jewell:
Enclosed please find for filing an original and seven (7) copies of i-wireless, LLC's ("i-wireless")
Application for Limited Designation as an Eligible Telecommunications Carrier in the State of Idaho.
i-wireless has also enclosed one (l) copy of Exhibit 5 (CONTIDENTIAL NAL Response) on a CD-
ROM in a separate sealed envelope marked "CONFIDENTIAL." i-wireless respectfully requests the
appropriate confidential treatment of the enclosed NAL Response in accordance with Rule 67 of the
Commission's Rules of Procedure. The NAL Response is protected by law from public inspection,
examination or copying. The NAL Response contains proprietary and competitively sensitive information
that is not customarily disclosed to the public or within the industry and constitutes trade secrets. The NAL
Response reveals details about i-wireless'business practices, sensitive customer information, and financials,
the disclosure of which would cause harm to i-wireless and put the Company at a competitive disadvantage.
i-wireless takes reasonable efforts to maintain the confidentiality of the NAL Response in all jurisdictions. i-
wireless expects that the NAL Response will be restricted to counsel, agents, and employees who are
specifically assigned to this Case by the Commission.
I have also enclosed an extra copy of this letter to be date stamped and returned to me in the
If you have any questions or if I may provide you withenclosed, self-addressed, postage prepaid envelope.
additional information, please do not hesitate to you.
Respectfull
. Steinhart
Attomey
Re:
Enclosures
Attorneys for i-wireless, LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of
I-WTRELESS, LLC FOR LTMITED
DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARRIER
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APPLTCATION OF I-WIRELESS, LLC FOR LTMTTED DESIGNAqONSS AN
ELIGIBLE TELECOMMUNICATIONS CARRIER 4
Lance J.M. Steinhart
Managing Attorney
Lance J.M. Steinhart, P.C.
Attomeys at Law
1725 Windward Concourse, Suite 150
Alpharetta, Georgia 30005
[phone] (Phone)
[phone] (Fax)
E-Mail: [e-mail]
Attorneys for i-wireless, LLC
October 19,2015
III.
IV.
TABLE OF CONTENTSI. INTRODUCTION .....................1
il. BACKGROUND .......................2
A. Company Overview.. .......................2
B. Proposed Lifeline Offering.... ..........4
C. Plan Enrollment .............6
D. Prevention of Waste, Fraud and Abuse .............7
E. Notice of Apparent Liability.... ........9
1. Background................ ..........9
2. Status ...............10
3. State ETC Approvals .........12
F. Biennial Audit........ ......14
THE COMMISSION HAS JURISDICTION TO DESIGNATE WIRELESSETCS .....................14
A. The ETC Designation Request Is Consistent with Recent CommissionPrecedent ..................... 16
I-WIRELESS SATISFIES THE REQUIREMENTS FOR DESIGNATION
AS AN ETC.......... ...................16
A. i-wireless Will Provide Service Consistent With the FCC's Grant of
Forbearance from Section 214's Facilities Requirements............ .......17
i-wireless Is a Common Carrier .....18
i-wireless Will Provide All Required Supported Services.............. .....18
l. Voice Grade Access to the Public Switched TelephoneNetwork ...........18
2. Minutes of Use for Local Service...... ....................19
3. Access to Emergency Services ............19
4. Toll Limitation for Qualified Low-Income Customers.............................19
5. Other Services.... ................20
i-wireless Will Advertise the Availability of Supported Services .......20
i-wireless Requests Designation Throughout its Service Area in Idaho................21
Service Commitment Throughout the Proposed Designated Service
Area ......... ....................22
Five-Year Network Improvement Plan ...........22
Ability to Remain Functional in Emergency Situations................ ......22
Commitment to Consumer Protection and Service Quality ................23
B.
C.
D.
E.
F.
G.
H.
I.
J. Local Usage Requirement.............. .................23
K. Equal Access Requirement.............. ................24
L. Financial and Technical Capability............. ......................24
M. i-wireless Will Comply with Certification and VerificationRequirements............ .....................25
N. i-wireless Will Comply With All Regulations Imposed By TheCommission............... ....................25
V. DESIGNATION OF I-WTRELESS AS AN ETC WOULD PROMOTE THE
PUBLIC INTEREST ...,...,.,..,..26
A. Advantages of i-wireless' Service Offering.... ....................26
B. The Benefits of Competitive Choice ...............28
C. Impact on the Universal Service Fund ......... .....................29
VI. ANTI-DRUG ABUSE CERTIFICATION..... .............30
vII. CONCLUSION.......... .............30
TABLE OF EXHIBITS
Exhibit
Certification of John Willis, COO of i-wireless, LLC ......... ........1
Proposed Lifeline Offering.... ..................2
Lifeline Certification Form...... ................3
CONFIDENTIAL NAL Response.......... ..................5
Ex Parte Letters .....................6
Post-NAL State ETC Approval Orders .....................7
WA Order ............8
Biennial Audit Results...... .......................9
i-wireless Forbearance Order ..................10
i-wireless' FCC-Approved Compliance Plan .............11
Sample Advertisement............. ................12
201I Lifeline Participation Rates by State ................13
Wire Centers.............. ............ 14
Key Management 8ios......... ...................15
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of
I-WIRELESS, LLC FOR LIMITED
DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARRIER
CASE NO.
APPLICATION OF I.WIRELESS, LLC FOR LIMITED DESIGNATION AS AN
ELIGIBLE TELECOMMUNICATIONS CARRIER
INTRODUCTION
i-wireless, LLC ("i-wireless" or the 'oCompany"), by its undersigned counsel, and
pursuant to Section 2la@)Q) of the Communications Act of 1934, as amended (the "Act")I,
Sections 54.101 through 54.207 of the Rules of the Federal Communications Commission
("FCC"),2 and the Idaho Public Utilities Commission's ("Commission") rules and regulations3,
hereby submits this Application for Designation as an Eligible Telecommunications Carrier
("ETC") in the State of Idaho. i-wireless seeks ETC designation solely to provide Lifeline service
to qualifying Idaho consumers; it will not seek access to funds from the federal Universal
Service Fund ("USF") for the purpose of participating in the Link-Up program or providing
service to high cost areas.a As demonstrated herein, and as certified in Exhibit 1 to this
Application, i-wireless meets all the statutory and regulatory requirements for designation as an
' +7 u.s.c. g 2la(eX2)
' 47 c.F.R. gg 54.101-54.207.
3 See In the Matter of the Application of lllilC Holding Co., Inc. d/b/a Cellular-one Seeking
Eligible Telecommunications Carrier that may Receive Federal Universal Service Support,
(August 4,2005) ("Commission Order No. 29841").
' Given that i-wireless only seeks support from the low-income program and does not seek any
ETC certification requirements for the high-cost program are not applicable to the Company.
Designation as an
Order No. 29841
high-cost support,
ETC in the State of Idaho, including the new requirements outlined in the FCC's USF/ICC
Transformation Orders and Lifetine and Link Up Reform Order.6 Rapid grant of i-wireless'
request, moreover, would advance the public interest because it would enable the Company to
commence much needed Lifeline service to low-income Idaho residents as soon as possible.
Accordingly, the Company respectfully requests that the Commission expeditiously approve this
Application for ETC designation.
All correspondence, communications, pleadings, notices, orders and decisions relating to
this Application should be addressed to:
Lance J.M. Steinhan
Managing Attorney
Lance J.M. Steinhart, P.C.
Attomeys for i-wireless, LLC
1725 Windward Concourse, Suite 150
Alpharetta, Georgia 30005
[phone] (Phone)
[phone] (Fax)
E-Mail: [e-mail]
BACKGROUND
A. Company Overview
i-wireless is a North Carolina Limited Liability Company.T Its principal office is located
Levee Way, Suite 3104, Newport, Kentucky 41071. i-wireless is a provider of commercial
mobile radio service ("CMRS") throughout the United States, and provides prepaid wireless
s In the Matter of Connect America Fund, A National Broadband Plan for Our Future, Establishing Just and
Reasonable Rates for Local Exchonge Cqrriers, High-Cost Universal Service Support, Developing a Unified
Intercarrier Compensation Regime, Federal-State Joint Board on Universal Service, Lifeline and Link-Up,
Universal Service Reform - Mobility Fund, WC Docket No. 10-90, GN Docket No. 09-51, WC Docket No. 07-135,
WC Docket No. 05-337, CC Docket No. 96-45, WC Docket No. 03-109, WT Docket No. 10-208, Report and Order
and Further Notice of Proposed Rulemaking, FCC I l-16l (rel. Nov. 18, 2011) (*USF/ICC Transformation Order").
6 In the Matter of Lifeline and Link ttp Reform and Modernization, Lifeline qnd Link Up, Federal-Stqte Joint Board
on Universal Service, Advancing Broqdband Availobility Through Digital Literacy Training, WC Docket No. I l-42,
WC Docket No. 03-109, CC Docket No. 96-45, WC Docket No. 12-23, Report and Order and Further Notice of
Proposed Rulemaking, FCC l2-l I (rel. Feb. 6,2012) ("Lifeline and Link Up Reform Order").
' i-wireless was organized in the State of North Carolina on September 7,2006.
II.
atl
telecommunications services to consumers by using the Sprint Spectrum, L.P. ("Sprint") network
on a wholesale basis to offer nationwide service. i-wireless obtains from Sprint the network
infrastructure and wireless transmission facilities to allow the Company to operate as a Mobile
Virtual Network Operator ("M\rNiO"), similar to TracFone Wireless, [nc. (ooTracFone") and Virgin
Mobile USA, L.P. ("Virgin Mobile"), who have been granted ETC status by the Commission.8 i-
wireless has been designated as an ETC in Arkansas, Aizona, Califomia, Colorado, Georgia,
Iowa,Illinois,Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi,
Missouri, Nebraska, Nevada, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas,
Utah, Washington, West Virginia and Wisconsin, and by the FCC in Alabama, Connecticut,
Delaware, District of Columbia, Florida, New Hampshire, New York, North Carolina,
Tennessee, and Virginia.e i-wireless currently has applications for ETC designation pending with
Hawaii, Massachusetts, New Jersey, Oklahoma, and South Dakota; no such petitions have been
denied.
i-wireless' prepaid wireless services are affordable, easy to use, and attractive to low-
income consumers, providing them with access to emergency services and a reliable means of
communication that can be used both at home and while traveling to remain in touch with friends
and family, as well as for contacting prospective employers. i-wireless offers consumers a variety
of simple and affordable prepaid calling plans, easy-to-use handsets, and high-quality customer
service. Given its pricing and marketing strategy and the demographics of other, similar MVNOs'
8 See In the Matter of the Amended Application of TracFone Wireless, Inc. for Designation as an Eligible
Telecommunications Carrier in the State of ldaho for the Limited Purposes of Offering Ldeline Service to Qualified
Households. Case No. TFW-T-09-01. Order No. 32586 (June 29, 2012) ("TracFone ETC Order"); In the Matter of
the Petition of Virgin Mobile USA for Limited Designation os an Eligible Telecommunications Carrier. Case No.
VMU-T-l l-01. Final OrderNo. 32645 (Sept. 19,2012) ("Virgin Mobile ETC Order").
e See In the Matter of Federal-State Joint Board on (Jniversal Service, i-wireless, LLC Petition for Limited
Designation as an Eligible Telecommunicqtions Carrier in the States of Alabama, Connecticut, Delqware, Florida,
New Hampshire, North Cqrolina, New Yorh Tennessee, the Commonweqlth of Virginio, and the District of
Columbia, WC Docket No. 09-197, Order, DA 12-934 (rel. June 13,2012).
customers, i-wireless anticipates that many of its customers will be from low-income backgroturds
and will not previously have enjoyed access to wireless service because of economic constraints,
poor credit history, or sporadic employment. i-wireless does not conduct credit checks or require
customers to enter into long-term service contracts as a prerequisite to obtaining wireless service.
By providing affordable wireless plans and quality customer service to consumers who are
otherwise unable to afford them, or were previously ignored by traditional carriers, i-wireless will
expand the availability of wireless services to many more consumers, which is the principal reason
that Congress created the universal service program.
B. Proposed Lifeline Offering
i-wireless has the ability to provide all services and functionalities supported by the
universal service program, as detailed in Section 5a.101(a) of the FCC's Rules (47 C.F.R. $
5a.l0l(a)) throughout ldaho. i-wireless intends to be a leader in the prepaid marketplace by
offering consumers exceptional value and competitive amounts of voice usage at all price points.
The Company's Lifeline service offering will provide customers with the same features and
functionalities enjoyed by all other i-wireless prepaid customers, with one notable exception:
prepaid Lifeline services will not require payment of an out-of-pocket fee by subscribers, but
instead, i-wireless will receive support from the Lifeline program as compensation for providing
those services.
i-wireless will provide Lifeline service under the brand name o'Access Wireless." As
Exhibit 2 demonstrates, i-wireless' Lifeline service offering proposes to give eligible customers
the following Lifeline Plan choices:
l. 250 Anvtime Minutes Plan (non-tribal). Eligible customers enjoy a free handset and
250 anytime minutes with unlimited text messaging per month.
Unlimited Talk and Text Plan (tribal only). Eligible tribal customers enjoy a free
handset and unlimited voice minutes plus unlimited text messages per month.
Retail Discount Plan. The second option allows Lifeline eligible customers to choose
from any i-wireless monthly retail planro at a discount - up to $15 for non-tribal
customers or up to $40 for tribal custome.s.ll
Customers can change their plan on their monthly plan date, without penalty, should they
determine that another plan better meets their needs or if their needs change. i-wireless does not
impose burdensome credit checks or long-term service contracts. Furthermore, i-wireless does
not assess charges for activation or connection of service, and the 250 Minute plan includes all
applicable taxes and fees. Minutes are credited to a customer's account at the beginning of every
30-day cycle, which is initiated on their Lifeline activation date. A customer's handset does not
have to be "on" to receive minutes, as i-wireless' operations are system-based, not handset-
based. Customers may place calls to i-wireless customer service and to 911 for free, regardless
ofaccount balance or activation status.
In addition to wholly supported voice services, prepaid Lifeline customers will also
receive a free handset as well as have access to voice mail, caller I.D. and call waiting services at
no additional charge, even after their initial allotment of included minutes has been consumed.
Customers are not bound by a local calling area requirement; all i-wireless plans come with
domestic long distance at no extra charge and exceptional nationwide digital coverage on the
ro Except a Text Only Plan.
rr i-wireless currently offers up to a $15 discount for non-tribal and up to a $40 discount for tribal; however, the
Company may re-evaluate the discount applied to its retail plans based on the outcome of the FNPRM regarding a
change in the federal Lifeline support amount. See Lifeline and Link Up Reform Order Section XIII.D. The $15
discount consists of the Lifeline subsidy, currently $9.25, and a Company credit. The Company credit is not
available on select retail rate plans due the highly competitive nature of the market offer. In those instances, the
Company credit is reflected in a reduction in the overall retail price. Currently, the Company credit is not available
on the $35 Unlimited Talk & Text retail rate plan. i-wireless commits that it will continue to offer a Lifeline
discount at a minimum equal to the federal Lifeline support amount, plus any state funds, if applicable.
2.
aJ.
Nationwide Sprint PCS Network. i-wireless does not decrement minutes for balance inquiries or
calls placed to customer service. i-wireless Lifeline customers will have access to the same
exceptional customer care provided to retail customers. The Company contracts with a high
quality, U.S. domestic customer care group whose hold time is among the lowest in the prepaid
wireless industry. Additional ainime may be purchased over the phone (by calling the IVR or
through customer care interface) or online; airtime cards are currently sold in denominations of
$10, $25, $35 and $50 and include a set number of minutes with unlimited text messaging for a
period of time and a preset amount of mobile intemet access and picture mail. The chan in
Exhibit 2 provides details for each card denomination.l2 i-wireless sends low and depleted
balance alerts in the form of a free text message to the customer, and also alerts the customer
through a free text message when minutes have been added to their account. i-wireless' prepaid
offering will be an attractive altemative for consumers who need the mobility, security, and
convenience of a wireless phone, but who are concerned about usage charges or long-term
contracts.
C.Plan Enrollment
Customers interested in obtaining information on the Lifeline program will be directed to
a toll-free telephone number and to the Company's Access Wireless website
(www.accesswireless.com), which will contain information regarding the Company's Lifeline
service plans, including a detailed description of the Lifeline program and eligibility criteria.
Customers may then request that an enrollment form be mailed to them, or they can download a
form from the internet. The certification forms, a sample of which is attached as Exhibit 3, will
explain in clear, easily understandable language that:
12 i-wireless may run promotions from time to time to increase the amount of minutes, texts and,/or data included.
6
(i) Lifeline is a federal benefiU
(ii) Lifeline service is available for only one line per household;
(iii) a household is defined, for purposes of the Lifeline program, as any individual or
group of individuals who live together at the same address and share income and
expenses;
(iv) households are not permitted to receive benefits from multiple providers;
(v) that violation of the one-per-household requirement would constitute a violation of
the FCC's rules and would result in the consumer's de-enrollment from the program, and
potentially, prosecution by the United States government; and
(vi) a Lifeline subscriber may not transfer his or her service to any other individual,
including another eligible low-income consumer.
i-wireless' certification form will also require all consumers, at sign up and annually
thereafter, to provide the information and certifications, under penalty of perjury, required by 47
C.F.R. $ 54.410(d;.13 i-wireless will review the applicant's information, certifications, and proof
documentation to determine eligibility in accordance with C.F.R. $ 54.41O(bxl) and (cXl). i-
wireless will annually re-certify the continued eligibility of all of its subscribers.
D. Prevention of Waste, Fraud and Abuse
i-wireless recognizes the importance of safeguarding the USF. The Company will utilize
the Universal Service Administrative Company's ("USAC") National Lifeline Accountability
Database ("NLAD") to veriff that Lifeline applicants do not already receive Lifeline service. i-
wireless utilizes a standard electronic application tool known as the Enrollment Compliance
Platform ("ECP") across all states and enrollment methods in order to ensure the highest level of
compliance. The Company reviews each application in real time using its internal Review Team.
This team, made up of non-commissioned employees, verifies the accuracy and consistency of
the proof documentation, including proof of eligibility and proof of valid identification, for every
application received. The ECP automatically conducts internal and external (NLAD) system
validation checks prior to proceeding with enrollment. Based on the results of the
t3 See Lifeline and Link Up Reform Order page 227 -29 .
documentation and system checks, the Review Team will either approve or deny the application
and a decision is provided to the applicant in real-time.
Furthermore, the Company has implemented the following 60-day non-usage policy in an
effort to avoid waste, fraud, and abuse of the program. i-wireless will not seek reimbursement
from the USF for inactive subscribers who have not used the service for a consecutive 60-day
period.la i-wireless will notiff its subscribers at service initiation about the non-transferability of
the phone service, its usage requirements, and the de-enrollment and deactivation that will result
following non-usage in any 60-day period of time.rs An account will be considered active if
during any 60-day period the authorized subscriber does at least one of the following: makes a
monthly payment; purchases minutes from the Company to add to an existing pre-paid Lifeline
account; completes an outbound call; answers an incoming call from anyone other than the
Company, its representative, or agent; or affirmatively responds to a direct contact from the
Company confirming that he or she wants to continue.l6 i-wireless will provide the subscriber 30
days' notice, using clear, easily understood language, that the subscriber's failure to use the
Lifeline service within the 30-day notice period will result in service termination for non-usage;
such notice may be given after 30 days of non-usage. Customers that have been deactivated may
participate in the Company's Lifeline service in the future by reapplying and re-establishing
eligibility.
To funher protect the integrity of the USF, i-wireless has contracted with CGM, LLC of
Roswell, Georgia, a lifeline service bureau, to edit all subsidy request data. CGM will process
and validate the Company's subsidy data to prevent: (1) Duplicate Same-Month Lifeline
ta See Lifeline and Link Up Reform Order atl257.
15^Jee ut-
t6 See Lifeline and Link Up Reform Order atl26l.
Subsidies (Double Dip): any name/address that is already receiving a lifeline subsidy from the
Company will be automatically prevented from receiving a second lifeline subsidy in that same
month; and (2) Inactive lines receiving subsidy: CGM's systems compare all subsidy requests to
underlying network status to ensure that subsidies are requested only for active lines. Through
the processes described above, i-wireless ensures that it does not over-request from support
funds.
E. Notice of Apparent Liability
1. Background
On November 1, 2013, the FCC issued a Notice of Apparent Liability for Forfeiture
("NAL") to i-wireless. For convenience, a copy of the NAL is attached hereto as Exhibit 4. i-
wireless takes very seriously the issue of alleged intra-company duplicates raised in the NAL. i-
wireless believes that the NAL is both misguided and unfounded, and on January 10,2014, i-
wireless submitted its response to the NAL seeking cancellation of the proposed forfeiture
("NAL Response"). i-wireless' NAL Response contains a comprehensive factual analysis and
legal defense against the allegations of the FCC. A copy of the confidential NAL Response is
attached hereto as Exhibit 5.
For the following reasons, the Company cannot estimate when, if ever, the FCC might
consider converting the NAL to a forfeiture order, nor what the company's response might be to
the conversion. First, the NAL contains allegations rather than factual and legal determinations.
Though it is more typical for the FCC to conduct a factual investigation prior to issuing a public
NAL, it did not do so here with respect to the alleged duplicate accounts. i-wireless had no
advanced notice of the FCC action. The case before the FCC involves a complex set of facts
related to each subscriber enrolled in the Lifeline program. i-wireless believes that the vast
majority of the alleged duplicates would have passed the duplicate screen presently incorporated
into the FCC's duplicate database - the NLAD. The FCC will need to do its fact finding in the
context of the NAL proceeding and i-wireless will cooperate fully to allow for a proper
determination as to whether any of the customer-attestation-supported enrollments involve a
customer unlawfully receiving a duplicate benefit. Similarly, the FCC will need to consider i-
wireless' legal defenses to allegations of various rule violations prior to making any formal
finding.
Second, the proposed forfeiture structure is only a proposal. Its methodology is
inconsistent with previous FCC rulings nor does it follow any established guideline.
Third, the FCC has five years to act on an NAL (see sectio n 8.2 below). Possible
outcomes include no further public action by the agency, cancellation of the NAL, and a
settlement and consent decree. Absent those outcomes, the FCC could take other action such as
folding the issues raised in the NALs into a rulemaking proceeding or converting the NAL to a
forfeiture order. Such an order would be subject to appeal in a United States Court of Appeals.
It is impossible to predict the outcome at this point. The process of resolving an NAL typically
involves extensive engagement between the recipient and the FCC. i-wireless will cooperate
fully and we will seek an outcome that is fair for our customers, our employees, our owners, and
the Lifeline program itself.
.,Status
i-wireless' FCC counsel has met with members of each FCC Commissioner's offices to
discuss the Company's NAL Response. On January 23,2014, John Heitmann and Josh Guyan of
Kelley, Drye & Warren LLP (FCC counsel for i-wireless, LLC) had a call with Rebekah
Goodheart from Commissioner Clybum's office, as well as met with Nick Degani from
l0
Commissioner Pai's office, Christi Barnhart from Commissioner Rosenworcel's office, and Amy
Bender of Commissioner O'Reilly's office. Messrs. Heitmann and Guyan met with Amy Bender
again on February 4,2014 to further discuss the NAL, and met with Daniel Alvarez of Chairman
Wheeler's office on February 6. On November 13,2014, i-wireless and its FCC counsel, along
with other members of the Lifeline Connects Coalition (companies that have joined together to
protect and preserve the integrity of the Lifeline program, the "Coalition"), met with Rebekah
Goodheart, Wireline Legal Advisor to Commissioner Clyburn, and with Ryan Palmer, Jonathan
Lechter, and Melanie Tiano of the Wireline Competition Bureau. The Coalition discussed the
pending NALs, among many other Lifeline-related issues.
On April 30, 2015, i-wireless and its FCC counsel, along with other members of the
Lifeline Connects Coalition, met with Trent Harkrader, Jonathan Lechter, Garnet Hanly, Melanie
Tiano and Regina Brown from the Wireline Competition Bureau and Eric Feigenbaum from the
Office of Media Relations to discuss many aspects of the Lifeline program, including the fact
that "instead of cancelling the various duplicate Notices of Apparent Liability (lt{Al,s) based on
responses showing near perfect records at complying with a standard that should be transparent,
the Commission delays (and denies) justice while continuing to ignore its own deadlines on
related appeals of USAC audits" (see May 4, 2015 Ex Parte Letter, attached hereto as Exhibit 6).
Courtesy copies of the respective Ex Parte Letters filed on January 27,2014, February 6,2014,
February lO,2Ol4, and November 17,2014, and May 4,2015 are attached as Exhibit 6 for
reference.
Thus far, the FCC has taken no further action on i-wireless' NAL and none has been
indicated, despite numerous attempts by i-wireless to reach a resolution. By law, the NAL will
expire five (5) years after issuance. Section 50a(c) of the Communications Act, 47 U.S.C. $
1l
504(c), provides that the FCC may not use an NAL against a licensee if that licensee has not paid
the proposed fine or no court has ordered it to pay an imposed forfeiture. In the absence of
voluntary payment, per Section 50a(a) of the Communications Act,47 U.S.C. $ 504(a), the FCC
may refer the case to the Department of Justice ("DOJ"), and pursuant to such referral, a U.S.
attorney may then institute a civil suit in the name of the United States to recover the forfeiture
amount subject to a trail de novo. Pursuant to 28 U.S.C . S 2462, the DOJ has five years from the
date the claim "accrued" (i.e., the date of the alleged violation) to commence a collection action
against the entity. Accordingly, if no payment is made voluntarily and no recovery suit is
commenced within 5 years of the date of the alleged infraction, any related NAL or forfeiture
order becomes inactionable and should be cancelled.
3. State ETC Approvals
Absent further action from the FCC regarding the NAL, other state commissions have
been moving forward with i-wireless' ETC designation requests.rT The Oregon Public Utility
Commission designated i-wireless as an ETC on September 29, 2015, taking into account the
inaction of the FCC and the positive findings of other state utility commissions, and noting that
sufficient safeguards have been put in place to warrant a finding that any public interest concerns
resulting from the NAL have been adequately addressed.ls Likewise, both the Pennsylvania
Public Utility Commission and the Nebraska Public Service Commission recently found it in the
public interest to designate i-wireless as an ETC (on September 3, 2015 and June 16, 2015,
respectively).le On October 7,2014, the Georgia Public Service Commission granted i-wireless'
t'A CD containing copies of each state ETC approval referenced in this section is attached hereto as Exhibit 7.
t8 See In the Matter of i-wireless, LLC Application for Designation as an Eligible Telecommunications Carrier in
Oregon for the Purpose of Offering Lifeline Service to Qualified Households, Docket No. UM 1509, Order No. l5-
300 (entered Sep. 29, 2015) at pp.9-10, section VI.D. http://apps.puc.state.or.us/ordersi20lSords/15-300.pdf.
t' Link to Pennsylvania Order: http://www.puc.state.pa.us//pcdocs/13805 l0.docx; Link to Nebraska Order:
http ://psc.nebraska. gov/orders/telecon/C-4622.NUSF-90.7.pdf.
t2
request to expand its ETC service area. On May 29, 2014 the Washington Utilities and
Transportation Commission ("WA UTC") issued an order renewing i-wireless' ETC designation
("WA Order," attached as Exhibit 8). WA UTC Staff suggested "because there is no reasonable
estimate as to when the FCC will resolve the NAL, the commission should not wait on the result
of the NAL to decide on i-wireless' ETC renewal. This issue does not change staff s evaluation
of i-wireless' ETC Renewal petition" (WA Order fl 7). The WA UTC concurred with Staff,
ultimately determining that i-wireless' designation as an ETC is in the public interest and
granting i-wireless' request for continued ETC designation.
The Califomia Public Utilities Commission ("CA PUC") designated i-wireless as an ETC
on September 11,2014 (Resolution T-1744r.20 The CA PUC Staff ("CD Staff') engaged in
rigorous due diligence as part of the ETC designation process, performing research using
LexisA.{exis legal resource searches, Google Internet searches (including Better Business Bureau
feedback), reviewing industry and trade publications, querying other govemmental agencies,
contacting the FCC and USAC, and reviewing the company's history of operations. CD Staff
also considered the NAL issued to i-wireless and noted:2l
"The basis for the NAL resulted from USAC's in-depth validation review in
specified months...The FCC has not adopted a threshold for an acceptable level
of duplicates. To assess i-wireless' error rate, CD staff relied upon the Federal
Improper Payments Elimination and Recovery Act of 2010 (IPERA)22 as a
guideline for an acceptable level of error for duplicate enrollments. The IPERA
asserts that "significant" risk exists when improper program payments exceed
$10,000,000 of all payments made in a fiscal year or l.5Yo of a fiscal year's
program outlay. Absent an FCC threshold, CD staff finds that the l.5Yo provides
a reasonable guideline for an acceptable level of duplication and based on this
benchmark, CD finds that i-wireless' 0.650lo duplicate rate does not rise to the
'o Link to California Order: hup://docs.cpuc.ca.gov/PublishedDocs/Published/G00O/M 107/K222l107222695.PDF
2r Resolution T-17449, p. l7-18. Note, the reference to 0.65%o duplicate rate is incorrect. Based on each of USAC's
hndings (from the in-depth validation reviews that were the subject of the NAL), i-wireless had an effective
duplicate detection rate of 99.74Yo, and therefore a duplicate rate of 0.26Yo.
" 3l U.S.C,3 321 note, July 22,2010.
t3
level of a "significant" risk that justifies a denial of their ETC designation request.
As an additional safeguard against waste, fraud, and abuse, in April 2014, USAC
launched the National Lifeline Accountability Database (NLAD) where all
carriers must upload Lifeline subscriber information. USAC's NLAD process
prohibits companies from entering the same name twice by blocking duplicate
enrollment attempts via live Internet connections."
In summary, California's due diligence review, including consideration of the NAL, "did
not uncover any fitness issues to deny approval of i-wireless's ETC request" and California
found it consistent with the public interest to designate i-wireless as an ETC.23 i-wireless asserts
that California's analysis is equally applicable to i-wireless' request for ETC designation in
Idaho.
F. Biennial Audit
In accordance with 47 C.F.R. I 54.420, i-wireless recently underwent its third party
biennial audit to assess the Company's overall compliance with respective FCC rules (47 C.F.R.
$ 54, Subpart E) and the company's internal controls regarding these regulatory requirements.
The results of i-wireless' biennial audit are attached hereto as Exhibit 9.
III. THE COMMISSION HAS JURISDICTION TO DESIGNATE WIRELESS ETCS
Section 2la@)Q) of the Act (47 U.S.C. $ 21a(e)(2)) provides state public utility
commissions with the "primary responsibility" for the designation of ETCs. Although Section
332(c)(3)(A) of the Act prohibits states from regulating the entry of or the rates charged by any
provider of commercial mobile service or any private mobile service, this prohibition does not
allow states to deny wireless carriers ETC status.2a Therefore, the Commission has the authority
23 Resolution T-17 449, p.l8
2a See Federal-State Joint Boqrd on (Jniversal Service, First Report and Order, l2 FCC Rcd 8776, 8858-59, fl 145
(1997) ("USF Order").
l4
to designate i-wireless as an ETC. Pursuant to this authority, the Commission has designated
numerous carriers as ETCs in the State of Idaho, including many wireless carriers.25
Under the Act, a state public utility commission with jurisdictional authority over ETC
designations must designate a common carrier as an ETC if the carrier satisfies the requirements
of Section 2la(eX1). i-wireless recognizes that Section 2la(e)(l)(A) of the Act states that ETCs
shall offer services, at least in part, over their own facilities and that Section 54.201(i) of the
FCC's Rules (47 C.F.R. $ 54.201(i)) prohibits state commissions from designating as an ETC a
telecommunications carrier that offers services exclusively through the resale of another carrier's
services. However, on April 1,2009, i-wireless filed with the FCC a petition requesting that the
FCC exercise its forbearance authority under Section l0 of the Act (47 U.S.C. $ 160) with
respect to the facilities-based service requirement Lifeline-only ETC designation.26 The FCC
granted the Petition for Forbearance for the purposes of participating in the Lifeline program in
an Order dated June 25, 2010. Section 10(e) of the Act(47 U.S.C. $ 160(e)) provides: "[a] State
commission may not continue to apply or enforce any provision of this chapter that the [Federal
Communications] Commission has determined to forbear from applying under subsection (a) of
this section." As such, the Commission is required by Section l0(e) to act in accordance with
the FCC's grant of forbearance, and therefore, may not apply the facilities-based requirement to
i-wireless. Therefore, the Commission has the authority to act under Section 2la@)Q) of the Act
and to grant i-wireless' request for designation as an ETC throughout the State of Idaho.
" See e.g., TracFone ETC Order and Virgin Mobile ETC Order.
2u See i-wireless, LLC Petitionfor Forbearancefrom 47 U.S.C. $ 21a@@@), CC Docket No. 96-45, filed Apr. l,
2009,("Petitionfor Forbearance"), Order, FCC l0-ll7 (rel. June 25, 2010) ("i-wireless Forbearance Order"). A
copy of the i-wireless Forbearqnce Order is attached hereto as Exhibit 10.
15
A. The ETC Designation Request Is Consistent with Recent Commission
Precedent
i-wireless' request for ETC designation to participate in the Lifeline program is consistent
with the Commission's decisions designating TracFone and Virgin Mobile as ETCs.27 In its
decisions, the Commission determined that designation of a prepaid wireless provider as an ETC
would serve the public interest. i-wireless requests that the Commission expeditiously process its
ETC Application so that it can quickly commence providing qualifying low-income Idaho
customers with affordable USF-supported wireless services during these challenging economic
times for all state residents. Designation of i-wireless as an ETC would further competition for
wireless Lifeline services and would offer eligible consumers an additional choice of providers
for accessing telecommunications services, representing a significant step towards ensuring that
all low-income consumers share in the many benefits associated with access to wireless services.
IV. I-WIRELESS SATISFIES TIIE REQUIREMENTS FOR DESIGNATION AS AN
ETC
Section 25a@) of the Act provides that "only an eligible telecommunications carrier
designated under section 2I4(e) shall be eligible to receive specific federal universal service
support." Section 2la@)Q) of the Act authorizes state commissions, such as the Commission, to
designate ETC status for federal universal service purposes and authorizes the Commission to
designate wireless ETCs.28 Section 2la(e)(l) of the Act and Section 54.201(d) of the FCC's
rules provide that applicants for ETC designation must be common carriers that will offer all of
the services supported by universal service, either using their own facilities or a combination of
their own facilities and the resale of another carrier's services, except where the FCC has
forbome from the o'own facilities" requirement. Applicants also must commit to advertise the
21 See TracFone ETC Order; see also Virgin Mobile ETC Order
28 See USF Order, at 8858-59, fl 145.
t6
availability and rates of such services.2e As detailed below, i-wireless satisfies each of the above-
listed requirements.
A. i-wireless Will Provide Service Consistent with the FCC's Grant of
Forbearance from Section 214's Facilities Requirements
In the i-wireless Forbearance Order, The FCC conditionally granted i-wireless' Petition
for Forbearence from the facilities requirement, "given the importance of public safety and in
light of the fact that a Lifeline ETC is generally a low-income customer's only connection to the
public switched telephone network."3o The FCC further explained that 'orequiring a Lifeline
provider to own the facilities it uses to offer service does not necessarily further the statutory
goal of the low-income program."3l
The FCC specifically conditioned its grant of forbearance on i-wireless as follows:
(a) i-wireless providing its Lifeline customers with basic 911 and enhanced 911
("E911") access regardless of activation status and availability of prepaid minutes;
(b) i-wireless providing its new Lifeline customers with E9ll-compliant handsets
and replacing, at no additional charge to the bustomer, noncompliant handsets of
existing customers who obtain Lifeline-supported service; (c) i-wireless complying
with conditions (a) and (b) as of the date it provides Lifeline service; (d) i-wireless
obtaining a certification from each Public Service Answering Point ("PSAP") where
i-wireless seeks to provide Lifeline service confirming that i-wireless provides its
customers with 911 and E911 access or self-certifying that it does so if certain
conditions are met; (e) i-wireless requiring each customer to self-certify at time of
service activation and annually thereafter that he or she is the head of household and
receives Lifeline-supported service only from i-wireless; (f) i-wireless establishing
safeguards to prevent its customers from receiving multiple i-wireless Lifeline
subsidies at the same address, and (g) i-wireless dealing directly with the customer to
certify and verify the customer's Lifeline eligibility. The FCC required i-wireless to
submit a plan describing the measures it would take to implement each of these
conditions.32
2e See47 U.S.C. $ 2la(e)(l) and47 C.F.R. $ s4.2}t(d)(2),
30 i-wireless Forbearance Order \ ll.
t'u.n$.
32 See i-wireless Forbearance Orderl16.
t7
In accordance with the i-wireless Forbearance Order, i-wireless filed its Compliance Plan which
the FCC approved on October 21,2011.33 A copy of its Compliance Plan, as approved, is
attached hereto as Exhibit I f . i-wireless commits to providing Lifeline service in Idaho in
accordance with its Compliance Plan and in accordance with the Lifeline and Link Up Reform
Order.
Consistent with paragraph 383 of the Lifeline and Link Up Reform Order, i-wireless will
no longer follow the PSAP certification process outlined in the Company's forbearance order
and Compliance Plan. i-wireless will, however, continue to comply with applicable 9l llEgll
public safety obligations, including 47 C.F.R. $ 20.18(m), the requirement to provide 911-
enabled handsets, and any state-imposed requirements.34
B. i-wireless Is a Common Carrier
CMRS providers like i-wireless are treated as common carriers.35
C. i-wireless Will Provide All Required Supported Services
Through its wholesale arrangements with Sprint, i-wireless is able to provide all of the
services and functionalities required by Section 54.101(a) and Section 54.202(a) of the FCC's
Rules (47 C.F.R. $ 5a.101(a) and47 C.F.R. S 5a.202(a)), including the following:
1. Voice Grade Access to the Public Switched Telephone Network
i-wireless provides voice grade access to the public switched telephone network
33 See i-wireless LLC's Revised Compliance Plan, CC Docket No. 96-45, WC Docket No. 09-197 (filed Sept. 9,
201l) ("Compliance Plan"); iwireless, LLC Petitionfor Forbearancefrom 47 USC. $2la@(l)(A), CC Docket No.
96-45, WC Docket No. 09-197, DA I l-1763, 201I WL 5038791 (rel. Oct. 2l,20ll) ("Compliance Plan Ordef').
3a See Lifeline and Link-up Reform Order,\375.
3s Implementationofsections3(n)qndi32oftheCommunicqtionsAct,RegulatoryTreatmentofMobileServices,
GN Docket No. 93-252, Second Report and Order, 9 FCC Rcd l4l l, 1425 n 37, 1454-55 fl 102 (1994) (wireless
resellers are included in the statutory "mobile seryices" category, and providers of cellular service are common
carriers and CMRS providers); 47 U.S.C. $ 332(cXl)(A) ("mobile services" providers are common carriers); see
also PCIA Petitionfor Forbearancefor Broadband PCS, WT Docket No. 98-100, Memorandum Opinion and Order
and Notice of Proposed Rulemaking, 13 FCC Rcd 16857, 169ll fl lll (1998) ("We concluded [in the Second
Report and Orderl that CMRS also includes the following common carrier services: cellular service, ... all mobile
telephone services and resellers ofsuch services.")
l8
("PSTN") through the purchase of wholesale CMRS services from Sprint.
2. Minutes of Use for Local Service
As part of the voice grade access to the PSTN, an ETC must provide minutes of use for
local service at no additional charge to end-users. The FCC has not specified a minimum
amount of local usage that an ETC must offer.36 i-wireless offers a variety of rate plans that
provide its customers with minutes of use for local service at no additional charge.
3. Access to Emergency Services
i-wireless provides 911 and E911 access for all of its customers to the extent the local
government in its service area has implemented 91 I or E9 I I systems. i-wireless also complies
with the FCC's regulations goveming the deployment and availability of E911 compatible
handsets.
4. Toll Limitation for Qualified Low-Income Customers
ln its Lifeline and Link Up Reform Order, the FCC stated that toll limitation would no
longer be deemed a supported service.3T "ETCs are not required to offer toll limitation service to
low-income consumers if the Lifeline offering provides a set amount of minutes that do not
distinguish between toll and non-toll calls."38 Nonetheless, i-wireless' offerings inherently allow
Lifeline subscribers to control their usage, as its wireless service is offered on a prepaid, or pay-
as-you-go, basis. i-wireless' service, moreover, is not offered on a distance-sensitive basis and
local and domestic long distance minutes are treated the same. i-wireless will not seek
reimbursement for toll limitation service.
'u See e.g., In the Matter of Federal-State Joint Board on (Jniversal Service, Recommended Decision l5 FCC Rcd
7331 (2002).
37 See Lifeline and Link Up Reform Order at\367.
38 See Lifeline and Link Up Reform Order at\ 49.
t9
5.Other Services
While no longer required by 47 C.F.R. $ 5a.101(a), i-wireless provides dual tone multi-
frequency ("DTMF") signaling to expedite the transmission of call set up and call detail
information throughout the network, single party service for the duration of each telephone call
and not multi-party (or "party-line") services, access to operator services, the ability to make
interexchange, or long distance, telephone calls, and access to directory assistance services by
dialing "411" from the provided wireless handsets.
D. i-wireless Will Advertise the Availability of Supported Services
i-wireless will advertise the availability and rates for the services described above using
media of general distribution as required by 47 C.F.R. $ 54.201(d)(2) of the FCC's regulations.
i-wireless' advertising will comply with the requirements set forth in the Lifeline and Link Up
Reform Order.3e The Company will engage in advertising campaigns specifically targeted to
reach those likely to qualiS for Lifeline service, using methods such as print advertisements and
online media.ao i-wireless may also promote the availability of its Lifeline offering by
distributing brochures at various state and local social service agencies, and may partner with
nonprofit assistance organizations in order to inform customers of the availability of its Lifeline
service.
i-wireless will explain in clear, easily understood language the following disclosures in all
marketing materials related to the supported service: (1) the offering is a Lifeline-supported
service; (2) only eligible consumers may enroll in the program; (3) the program is limited to one
benefit per household, consisting of either wireline or wireless service; and (a) Lifeline is a
govemment benefit program. i-wireless' website and printed collateral will explain the
3e See Lifeline and Link Up Reform Order at Section VII.F.
a0 See attached Exhibit 12 for asample advertisement.
20
documentation necessary for enrollment, and the details of i-wireless' plans. Such collateral and
website information, as well as its application, will make clear that consumers who willfully
make false statements in order to obtain the benefit can be punished by fine or imprisonment or
can be barred from the progra-.ol For broadcast advertisements and outdoor signs, and any
other situation in which inclusion of documentation information and wamings against willful
false statements are not practicable, i-wireless will include the URL link for its website where
disclosures will be listed. Additionally, i-wireless will disclose the company name under which
it does business and the details of its Lifeline service offerings in any Lifeline-related marketing
and advertising.a2
Statistics suggest there are many eligible customers who are not yet aware of the
programs. According to the best data available to the Company, as of December 31, 2011, only
between 10-20% of consumers eligible for Lifeline Services in the State of Idaho were being
provided such services.o3 i-wireless believes that its advertising and outreach efforts will inform
consumers of the availability of Lifeline service in a manner that will result in increased
participation by qualified consumers in the Lifeline program.
E. i-wireless Requests Designation Throughout Its Service Area in ldaho
i-wireless is not a rural telephone company as defined in Section 153(37) of the Act (47
U.S.C. $ 153(37)). Accordingly, the Company is required to describe the geographic area(s)
within which it requests designation as an ETC. i-wireless requests designation as an ETC that is
statewide in scope, subject to the existence of its underlying carrier's facilities and corresponding
at See Lifeline and Link Up Reform Order at\275.
42dtee ta.
a3 See attached Exhibit 13, 2}ll Lifeline Participation Rates by State, which was obtained from USAC, an
independent not-for-profit corporation designated as the administrator of the federal Universal Service Fund by the
FCC. USAC administers Universal Service Fund (USF) programs for high cost companies serving rural areas, low-
income consumers, rural health care providers, and schools and libraries.
2l
coverage.44 i-wireless understands that its service area may overlap with rural carriers in Idaho,
but maintains that the public interest factors described below justify its designation in these
carriers' service areas, especially because it seeks ETC designation solely to utilize USF funding
to provide Lifeline service to qualified low-income consumers. It does not seek and will not
accept Link-Up or high cost support
F. Service Commitment Throughout the Proposed Designated Service Area
i-wireless provides service in Idaho by reselling service which it obtains from its
underlying facilities-based provider. The provider's network is operational and largely built out.
Thus, i-wireless will be able to commence offering its Lifeline service to all locations served by
its underlying carrier very soon after receiving approval from the Commission. i-wireless
commits to comply with the service requirements applicable to the support that it receives.a5
G. Five-Year Network Improvement Plan
As set forth in the Lifeline and Link Up Reform Order, a common carrier seeking
designation as a Lifeline-only ETC is not required to submit a five-year network improvement
plan as part of its application for designation as an ETC.a6
H. Ability to Remain Functional in Emergency Situations
In accordance with 47 CFR $54.202(a)(2), i-wireless has the ability to remain functional
in emergency situations. Through its agreement with its underlying carrier, i-wireless provides to
its customers the same ability to remain functional in emergency situations as currently provided
by the ILECs to their own customers, including access to a reasonable amount of back-up power
to ensure functionality without an external power source, the ability to reroute traffic around
nn A list of wire centers in which the Company requests ETC designation is attached hereto as Exhibit 14.
a5 See Lifeline qnd Link Up Reform Order atpage 208, revised $ 5a.202(a)(l)(i).
a6 See Lifeline and Link Up Reform Order at\386.
22
and the of managing traffic spikes resulting from emergency
I. Commitment to Consumer Protection and Service Quality
Under FCC guidelines, an ETC applicant must demonstrate that it will satisff applicable
consumer protection and service quality standards.aT The Company commits to satisffing all
such applicable state and federal requirements related to consumer protection and service quality
standards. Specifically, i-wireless commits to comply with the Cellular Telecommunications and
Internet Association's (CTIA) Consumer Code for Wireless Service.
J. Local Usage Requirement
An applicant for ETC designation is no longer required to demonstrate that it offers a
local usage plan that is "comparable" to the plan offered by the ILEC in the relevant service
territory.as Nevertheless, not only will the Company's offering be comparable to the underlying
ILEC plans, but it also will exceed them in several respects. i-wireless will offer customers a
certain amount of service free of charge. In contrast to the ILEC plans, which contain relatively
small local calling areas, i-wireless customers can use these free minutes to place calls statewide
(and even nationwide) because i-wireless does not constrict customers' use by imposing a local
calling area requirement. i-wireless will also provide Lifeline customers with E911 capabilities
and access to voice mail, caller LD., and call waiting services at no cost. The very nature of the
wireless phone, i.e. mobility, has a tremendous benefit to many consumers, a benefit to which a
monetary value cannot be easily assigned.
n' See47 C.F.R. $ 5a.202(aX3).
a8 See Liftline and Link Up Reform Order atpage208, revised $ 5a.202(a).
23
K. Equal Access Requirement
FCC Rules no longer require an applicant for ETC status to provide a certification that it
acknowledges that the FCC may require it to provide equal access to long distance carriers in the
event that no other ETC is providing equal access within the service area.oe
L. i-wireless is Financially and Technically Capable
i-wireless is financially and technically capable of providing Lifeline-supported services.
i-wireless is 50% owned by Genie Global, Inc. and 50% owned by The Kroger Co., the nation's
largest grocery retail chain and the second largest retailer overall. i-wireless is a fully
consolidated variable interest entity of The Kroger Co., as defined by The Sarbanes-Oxley Act.
The Kroger Co. is a publicly traded company with $110 Billion in sales and is lTth on Fortune's
500 list.so i-wireless has been in business for over 8 years and successfully provides wireless
services throughout the United States, and is the Nation's 3rd largest Lifeline provider, approved
to operate in 38 jurisdictions. i-wireless has not been subject to enforcement action or ETC
revocation proceedings in any state. i-wireless is financially able to provide Lifeline-supported
services; the Company does not, and does not intend to, offer exclusively Lifeline-supported
services-and is therefore not exclusively dependent on universal service support for its revenue.
Furthermore, the senior management of i-wireless has great depth in the telecommunications
industry and offers extensive telecommunications business technical and managerial expertise to
the Company.sl i-wireless will be providing resold wireless service, and therefore will also rely
upon the managerial and technical expertise of its underlying carrier.
49-see td.
so As a fully consolidated entity of Kroger, i-wireless' finances are incorporated into the consolidated financial
statements of Kroger. For Kroger's most recent SEC l0-K, see
http://ir.kroger.com/doc.aspx?IID:4004 I 36&DID:3 I 92 I 0 I 3.
5r See Exhibit l5 for key management bios.
24
M. i-wireless Will Comply with Certification and Verification Requirements
Section 54.410 of the FCC's Rules requires ETCs to certiff and verifu a Lifeline
customer's initial and continued eligibility. i-wireless will certify and veriff consumer eligibility
in accordance with the FCC's requirements and with Commission Order No. 29841.52 In Idaho,
i-wireless intends to verify Lifeline eligibility by relying on consumers' certifications and proof
documentation in accordance with 47 C.F.R. $ 54.410(b)(l) and (c)(1), in lieu of a state
eligibility database.
N. i-wireless Will Comply With All Regulations Imposed By The Commission
By this Application, i-wireless hereby asserts its willingness and ability to comply with
all the rules and regulations that the Commission may lawfully impose upon the Company's
provision of service contemplated by this Application, to the extent such provisions apply to a
prepaid wireless provider. Upon Commission request, the Company is prepared to answer
questions or present additional testimony or other evidence about its services within the state. i-
wireless commits that 100%o of federal universal service funds will flow through directly to
Lifeline customers. The Company commits to comply with the reporting requirements adopted
by the Commission.s3
As the Company is not seeking high-cost support for its wireless service, it hereby
requests a waiver of the following Commission Rules: Commission Order No. 29841 Section B.l
(two-year network improvement and maintenance plan based on high-cost support) and
Commission Order No.29841 Section C.1 (annual report of certain information based onhigh-
cost support). Because the Company is not seeking high-cost support, these rules are not
applicable and, therefore, should be waived.
52 See Commission Order No. 29841 at Appendix, Section D.
s3 See Commission Order No. 29841 at Appendix, Section C.
25
V. DESIGNATION OF I.WIRELESS AS AN ETC WOULD PROMOTE THE
PUBLIC INTEREST
One of the principal goals of the Act, as amended by the Telecommunications Act of
1996, is "to secure lower prices and higher quality services for American telecommunications
consumers and encourage the rapid deployment of new telecommunications technologies" to all
citizens, regardless of geographic location or income.sa Designation of i-wireless as an ETC in
Idaho will further the public interest by providing Idaho consumers, especially low-income
consumers, with low prices and high quality services. Many low-income customers in Idaho
have yet to reap the full benefits of the intensely competitive wireless market. Whether because
of financial constraints, poor credit history or intermittent employment, these consumers often
lack the countless choices available to most consumers.
The instant request for ETC designation must be examined in light of the Act's goal of
providing low-income consumers with access to telecommunications services. The primary
purpose of universal service is to ensure that consumers-particularly low-income consumers-
receive affordable and comparable telecommunications services. Given this context, designating
i-wireless as an ETC would significantly benefit low-income consumers eligible for Lifeline
service in the State of Idaho - the intended beneficiaries of universal service.
A. Advantages of i-wireless' Service Offering
The public interest benefits of the Company's wireless service include larger local calling
areas (as compared to traditional wireline carriers), the convenience and security afforded by
mobile telephone service, the opportunity for customers to control cost by receiving a preset
amount of monthly airtime at no charge, the ability to purchase additional usage at flexible and
affordable amounts in the event that included usage has been exhausted, 911 service and, where
to Telecom*unications Act of l996,Pub. L. No. 104-104, I l0 Stat. 56.
26
available, E9l1 service in accordance with current FCC requirements. The Company's Lifeline
customers will receive the same high-quality wireless services and exceptional customer service
provided to all Company customers. i-wireless' Lifeline rate plans will not only allow feature-
rich mobile connectivity for qualifying subscribers at no cost to the subscriber, but also will
bring a variety of rate plans into the reach of Lifeline customers that are comparable in minutes
and features to those available to post-paid wireless subscribers - but at low Lifeline rates and
without the burden of credit checks or contracts.
i-wireless' Lifeline program will provide low-income Idaho residents with the convenience
and security offered by wireless services----even if their financial position deteriorates. The
economic circumstances indicate that low-income individuals, now more than ever, can greatly
benefit from the advantages offered by the Company's Lifeline service, thus allowing those
adversely impacted by the failing economy or job loss to have access to a free wireless service to
assist in emergency situations, facilitate job search efforts, and to maintain contact with family
members.
lt is also a commonly accepted fact that in today's market all consumers, including
qualified Lifeline customers, view the portability and convenience of wireless service not as a
luxury, but as a necessity. Mobile service allows children to reach their parents, wherever they
may be, allows a person seeking employment the ability to be contacted by potential employers,
and provides end users with the ability to contact emergency service providers, regardless of
location. Providing i-wireless with the authority necessary to offer discounted Lifeline service to
those most in danger of losing wireless service altogether undoubtedly promotes the public
interest.
27
Moreover, grant of i-wireless' Application will serve the public interest in increasing the
number of ETCs in Idaho. By granting ETC status to i-wireless, the Commission will enable i-
wireless to increase the number of Idaho residents receiving Lifeline support, thereby increasing
the amount of USF money flowing into Idaho. In sum, ETC designation in the State of Idaho
would enable i-wireless to provide all of the public benefits cited by the FCC in its analysis in the
Virgin Mobile Order. Namely, i-wireless would provide "increased consumer choice, high-quality
service offerings, and mobility,"Ss as well as the safety and security of effective 911 and E911
services.s6
B. The Benefits of Competitive Choice
The benefits to consumers of being able to choose from among a variety of
telecommunications service providers have been acknowledged by the FCC for more than three
decades.5T Designation of i-wireless as an ETC will promote competition and innovation, and
spur other carriers to target low-income consumers with service offerings tailored to their needs
and to improve their existing networks to remain competitive, resulting in improved services to
consumers. Designation of i-wireless as an ETC will help assure that quality services are
available at 'Just, reasonable, and affordable rates" as envisioned in the Act.s8 Introducing i-
wireless into the market as an additional wireless ETC provider will afford low-income Idaho
residents a wider choice of providers and available services while enhancing a competitive
marketplace as ETCs compete for a finite number of Lifeline-eligible customers. Increasing the
competitive marketplace of providers has the potential to effectively increase the penetration rate
and reduce the number of individuals not connected to the PSTN.
ss See Virgin Mobile Order,24FCC Rcd at 3395 fl 3S.
s6 See Id. at3391 1123.t' See, e.g., Specialized Common Cqrrier Services,29 FCC Rcd 870 (1971).
58 See 47 U.S.C. $ 254(bXl).
28
C. Impact on the Universal Service Fund
i-wireless' request for designation as an ETC solely for Lifeline purposes would not
unduly burden the USF or otherwise reduce the amount of funding available to other ETCs.
With Lifeline, ETCs only receive support for customers they obtain. The amount of support
available to an eligible subscriber is exactly the same whether the support is given through a
company such as i-wireless or the Incumbent LEC operating in the same service area. i-wireless
will only increase the amount of USF Lifeline funding in situations where it obtains Lifeline
customers not enrolled in another ETC's Lifeline program. By implementing the safeguards set
forth in the Lifeline and Link-up Reform Order, i-wireless will minimize the likelihood that its
customers are not eligible or are receiving duplicative support either individually or within their
household. Significantly, the Company's designation as an ETC will not increase the number of
persons eligible for Lifeline support. i-wireless' ability to increase the Lifeline participation rate
of qualified low-income individuals will further the goal of Congress to provide all individuals
with affordable access to telecommunications service, and thus any incremental increases in
Lifeline expenditures are far outweighed by the significant public interest benefits of expanding
the availability of affordable wireless services to low-income consumers. According to the FCC,
"the additional choice and service options of another wireless reseller offering a service for low-
income consumers represents a significant benefit for consumers and is in the public interest,"
and "A new entrant should incent existing wireless reseller ETCs to offer better service and
terms to their customers, which provides additional evidence that forbearance in the context of
the Lifetine program outweighs the potential costs."5e
se See i-wireless Forbearance Order at't[ 19.
29
VI. ANTI-DRUG ABUSE CERTIFICATION
i-wireless certifies that no party to this Application is subject to denial of federal benefits,
including FCC benefits, pursuant to Section 5301 of the Anti-Drug Abuse Act of 1988.
VII. CONCLUSION
Based on the foregoing, designation of i-wireless as an ETC in the State of Idaho accords
with the requirements of Section 2Ia@)(2) of the Act and is in the public interest.
WHEREFORE, i-wireless respectfully requests that the Commission promptly designate
i-wireless as an ETC in the State of Idaho.
Attorneys at Law
1725 Windward Concourse, Suite 150
Alpharetta, Georgia 30005
[phone] (Phone)
[phone] (Fax)
E-Mail: [e-mail]
Attorneys for i-wireless, LLC
October 19,2015
lM. Steinhart, P.C.
30
EXHIBIT 1
Certification of John Willis, COO of i-wireless, LLC
State of Kentucky
County of Campbell
Certification
Personally appeared before the undersigned, an officer duly authorized to administer oaths, John
Wi1lis, who first being duly sworn, deposes and states that he is the Chief Operating Officsr of i-
wireless, LLC, Applicant in this application, and has read the foregoing and knows the contents
thereof, and confirms that the statements made herein are true to the best of his knowledge and
belief.
Dated: 'i /t /, n
)
)
)
Subscribed and sworn to before me, a Notary Public, this 3 day of \pre.+Bfin, 2015.
(Nlotary Seal)
My Commission Expires:ERIC J, SCHIMPF\l, :a(v f)r/i)lic. Kentucky
-cl.lte Al Large',ly Cc-nmrssion Expires
August 4, 20I9
Notary tD# 599268
illis, Chief Operating
-oized to administer oath)
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IDAHO
APPLICANT INFORMATION
First Name:
Residential Address:
(NO P,O. BOXE5, MUST BE YOUR PRINCIPAL ADDRESS)
This address is: E Permanent tr Temporary tr Multi-Household
Mailing Address:
E Bureau of lndian Affairs General Assistance
tr Federal Public Housing Assistance (FPHA)/Section 8
tr Food Distribution Program on lndian Reservations
tr Headstart (meeting income-qualiffing standards)
EI Low lncome Home Energy Assistance Program (LIHEAP)
B Medicaid
tmportant lnfu rmation About the Lifeline Program
Access Wireless is a service provider for the government-funded Lifeline
Assistance Program. Lifeline service is provided by i-wireless, LLC, d/b/a
Access Wireless, which is an eligible telecommunications carrier. Lifeline
service is non-transferable. Only one Lifeline discount may be received
per household. A household is defined, for the purposes of the Lifeline
program, as any individual or group of individuals who live together at
the same address and share income and expenses. A household is not
permltted to receive benefits from multiple providers. Violation of the
one-per-household rule constitutes a violation of the FCC's rules and
will result in the customert de-enrollment from Lifeline and potentially
prosecution from the United States government. Only eligible customers
may enroll in the program, Consumers who willfully make a false state-
ment in order to obtain the Lifeline benefit can be punished by fine or
imprisonment or can be barred from the program. Customers must pres-
ent proper documentation confirming eligibility for the Lifeline program.
Your information will be validated against public records and any dis-
crepancies could result in delays in your approval or rejection of service.
MI:
City:
Contact Telephone N um ber:
Date of Birth:Last 4-digits of Social Security Number (or fullTribal lD Number): XXX-XX-
I am a Tribal Resident: tr Yes tr No
QUALIFYING PROGRAM INFORMATION
Applicant must provide documented proof of participation in the program indicated below or proof of income.
,ilCCtrSsWIRE LESS,
A govern ment-funded Lifeline Assi stance Progra m.
Last Name:
Apt/Floor/Other
Apt/Floor/Other
State:ZIP Code:
Email Address:
tr National School Lunch Programb Free Lunch Program (NSLP)
0 Supplemental Nutrition Assistance Program (SNAP)/Food Stamps
tr Supplemental Security lncome (SSl)
tl Temporary Assistance for Need Families (TANF)
tr Tribally Administered Temporary Assistance for Needy Families (TANF)
Activation & Usage Requirements
This service is a prepaid service and you must activate it by dialing 611
from your AccessWireless handset.To keep youraccount active, you must
use your Lifeline service at least once during any 5Gday period by com-
pleting an outbound call, purchasing additional minutes from Access
Wireless, answering an inbound call from someone other than Access
Wirelest or by responding to a direct contact from Access Wireless con-
firming that you want to continue receiving Lifeline service from them.
lf your service goes unused for 60 days, you will no longer be eligible for
Lifeline benefits and your service will be suspended (allowing only 911
calls and calls to the Access Wireless Customer Care center) subject to a
3Gday cure period during which you may use the service (as described
above) or contact Access Wireless to confirm that you want to continue
receiving your Lifeline service from them.
tr I hercby certify that I hane red and understood the disdosurcs lbted
above rcgnding activation and usage requircments and important
information on the Lifeline prcgram.
You're almost done
CONTINUE FORM ON BACK
I hereby certify, under penalty of perjury, that: trnrraL By EAcH LrNE)
_(1) I meet the program-based eligibility criteria for receiving Lifeline service with an annual household income at or below 135% FPG,
and have provided documentation of eligibility if required.
I will notify Access Wireless within 30 days if for any reason, I no longer satisff the criteria for receiving Lifeline including, as relevant,if
I no longer meet the income-based or program-based eligibility criteria, I begin receiving more than one Lifeline benefit, or another
member of my household is receiving a Lifeline benefit. I understand that I may be subject to penalties if I fail to follow this requirement.
I am not listed as a dependent on another person's tax return (unless over the age of 60).
I attest, to the best of my knowledge, that no one in my household, including myself, is receiving a Lifeline-supported service from
any other landline or wireless company such as Qwest Corporation, Assurance Wireless, or Syringa Wireless.
The residential address listed above is my primary residence, not a second home or business.
lf I move to a new address, I will provide that new address to Access Wireless within 30 days.
lf I provided a temporary residential address to Access Wireless, I will veriff my temporary residential address as required by law.
I acknowledge that providing false or fraudulent information to receive Lifeline benefits is punishable by law.
I acknowledge that I may be required to re-certifo my continued eligibility for Lifeline at any time, and my failure to re-certify as to my
continued eligibility within 30 days will result in de-enrollment and the termination of my Lifeline benefits.
(10 The information included in this certification form is true and correct to the best of my knowledge.
_ 0 f ) lf Access Wireless finds that I am already receiving a Lifeline discount benefit from another provider, I agree that I want to transfer my
Lifeline discount benefit from that Lifeline provider to Access Wireless. I understand that once the transfer is complete, I will lose my
Lifeline Program benefit with any other Lifeline provider from which I am currently receiving a Lifeline discount. Access Wireless has
explained to me and I understand that I may not have multiple Lifeline Program benefits with the same or different providers.
_ 02) I certifo that the individual named on the documentation used to demonstrate program participation or income eligibility is part of
my household.
lJ3) lf Ap pli coble; I reside on Federal ly reco g n ized Tribal Lands.
AUTHORIZATION & CERTIFICATIONS {rNrrAL By EAGH uNE)
_ (1 ) I hereby authorize Access Wireless to access any records to veriff my statements on this form and to confirm my eligibility for the Lifeline
program. I also authorize Access Wreless to release any records required for the administration of the Lifeline program, including name,
telephone number, address, date of birth, Social Security Number as required by state, amount of support being sought, means of
qualification forsupport,and dates of service initiation and termination to the Universal Service Administrative Company, to be usd in a Lifeline
database and to ensure the proper administration of the Lifeline Program. Failure to consent will result in denial of service.
(2) I understand that I have the right to enroll in the Lifeline service using non-electronic methods. I further understand that I have the right
to withdraw this consent at any time prior to activation of my service. Access Wireless has advised me that I may request a paper copy of
my contract and associated fees by calling 61 1 from my mobile handset.
(3) lherebyauthorizeAccessWirelesstosendtextmessagestomyAccessWrelessphonenumberaboutmyLifelinebenefit.Textmessagessent
by Access Wireless will not decrement my available wireless minutes or texts. Standard voice, data and text rates will apply to all messages
to and from anyone other than Access Wireless.
(2)
_ (3)
_ (4)
(s)
(6)
(7)
(8)
(e)
Mail application to:
Access Wireless
One Levee Way, Suite 3l06
Newport, KY 41071
For faster processing fax to:
1-888-594-4473
You can also apply online at:
www.accesswi reless.com
lf you have any questions
cALL 1-888-450-1838
APPLICANT'S SIGNATURE Preose use btue or btack tnk DATE
This signed authorization is required in ordel to enroll )eu in the Lifeline Program in your state and is onlyfor the purpose ofverifying your
participation in these programs and will not be used for any other purpose, Service requests will not be processed untll thls fotm has been
received and vedfied by Access Wreless.
r^tla
OCCESSWIRELESS,
A govern ment-funded Lifel i ne Assistance Program
6
*ofHousehold AnnualMembers lncome
Fot eoch additional household member above 8, odd 54,1 60.
lmportant lnformation About the Lifeline Program
Access Wireless is a service provider for the governmentdtnded Lifeline
Assistance Program. Lifeline service is provided by i-wireless, LLC, dlbla
Access Wireless, which is an eligible telecommunications carrier. Lifeline
service is non-transferable. Only one Lifeline discount may be received
per household. A household is defined, for the purposes ofthe Lifeline
program, as any individual or group of individuals who live together at
the same address and share income and expenser A household is not
permitted to receive benefits from multiple providers. Violation of the
one-per-household rule constitutes a violation of the FCCI rules and
will result in the customerS de-enrollment from Lifeline and potentially
prosecution from the United States government. Only eligible customers
may enroll in the program. Consumers who willfully make a false state-
ment in order to obtain the Lifeline benefit can be punished by fine or
imprisonment or can be barred from the program. Customers must pres-
ent proper documentation confirming eligibility for the Lifeline program.
Your information will be validated against public records and any dis-
crepancies could result in delays in your approval or rejection of service.
Activatlon & Usage Requlrements
This service is a prepaid service and you must activate it by dialing 6'll
from your AccessWireless handset.To keep your account active, you must
use your Lifeline service at least once during any 6G,day period by com-
pleting an outbound call, purchasing additional minutes from Access
Wireless, answering an inbound call from someone other than Access
Wreless, or by responding to a direct contact from Access Wireless con-
firming that you want to continue receiving Lifeline service from them.
lf your service goes unused for 60 days, you will no longer be eligible for
Lifeline benefits and your service will be suspended (allowing only 9l I
calls and calls to the Access Wreless Customer Care center) subject to a
3Gday cure period during which you may use the service (as described
above) or contact Access Wreless to confirm that you want to continue
receiving your Lifeline service from them.
tr ! hereby ceilify that I harc rcad and understood the disdosurcs lfisted
abow regadlng actlvatlon and usage requlrements and important
information on the Lifeline pogram.
You're almost done
CONTINUE FORM ON BACK
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ilflCtrS5WIRELESS.
A govern ment-funded Lifel ine Assistance Prog ra m
APPLICANT INFORMATION
First Name:Last Name:
Residential Address:Apt/Floor/Other
(NO PO. BOXES, MUST BE YOUR PRINCIPAL ADDRESS)
This address is: D Permanent tr Temporary tr Multi-Household
Mailing Address:Apt/Floor/Other
City:State:ZIP Code:
Contact Telephone Nu mber:Email Address:
Date of Birth;- Last Four Digits of Social Security Number (or fullTribal lD Number): XXX-XX-
I am a Tribal Resident tr Yes tr No
QUALIFYING INCOME ELIGIBILITY INFORMATION
You are eligible to apply if your household income is at or below 1 35% of
ttre Federal PoveflGuidelines (FPG).You must submit proof of total household
income for income.based qualification. Proof can include last year's income
tax return, Social Security, retiremenUpension, UnemploymentAA/orkerJ
Compensation statement of benefits, divorce decreg child support award,
three monthJconsecutive pay stubt letterfiom employer verifuing incomg
or other official documents containing income information. Please do not
provide originaldocuments - copies ONLY.
MI:
I hereby certify, under penalty of perjury, that trrrrnr By EAcH LrNE)
_ (1 ) I meet the program-based eligibility criteria for receiving Lifeline service with an annual household income at or below 1 3570 FPG,
and have provided documentation of eligibility if required.
(2) lwill notiff Access Wireless within 30 days if for any reason, I no longer satisffthe criteria for receiving Lifeline including, as relevanL if
I no longer meet the income-based or program-based eligibility criteria, I begin receiving more than one Lifeline benefit, or another
member of my household is receiving a Lifeline benefit. I understand that I may be subject to penalties if lfail to follow this requirement.
(3) I am not listed as a dependent on another person! tax return (unless over the age of 60),
(4) I attest, to the best of my knowledge, that no one in my household, including myself, is receiving a Lifeline-supported service from
any other landline or wireless company such as Bellsouth Telecommunications lnc., SafelinkWireless, or Assurance Wireless.
(5) The residential address listed above is my primary residence, not a second home or business.
_ (6) lf I move to a new address, I will provide that new address to Access Wireless within 30 days.
(7) lf I provided a temporary residential address to Access Wireless, lwill verify my temporary residential address as required by law.
(8) I acknowledge that providing false or fraudulent information to receive Lifeline benefits is punishable by law.
(9) I acknowledge that I may be required to re-certiff my continued eligibility for Lifeline at any time, and my failure to re-certiff as to my
continued eligibility within 30 days will result in de-enrollment and the termination of my Lifeline benefits.
(10) The information included in this certification form is true and correct to the best of my knowledge.
(11) lf Access Wireless finds that I am already receiving a Lifeline discount benefit from another provider, I agree that I want to transfer my
Lifeline discount benefit from that Lifeline provider to Access Wireless. I understand that once the transfer is complete, I will lose my
Lifeline Program benefit with any other Lifeline provider from which I am currently receiving a Lifeline discount. Access Wireless has
explained to me and I understand that I may not have multiple Lifeline Program benefits with the same or different providers.
(12) I certify that the individual named on the documentation used to demonstrate program participation or income eligibility is part of
my household.
03) lf Applicoble: I reside on Federally recognized Tribal Lands.
AUTHORIZATION & CERTIFICATIONS (rilrnAr By EACH LINE)
_(1) lherebyauthorizeAccessWrelesstoaccessanyrecordstoverifimystatementsonthisformandtoconfirmmyeligibilityfortheLifeline
program. I also authorize Access Wreless to release any records required for the administration of the Lifeline program, including name,
telephone number, address, date of birth, Social Security Number as required by state, amount of support being sought, means of
qualification for support and dates of service initiation and termination to the Universal Service Administrative Company, to be used in a Lifeline
database and to ensurethe properadministration of the Lifeline Program, Failure to consent will result in denial of service.
(2) I understand that I have the right to enroll in the Lifeline service using non-electronic methods. I further understand that I have the right
to withdraw this consent at any time prior to activation of my service. Access Wireless has advised me that I may request a paper copy of
my contract and associated fees by calling 6l I from my mobile handset.
(3) lherebyauthorizeAccessWrelesstosendtextmessagestomyAccessWrelessphonenumberaboutmyLifelinebenefit.Textmessagessent
by Access Wreless will not decrement my available wireless minutes or texts. Standard voice, data and text rates will apply to all messages
to and from anyone other than Access Wreless.
Mail application to:
Access Wireless
One Levee Way, Suite 31 06
Newport, KY 41071
For faster processing fax to:
1-888-594-4473
You can also apply online at:
www.accesswi reless.com
APPLICANT'S SIGNATU RE Prease use btuc or btack ink DATE
This slgned authodzation is required in order to enrdl you in the lJfelhe Program in )lour state and ls only fd the prpose of wlfilng pur
partidpation In these programs and will not be used for any other purpose. Service requests will not be p.ocessed untl 0ris fom has been
received and vedfied by Acces Wreless.
re
lf you have any questions
cALL 1-888-4s0-1838 CCCCSSWIRELESS,
A govern ment-fu n ded Lifeli ne Assista nce Program.
Federal Communications Commission FCC t3-148
Before the
Federal Communications Commission
Washington, D.C.20554
In the Matter of EB-IHD-13-00010656
NAL/Acct. No.: 201432080003
0016194292
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: November 1,2013
By the Commission:
I. INTRODUCTION
November 1,2013
1. In this Notice of Apparent Liability for Forfeiture (NAL), we continue our commitment
to combatting waste, fraud, and abuse in the Lifeline program (Lifeline) by taking action and proposing
monetary forfeitures against a company that apparently has ignored our rules and exploited a program
dedicated to providing low-income Americans with basic telephone service. Specifically, we find that i-
wireless, LLC (i-wireless), apparently willfully and repeatedly violated Sections 54.407, 54.409, and
54.410 of the Commission's rulesr by requesting and/or receiving support from the Lifeline program of
the Universal Service Fund (USF or Fund) for ineligible subscriber lines between the months of October
2012 and April 2013. Based on our review of the facts and circumstances surrounding these apparent
violations, we propose a monetary forfeiture in the amount of eight million, seven hundred and fifty-three
thousand and seventy-four dollars ($8,75 3,074).
II. BACKGROUND
2. Lifeline Service. Lifeline is part of the USF and helps qualiffing consumers have the
opportunities and security that phone service brings, including being able to connect to jobs, family
members, and emergency services.2 Lifeline service is provided by Eligible Telecommunications
Carriers (ETCs) designated pursuant to the Communications Act of 1934, as amended (Act).3 An ETC
may seek and receive reimbursement from the USF for revenues it forgoes in providing the discounted
services to eligible customers in accordance with the rules.a Section 5a.403(a) of the Commission's rules
specifies that an ETC may receive $9.25 per month for each qualifying low-income consumer receiving
Lifeline service,s and up to an additional $25 per month if the qualiffing low-income consumer resides on
Tribal lands.6 ETCs are required to pass these discounts along to eligible low-income consumers.'
'47 c.F.R, gg 54.407, s4.409,54.410.
' Lyeline and Link Up Reform and Modernization, Report and Order and Further Notice of Proposed Rulemaking,
27 FCC Rcd 6656, 6662-67, paras. l1-18 (2012) (Lifuline Reform Order); see also 47 C.F.R. $$ 54.400-54.422.
3 +Z U.S.C. $ 25a(e) (providing that "only an eligible telecommunications carrier designated under section 214(e) of
this title shall be eligible to receive specific Federal universal service support");47 U.S.C. g 2la(e) (prescribing the
method by which carriers are designated as ETCs).
o 47 c.F.R. g 5a.ao3(a).
s Lifeline provides a single discounted wireline or wireless phone service to each qualifying low-income consumer's
household. See 47 C.F.R. $ 54.401,' see also 47 C.F.R. $ 54.400(h) (defining "household" as "any individual or
(continued. . ,.)
)
)
)
)
)
Federal Communications Commission FCC 13-148
3. The Commission's Lifeline rules establish explicit requirements that ETCs must meet to
receive federal Lifeline support.8 Section 5a.a07@) of the rules requires that Lifeline support "shall be
provided directly to an eligible telecommunications carrier, based on the number of actual qualiffing low-
income consumers it serves."e Pursuant to Section 54.407(b) of the rules, an ETC may receive Lifeline
support only for qualifuing low-income consumers.to A "qualiffing low-income consumer" must meet
the eligibility criteria set forth in Section 54.409 of the rules, including the requirement that he or she
"must not already be receiving a Lifeline service,"rrand must, pursuant to Section 54.410(d) of the rules,
certiff his/her eligibility to receive Lifeline service.12
4. Section 54.410(a) of the Commission's rules requires further that ETCs have procedures
in place "to ensure that their Lifeline subscribers are eligible to receive Lifeline services."13 As explained
above, such eligibility requires that a consumer seeking Lifeline service may not already be receiving
Lifeline service. This obligation therefore requires, among other steps, that an ETC search its own
internal records to ensure that the ETC does not provide duplicate Lifeline service to any subscriber (an
"intra-company duplicate"). la
5. The Commission's rules further prohibit an ETC from seeking reimbursement for
providing Lifeline service to a subscriber unless the ETC has confirmed the subscriber's eligibility to
receive Lifeline service.rt In accordance with Section s4.4l},before an ETC may seek reimbursement, it
must receive a certification of eligibility from the prospective subscriber that demonstrates that the
subscriber meets the income-based and program-based eligibility criteria for receiving Lifeline service,
(Continued from previous page)
group of individuals who are living together at the same address as one economic unit"); Lifeline Reform Order,27
FCC Rcd at 6760, para.24l (noting that the costs of wireless handsets are not supported by the Lifeline program).
6 See 47 C.F.R. $ 54.403(a). Tribal lands include any federally recognized Indian tribe's reservation, pueblo, or
colony, including former reservations in Oklahoma. See 47 C.F.R. $ 5a.a00(e).
7 See 47 C.F.R. $ 54.403(a); Lifetine Reform Order,27 FCC Rcd at 6681, para. 53.
8 See 47 C.F.R. $$ 54.400-54.422.
n 47 c.F.R. g 5a,ao7(a).
'o 47 C.F.R. (i 54.407(b). In 201l, the Commission took action to address potential waste, fraud, and abuse in the
Lifeline program by preventing duplicate payments for multiple Lifeline-supported services to the same individual.
See Lifeline and Link Up Reform and Modernization,Report and Order, 26FCCRcd9022-23,9026,para. I (201l)
(Liftline Duplicales Order); see also Lifeline and Link Up Reform and Modernization, Order,28 FCC Rcd 9057
(Wir. Comp. Bur. 2013); 47 C.F.R. $ 5a.al0(a). Specifically, the Commission amended Sections 54.401 and 54.405
of the rules to codify the restriction that an eligible low-income consumer cannot receive more than one Lifeline-
supported service at a time. See Lifeline Duplicates Order,26 FCC Rcd at 9026, para.7. In the Li/eline Reform
Order,this codified restriction was moved from Section 54.401(a) to revised Section 54.409(c). See Lifeline Reform
Order,27 FCC Rcd at6689,para.74, n.192. The Commission reiterated this limitation inthe Liftline Reform
Order. See Lifeline Reform Order,27 FCC Rcd at6689,para.?4;47 C.F.R. $ 54.405.
" 47 c.F.R. gg 54.400(a), 5a.a09(c).
" 47 c.F.R. g 54.410(d).
'' 47 c.F.R. g 5a.alo(a).
ta See Lifeline Reform Order,27 FCC Rcd at669l,para.78. In June 2013, the Wireline Competition Bureau on
delegated authority underscored these obligations, prohibiting ETCs from activating "a service that it represents to
be Lifeline service, even on an interim basis while the consumer's application is being processed, before verifring
eligibility," including that a consumer's household does not already subscribe to Lifeline service. Lifeline and Link
Up Modernization and Reform, Order,28 FCC Rcd 9057, 9059, para. 6 (Wir. Comp. Bur. 2013); see also 47 C.F.R.
$ sa.al0(a).
t5 See 47 C,F.R. $ 54.410(b).
Federal Communications Commission FCC 13-148
and that the subscriber is not already receiving Lifeline service.16 As the foregoing discussion reveals,
when an ETC seeks Lifeline service support reimbursement for a low-income consumer who already
receives Lifeline service from that same ETC, that ETC has violated its obligation under the
Commission's rules to confirm the subscriber's eligibility for Lifeline service.
6. ETCs that provide qualifying low-income consumers with Lifeline discounts file an FCC
Form 497 with the Universal Service Administrative Company (USAC), either quarterly or monthly, to
request support that reimburses them for providing service at the discounted rates. An ETC's FCC Form
497 documents the number of qualiffing low-income customers served and the total amount of Lifeline
support claimed by the ETC during the specified time period. Section 54.407(d) provides that an ETC
may receive reimbursement from the Fund, however, only if it certifies as part of its reimbursement
request that it is in compliance with the Lifeline rules.r7 An ETC may revise its Form 497 datawithin 12
months after the data are submitted.rs
7. In addition to reviewing claims submitted by ETCs, USAC conducts in-depth data
validations (IDVs) to further ensure compliance with the Lifeline rules.re When a company is selected for
an IDV, USAC will send the company a letter requesting subscriber data for a prior month or months.
Once USAC receives the company's data, it analyzes the company's subscriber information to determine
whether there are any duplicate subscribers and sends the company another letter with its initial results.
USAC provides the company with an opportunity to submit a revised subscriber list to correct subscriber
data or to remove subscribers that are no longer receiving service. If USAC determines that a low-income
consumer is the recipient of multiple Lifeline benefits from that same ETC, it will send another letter to
the ETC identiffing the instances of intra-company duplicative support, seek a recovery, and notify the
ETC that it must commence the deenrollment process for those duplicates.2o
8. i-wireless, LLC. i-wireless, a North Carolina limited liability company headquartered in
Newport, Kentuc$i, is equally owned by two members, Genie Global, Inc. and The Kroger Co., which is
a large grocery retail chain.2r i-wireless has been designated an ETC and offers Lifeline service in a
number ofjurisdictions including, but not limited to, Illinois,22 Indiana,23 New York,2a North Carolina,25
Ohio,26 South Carolina," Tennessee,28 and West Virginia.2e
16 See 47 C.F.R. $ 54.410(b), (c); see also 47 C.F.R. $ 54.410(d).
ti See 47 C.F.R. $ 54.407(d).
tB See Lifeline Reform Order, 27 FCC Rcd 6788, para. 305. Subsequent revisions, however, do not vitiate violations
of an ETC's duty to verifr the eligibility of the subscribers that are reflected on any of its previously filed Form
497s.
te See Lifeline Duplicates Order,26 FCC Rcd at9026,para.7.
20 Although USAC recovers the duplicative support payments for the month at issue in the IDV examination
(generally a single month), it does not at present always seek to recover the duplicative support that the ETC may
have received for the same duplicates for the preceding and following months. We therefore direct USAC, when it
determines that an ETC has sought support from the Fund for an intra-company duplicate, to require the ETC to
report to USAC (a) the month in which the ETC began requesting and/or receiving duplicative support for each such
subscriber, and (b) the month the ETC stopped requesting and/or receiving duplicative support for each such
subscriber, We further require that, after receiving such information, USAC shall recover from the ETC all of the
duplicative support it has received for such subscribers.
2l
^See State of North Carolina Department of State, Corporations Division,
http://www.secretary.state.nc.us/corporations/corp.aspx?Pitemid=8039285 (last visited Oct. 22,2013).
22 Illinois Commerce Comm., File No. I l-0073 (granted Apr. 15, 2011).
23 Indiana Util. Reg. Comm., Cause No. 41052 ETC 56 (Aug. 3, 201l).
2a See In The Mauer Of Telecommunications Cariers Eligible for Universal Support, i-wireless, LLC Amended
Petitionfor Designation as an Eligible Telecommunicalions Catier in the Stales of Alabama, Connecticut,
. (continued....)
J
Federal Communications Commission FCC 13-148
9. USAC conducted IDVs of the Lifeline support requested by i-wireless for its subscribers
in the following eight states for the months specified: Ohio (October 2012); North Carolina (November
2012); Illinois (November 2|l2,December 2012, and January 2013 through April 2013); Tennessee
(December 2012); West Virginia (December 2012); New York (January 2013); Indiana (February 2013);
and South Carolina (February 2013). Based on USAC's analysis, i-wireless apparently had 1,684
individual intra-company duplicate lines for which i-wireless improperly sought Lifeline support
reimbursement.3o According to USAC, i-wireless requested S24,358 in overpayments from USAC over
the months covered by the IDVs.
III. DISCUSSION
10. Under Section 503(bXl) of the Act, any person who is determined by the Commission to
have willfully or repeatedly failed to comply with any provision of the Act or any rule, regulation, or
order issued by the Commission shall be liable to the United States for a forfeiture penalty.'' Section
312(0(l) of the Act defines "willful" as the "conscious and deliberate commission or omission of [any]
act, inespective of any intent to violate" the law.32 The legislative history to Section 312(0(l) of the Act
clarifies that this definition of willful applies to both Sections 312 and,503(b) of the Act,33 and the
Commission has so interpreted the term in the Section 503(b) context.3a The Commission may also
(Continued from previous page)
Delaware, Florida, New Hampshire, North Carolina, New York, Tennessee, the Commonwealth of Virginia, and the
District of Columbia, Amended Petition of Cricket Communications, Inc. for Designation as an Eligible
Telecommunication Carrier, Order, 27 FCC Rcd 6263 (2012) (FCC June I i, 2013 ETC Designation Order). The
Commission also designated i-wireless as an ETC in Alabama, Connecticut, Delaware, Florida, New Hampshire, the
Commonwealth of Virginia, and the District of Columbia.
2s Id.
'u Ohio Pub. Util. Comm., File No. I l-571-TP-UNC (Granted Nov. 22, 201l).
27 South Carolina Pub. Service Comm., Docket No. 201l-107-C, Order No. 20ll-766 (Oct. 31, 2011).
28 See FCC June 13, 20t 3 ETC Designation Order,27 FCC Rcd 6263.
2e West Virginia Pub. Service Comm., Case No, I l-0501-C-PC (granted July 12, 201l).
30 An "intra-company duplicate line" is any line for which i-wireless sought and/or received reimbursement in
violation of the Commission's one line per household rule. See 47 C.F.R. $ 5a.a09(c). For the purposes of applying
the second prong ofour three-part forfeiture framework (a base forfeiture of$5,000 per duplicate), given the unique
circumstances presented by Lifeline intra-company duplicate cases involving multiple months of duplicate service,
we have counted each intra-company duplicate line once, regardless of the number of months in which i-wireless
sought and/or received reimbursement for that line. We account for the duration of each intra-company duplicate
line (i.e., the number of months that i-wireless sought compensation for each intra-company duplicate line) in the
first and third prongs ofour forfeiture calculation. See infra paras. 14-15.
3t See 47 U.S.C. $ 503(b)(l)(B); 47 C.F.R. $ 1.80(a)(1).
3'47 u.s.c. $ 312(0(l).
" H.R. Rep. No. 97-765, 97d Cong. 2d Sess. 5 I (19S2) ("This provision [inserted in Section 3 l2] defines the terms
'willful' and 'repeated' for purposes ofsection 3l2,and for any other relevant section ofthe act (e.g., Section
503).... Asdefined[,]...'willful'meansthatthe licenseeknewthathewasdoingthe actinquestion, regardless
of whether there was an intent to violate the law. 'Repeated' means more than once, or where the act is continuous,
for more than one day. Whether an act is considered to be'continuous' would depend upon the circumstances in
each case. The definitions are intended primarily to clarifr the language in Sections 312 and 503, and are consistent
with the Commission's application of those terms . . . .").
'u See, e.g., So. Cal. Broad. Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388 (1991), recons. denied,T
FCC Rcd 3454 (1992) (Southern Cali/ornia Broadcasting).
Federal Communications Commission FCC 13-148
assess a forfeiture for violations that are merely repeated, and not willful.35 'oRepeated" means that the act
was committed or omitted more than once, or lasts more than one day.3u To impose such a forfeiture
penalty, the Commission must issue a notice of apparent liability, and the person against whom the notice
has been issued must have an opportunity to show, in writing, why no such forfeiture penalty should be
imposed.3T The Commission will then issue a forfeiture if it finds, based on the evidence, that the person
has violated the Act, or a Commission Rule or Order.38
I l. Based on the record evidence developed in this investigation, we conclude that i-wireless
apparently willfully and repeatedly violated Sections 54.407,54.409,and 54.4103e of the rules by
concurrently requesting Lifeline support reimbursement for 1,684 individual intra-company duplicate
lines. Based on the facts and circumstances before us, we therefore conclude that i-wireless is apparently
liable for forfeiture penalties totaling $8,753,074.
IV. PROPOSED FORFEITURE
12. For the violations at issue here, Section 503(b)(2XB) of the Act authorizes the
Commission to assess a forfeiture against a telecommunications canier of up to $150,000 for each
violation or each day of a continuing violation, up to a statutory maximum of $1,500,000 for a single act
or failure to act.ao In determining the appropriate forfeiture amount, we consider the factors enumerated
in Section 503(bX2XE) of the Act, including'the nature, circumstances, extent, and gravity of the
violation and, with respect to the violator, the degree of culpability, any history of prior offenses, ability
to pay, and such other matters as justice may require,"al as well as our forfeiture guidelines.a
3s See, e.g., Callais Cablevision, /nc., Notice of Apparent Liability for Monetary Forfeiture, l6 FCC Rcd 1359,
1362, para. l0 (2001) (Callais Cablevision) (proposing a forfeiture for, inter alia, a cable television operator's
repeated signal leakage).
36 Southern California Broadcasting,6 FCC Rcd at 4388, para. 5; Callais Cablevision, 16 FCC Rcd at 136, para. 9.
37 47 u.s.c. g s03(b)(a); 47 c.F.R. $ 1.80(0.
38 See, e.g., SBC Communicalions, /rzc., Forfeiture Order, l7 FCC Rcd 7589, 759l,para.4 (2002).
" 47 C.F.R. $$ 54.407, 54.409,54.410; see also supra paras.3-6 (discussing these rules and observing that when an
ETC seeks Lifeline service support reimbursement for a low-income consumer who already receives Lifeline service
from that ETC, that ETC has failed in its obligation to confrrm the subscriber's eligibility for Lifeline service in
violation of the rules).
& See 47 U.S.C. $ 503(bX2)(B); 47 C.F.R. $ 1.80(bX2). These amounts reflect inflation adjustments to the
forfeitures specified in Section 503(bX2)(B) ($100,000 per violation or per day of a continuing violation and
$1,000,000 per any single act or failure to act). The Federal Civil Penalties Inflation Adjustment Act of 1990, Pub.
L. No. l0l-410, 104 Stat. 890, as amended by the Debt Collection Improvement Act of 1996, Pub. L. No. 104-134,
Sec. 31001, I l0 Stat. l32l (DCIA), requires the Commission to adjust its forfeiture penalties periodically for
inflation. See 28 U.S.C. $ 2461 note (4). The Commission most recently adjusted its penalties to account for
inflation in 2013. See Amendment of Section 1.80(b) of the Commission's Rules, Adjustment of Civil Monetary
Penalties to Reflect InJlation,DA l3-1615, 2013 WL 3963800 (Enf. Bur. 2013); see a/so Inflation Adjustment of
Monetary Penalties, 78 Fed. Reg. 49,370-01 (Aug. 14, 2013) (setting Sept. 13, 2013, as the effective date for the
increases). However, because the DCIA specifies that any inflationary adjustment "shall apply only to violations
which occur after the date the increase takes effect," we apply the forfeiture penalties in effect at the time the
violation took place. 28 U.S,C. $ 2461 note (6). Here, because the violations at issue occurred before September
13,2013, the applicable maximum penalties are based on the Commission's previous inflation adjustment that
became effective on September 2,2008. See Inflation Adjustment of Maximum Forfeiture Penalties, 73 Fed. Reg.
44,663,44,664 (July 31, 2008).
n' 47 u.s.c. $ 503(bX2XE).
a2 See 47 C.F.R. $ L80(b)(8); Note to Paragraph (b)(8): Guidelines for Assessing Forfeitures.
Federal Communications Commission FCC 13-148
13. If an ETC violates our rules and submits a request for Lifeline support that it knew or
should have known includes ineligible subscribers, and thus requests and/or receives more reimbursement
from the Fund than the amount to which it is properly entitled, it undermines the low-income support
reimbursement mechanism. The Commission believes that the imposition of a significant forfeiture
amount is a necessary response to Lifeline overcollection violations. Lifeline ETCs must expend the
necessary company resources to ensure compliance with the Commission's Lifeline rules, especially the
rules and procedures requiring that providers request and/or receive federal universal service support only
for service provided to eligible consumers. Imposing a significant forfeiture on such rule violators should
deter those service providers that fail to devote sufficient resources to ferreting out company practices
resulting in overcollection violations. In addition, a significant forfeiture should achieve broader industry
compliance with Lifeline rules that are critically important to the effective functioning of the Fund.
14. To eliminate waste, fraud, and abuse, maintain the integrity of the Fund, and protect the
consumers who contribute to the Fund, the Commission has implemented a three-part forfeiture
framework for Lifeline overcollection violations that imposes: (l) a base forfeiture of 520,000 for each
instance in which an ETC files an FCC Form 497 that includes ineligible subscribers in the line count,
which is a violation of the certification requirement contained in Section 54.407(d) of our rules;43 (2) a
base forfeiture of$5,000 for each ineligible subscriber for whom the ETC requests and/or receives
support from the Fund in violation of Sections 54.407, 54.409, and 54.410 of our rules;aa and (3) an
upward adjustment of the base forfeiture equal to three times the reimbursements requested and/or
received by the ETC for ineligible subscribers.as
15. Based on the facts and record before us, we have determined that i-wireless has
apparently willfully and repeatedly violated Sections 54.407, 54.409, and 54.410 of the rules.a6 As
documented above, over the course of seven months, and in connection with the submission of thirteen
FCC Form 497s, i-wireless requested Lifeline support reimbursement of $24,358 for customers who were
receiving more than one i-wireless Lifeline service. Accordingly, with respect to the first component of
the structure articulated by the Commission, we propose a base forfeiture of $260,000 for the submission
of the FCC Form 497s that included the ineligible intra-company duplicate subscribers in the line counts.
With respect to the second component, we propose a base forfeiture of $8,420,000 based on the 1,684
individual intra-company duplicate lines for which i-wireless requested and/or received compensation
from the Fund. Finally, with respect to the third component, we propose an upward adjustment of
$73,074, which is three times the amount of support i-wireless requested and/or received for ineligible
consumers. We therefore conclude that a total proposed forfeiture of $8,753,074 against i-wireless for its
apparent violations of the Commission's Lifeline rules is warranted.
16. This NAL will in no way foreclose the Commission or any other governmental entity
from taking additional enforcement action and imposing additional forfeitures for other violations of the
Lifeline rules. Moreover, the Commission clarifies that the penalties that result from this NAL are
separate from any amounts that an ETC may be required to refund to USAC in order to make the Fund
whole.
V. ORDERINGCLAUSES
17. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the Act, and 1.80 of
the rules,aT i-wireless, LLC, is hereby NOTIFIED of this APPARENT LIABILITY FOR A
o'47 c.F.R. $ 54.407(d).
* +7 C.f.R. $$ 54.407, 54.409,54.410; see Easy Tel. Servs. d/b/a Easy Wireless, File No. EB-IHD-13-00010590,
Notice of Apparent Liability for Forfeiture, FCC l3-129, at5-7,paras. l3-18 (Sept. 30, 2013) (Easy Ll/ireless).
as See Easy Wireless,Fcc 13-129, at 5-7, paras. l3-18.
ou 47 c.F.R. $$ 54.407, 54.409,54.410.
o'47 u.s.c. g 503(b); 47 c.F.R. $ 1.80.
Federal Communications Commission FCC 13-148
FORFEITURE in the amount of eight million, seven hundred and fifty+lree thousand and seventy-four
dollars ($8,753,074) for apparently willfully and repeatedly violating Sections 54.407,54.409, and 54.410
of the rules.as
I 8. IT IS FURTHER ORDERED that, pursuant to Section I .80 of the rules,ae within thirty
(30) calendar days of the release date of this Notice of Apparent Liability for Forfeiture, i-wireless
SHALL PAY the full amount of the proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation ofthe proposed forfeiture.
19. Payment of the forfeiture must be made by check or similar instrument, wire transfer, or
credit card, and must include the NAl/Account number and FRN referenced above. i-wireless shall also
send electronic notification of payment to Theresa Z. Cavanaugh, at [e-mail] and to
Pam Slipakoff at [e-mail] on the date said payment is made. Regardless of the form of
payment, a completed FCC Form 159 (Remittance Advice) must be submitted.so When completing the
FCC Form 159, enter the Account Number in block number 23A (call sign/other ID) and enter the letters
"FORF" in block number 24A (payment type code). Below are additional instructions you should follow
based on the form ofpayment you select:
o Payment by check or money order must be made payable to the order of the Federal
Communications Commission. Such payments (along with the completed Form 159) must be
mailed to FederalCommunications Commission, P.O. Box 979088, St. Louis, MO 63197-9000,
or sent via overnight mail to U.S. Bank - Govemment Lockbox #979088, SL-MO-C2-GL, 1005
Convention Plaza, St. Louis, MO 63101.
o Payment by wire transfer must be made to ABA Number 021030004, receiving bank
TREASA{YC, and Account Number 27000001. To complete the wire transfer and ensure
appropriate crediting of the wired funds, a completed Form 159 must be faxed to U.S. Bank at
[phone] on the same business day the wire transfer is initiated.
o Payment by credit card must be made by providing the required credit card information on FCC
Form 159 and signing and dating the Form 159 to authorize the credit card payment. The
completed Form 159 must then be mailed to Federal Communications Commission, P.O. Box
979088, St. Louis, MO 63197-9000, or sent via ovemight mail to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101.
Any request for making full payment over time under an installment plan should be sent to: Chief
Financial Officer-Financial Operations, Federal Communications Commission,445 l2th Street, S.W.,
Room l-A625, Washington, D.C. 20554.st If you have questions regarding payment procedures, please
contact the Financial Operations Group Help Desk by phone, l-877-480-3201, or by e-mail,
[e-mail].
20. The written statement seeking reduction or cancellation of the proposed forfeiture, if any,
must include a detailed factual statement supported by appropriate documentation and affidavits pursuant
to Sections l l6 and LS0(0(3) of the rules,s2 and may include any data or information demonstrating that
the IDV results referenced in this NAL are materially erroneous or anomalous or that the forfeiture
ot 47 c.F.R. gg 54.407, 54.409,54.410.
n' 47 c.F.R. $ 1.80.
5o An FCC Form 159 and detailed instructions for completing the form may be obtained at
http://www.fcc.gov/Forms/Form I 59l I 59.pdf.
st See 47 C.F.R. g l.lgl4.
t'47 c.F.R. gg 1.16, l.so(0(3).
Federal Communications Commission FCC 13-148
proposed is otherwise inappropriate. t' The written statement must be mailed to Theresa Z. Cavanaugh,
Chief, Investigations and Hearings Division, Enforcement Bureau, Federal Communications Commission,
445 nh Street, S.W., Washington, D.C.20554, and must include the NAL/Acct. No. referenced in the
caption. The written statement shall also be emailed to Theresa Z. Cavanaugh, at
Terry.Cavanaugh@fcc. gov and to Pam S lipakoff at Pam. S I ipakoff@fcc. gov.
21. The Commission will not consider reducing or canceling a forfeiture in response to a
claim of inability to pay unless the petitioner submits: (l) federal tax retums for the most recent three-
year period; (2) financial statements prepared according to generally accepted accounting principles
(GAAP); or (3) some other reliable and objective documentation that accurately reflects the petitioner's
current financial status. Any claim of inability to pay must specifically identi$ the basis for the claim by
reference to the financial documentation submitted.
22. IT IS FURTHER ORDERBD that a copy of this Notice of Apparent Liability for
Forfeiture shall be sent by certified mail, retum receipt requested, and first class mail to Lance J.M.
Steinhart, Esq., Lance J.M. Steinhart,P.C.,1725 Windward Concourse, Suite 150, Alpharetta, GA 30005.
FEDERAL COMMUNICATIONS COMMIS S ION
Marlene H. Dortch
Secretary
53 For example, the written statement could include data showing that the months examined in the IDVs were
outliers or otherwise not representative.
EXHIBIT 5
CONI'IDENTIAL NAL Response
NEW YORK, NY
LOS ANGELES. CA
CHICAGO. IL
STAMFORD, CT
PARSIPPANY. NJ
KELLEY DRYE & WARREN r-r-p
A LIMIIED IIAAIIIIY PARTXERSAIP
WASHINGTON HARBOUR, SUITE 4OO
3O5O K STREET, NW
WASHTNGTON, D.C. 20007-5108
(202t 312-E100
FACSIMILE
(202) 3a2-E45r
w ww. k e llc yd rye. c o m
OIRECT LINE: 1202) 312-E514
EMAIL: [e-mail]
BRUSSELS. BELGIUM
AFFILIATE OFFICES
MUMBAI. INOIA
January 27,2014
VI,l ECFS
Marlene H. Dortch, Secretary
Federal Communications Commission
445lzth Street, S.W.
Washington,DC 20554
Re: Notice of ExParle Presentation: WC Docket Nos. 11-42.03-109
Dear Ms. Dortch:
On Thursday, January 23,2014, John Heitmann and Joshua Guyan of Kelley
Drye & Warren LLP, on behalf of five members of the Lifeline Connects Coalition
("Coalition"),r participated in a telephone call with Rebekah Goodheart of Commissioner
Mignon Clyburn's office, and met with Nicholas Degani of Commissioner Pai's office to discuss
the role of the members in the Lifeline program and the Notices of Apparent Liability ("NALs")
recently issued to several Lifeline eligible telecommunications carriers ("ETCs") including three
members of the Coalition - i-wireless, Telrite and Global Connection. Also on January 23,
2014, John Heitmann met with Christi Barnhart of Commissioner Rosenworcel's office and on
January 24,2014 John Heitmann and Joshua Guyan met with Amy Bender of Commissioner
O'Reilly's office to discuss the same matters. The following summary captures points made
during the discussions related to the above-captioned dockets.
Lifeline Connects Coalition Support of the Lifeline Program
We discussed the Coalition's role in response to the Commission's call for
industry support in publically defending the program and promoting its effectiveness. These
companies have developed and distributed materials to use in support of the program, including
The members ofthe Coalition represented
LLC; Global Connection [nc. of America;
Jay Wireless, LLC.
by the undersigned are Boomerang Wireless,
i-wireless LLC; Telrite Corporation; and Blue
KELLEY DRYE & WARREN r-r-p
Marlene H. Dortch, Secretary
January 27,2014
Page Two
the enclosed Myths v. Facts to dispel false rumors regarding the program;2 summary of the
Commission's Lifeline reforms to demonstrate the Commission's actions to reform and improve
the Lifeline program;3 and testimonials from Lifeline subscribers to highlight the stories of real
people that rely on these companies and the Lifeline program to provide access to employers,
potential employers, teachers, doctors, nurses and family while they struggle to improve their
economic situation.a Further, these companies joined to form the Lifeline Reform 2.0 Coalition
in June 2013 to file a petition for rulemaking proposing additional business-plan agnostic
reforms to the Lifeline program.s A summary of the Lifeline Reform 2.0 proposals is enclosed.6
Competition Will Improve the Transition to Broadband
These companies support the transition of the Lifeline program to support
broadband service for low-income households and will be key to ensuring competition in the
low-income and Lifeline markets to provide broadband service. The program does not benefit
from having only one or two major wireless Lifeline providers. Rather, it is improved by the
existence of completion in the marketplace, which has resulted in an increase in the standard free
wireless minutes offering from 68 minutes to 250 minutes and improved text messaging offers.
Further, some ETCs like Boomerang Wireless are already experimenting with offering some
broadband data service to Lifeline subscribers on a trial basis. Broadband offerings for low-
income Americans will be improved by having healthy competition in the wireless Lifeline
marketplace.
Commitment to Combating Duplicate Enrollment Attempts
We also discussed the commitment these companies have made to combating
duplicate enrollments in the Lifeline program, both within each company and between ETCs.
For example, these companies have joined with dozens of other ETCs that voluntarily utilize an
Inter-company Duplicates Database ("lDD") developed by CGM, LLC that currently includes
more than 2.2 million lines and has prevented over 337,000 duplicate enrollment affempts since
its inception. That equates to savings to the Lifeline program of $3.9 million per month, which
would be $46.8 million annually.T These efforts were undertaken before the development of the
See Exhibit A.
See Exhibit B.
See Exhibit C.
,See Lifeline Reform 2.0 Coalition Petition
109, CC Docket No. 96-45 (filed June 28,
See Exhibit D.
See graphlc representation at Exhibit E.
for Rulemaking, WC Docket Nos. I l-42,
2013).
.,
J
4
5 03-
KELLEY DRYE & WARREN r-r-p
Marlene H. Dortch, Secretary
January 27,2014
Page Three
Commission's National Lifeline Accountability Database ("NLAD") and the IDD has blocked
inter-company duplicate enrollment affempts while the NLAD was supposed to have been
operational (since. February 2013).8 These companies have worked extensively with the
Wireline Competition Bureau ("Bureau") and the Universal Service Administrative Company
("USAC") to vet and improve the NLAD (including its identity verification component),
including by flying in technical advisors from the companies to meet with and assist USAC and
its NLAD vendor and through CGM's consistent efforts to educate the Bureau and USAC on its
experience building and operating a duplicates database. The companies are pleased that the
NLAD will be "live" for real-time enrollment "dips" starting next month and stand ready to help
to make sure that the launch is successful.
The Notices of Apparent Liability
Unfortunately, despite these efforts to combat duplicate enrollments, the
Commission has undertaken a misguided and harmful process of proposing multi-million dollar
fines against ETCs for failing to eradicate 100 percent of end-user fraud allegedly perpetrated in
the form of intra-company duplicate enrollments in the Lifeline program. The NALs give the
false perception to the media, Congress and the American public that there has been over $90
million in fraud committed in the Lifeline program, when in fact the alleged overpayments from
the fund total approximately $330,000.
i-wireless, Telrite, and Global Connection each have received an NAL, despite the
fact that each company has had its compliance program and duplicate detection processes vetted
and approved by the Bureau. Each company disputes the allegation of duplicate enrollments, but
even if every one of the alleged intra-company duplicates were duplicates, the companies would
have near-perfect track records at protecting the program from such duplicate enrollments - i-
wireless 99.7 percent, Telrite 99.6 percent and Global Connection99.4 percent. The
Commission and USAC appear to expect perfection in guessing what USAC deems to be a
duplicate, but these track records at blocking duplicate enrollment attempts are not the sign of
ETCs that ignore the Commission's rules or abuse the program by accepting duplicate
enrollments attempts by end-users. In fact, if each company were subject to the Improper
Payments Elimination and Recovery Act of 2010 threshold for government disbursement
programs, none would be considered to be susceptible to "significant improper payments"
because the alleged improper payments are less than 1.5 percent.e
See graphic representation showing the timeline for the NLAD at Exhibit F.
See Improper Payments Elimination and Recovery Act of 2010,
2010,31 u.s.c. $ 3321.
tll-204 (Jut.22,
KELLEY DRYE & WARREN t-t-p
Marlene H. Dortch, Secretary
January 27,2014
Page Four
Indeed, each company has extensive processes and procedures in place to block
duplicate enrollments, both intra-company through internal database checks and inter-company
through the IDD using software that looks for matching data. However, the Commission's rules
and orders do not define a "duplicate" for purposes ofthe one-per-household rule, nor do they
define a "subscriber" for purposes of determining whether the subscriber receives more than one
Lifeline-supported service. Notably, when the Bureau has provided guidance on what it views to
represent a duplicate, it has offered something different on no less than four occasions (In-Depth
Validation instructions to USAC, Lifeline Biennial Audits, NLAD seeding and in Public Notices
requiring the use of all subscriber data for detecting duplicates).r0
In the IDVs that were conducted by USAC since 201l, the Commission instructed
USAC to look for "same name and same address" duplicates.ll Instead, USAC looked for
similar name and similar address 'oduplicates" using a subjective process that it would not make
available to ETCs. No Commission rule, however, defines which similarities are meaningful and
which are not - or how to addresses multiple variations in that information. For example, USAC
appears to discount or ignore differences in name such as Jr. and Sr. (regardless of whether the
subscribers have completed an independent economic household form) and secondary address
fields such as apartment numbers.
In2013, USAC started notifing ETCs of alleged intra-company duplicates and
instructing ETCs through findings letters to de-enroll them. Although the companies often
suspected that many or all of the alleged duplicates were not in fact duplicates, they generally
followed a practice of de-enrolling the subscribers within 5 business days at the instruction of
USAC as they had done for inter-company duplicates. The findings generally involved a tiny
portion (less than lYo) of the subscribers reviewed and small amounts ranging from $9 to a few
hundred or a few thousand dollars that USAC captured from the ETC's next month's
disbursement. As a result of the release of the NALs discussed herein, ETCs, including those
that have not received NALs like Boomerang Wireless, have begun appealing all USAC intra-
company duplicate IDV findings to the Bureau.
In order to thwart duplicate enrollment attempts, since June 2012,the
Commission has required Lifeline ETCs to obtain two additional pieces of information about
each subscriber: date of birth and last four digits of the subscriber's social security number
("SSN"). The Bureau has addressed the question of what ETCs must do with this information
See Wireline Competition Bureau Announces Duty to Query the National Lifeline
Accountability Database, WC Docket No. I l-42, Public Notice, DA l4-40 (rel. Jan. 14,
2014) CNLAD Query Public Notice).
See Letter from Sharon E. Gillett, Chie[ WCB, to D. Scott Barash, Acting Chief
Executive Officer, USAC, DA I l-1082 at 5 (June 2l,20ll).
KE LLEY
Marlene H. Dortch, Secretary
January 27,2014
Page Five
DRYE & WARREN r-r-p
differently in several different contexts. The NLAD will check applicants for same exact last
name, date of birth and last four digits of the SSN, which will be effective, but no process can be
perfect and perfection should not be expected. Further, the Bureau has proposed audit
procedures for the Lifeline Biennial Audits that would require independent auditors to define a
"subscriber" as having a match of (full) name, date of birth and last four digits of the SSN.l2
While USAC ignores date of birth and SSN information for purposes of finding duplicates in its
IDVs, the Bureau (rationally) instructs ETCs that they must consider that information in making
a duplicate determination. I 3
Starting in September 2013,likely in response to pressure from Congress, the
Commission started converting the IDVs, in many cases, directly into NALs without any Letter
of Inquiry from the Enforcement Bureau. The NALs impose an unconstitutional forfeiture
structure that seeks to fine Telrite 522,399,761for alleged overpayments from the Lifeline
program of $41,587;'o to fine GlobalConnection $11,702,695 foralleged overpayments of
522,565;ts and to fine i-wireless $8,753,074 for alleged overpayments of $24,358.r6 Those
proposed fines are multiples of 538,519 and 359 times the alleged harm to the Lifeline
program.'' In one particularly egregious example, the Commission has proposed to fine i-
wireless 525 ,027 .7 5 for a single alleged duplicate subscriber in West Virginia. | 8
In previous enforcement actions alleging duplicate Lifeline accounts, the
Commission proposed fines that were 3.6 times (VCI Company),re 1.09 times (TerraCom)2o and
See Wireline Competition Bureau Seel<s Comment on the Lifeline Bienniol Audit Plan,
WC DocketNo. ll-42, PublicNotice, DA13-2016, atAttachment2,p.l5 (rel. Sept.30,
2013).
,See NLAD Query Public Notice
In re Telrite Corporation, Notice of Apparent Liability for Forfeiture, File No. EB-IHD-
13-00010674 (rel. Dec. I l, 2013) ("Telrite NAL").
In re Global Connection Inc. of America d/b/a Stand Up l(ireless, Notice of Apparent
Liability for Forfeiture, File No. EB-IHD- l3-00010970 (rel. Dec. I l, 2013) ("Global
Connection NAL").
In re i-wireless, LLC, Notice of Apparent Liability for Forfeiture, File No. EB-IHD-13-
00010656 (rel. Nov. 1,2013) ("i-wireless NAL").
See graphic representations at Exhibit G.
See i-wireless NAL.
See In the Matter of VCI Company Apparent Liabilityfor Forfeiture, File No. EB-O7-IH-
3985, Notice of Apparent Liability for Forfeiture and Order, 22FCC Rcd 15933 (rel.
Aug. 15,2007).
t2
l5
l3
t4
t7
l8
l9
KELLEY DRYE & WARREN t-t-p
Marlene H. Dortch, Secretary
January 27,2014
Page Six
4.2 times (YourTel)2l the alleged overpayment. As a further comparison, in the Commission's
recent consent decree with AT&T over improper Telecommunications Relay Service ("TRS")
reimbursements, AT&T agreed to make an $11,250,000 voluntary contribution in addition to a
reimbursement of $7,000,000 in improperly received TRS funds - a penalty representing 1.6
times the alleged harm.zz In an action regarding alleged violations of the Commission's truth-in-
billing rules against Verizon Wireless, the Commission proposed to fine the company less than
half of the alleged overpayments received for data usage charges." The.e comparisons
demonstrate that the fines proposed against Telrite, Global Connection, i-wireless and other
Lifeline ETCs are unlawfully punitive.
Fines like those proposed against Telrite, Global Connection, i-wireless and
others threaten the viability of the Lifeline program and impact even those ETCs that have not
received an NAL. Since no company can be perfect at eliminating all intra-company duplicates
by guessing perfectly what USAC will determine to be a similar name, similar address
"duplicate," under its subjective standard, all ETCs are operating with the prospect of such
enforcement actions and the unreasonably punitive fines structure. The specter of these NALs
has slowed or stopped state approval of ETC designations (even for ETCs without NALs),
threatened investment in Lifeline providers and resulted in job losses at ETCs.
The NALs and IDV appeals have revealed that USAC's "similar name, similar
address" approach to duplicate detection can result in outcomes that could be or could be
perceived to be racial profiling or some other form of discrimination resulting in disparate impact
or disparate treatment. For example, one i-wireless IDV that was included in its NAL alleges
that two subscribers both named Jose with different last names, different SSNs and different
dates of birth that live in the same apartment building in the Bronx, New York (in different
apartments) are duplicates. As another example, Boomerang Wireless not only appealed the
IDV findings but also appealed the disconnect and self-help aspects with respect to duplicate
pairs for which it has an independent economic household form and for another group of
2t
See In the Matter of TeruaCom, Inc., Consent Decree, 28 FCC Rcd 1527 (rel. Feb. 26,
2013).
In the Matter of YourTel America, Inc., Consent Decree, 28 FCC Rcd 1539 (rel. Feb. 26,
2013).
See In the Matter of AT&7, File No.: EB-TCD-12-00000337, Acct. No.: 201332170011,
FRN: 0005193701, Order 28 FCC Rcd 5994, 6004-05 (rel. May 7,2013).
See In the Matter of Verizon Wireless Data Usage Charges, File No. EB-09-TC-458,
Account No. 20 I 13217 0001, FRN No. 0019212406, 25 FCC Rcd I 5 1 05 (rel. Oct. 28,
2010) (Verizon Wireless agreed to a voluntary contribution of $25 million for $52.8
million refunded to customers).
KELLEY DRYE & WARREN r-r-p
Marlene H. Dortch, Secretary
January 27,2014
Page Seven
duplicates that would result in Boomerang Wireless having to disconnect members of an Asian
ethnic minority with short, similar names who live close by to each other.2a We do not suggest
that USAC would intentionally discriminate against certain ethnic minorities. However, the
extent to which outcomes like this have resulted from USAC's unauthorized deviation from the
Bureau's instructions for conducting IDVs2s is not known. Fortunately, with the NLAD finally
going "live" next month, the Commission can soon rely on a more predictable and rational
means of duplicate detection that avoids the unintended consequences resulting from USAC's
IDVs.
This letter is being filed electronically for inclusion in the public record of the
above-referenced proceedings. Please feel free to contact the undersigned with any questions.
Respectfu lly submitted,
*T'^*S**t+r-.*.---..-
John J. Heitmann
Joshua T. Guyan
Counsel to Boomerang Wireless, LLC; Global
Connection Inc.; i-wireless LLC; Telrite
Corporation; and Blue Jay Wireless, LLC
Enclosures
Rebekah Goodheart
Nicholas Degani
Christi Barnhart
Amy Bender
See Notice of Written Ex Parte Presentation Regarding Boomerang Wireless Request for
Review; WC Docket Nos. I l-42,03-109 (filed Jan. 10, 201$; Boomerang Wireless,
LLC Supplement to Request for Review, WC Docket Nos. I l-42,03-109, (Jan. 10,
2014).
See 47 C.F.R. $ 5a.702(c); The Conference Group, LLC v. FCC,720 F.3d 957, 960 (D.C.
Cir. 2013) (USAC "has no policy or interpretive role").
EXHIBIT A
Life LineCon nects
The Truth About Lifeline
Myth: The government gives away cellphones through Lifeline.
Fact: The Lifeline program does not pay for phones. lt subsidizes the services only.
Myth: This is just another Obama Administration entitlement program.
Fact: The Lifeline program was created in 1985 under President Ronald Reagan for
wireline phone service only. ln 2005, Lifeline was expanded under the Bush
Administration to include pre-paid wireless service.
Myth: Cellphone service is a luxury and does not require a government subsidy.
Fact: When the program began in 1985, only 80 percent of low-income households had
phone service. Today, that level has increased to 92 percent in large part due to the
success of the Lifeline program. According to the Centers for Disease Control, a majority
of Americans living in poverty have only a cellphone and no wireline telephone, and
over 40 percent of children live in homes with only a cellphone.
Myth: All you have to do is sign up. There's no real check to see who is eligible.
Fact: All Lifeline service providers are now required by the FCC to verify eligibility of a
consumer by verifying income or participation in a qualifying program. A consumer is
only eligible for Lifeline if their income is at or below 135 percent of the federal poverty
guidelines, or a participant in Medicaid, Food Stamps, Federal Public Housing Assistance,
National School Lunch Program, Bureau of lndian Affairs General Assistance, or Head
Start.
Myth: Our tax dollars are used to pay for these discounted phone services.
Fact: Absolutely no federal tax dollars are used to fund the program. Funding comes
from the UniversalService Fund (USF) from fees assessed on service providers and
customers, which is also used to provide subsidies for rural phone service, rural
telemedicine connectivity and public schools and libraries.
Myth: People can sign up for as many Lifeline accounts as they want.
Fact: The FCC's rules permit only one Lifeline account per household. The FCC and the
industry have worked diligently to eliminate duplicate enrollments, and later this year,
the National Lifeline Accountability Database is expected to come online to help prevent
duplicate enrollments before they happen.
Myth: The program ballooned and became fraught with fraud under the Obama
Administration.
Fact: Under Chairman Genachowski, major reforms adopted last year to curb waste,
fraud and abuse have saved the fund more than SZOO million in 2OL2 and are projected
to save S+OO million in 2013. The fact is that under the FCC's recent reforms,
enrollment in Lifeline has leveled off and has begun to shrink.
Myth: 4L% of Lifeline subscribers couldn't demonstrate eligibility or refused to
respond to requests for recertification in 2012.
Fact: The FCC found that 29Yo -- not 4L% - of Lifeline customers that were enrolled in
the program as of June 2012 were de-enrolled at of the conclusion of the 2012 Lifeline
Recertification Process. The FCC concluded that a non-response to a recertification
request does not indicate that a subscriber was ineligible at the time of enrollment or at
the time of the annual recertification.
For more information on the Lifeline Program, visit htto://www.lifelineconnects.orel
EXHIBIT B
Federal Communications Commission Low-lncome Fund Reforms
Lifeline Reform Order (FCC 12-11) February 6,2OL2
Lifeline Further Reform Order (DA 13-1441)June 25,2OL3
o Conformed the Lifeline rules to the new definition of "voice telephony service"
o Provides blanket forbearance from the "own facilities" requirement, if carriers file a Compliance Plan
o Toll Limitation Service support to be phased down and then eliminated
o New flat 59.25 Lifeline reimbursement
o Link Up eliminated, except in Tribal areas for ETCs receiving High Cost support
o New eligibility, enrollment, certification and verification regime, including duplicates and eligibility
databases; requirement to view proof of eligibility
o The 2013 Lifeline Reform Order states that ETCs may not provide an activated device for Lifeline service
until the consumer's eligibility is fully verified and all enrollment steps are completed
o As of June 7,2072, customer eligibility depends on compliance with one-per-household requirement
o ETCs must inform prospective customers that only one Lifeline service is available per household
(marketing disclosures)
o Lifeline application must include certification from customer that household is not already
receiving a Lifeline service
o Marketing disclosures
o Two special requirements for pre-paid providers
. Activation: no Lifeline support until the subscriber activates the service by means specified by
carrier, such as outbound call
. Usage: no Lifeline support for subscribers that have not "used" the service for 60 days
o ETCs were required to re-certify all existing customers as of June L, 2OL2 by the end of 2012 and report to
the FCC and USAC on January 31, 2013 (Form 555); must re-certify all subscribers annually and report by
Jan. 31 for the previous year
o New ETCs will be audited by USAC within 12 months of seeking Lifeline reimbursement (by activating a
Study Area Code to provide Lifeline service)
o ETCs that draw SS million or more annually from the Low-lncome Fund must hire an independent audit
firm to perform audits every 2 years
Savings Reported by the FCC
o February L2,2013 News Release: 2012 savings in Lifeline program more than SZt+ million; expect at least
an additional 5400 million in 2013
EXHIBIT C
REAL
REAL
REAL
FAMILIES
STORIES
LIFELIN E
1i3:.i... : : :*f:.*,:.:., WlfSleSS
''r:1:rli.rr.ri ..-,' ..
"I was in desperate need of a phone and on the job hunt fiercely. Well my
first interview I gave the receptionist my phone number and although I didnt
get the job I got another interview and they were able to call me because of
my new phone thanks to StandUPl'
Stand{}P -Lillian W.
WIRELESS
"Without my phone I could not make the phone calls to inquire about
employment. I just received a call about an hour ago from an employer to
schedule me for an interview. Without this phone that would not have been
possible."
- Edward B. (Chicago, IL)
"I got laid offfrom my job and have been looking for employment for the
past 7 months. I need to have a phone where potential employers can contact
me."
-Tara G., Kentucky
,.
.,.,;., ,-.til,:,r, V/lR E LESS.
"I used to work in a beauty shop, but I couldnt afford the rent any longer so
now I cut hair out of my apartment. My clients need a way to contact me to
schedule appointments. I rely on my Lifeline phone so that they can reach
me. If they call and I'm not available, they'll go somewhere elsel'
--Charlene P., Indiana
C
i:..1.:,WlRE LESS.
"My kids and I were home alone one day and a young man started
banging and kicking at my door and windows. He was screaming, "Let me in
now!" My kids were scared, crying and upset because he would not stop or go
away. I called 911. The police arrived and chased him away. Having my Life
Wireless cell phone gives me a sense of comfort and security because I know
I will be able to use it to call for help if I need to in the future."
- Amber M. (Saginaw, MI)
I am a domestic violence survivor and I am starting my life over with my
two children. I currently have two jobs and pay rent and childcare expenses
myself. I feel this phone will help me a lot. Thankyou.
StandUP
-Gekiya M.
WIRELESS
"This phone has saved my life. I am a single mother of three and go-
ing to college. Within 48 hours of receiving this phone, I was assaulted. Had
I not received this phone I would have never been in the position call911.
There was no one around at the time to help me. I am very grateful for the
person at the tent who helped me get this phone. I went back to the tent a few
days after my assault and thanked the agent for saving my life."
- Maria R. (Chicago,IL)
"I am a recovering addict. Me getting this phone and Lifeline service is going
to be a fresh start of a new real life. Having this new phone will be the lst
thing that I will use to start my new life. Thank you so much!"
6rfouch
|enifer T. (Oklahoma City, OK)
WIRELESS
Powered by Boonrerang W,reless
"I'm a young Army veteran and a single father. I joined the service when I
was 19 as a way to provide for my family. I've served for 6 years including
tours in South Korea, fapan, Germany and Afghanistan. I income-qualiff
for Lifeline service. Since returning home, I've settled in a remote area of
Nevada. I find occasional work as a freelance mechanic, but am struggling
to find full-time employment. I use my Lifeline phone on my resume when
applying for jobs and as a way to keep in touch with my family members that
live far away''
-Brian S., Nevada
:::WIR E LESS.
"I became homeless and am now living in a shelter My StandUP Wireless
phone has helped me keep in touch with my family during a current time of
personal crisis. It has helped them to know that I am in a safe place.
My StandUP phone has helped me keep doctor's appointments at the local
Veteran's Association facility and it has helped me to have a phone to receive
calls for future employment. Without the StandUP phone I'd have no way
of communicating with anyone and therefore get out of this personal crisis.
Thank you for being there for me! "
Regina F.
StandUP
WIRELESS
Meet Aesha M. from Broken Arrow Oklahoma. Aesha is a single mom of one
with another child on the way. She was in need of a phone to get in contact
with her doctors and family during her pregnancy. She was very thanKul for
our help and told me that having Lifeline service would help her out tremen-
dously in this time of need.
Snl:uch
WIRELESS
Powered lry l]oomerilnq Wireless
"I have three young children and need to provide their schools with an
emergency contact number in case they need to reach me. My Lifeline phone
gives me peace of mind knowing that I can be reached if anything happens to
one of them."
-Darnique ]., Ohio
,;.
i: . ]. ., WIR E LESS.
"I dont want to have to rely on this service, but for now anything that can
help us save money is a lifesaver. We just moved to Cincinnati from Missouri
to live with my Dad. I'm trying to find a job so that we can save some money
to find a place of our own. My kids qualify for Medicaid, so I can use this
phone to make their doctor's appointments."
--Stephanie F., Kentucky
WIRE LESS
"Thank you for connecting our residents to Life Wireless' cell phone
program. It may seem like such a simple thing to be able to place and receive
calls, but when you are homeless and desperately trying to stabilize your fam-
ily's life, having access to a reliable phone service is essential. Thank you so
much for partnering with us to support these womenl'
:,
- |ulianna Janssen, Ascension Place (Minneapolis, MN)
6nTouch
WIRELESS
Powered bY Boomeratlq Wileless
il'
"I am a single Mom with three kids. My ex-husband does not pay child
support and I am solely responsible for taking care of our children. I clean
houses and offices to make a living, but I need to know where my kids are
and that they are okay when I'm working."
-Samantha L., Ohio
'a
:;{I$SWIRELESS.
"l am77 years old. I am so thanKul for this phone and Lifeline services
because it will give my family peace of mind. I have had 7 heart attacks and
have seven stints. Needless to say my family is concerned about me. I am glad
to have this phone because my family can now have peace of mind knowing
that they can get in contact with me and that I have a way to call in case of an
emergency. Lifeline service means peace of mind to my family and I."
Edwina Neadeau
"I became a StandUp customer in February of 2013.I am delighted with
the service. My two grandsons have asthma. More than once the pre-K or
elementary school has called me on my StandUp phone to alert me that
the asthma was acting up so I could take them home to their machine that
provides breathing treatments. That would not have been possible in the year
before receiving my Lifeline phone as I did not have phone service."
-Susan B.
StandtlP
WIRELgSS
"I use my lifeline to make doctor appointments and to help with my
78 year old grandmother who suffers from arthritis. She fell just the other day
and she was able to call me on my phone so that I could come over and help
her get back upl'
rwlr€,|€cs',':Shandia S. (Saginaw, MI)
NEW YORK, NY
LOS ANGELES. CA
CHICAGO, IL
STAMFORD. CT
PARSIPPANY. NJ
KELLEY DRYE & WARREN r-r-p
A UM[EO LrAtrL|TY P^itr€RAHtP
WASHINGTON HARBOUR, SUITE 4OO
3O5O K STREET, NW
WASHINGTON,20007-51 08
FACSIMILE
12021 3a2-Ea51
w ww. ko llc yd ryo. co m
(2021 312.81OO
EMAIL: ihoitmann@kclleyd,y€.qom
February 6,2014
Vm ECF.S
Marlene H. Dortch, Secretary
Federal Communications Commission
445lzth Street, S.W.
Washington, DC 20554
Re: Notice of ExParle Presentation: WC Docket Nos. 11-42.03-109
Dear Ms. Dortch:
On Tuesday, February 4,2014, John Heitmann and Joshua Guyan of Kelley Drye
& Warren LLP, on behalf of Boomerang Wireless, LLC; Global Connection Inc. of America; i-
wireless LLC; Telrite Corporation; and Blue Jay Wireless, LLC, each members of the Lifeline
Connects Coalition ("Coalition"), met with Amy Bender of Commissioner O'Reilly's office to
further discuss the role of the members in the Lifeline program and the Notices of Apparent
Liability ("NALs") recently issued to several Lifeline eligible telecommunications carriers
("ETCs") including three members of the Coalition - i-wireless, Telrite and Global Connection.
On Wednesday, February 5,2014, we met with Nicholas Degani of Commissioner Pai's office to
discuss the same topics. We had met with Mr. Degani on January 23,2014 and with Ms. Bender
on January 24,2014 to discuss these topics and filed an ex parte letter on January 27,2014
detailing our discussions. I
This week's meetings included topics and discussion consistent with the January
27,2014 ex parte leffer and we utilized the same exhibits with a few exceptions. First, at the
meetings this week, we provided a new graphic (Exhibit A herein) illustrating the effectiveness
of ETCs at screening out intra-company duplicates (approximately 95.5 percent and often better)
even if all of the alleged duplicates in the NALs are in fact duplicates. Second, we provided a
See Notice of Ex Parte Presentation of Boomerang Wireless, LLC; Global Connection
lnc. of America; i-wireless LLC; Telrite Corporation; and Blue Jay Wireless, LLC, WC
Docket No. I l-42, 03-109 (Jan. 27, 2014).
KELLEY DRYE & WARREN r-r-p
Marlene H. Dortch, Secretary
February 6,2014
Page Two
graphic (Exhibit B herein) showing the different iterations of Wireline Competition Bureau
guidance on what it views to represent a duplicate Lifeline subscriber - In-Depth Validation
("IDV") instructions to USAC (same name and same address), Lifeline Biennial Audits (same
name, date of birth and last four digits of social security number) and the National Lifeline
Accountability Database ('NLAD") seeding (same last name, date of birth and last four digits of
social security number), as well as the standard USAC used in the IDVs that underlie the NALs
(similar name and similar address). We emphasized that an enforcement proceeding is not the
appropriate forum for the Commission to develop a policy for what constitutes a duplicate
Lifeline subscriber (i.e., what data fields have to match or how similar how many data fields
need to be).
In addition, at the meetings we provided an updated graphic (Exhibit C herein)
showing the results of the Inter-company Duplicates Database ("IDD") developed by CGM, LLC
that these ETCs voluntarily check for inter-company duplicates when enrolling Lifeline
customers. As of January 2014, the IDD includes more than 2.4 million lines and has prevented
over 354,000 duplicate enrollment attempts since its inception. That equates to savings to the
Lifeline program of $4.1 million per month, which would be 549.2 million annually.
We look forward to the launch of the NLAD beginning this month and to working
with the Commission on a way forward that restores stability to the Lifeline program.
This letter is being filed electronically for inclusion in the public record of the
above-referenced proceedings. Please feel free to contact the undersigned with any questions.
Respectfully submitted,
*$L.^"f+t*;+r-{s_._t__=.
John J. Heitmann
Joshua T. Guyan
Counsel to Boomerang Wireless, LLC; Global
Connection Inc.; i-wireless LLC; Telrite
Corporation; ond Blue Jay Wireless, LLC
Enclosures
Amy Bender
Nicholas Degani
EXHIBIT A
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EXHIBIT B
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A IIMITEO IIABILITY PARTNERSHIP
WASHINGTON HARBOUR, SUITE 4OO
3O5O K STREET, NW
wASHINGTON, D.C. 20007-5108
l2o2l 342-840O
FACSIMII.E
[phone]
w ww. ke lle yd ry6. co m
DIRECT LINE: 1202)- 342-8544
EMAIL: [e-mail]
BRUSSELS, BELGIUM
AFFILIATE OFFICES
MUMBAI, INOIA
February 10,2014
VIa ECFS
Marlene H. Dortch, Secretary
Federal Communications Commission
445lzth Street, S.W.
Washington,DC 20554
Re: Notice of ExParle Presentation: WC Docket Nos. 11-42.03-109
Dear Ms. Dortch:
On Thursday, February 6,2014, John Heitmann and Joshua Guyan of Kelley
Drye & Warren LLP, on behalf of Boomerang Wireless, LLC; Global Connection [nc. of
America; i-wireless LLC; Telrite Corporation; and Blue Jay Wireless, LLC, each members of the
Lifeline Connects Coalition ("Coalition"), met with Daniel Alvarez of Chairman Wheeler's
office to funher discuss the role of the members in the Lifeline program and the Notices of
Apparent Liability ('NALs") recently issued to several Lifeline eligible telecommunications
carriers ("ETCs") including three members of the Coalition - i-wireless, Telrite and Global
Connection. The topics and discussion were consistent with the ex parte letters filed on January
27,2014 and February 6,2014 regarding meetings with the other Commissioners' legal advisors,
and we utilized the same exhibits.l
IDV Appeals and Enforcement Safe Harbor
We also discussed the fact that, as a result of the NALs, many ETCs including
those in the Coalition have begun to appeal new In-Depth Validation ("IDV") findings letters
,SeeNotice of ExParte PresentationofBoomerangWireless,LLC; GlobalConnection
Inc. of America; i-wireless LLC; Telrite Corporation; and Blue Jay Wireless, LLC, WC
Docket No. I 1-42, 03-109 (Jan. 27, 2014) and Notice of Ex Parte Presentation of
Boomerang Wireless, LLC; Global Connection Inc. of America; i-wireless LLC; Telrite
Corporation; and Blue Jay Wireless, LLC, WC Docket No. I l-42, 03-109 (Feb. 6, 2014).
KELLEY DRYE & WARREN r-r-p
Marlene H. Dortch, Secretary
February 10,2014
Page Two
from the Universal Service Administrative Company ("USAC"). Any ETC that has participated
in an IDV that resulted in the allegation of any intra-company duplicates can (pursuant to the
Commission's apparent strict liability standard) result in an NAL. It is clear that ETCs can be
close to perfect af screening for intra-company duplicates,2 but they cannot be perfect. The lack
of perfection, however, does not signal that an ETC has ignored the Commission's rules or
exploited the Lifeline program.
As part of the appeals, we have proposed that the Commission establish a safe
harbor reflecting a minimum level of due diligence that a Lifeline ETC should employ to screen
for duplicates. The goal of the Lifeline rules undoubtedly is to help to prevent subsidies from
being paid for ineligible subscriber accounts. The Lifeline regulatory framework is a process-
based, not a results-based, framework, but the Commission's Lifeline rules do not provide
instruction to Lifeline ETCs regarding the actions needed to be taken in order to detect duplicates
(however the term might be defined). Because no standard of conduct has been set, it is
impossible for an ETC to know at this time what actions will be sufficient for screening for
duplicates.
The safe harbor should identiff the steps a Lifeline ETC should take in order to
check for duplicate enrollments in its own records. We suggest that these steps should be
satisfied by evidence that the ETC (l) has obtained a valid certification from the subscriber
attesting, under penalty of perjury, that the subscriber is not receiving another Lifeline-supported
service, and (2) has submitted the subscriber's record to an electronic screening process using the
National Lifeline Accountability Database ("NLAD") (when available) or, where the NLAD is
not available, using a state database, a third-party database of subscribers or the ETC's own
subscriber records.
Provided that the Lifeline ETC can demonstrate receipt of a certification form
satisfying Section 54.410(d) and electronic screening through the NLAD or other appropriate
database, then the ETC would not be subject to retroactive liability for enrollment of the
subscriber. If, after additional review via an IDV or otherwise, USAC or the Commission
concludes that an account is a duplicate, the Lifeline ETC would be required to de-enroll the
account as insffucted. However, the Lifeline ETC would not be required to return any Lifeline
benefits received prior to the determination that the account is ineligible. Moreover, the Lifeline
ETC would not be subject to any potential fines or penalties for having enrolled the subscriber or
Even if all of the duplicates alleged in the NALs are in fact duplicates, i-wireless would
have been 99.7 percent effective at screening for intra-company duplicates, Telrite would
have been 99.6 percent effective and Global Connection would have been 99.4 percent
effective.
KELLEY DRYE & WARREN r-r-p
Marlene H. Dortch, Secretary
February 10,2014
Page Three
having requested reimbursement for the subscriber prior to the USAC or Commission
determination.
Moving Forward to Broadband
We discussed our appreciation for Chairman Wheeler's support for the Lifeline
program and his desire to move the Lifeline program forward to support and provide broadband
services for low-income Americans.3 These companies support the transition of the Lifeline
program to support broadband service for low-income households and will be key to ensuring
competition in the low-income and Lifeline markets to provide broadband service. The program
does not benefit from having only one or two major wireless Lifeline providers. Rather, it is
improved by the existence of competition in the marketplace, which has resulted in an increase in
the standard free wireless minutes offering from 68 minutes to 250 minutes and improved text
messaging offers. Broadband offerings for low-income Americans will be improved by having a
healthy Lifeline ecosystem in the wireless marketplace with multiple ETCs that are able to attract
adequate investment.
We look forward to the launch of the NLAD beginning this month and to working
with the Commission on a way forward that restores stability to the Lifeline program and permits
competition in the marketplace.
Chairman Wheeler Town Hall With Voices for Internet Freedom Coalition (Jan. 10,
2014, avallable at http://www.politico.com/morningtech/01 l4lmorninetechl26T3.html
("I am big supporter of Lifeline...The idea of Lifeline for broadband is a legitimate
concept, and we have to figure how to make it work.").
KELLEY DRYE & WARREN r-r-p
Marlene H. Dortch, Secretary
February 10,2014
Page Four
This letter is being filed electronically for inclusion in the public record of the
above-referencedproceedings. Please feel free to contact the undersigned with any questions.
Respectfully submitted,
*r^"f*.r+"-"--"".-
John J. Heitmann
Joshua T. Guyan
Counsel to Boomerang Wireless, LLC; Global
Connection Inc.; i-wireless LLC; Telrbe
Corporation; and Blue Jay Wireless, LLC
cc:Daniel Aharez
NEW YORK, NY
LOS ANG€LES, CA
cr.lrcAGo, rL
STAMFORO. CT
PARSIPPANY, NJ
KELLEY DRYE & WARREN rr-p
A LIMIIEO IIASIIiTY PARTXEiSHIP
WASHINGTON HARBOUR, SUITE 4OO
3050 K STREET, NW
WASHINGTON, DC 2OOO7
(202) 3il2-8,100
November 17,2014
FACSIMILE
[phone]
www. kc ll o y d ry c. co m
JOHN J, HEITMANN
EMAIL: [e-mail], BELGIUM
AFFILIATE OFFICE
MUMBAI, INDIA
Marlene Dortch, Secretary
Federal Communications Commission
445 lzth Sffeet, SW
Washington,DC 20554
Re:
Dear Ms. Dortch:
Notice of Lifeline Connects Coalition Oral Ex Parle Presentation:
WC Docket Nos. 1l-42. 09-197
On November 13,2014, Brian Lisle and Susan Berlin of Telrite Corporation, Jeni
Kues of i-wireless, LLC, Dave Skogen of Global Connection of America [nc., Jaime Palmer and
Lauren Moxley of Blue Jay Wireless, LLC, Chuck Campbell of CGM, LLC and John Heitmann and
Joshua Guyan of Kelley Drye & Warren LLP met with Ryan Palmer, Jonathan Lechter, and
Melanie Tiano of the Wireline Competition Bureau ("Bureau"). The companies represented are the
members of the Lifeline Connects Coalition that have joined together to protect and preserve the
integrity of the Lifeline program by educating and separating myths from facts about the program,
sharing best practices on compliance and industry self-regulation, and by proposing additional
reforms dubbed "Lifeline Reform 2.0" to the FCC in a petition for rulemaking filed last year and
updated in April 2}l4.l
In the meeting, we discussed Commissioner Clyburn's speech2 delivered at an event
entitled "Reforming {-ifeline for the broadband era" at the American Enterprise Institute on
November 12,2014.' The Coalition supports Commissioner Clyburn's goal of modemizing the
Lifeline program for the broadband era. Today's Lifeline program does not do enough to make
I See Lifeline Reform 2.0 Ex Parte, WC Docket No. I l-42 at 5-9 (Apr. 14, 2Ol4).
' Sr" http://transition.fcc.eov/Daily Releases/Dail.v-Businessl20l4/db I I l2/DOC-
3304534.l.pdf (last visited Nov. 16, 2014).3 See http://www.aei.ore/events/refbrnring-lifeline-broadband-era/ (last visited Nov. 16,
2014).
KELLEY DRYE & WARREN r-r-p
Marlene Dortch, Secretary
November 17,2014
Page Two
broadband services affordable for low-income Americans. The speech raises many important
questions and issues that should be considered as part of a further notice of proposed rulemaking as
well as in the context of the Communications Act update underway in Congress.
Among those questions is whether wireless Lifeline eligible telecommunications
carriers ("ETCs") can include broadband in their popular "free" or no cost to consumer offerings,
based on the current $9.25 subsidy. In exploring this issue, the Commission will have to consider
the impact proposals will have on program participation by consumers and service providers.
Wireless ETCs successfully removed a significant barrier to consumers with their "free" service
offerings and the result was a positive and meaningful increase in program participation. The
Commission also must be mindful that a program that favors large providers or those with the most
expansive retail presence may effectively limit competition and eventually result in less innovation
and service to consumers.
The Commission also must assess proposed program administration changes
carefully in terms of practicality. In 2012,the Commission acted to take the eligibility
determination out of the hands of ETCs.a However, the Commission's 2012Lifeline Reform Order
mandate to develop a national eligibility database remains unrealized nearly ayear after it was set
to be completed. New proposals, including those that contemplate more complicated interaction
with other federal benefit programs, should be assessed with this experience in mind.
New administrative proposals also must be assessed based on their costs. According
to the 2013 USAC Annual Report, the percentage of USAC administrative expenses divided by
total USF program disbursements was 1.29 percent.t By comparison, the Supplemental Nutrition
Assistance Program ("SNAP") utilizes government entities to determine applicant eligibilify and
annual administrative costs are approximately 9 percent (about $7 billion) of benefits paid.o While
See Lifeline and Link Up Reform and Modernization, Lifeline and Link Up, Federal-State
Joint Board on Universal Service, Advancing Broadband Availability Through Digital
Literacy Training, WC Docket No. 1l-42, WC Docket No. 03-109, CC Docket No. 96-45,
WC Docket No. 12-23, Report and Order and Further Notice of Proposed Rulemaking, FCCl2-ll, fl 403 (rel. Feb. 6, 2012).
See USAC 2013 Annual Report at 5, available at
http://www.usac.ore/about/tools/publications/annual-reports/default.aspx (last visited Nov.
17,20t4).
See Food and Nutrition Service, Supplemental Nutrition Assistance Program, Program
Accountability and Administration Division, State Activity Report, Fiscal Year 2013 at2
(July 2014), available at http://www.fns.usda.qov/sites/default/files/snap/2013-state-
activity.pdf (last visited Nov. 17, 2014) (showing total issuance ofjust over $76 billion and
just under $7 billion in total costs).
KELLEY DRYE & WARREN r-r-p
Marlene Dortch, Secretary
November 17,2014
Page Three
the administrative costs for the entire USF were $107 million in 2013, administrative costs for
Lifeline would be $162 million at 9 percent of total disbursements ($1.8 billion in 2013).
The Commission also must assess the potential impact of coordination with other
federal benefit programs based on the Lifeline program's participation rate and overall program
costs. Lifeline is dramatically undersubscribed by comparison to many other federal benefits
programs. Coordinated enrollment could result in a dramatic increase in program participation and
corresponding costs. Because Lifeline is the Commission's only means-tested USF program, these
issues require careful consideration. While it is undesirable to defer broadband funding for certain
high cost locations and E-rate applicants, it is unacceptable to deny Lifeline service to an eligible
consumer.
As part of its Lifeline modernization effort, the Commission should recognize that
ETCs are a valuable part of the Lifeline ecosystem. The ETC designation process results in a
degree of control and accountability that would not be present in a system with service providers
freed from ETC market entry and oversight requirements. To achieve greater program
participation, the Commission can and should streamline its own ETC designation process and set
guidelines for the states. Additional actions can be taken to even-out and reduce regulatory burdens
for ETCs while making sure that markets and consumers pick winners and losers (rather than
regulators). Rationalization of the current framework will be an essential element of the Lifeline
program's move to broadband. Businesses require predictability and certainty. With broadband
capable smartphones being more costly than the handsets they will replace, the Commission must
establish a regulatory framework that provides the predictability and certainty necessary for ETCs
to invest and put broadband capable devices in the hands of consumers.
The Coalition stands ready to discuss Commissioner Clyburn's proposals and others
with the Bureau in any context. There are many questions to be answered and we applaud
Commissioner Clyburn for starting the process. The successful transition of the Lifeline program to
broadband will require a tremendous focus on the details and collaboration among all stakeholders.
While moving the Lifeline program to broadband is both exciting and essential, there
is much unfinished work to be done related to today's program. Accordingly, the Coalition
members also discussed: (l) the efforts of the Lifeline Connects Coalition to protect and defend the
Lifeline program at the Commission, in the media and on Capitol Hill; (2) the reform proposals of
the Lifeline Reform 2.0 Coalition, including minimum requirements for state eligibility databases,
retention of proof of eligibility and a "shot clock" for Bureau and Commission review and approval
of pending items; (3) matters of importance to the Bureau, or pending or soon to be pending before
the Bureau, including federal ETC petitions, the Lifeline Notices of Apparent Liability for alleged
intra-company duplicates, In-Depth Validation appeals, and USAC Payment Quality Assurance
("PQA") appeals; (4) compliance plan modifications and Lifeline industry consolidation under the
Marlene Dortch, Secretary
November 17,2014
Page Four
Bureau's July Public Notice;7 and (5) support for the TracFone Petition for Rulemaking and for
Interim Relief proposing to count Lifeline subscriber text messaging as "use" of the Lifeline service
for purposes ofthe 60-day non-usage rule,8 as well as counting data usage as "use" pursuant to the
rules.
KELLEY DRYE & WARREN r-r-p
Pursuant to Section 1.1206(b) of the Commission's rules, this letter is being frled
electronically.
Respectfully submitted,
o1(h**S+{.tr..-.-.^*__
John J. Heitmann
Joshua Guyan
Kelley Drye & Warren LLP
3050 K Street, NW
Suite 400
Washington,DC 20007
[phone]
Counsel for Lifeline Connects Coalition
Ryan Palmer
Jonathan Lechter
Melanie Tiano
See l{ireline Competition Bureau Reminds Caruiers of Eligible Telecommunications
Carrier Designation and Compliance Plon Approval Requirementsfor Receipt of Federal
Lifeline Universal Service Support, WC Docket Nos. 09-197, ll-42, Public Notice, DA l4-
1052 (rel. July 24, 2014).
See TracFone Petition for Rulemaking and For Interim Reliee WC Docket No. I l-42 (filed
Oct. l, 2014).
KELLEY DRYE & WARREN
WASHINGTON HARBOUR, SUITE
3O5O K STREET, NW
WASHINGTON, DC 2OOO7
1202) 342-8100
LLP
NEW YORK, NY
LOS ANGELES, CA
CHICAGO, IL
STAMFORD, CT
PARSIPPANY, NJ
FACSIMILE
(202) 342"8151
www.kell€ydrye.com
JOHN J, HEITMANN
EMAILi [e-mail]. EELGIUM
AFFILIAT€ OFFICE
MUMBAI, INDIA
May 4, 2015
Marlene Dortch, Secretary
Federal Communications Commission
445 lzth Street. SW
Washington,DC 20554
Re:Notice of Lifeline Connects Coalition Oral Ex Parle Presentation:
WC Docket Nos. ll-42. 09-197
Dear Ms. Dortch:
On April30,20l5, Brian Lisle of Telrite Corporation; Jeni Kues of i-wireless LLC;
Jaime Palmer of Blue Jay Wireless, LLC; Dave Skogen of Global Connection lnc. of America; and
John Heitmann and Joshua Guyan of Kelley Drye & Waren LLP rnet on behalf of the Lifeline
Connects Coalition (Coalition)l with Trent Harkrader, Jonathan Lechter, Garnet Hanly, Melanie
Tiano and Regina Brown from the Wireline Competition Bureau (Bureau) and Eric Feigenbaum
from the Office of Media Relations to discuss the Lifeline program. In the meeting, we discussed
the membership and role of the Coalition, which formed to protect and preserve the integrity of the
Lifeline program by educating and separating myths from facts about the program, sharing best
practices on compliance and industry self-regulation, and by proposing additional reforms dubbed
"Lifeline Reform 2.0" to the FCC in a petition for rulemaking filed in 2013 and updated in April
2014.2
We also discussed the new materials the Coalition has prepared regarding the
Lifeline program, which are included in the exhibit. The first document describes the Coalition's
2015 priorities, which are competition, program integrity and broadband. The second document is
meant to dispel mlhs that the Lifeline program is "fraud ridden" by showing that the
The members of the Lifeline Connects Coalition are i-wireless LLC, Telrite Corporation,
BIue Jay Wireless, LLC and Global Connection Inc. of America. Descriptions of each
company are provided in the attached Exhibit.
,See Lifeline Reform 2.0 Ex Perte, WC Docket No. I 1-42 at 5-9 (Apr. 14. 2014).
KELLEY DRYE & WARREN I-I-p
Marlene Dortch, Secretary
May 4,2015
Page Two
Commission's own Improper Payments Elimination and Recovery Act (IPERA) analysis estimates
an improper payment rate of 0.32 percent for Lifeline in2014. That compares favorably to the
Government Accountability Office's estimate for the government-wide level of improper payments,
which is 4.5 percent. The third document provides the Coalition's high-level principles for reform
following the outline proposed by Commissioner Clyburn in her November 2014 speech to the
American Enterprise lnstitute. Finally, the fourth document draws an important distinction between
two diffbrent tracks of enforcement efforts related to the Lifeline program - one targeting actual
criminal fraud and the other that involves allegations of duplicate enrollments by most of the major
Lif-eline providers, despite the Commission's failure to provide a clear and consistent definition of a
duplicate and the industry's success rate of better than 99 percent at guessing what the Universal
Service Administrative Company (USAC) would call a duplicate.
The Coalition members emphasized the need fbr the Commission and the Bureau to
provide greater regulatory certainty, especially as the Lifeline program transitions toward
broadband. Such regulatory certainty is an essential element of a healthy Lifeline ecosystem in
which Lifeline eligible telecommunications carriers (ETCs) need to be able to attract investment
necessary to improve products and services for Lifeline subscribers. Too many applications,
appeals and requests for action have gone unanswered, with some items now pending for years.3
Instead of'cancelling the various duplicate Notices of Apparent Liability (NALs) based on
responses showing near perfect records at complying with a standard that should be transparent, the
Commission delays (and denies) justice while continuing to ignore its own deadlines on related
appeals of USAC audits.4 The Commission's failure to establish minimum standards fbr state
eligibility databases is especially frustrating given that the agency is now more than a year late in
delivering the national eligibility database.5
While the Cornmission's f?rilure to act in many instances is inexplicable to investors,
several recent agency actions have been even more disturbing. Since the 2012 Lifeline Reform
Orcler, the industry has struggled to understand the Bureau's role in transactions involving ETC
designations or approved cornpliance plans. Last July. the Bureau 'oclarified" the order and
announced that any "lnaterial" changes to an approved compliance plan, including changes in
corporate ownership and control, must be pre-approved by the Bureau.6 The Public Notice provides
See Ex Parte Letter from John Heitmann to Marlene Dortch, WC Docket Nos. 1 1-42,09-
197 (Dec. 9,2014).
See id.
See Lifeline Refonn 2.0 Ex Parte, WC Docket No. I l-42 at 5-9 (Apr. 14, 2014).
See Wireline Competilion Bureau Reminds Caruiers of Eligible Telecontmunications
Carrier Designation ond Compliance Plan Approval Requirenrcnts for Receipt o/'Federal
Lifeline Univer,sal Service Support, WC DocketNos.09-197,11-42, Public Notice, DA l4-
1052 (rel. July 24,2014) ("Compliance Plan Change Public Notice").
4
5
6
KELLEY DRYE & WARREN r-r-p
Marlene Dortch, Secretary
May 4,2015
Page Three
no guidance on what constitutes a material change and fails to establish timelines for Bureau review
and approval of such changes (the last compliance plan was approved in December 2012). At a
time when the Commission should be fostering an environntent that strengthens Lifeline providers
so that they are prepared to play their important part in the transition of Lifeline to broadband, the
regulatory uncertainty oreated first by the 2012 Lifeline Re.form Order and then by the Public
Notice serves as a barrier to natural marketplace activity (e.g., industry consolidation) that could
result in improved service offerings to consumers.
The Bureau's recent creation of"production duplicates" and the unprecedented
resolution of them also upended investments based on the reasonable expectation that an enrollment
screened by the National Lifeline Accountability Database (NLAD) would not later be re-screened
to effectively revoke an approval. Accordingly, we urged the Bureau to ensure that any future
changes to the NLAD duplicate definition are rnade on the "front end" so that potential duplicate
applications are denied or recast as a benefit port and duplicate enrollments are not permitted to
enter the NLAD. Although the new third party identity verification (TPIV) dispute resolution
process is fundamentally unfuir to ETCs and consumers,T wireless Lifeline providers are also
reticent to use the TPIV dispute resolution process because the last tirne they did so, the Bureau and
USAC used the fact that the TPIV exceptions process was used to enroll applicants as cause to de-
enroll subscribers that were later alleged to be duplicates without giving them a choice in L,ifeline
providers.8
We also discussed nrisconceptions regarding the fact that some Lifeline providers
have reported low annual recertification rates and whether that indicates that Lifeline subscribers do
not value the service. First, Lifeline providers have reported positive recertification rates as high as
nearly ninety percent. Therefore, if an ETC is able to develop the necessary processes to make the
recertification process accessible to Lifeline subscribers, the subscribers do recertify because they
value the service. Second, the primary reason Lifeline subscribers fail to recertify is not that they
It is unfair to ETCs because they must incur the costs of activating a phone number and a
service plan prior to receiving NLAD approval for the enrollment if they want to enroll an
applicant that fails the NLAD TPIV check by submitting a dispute resolution. It is unfair to
consumers because they are required to prove the accuracy of all infonnation provided for
the enrollment (e.g.. first name, last name. date of birth and social security nurnber) even if
only one fleld cannot be matched by Lexis Nexis and even though Lexis Nexis data is not
intended to be perfect.
Mandating the de-enrollment of all "production duplicates" that did not pass the initial TPIV
check, rather than using the previously announced and established duplicate resolution
process utilized in20l4 and in each and every inter-carrier duplicate scrubbing process
since 201l, was fundamentally unfair to Lifeline providers that followed the Commission's
rules and USAC's processes required at the time for TPIV. See Lifeline Reform 2.0
Coalition Ex Parte and Request fbr Immediate Relief. WC Docket No. I 1 -42 (Mar. l, 2015)
and Lifeline Reform 2.0. Ex Parte, WC Docket No. l1-42 (Mar. 17, 2015).
KELLEY DRYE & WARREN t-r-p
Marlene Dortch, Secretary
May 4,2015
Page Four
are not eligible or do not value the service, but that the process is long, difficult and involves
understanding complicated legalese contained in the disclosures and certifications.
Criticalto the evolution of Lifeline toward broadband, we also discussed the need to
count the use of data and Internet services on phones as "usage" pursuant to the Commission's rules
so that customers that use the advanced services promoted by the Commission are not de-enrolled
because they did not make a voice call.
Finally, we expressed appreciation for the Bureau's hard work on the Lifeline
program and our desire to continue this dialogue regarding the Lifeline program as the Commission
considers a notice of proposed rulemaking.
Pursuant to Section 1.1206(b) of the Commission's rules, this letter is being filed
electronically.
Respectfully submitted,
*$t."s*t*+',.,^-*-**
John J. Heitmann
Joshua Guyan
Kelley Drye & Warren LLP
3050 K Street, NW
Suite 400
Washington, DC 20007
[phone]
Counse I for Life line Connects Cl oalition
cc: Trent Harkrader
Jonathan Lechter
Garnet Hanly
Melanie Tiano
Regina Brown
Eric Feigenbaum
EXHIBIT
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LESS.
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ffi
ffii-wireless LLC
i-wireless LLC (doing business as Access Wireless) is an eligible telecommunications carrier (ETC)
headquartered in Newport, Kentucky, just outside of Cincinnati, Ohio. The Company provides
wireless service in all fifty States and is an approved ETC for the Lifeline program in 35 states
and the District of Columbia. i-wireless serves approximately 820,000 Lifeline customers
nationwide.
Founded in 2005, i-wireless activated its first customer in 2006, and received its first Lifeline
ETC designation in 2011. The company directly employs 65 full-time and 20 part-time/contract
staff. ln addition, our outsourced call center, lT, compliance and accounting vendors employ
the equivalent of 110 full-time employees on our behalf.
As a subsidiary of The Kroger Company, the nation's largest traditlonal grocery retailer,
i-wireless is uniquely positioned to serve the needs of a large population of Lifeline-eligible
Americans.
Operating 2,625 grocery stores across 34 states and hundreds of small communities, Kroger
serves millions of customers that are participants in other entitlement programs, with a strong
concentration in both the Supplemental Nutrition Assistance Program (SNAP) and Medicaid
programs. Educating these customers about the availability of Lifeline and then providing them
with a convenient method of securing the service is a valuable public benefit and a distinct
competitive adva ntage.
The company is strongly determined to provide its customers with the highest-quality Lifeline
experience, and it does so by adding value in ways unique to our core grocery retailing
relationship. As an example, today this includes providing free and discounted food as a reward
for loyalty, loaded in the form of an electronic coupon on the customer's loyalty card and
redeemable in-store.
ln the future we intend to expand upon this experience, providing our Lifeline customers with
access to expanded nutritional information, proprietary grocery savings and free samples, and
discounts or free access to a number of other related categories (including fuel, education,
financial planning and services, and healthcare).
Access Wireless Lifeline beneficiaries telltheir stories about:
Getting a job. "l'm a young Army veteran and a single father. I joined the service when I was L9
as a way to provide for my family. l've served for 5 years including tours in South Korea, Japan,
Germany and Afghanistan. I income-qualify for Lifeline service. Since returning home, l've
settled in a remote area of Nevada. I find occasional work as a freelance mechanic, but am
struggling to find full-time employment. I use my Lifeline phone on my resume when applying
for jobs and as a way to keep in touch with my family members that live far away." (Brian S.,
Nevada)
Keeping a job and coordinating childcare. "l'm a single Mom. My son's father died of a drug
overdose and l'm [on] my own trying to support my little boy and l. I work part-time in a call
center and rely on family members to help me with childcare. When I get the chance to work
overtime and make more money, I use my Lifeline phone to call friends or family and ask for
additional help in watching my son. We need the extra money, so it's important that I don't
pass up those opportunities to earn some extra cash." (Amy R., Kentucky)
Serving clients. "l used to work in a beauty shop, but I couldn't afford the rent any longer so
now I cut hair out of my apartment. My clients need a way to contact me to schedule
appointments. I rely on my Lifeline phone so that they can reach me. lf they call and l'm not
available, they'll go somewhere else." (Charlene P., Arizona)
Emergencies. "l am a single Mom of four boys. I have used my Lifeline phone to call 911 on
two separate occasions. Once when a field next to our home caught fire and once when my 6-
year old had a fishing lure hooked in his leg. I was able to quickly call for the paramedics. l'm
so thankful to have my Lifeline phone." (Juanita E., Tennessee)
"l called 911 from my Lifeline phone because my friend went into a diabetic coma. She was
rushed to the hospital and in ICU for over a week." (Melissa E., Georgia)
Healthcare. "l have a fixed income and can barely afford to payfor my medication every
month. My daughter lives out of town and my Lifeline phone is the only way that I have to stay
in touch with her. I also use it to make my doctor's appointments and get my prescriptions
refilled at the pharmacy." (Henry T., Colorado)
Family. "l am a elderly caregiver and am trying to pursue an education while balancing a full-
time job and the needs of a family. Having a Lifeline phone allows me to check in to make sure
my son got off the school bus okay and made it home safely. I can also check in to make sure
that my ailing mother is doing ok," (Charese M., lndiana)
"l am a single Mom with three kids. My ex-husband does not pay child support and I am solely
responsible for taking care of our children. I clean houses and offices to make a living, but I
need to know where my kids are and that they are okay when l'm working." (Carol S.,
Colorado)
I btueja5wireless
Blue Jay Wireless, LLC
About Blue Jav
Blue Jay Wireless, LLC ("Blue Jay" or the "Company") is an eligible telecommunications carrier (ETC)
headquartered in Carrollton, Texas near Dallas www.blueiavwireless.com. Blue Jay currently employs
approximately 100 full time employees and is authorized to provide Lifeline services in 16 states or
jurisdictions including Arizona, Colorado, Hawaii, Kentucky, Michigan, Minnesota, Missouri, Nevada,
Oklahoma, Pennsylvania, Puerto Rico, Rhode lsland, South Carolina, Texas, Wisconsin and Utah with
additional licenses pending for national expansion.
Blue Jay Wireless is a prepaid wireless telecommunications company focused on serving the
disadvantaged and disabled lower-income consumer demographic in the U.S. with both Lifeline and
non-Lifeline services. Blue Jay was founded on the belief that everyone should have access to the safety
and convenience of wireless service. BlueJay provides affordable prepaid wireless service including
basic voice and text services with options for data upgrades on nationwide networks. Blue Jay's
products and plans are specifically geared toward serving lower income communities (including lower
income Spanish speaking communities) and disadvantaged citizens as reflected by its service models,
handset options, pricing plans and bilingual customer service support.
Mission Statement
Blue Jay Wireless is driven by its mission for its Samaritans to connect disadvantaged citizens with
employers, family and friends so no one is left behind. Blue Jay Samaritans are courageous individuals
who inspire us all, each having overcome unique life challenges of their own. Some have graduated
homelessness, some have overcome a disability, and many are Veterans which have served in the
Military.
Blue Jav Samaritan Program
The Blue Jay Samaritan Program was begun by Blue Jay Wireless in November 201,4 as a way to advance
career opportunities for people who have already given something to our community in the past or have
overcome a unique life challenge. Some Samaritans are people who have overcome a disability or a life
challenge and are ready to give back to the community while simultaneously creating an opportunity for
themselves. Many Samaritans are Military Veterans who have proven they know how to give to and
support the community through the services and sacrifices they have already made. Samaritans are on
the front line of our distribution channel and they handle the first steps of new subscriber
enrollment. BlueJayhasanestablishedtrackrecordofworkingwithinthecommunitiesitservesto
provide employment opportunities to those who need them the most. As an example, to date, Blue Jay
has employed over a dozen people from the Samaritan lnn, the largest homeless shelter in Collin County
Texas, who have graduated from homelessness to employment. Additionally, as of April 2015, there are
approximately 50 Samaritan employees enrolling subscribers for Blue Jay who are Veterans or
disabled Veterans having previously served in the Military. Through its Samaritans and the Lifeline
Program, Blue Jay is attempting to help our entire community grow and prosper as we all move into the
21"st centu ry together.
A btuejagwireless
Blue Jav Lifeline Beneficiaries Tell Their Stories About Transitioning to Emplovment
"l had been struggling to find work before I received my Blue Jay Wireless phone. I had no number to
put on my applications and had to tell potential employers that I did not have a phone. Once I obtained
the phone, I updated my resume to include my number and immediately started receiving calls back.
Within one month, I obtained full-time employment. Thank you Blue Jay Wireless for helping me and
my family." (Denise)
"l was introduced to Blue Jay Wireless in 2013 while residing at the Samaritan lnn. I was brought on as a
temporary employee and was offered a full-time position one week later. I could tell immediately that I
was embarking upon something special. The company has renewed my confidence in the old saying
"hard work pays off." I am looking forward to being part of the team for years to come." (Jeremy)
"l became a customer of Blue Jay when my family and I fell on hard times and had to enroll in SNAP. The
service was a godsend as we could no longer afford the monthly payments we were making for our
existing prepaid service. After being hired as a Blue Jay agent, I have been able to support my family.
And now I get the opportunity to make a difference in someone else's life by providing others in need
with affordable phone service." (Jerardo)
"l applied for a job with Blue Jay through Larimer County Workforce in Colorado. I was attending
Employment First job training where Blue Jay presented their Lifeline service offerings for qualified
customers. What I enjoy most about working for Blue Jay is having the opportunity to meet and hear the
stories of so many people from diverse backgrounds whose lives will be improved by having this phone
service." (Greg)
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Telrite Corp. dlbla Life Wireless
Telrite Corp. (doing business as Life Wireless) is an eligible telecommunications carrier (ETC)
headquartered in Covington, Georgia and established in 2010. Today over 500 employees and
contractors work for Telrite. Under the Life Wireless brand, Telrite provides Lifeline services in 31
jurisdictions - Arizona, Arkansas, Colorado, Georgia, lllinois, lndiana, lowa, Kentucky, Louisiana,
Kansas, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, North Dakota, Ohio,
Oklahoma, Pennsylvania, Puerto Rico, Rhode lsland, South Carolina, Texas, United States Virgin
lslands, Utah, Vermont, Washington, West Virginia and Wisconsin. As of March 2015, Life Wireless
served over 657,000 Lifeline customers.
Life Wireless' mission is to drive awareness and availability of the Lifeline program to underserved
markets across the U.S. in order to reach those most in need of affordable phone service. lts field
representatives organize sales events in the community, often partnering with local nonprofit
organizations, helping Life Wireless reach Lifeline-eligible populations overlooked by other Lifeline
companies that rely predominantly on advertising (internet, outdoor, mail, etc.) to attract eligible
subscribers.
Life Wireless is proud to be a part of the Lifeline program, helpingthose most in need stay connected
to loved ones, employers, medical providers, and emergency service providers. Life Wireless is
committed to preservingthe integrityof the Lifeline program and has been an industry leaderon
compliance issues. For example, the company has developed a rigorous program of training and
compliance, including mandatory training for field representatives through Life Wireless University,
real-time monitoring of all enrollment locations and activity for any anomalies, and daily "photo
audits" of enrollment locations to ensure proper placement of required disclosures and orderly
appearance of the enrollment site and field representatives.
Since 2014 Life Wireless has participated in "Hiring Our Heroes" events in 17 States leading to 14
individuals becoming representatives of Life Wireless since 201-4. "Hiring Our Heroes," a program of
the U.S. Chamber of Commerce Foundation, was launched in March 2011 as a nationwide initiative to
help veterans, transitioning service members, and military spouses to find meaningful employment
opportunities. Life Wireless currently has over 30 veterans on its active field representative roster. ln
addition to "Hiring for Heroes," Life Wireless actively works with Goodwill of North Georgia and its
First Choice Veterans employment program to staff its Marietta, GA network operation and customer
service centers and works with various Goodwill operations throughout the country on staffing
issues.
Life Wireless Lifeline beneficiaries telltheir stories about:
GettingaJob. "l havea2yearoldsonandlamcurrentlyexpectingmysecondchild. lamalsotaking
care of my mother. Recently I have been searching for a job. Before I had this phone I would have to
write down contact numbers of family and friends on job applications in hopes that potential
employers would somehow be able to contact me. Within just a few short weeks of receiving this
phone I was able to retain employment. Without this phone, it would not have been possible to get
this job and help support my family. I am extremely grateful for this service." (Brandy W.)
"This is very helpful without my phone I could not make the phone calls to inquire about
employment. I just received a call about an hour ago from an employer to schedule me for an
interview. Without this phone that would not have been possible. This service has been very helpful.
This phone is a blessing." (Edward B.)
Healthcare. "This has helped a lot with doctors for me and my husband. My husband has blood
issues and I am a diabetic. lt has helped me be able to talk to the doctors and make appointments for
me and my husband. He has to go to the doctor several times a week for blood thinning medicine.
We are both looking for a job right now so this cell phone helps with that too. I would not be able to
talk to my doctor if it weren't for this phone." (H, Rodriguez)
"l use my lifeline to make doctor appointments and to help with my 78 year old grandmother. My
grandmother suffers from arthritis. She felljust the other day and she was able to call me on my
phone so that I could come over and help her get back up. This phone also allows me to communicate
with my children so that I know they are all safe." (Shandia S.)
Veteran's Care. Tim is a six-year veteran of the U.S. Air Force who is now wheelchair-bound after
suffering from Lyme disease. He uses his Life Wireless phone to stay connected in case of
emergencies and remain an active member of his community. "Before I had the phone, I would be
stranded without communication if something was to go wrong and I was away from home. Regular
cell phone plans are so expensive they are beyond my reach, but the Life Wireless phone keeps me
rolling," says Tim. "lt's become a link for me to live a higher quality life. l'm a much more active
member of my community than I was before I had the Life Wireless phone." (Tim H.)
Emergencies. Maria, a single mother from Chicago, used her Life Wireless phone to call 911 when
she was assaulted. She credits the phone with saving her life. She also used the phone to contact a
domestic violence center, where she found safe temporary housing. "There are two single mothers at
the Rescue Center where I am staying that have do not own cell phones," she said. "We are going to
help them get a Lifeline phone for their safety in emergency situations also. I strongly believe this
program." (Maria R.)
"We had a family emergency. My daughter went into premature labor and had to deliver my
grandson via emergency C Section at 29 weeks. He was born weighing 3lbs 8oz so he is in the NICU,
Having this phone has allowed me to be able to communicate with my daughter while she was in the
hospital, stay informed on the progress of my grandson and arrange for my granddaughter to be
cared for while her mother is with my grandson in the hospital. We live in separate cities so
communicating over the phone is very important. Having this phone makes it possible for our family
to connect and create [a] strong support system for each other during this difficult time." (Margerei
B.)
0verview of who we ore and whot we do:
Globol Conneclion lnc ol Americo, of Norcross GA, wos
founded in 1998. We provide service lo both wireless ond
wireline customers. Our wireline brond is Reol Home Phone
ond our wireless brond is Stond Up Wireless. We currenlly
employ 55 people, ond, lhrough porlners, support onother
45 US jobs. We currenlly serve customers in twenly nine
stotes: Alobomo, Arizono, Arkonsos, Colorodo, Florido,
Georgio, lowo, Konsos, Kentucky, Louisiono, Moine, Mory-
lond, Mossochusetts, Michigon, Minnesolo, Mississippi,
Missouri, Nebrosko, Norlh C0rolin0, Ohio, Pennsylvonio,
Puerto Rico, Rhode lslond, Soulh Corolino, Tennessee,
Texos, Uloh, West Virginio ond Wsconsin.
0ur Wireless snd Wireline
phone service bronds
GCI0A slonds out in severul importunt woys:
We ore one of the few Lifeline providers lhol offer cuslomers 0 choice between home phone ond wireless service, depend-
ing on lheir unique needs.
We loke pride in our'A+' roling from the Better Business Bureou.
To better serve our customers, we utilize Americon bosed coll cenlers, providing dozens ol U.S. jobs.
SlondUP Wireless believes il is criticol lo inlegrole closely wilh the communilies il serves ond hos insliluled o -For lhe
community, ln the community, With lhe community'slrolegy. ln supporl of thot, we esloblished compony bronded, brick
ond morter locotions in multiple slotes including Arizono, Georgio, Louisiono, Morylond, Ohio, Pennsylvonio ond Wiscon-
sin, ln oddilion lo providing locol employmenl, lhese oullels ollow for foce{o{oce customer soles ond service, We hove
found thot this environmenl is especi0lly volu0ble to our more senior cuslomers os lhey benefit from honds on inslruclion
on how lo besl use our producls.
Globol underslonds lhol cuslomer requiremenls ore conlinuolty evolving ond thot lnlernel occess is o criticol ond growing
need. Thot is why we ore lounching new d0to-enobled prepold producls through 0 nelwork of up lo 20,000 retoil
locotions in lower income oreos. 0n oll of lhe producls, eligible consumers will be oble to opply Lifeline discounls ofter
oppropriotely enrolling in lhe progrom. Under lhis progrom, cuslomers will be oble lo purchose on lnternel enobled smort-
phone for $45.00 ond hove voice, lexl ond dolo service lor os low os 57.95 per monlh (plus lox ond ofler the Lifeline
discounl).
Globol is lhe proud sponsor of the holidoy food drives ond sports ond donce teoms o, 0moho, Nebrosko's Wokondo
Elemenlory School (Go Wildcols!), inner-cily boskelboll in Atlonlo, the GwinnetlCounty Georgio Lotino Food Drive ond
Cullurol Expo ond Autism Speoks in Phil0delphio,
Litslimm nrumkas fi hi6 dif$srsffi**
In our custpmers' Iives
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Lifeline Connects Coalition
Lifeline 2015: Competition, Program lntegrity and Broadband
The Lifeline Connects Coalition was formed in2Ol2 in response to concerns about potential waste, fraud
and abuse in the federal Universal Service Fund (USF) Low-lncome Program known as Lifeline. The
Coalition's compllance-centric member companies deliver wireless communications services across the
United States and include Blue Jay Wireless, Global Connection, i-wireless, and Telrite Corporation.
A well-run and effective Lifeline program re-engages underserved individuals in our increasingly digital
economy by enabling the unemployed to apply for jobs and be reachable to potential employers.
Additionally, the program plays a vital role in helping vulnerable populations such as the elderly and
disabled to access healthcare services, which can reduce healthcare-related expenses.
Since 20L2, the Coalition has advanced best practices and proposals for further reform to enhance the
integrity and efficient operation of the of the Lifeline program. Although the 2012 reforms adopted by
the Federal Communications Commission (FCC) have stabilized the program and placed it on a sound
regulatory footing, other FCC actions or the lack thereof work to the detriment of the program.
Mobile and broadband communications are essential to ensure full participation in our economy and
society, and the FCC must do more to ensure that Lifeline continues to serve as the "lifeline" it was
intended to be by providing affordable access to these essential forms of communication.
As Congress considers the #CommActUpdate, and the FCC contemplates further reform to the Lifeline
progrom ond its transition to broodbond, the Coalition offers the Iollowing priorities:
Competition and Program Administration. Stakeholders and policymakers all agree that Lifeline
subscribers should benefit from competition and the Lifeline program must be run efficiently and
effectively.
Competition. Consumers are the ultimate beneficiaries of competition in the Lifeline program,
providing them with access to additional airtime, data allowances, higher quality handsets and
meaningful choices in service offerings. Today, competition is being artificially constrained by
the failure of the FCC to act on long-pending petitions to operate in the L2 "federal jurisdiction
states" and other pending items. The resulting regulatory uncertainty deters innovation and
investment.
Program lntegrity. The FCC's seminal Lifeline program reform - the National Lifeline
Accountability Database (NLAD) - was delivered by the Universal Service Administrative
Company (USAC) a year late and without some of the functionality mandated by the FCC in its
2012 Lifeline Reform Order. Although the vast majority of duplicate enrollment attempts are
blocked by NLAD, the missing functionality and a poorly conceived identity verification process
have contributed to duplicate enrollments being approved by NLAD. The Coalition members
continue to offer the FCC and USAC advice on improvements to duplicate detection and identity
verification through the NLAD.
Enrollment and Eligibility. ln most instances, ETCs do not determine a consumer's eligibility for
Lifeline. Today's Lifeline program relies primarily on eligibility determinations made by other '
federal program administrators and leverages enrollment and eligibility verification platforms
':{-. *Lifeline Connects April2015
built and paid for by ETCs. This public/private partnership approach is highly effective and
efficient. Today's Lifeline program administration costs are 7.52%. By comparison, a voucher
program such as SNAP has program administration costs of approximately 9%. The Coalition
supports the creation of a national Lifeline eligibility verification database. Unfortunately, that
database has yet to be created notwithstanding the December 2013 deadline the FCC set for
itself. Therefore, the FCC should establish minimum standards for state eligibility databases so
that Lifeline providers can effectively confirm applicants' eligibility in real-time.
Lifeline program, resulting in criminal charges against a small number of ETCs and citations to
several hundred consumers. However, the FCC also has proposed massive penalties against
ETCs that have had a much better track record of preventing duplicate enrollments than the FCC
hashadwiththeNLAD. Thesemassiveproposedfinesforallegedduplicateratesofafractionof
one percent threaten the viability of ETCs by creating unnecessary doubt about them and the
Lifeline program. ln addition, dueling and duplicative investigations by the FCC's new
Enforcement Bureau "Strike Force" and Office of lnspector General waste government
resources, impose unreasonable costs on ETCs, and deny benefits to eligible consumers. A
rational, proportional and effective system of investigations and enforcement is essential to a
healthy Lifeline program.
Transition to Broadband. The Lifeline Program must follow the other USF programs and transition to
support broadband and data services.
Low-!ncome Consumers Need lnternet Access. Today, access to affordable communications is
the single greatest challenge facing those seeking to break the cycle of poverty. The Social
Science Research Council has found that the strongest drivers for low-income Americans' need
to access the lnternet are access to employment, education and government services.
lncreasingly (and in some cases, exclusively), job applications, healthcare, government services,
education and community support are available "online." Lifeline also is the USF program best
suited to help solve the "homework gap." However, today's Lifeline program is the only USF
program that does not focus support on broadband. To achieve its purpose, Lifeline must do
more to bring affordable broadband access to low-income Americans.
Mobile Broadband ls the Future of lifeline. Low-income Americans already choose to have a
phone in their pocket (rather than on the kitchen wall) and studies indicate that is where they
are most likely to make the most use of broadband. Accordlng to the most recent data
published by the Centers for Disease Control and Prevention (CDC), 59.!% of low-income
Americans do not have landline phone service and rely on mobile communications. A mobile
broadband connection can be used on a bus, on a work break, at a school, in a library and at
home. Today, more than 85% of Lifeline benefits support wireless service. A modernized
Lifeline program must do more to make affordable access to mobile broadband a reality for low-
income Americans.
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Lifeline Connects Coalition
Fact Checker: Waste, Fraud and Abuse in Lifeline
and in Comparison to other Federal Benefit Programs
Recently and over the past four years, some have called the Lifeline Program
"one of the government's most fraud-infested programs." This wasn't o true
stotement four yeors ogo ond it's not true todoy. The latest statistics from the
Federal Communications Commission (FCC) show that the Lifeline Program in
2014 had an improper payment rate of 0.32% which is significantly lower than
the federal government average.
The lmproper Payments Elimination and Recovery Act (IPERA) requires federal agencies such as the FCC
to develop an oversight process to identify and address improper payments from government
disbursement programs such as the federal Universal Service Fund (USF).
The IPERA defines an "improper payment" as any payment that should not have been made or that was
made in an incorrect amount under statutory, contractual or administrative requirements. An improper
payment includes, but does not necessarily Involve, fraud, "Significant improper payments" are
improper payments exceeding 7.5% of program outlays and 510 million or S100 million.
Lifeline has a very low improper payment rate. According to the FCC's Fiscal Year 2014 Agency
Financial Report, "the estimated improper payment rate for [Lifeline] was 0.32% for fiscal year
20t4." The total extrapolated amount of improper payments was S5.9 million (out of a S1.6
billion program). Lifeline is far from "fraud-infested." Rather, the program is the victim of
sensational "gotcha" media pieces and political rhetoric that feed a perception of fraud not
borne out by the facts. See http://www.fcc.gov/document/fiscal-vear-2014-agencv-financial-
reoort.
Lifeline has an improper payment rate that is much lower than the government average.
According to a March 2015 Government Accountability Office (GAO) study, the estimated
federal government-wide improper payments rate for fiscal year 20L4 was 4.5% of program
outlays and totaled $124.7 billion. The error rate was up from 4% in fiscal year 2013. See
http ://www.ea o.eovla ssets/670/659026. pdf .
Lifeline has an improper payment rate that is much lower than that of the E-rate Program.
The FCC FY 2Ot4 report found that the estimated improper payment rate for the Schools and
Libraries Program (known as E-rate) was 3,47o/o (or 3.81% including the Equipment lnventory
Pilot), which is up from 2.21%in 2013. E-rate is certainly notfraud-invested either (its error rate
is below the government average), however, its rate of improper payments is nearly 11 times
higher than Lifeline.
.f:rrr t il :]1:,:ii r|t ,Lifeline Connects p*l.r;*.s=v April2015
lmproper Payments: Lifeline in Comparison to other Programs
Lifeline is not "one of the government's most fraud-infested programs." Based on GAO studies of
fiscal years 2013 and 2014, a comparison of Lifeline to other government programs shows that Lifeline
has a comparatively low level of improper payments.
Se e 2aL4 http://www,eao.eovlassets/670/669026. pdf and 20L3
http ://www.eao.eov/assetsl670/667332.pdf .
lmproper Payments: Lifeline Historical
life]ine is not today and has not been "one of the government's most fraud-infested programs." Over
the past four years, Lifeline's potential for significant improper payments has remained low. A 2014 FCC
study found that the rate of improper payments in the Lifeline Program was extremely low.
517.7 billion (FY 2014)27.2%FY 20\4)85 times higher
than Lifeline
Small Business
Administration Disaster
Loan Disbursements
S121 million (FY 2013)L8.4% {FY 2013l,57.5 times higher
than Lifeline
Department of
Veterans Affairs State
Home Per Diem Grants
S135 million (FY 2013)L5s4% (FY 2013)nearly 50 times higher
than Lifeline
S45 billion (FY 2014)t2.7% ltY 20t41 nearly 40 times higher
than Lifeline
Ss.6 billion (FY 2014)tL.6% (FY 2014)36.25 times higher
than Lifeline
$1.6 billion (20L4)0.32% (FY 20t4)
Lifeline not at risk (less than 2.5%)
Lifeline not at risk (less than 2.5%)
Lifeline designated as susceptible to significant
improper payments
Study of actual calendar year 2013 transactions
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Lifeline Connects Coalition
2015 Principles for Lifeline Reform
Principles for Reform. Modernization of the Lifeline progrom will reguire smort reforms designed to further o
heolthy Lifeline ecosystem with government, cons,Jmers ond service providers each doing their port to ensure the
continued success ond viability of the progrom.
Value and Accessibility, Minimum service standards can help ensure good value is returned for Lifeline
subsidy dollars. However, competition is the most important driver of value and the Federal
Communications Commission (FCC) should preserve the ability of Lifeline providers to offer "free" services
that have proven effective in furthering adoption of mobile technology and program participation. lt is
unlikely that wireless Lifeline providers can include substantial amounts of broadband in their popular
"free" or no cost to consumer offerings, based on the current 59.25 subsidy.
Accountability and Dignity. Today, Lifeline program eligibility determinations are a shared responsibility
of ETCs, states and the FCC. Service providers play a role (but in no case are they the sole arbiter of an
individual's elieibility) because the FCC has failed to deliver a national Lifeline eligibility database and has
failed to provide guidance to states that could offer their own databases. There are few cases where this
multifaceted approach has raised concerns of waste, fraud or abuse. Such vulnerabilities can be
addressed effectively on a collaborative basls, without the need for creating a massive new bureaucracy
or by setting goals that are likely unobtainable from a practical or even financial perspective. More can be
done to ensure that consumers and their personal information are treated with dignity and care. While
many low-income Americans do not have easy access to retail stores or the lnternet, best practices can
ensure a dignified enrollment experience that respects the privacy of consumers.
lmproved Process and Competition. The Lifeline program would be well served by program
administration at the FCC, USAC and state commissions that works on and respects deadlines, provides
timely and reliable guidance, nimbly addresses ambiguities and vulnerabilities, and values effective and
constructive collaboration with all stakeholders. Streamlined eligible telecommunications carrier (ETC)
designation processes and rationalization of audits and enforcement actlvity also would produce greater
industry participation, competition and benefits for consumers.
leveraging Efficiencies. While the goal of leveraging technology used by and perhaps even coordinating
enrollment with other federal benefit programs serving low-income Americans is worth exploring, we live
in a country where benefit disbursement reflects a complicated patchwork of federal and state agencies,
unique statutory mandates, and public-private partnerships. While program efficiencies and synergies
should be sought, the Lifeline program should not be held back for the sake of seeking efficiencies that
are not reasonably obtainable by the government for practical, financial or other reasons. ln seeking out
efficiencies, care should be taken not to unwittingly deter private parties from developing solutions or to
limit competition and consumer choice by mandating solutions that favor large service providers. A
healthy Lifeline program will attract new entrants and smaller providers focused on serving the needs of
low-income Americans.
Public-Private Partnerships. A healthy Lifeline ecosystem requires government, consumers and industry
to act affirmatively, creatively and responsibly. A transition to broadband will require healthy service
providers that can attract entrepreneurial talent and investment, deliver compelling handsets and
products, and successfully tackle the adoption challenges facing low-income Americans.
Lifeline Connects
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Lifeline Connects Coalition
Federal Commun ications Com mission Lifeline Enforcement
The FCC recently has been involved with two very different tracks of enforcement with respect to the
Lifeline Program. The first involves allegations of criminalfraud committed by certain eligible
telecommunications carriers ("ETCs"), their owners and agents. These ETCs, individuals and allegations do
not involve Lifeline Connects Coalition member companies. The second track of enforcement involves
allegations of duplicate enrollments by most of the major Lifeline providers, despite the FCC's failure to
provide a clear and consistent definition of a duplicate, including when differences in data provided by
consumers under penalty of perjury should be disregarded.
Allegations of Criminal Fraud
On April LO,2O\4, the Department of Justice announced that three Associated Telecommunications
Management Services LLC ("ATMS") executives were indicted on charges of one count of conspiracy
to commit wire fraud and 15 substantive counts of wire fraud, false claims and money laundering for
their alleged role in a scheme to submit false claims to the Universal Service Administrative Company
("USAC")forLifelinereimbursements. AfederalcourtinFloridaissuedaseizurewarrantforthe
defendants' ill-gotten gains (S32 million), a yacht and several luxury cars. This case is pending. The
FCC's Office of lnspector General ("OlG") contributed to this case.
On April 25,20L4, Oscar Perez-Zumaeta was served with a criminal complaint for conspiracy to make
false statements to the government by providing to ICON Telecom, an ETC, false subscriber
information to seek fraudulent Lifeline reimbursements. The complaint alleges, among other things,
that Mr. Perez-Zumaeta engaged in a conspiracy to forge Lifeline recertification forms for thousands
of subscribers in Oklahoma. Mr. Perez-Zumaeta was indicted in an Oklahoma City federal court on
June 3, 2074. Mr. Perez pleaded guiltyto one count of money laundering on NovemberT,2OL4,and
was sentencedto31% years in prison on April 22,2015. ICON Telecom's owner entered into a plea
agreement on June 12,20L4 and was sentenced to four years in federal prison on April 2, 2015. The
FCC's OIG contributed to these cases,
Duplicate Enrollments and the FCC's Lifeline Notices of Apparent tiability {"NALs")
NIAD. More than a year after it was due, the FCC's duplicates database known as the National
Lifeline Accountability Database ( "NLAD") is now up and running. The NLAD defines a duplicate
subscriber as one with the same last name, date of birth AND last four digits of the social security
number as another Lifeline subscriber. lt uses this standard to screen duplicate Lifeline enrollment
attempts in real-time at the time of application. The Lifeline Connects Coalition member companies
actively worked with the FCC and USAC on the implementation of the NLAD, and stillcontribute to bi-
weekly calls and webinars regarding changes and clarifications to NLAD operation. No database is
perfect, but the NLAD uses a clear and reasonable duplicate definition and is working well.
!ndustry Self-regulation. Prior to the implementation of the NLAD, the Lifeline Connects Coalition
member companies joined with dozens of other ETCs to voluntarily utilize an interim inter-company
duplicates database developed by CGM, LLC to prevent over 375,000 duplicate enrollment attempts.
This equates to savings to the Lifeline program of over S+ mlllion per month or 5S0 million annually.
lntra-company Duplicates. Our companies proactively screen-out and block suspected unscrupulous
enrollment attempts that could result in intra-company duplicates. We estimate that we are nearly
100% effective in doing so.
Lifeline Connects .,ffieh'q; *''4V?u'.rs.ey April2015
lDVs. Prior to the NLAD coming online, USAC conducted state-by-state in-depth validations ("lDVs")
toscreenduplicateenrollments. ForpurposesofthelDVs,theFCCinstructedUSACtoscreen
subscribers with the same name and same address. lnstead, USAC looked for subscribers with similar
names and addresses using its own undisclosed standards while ignoring subscribersocial security
number and date of birth information ETCs are required to collect and consider. Without an FCC rule
or guidance, and while required to collect and use more consumer information than USAC reviewed,
ETCs were left to guess which accounts included subscriber data close enough to be determined to be
duplicates.
NALs. Between September 30,2073 and February 28,2014, the FCC has issued 12 NALs to Lifeline
service providers proposing fines totaling more than 59+ milllon for allegedly providing duplicate
benefits to consumers totaling S3+0,S9+. These items remain pending.
o Lifeline Connects Coalition member companies (and other ETCs receiving these NALs) were
nearly 100% perfect in blocking intra-company duplicate enrollments, yet the FCC has proposed
massive fines for a miniscule percentage of accounts that USAC found to have largely similar
subscriber information.
The NALs provide a false perception to the media, Congress and the American public that there
has been over S94 million in fraud committed in the Lifeline program, when in fact the alleged
overpayments from the fund total 5340,594,
The FCC has failed to provide a clear and consistent definition of what constitutes a duplicate
enrollment attempt by an applicant providing information and certifying to its veracity under
penalty of perjury.
The FCC exceeded its authority in the NALs by seeking to hold ETCs strictly liable for the acts of
apparently unscrupulous applicants seeking to obtain more than one Lifeline benefit.
The FCC's proposed fines are excessive and threaten the viability of ETCs and our ability to
provideLifelineservicestoeligibleconsumers. TheNALfinestructureresultsinproposedfines
of up to 586 times the alleged over-payment in Lifeline disbursements (which have already
been restored to the USF). A single alleged duplicate resulting in over-recovery of $9.25 gets
converted into more than 525,000 in fines.
It is our understanding that the alleged instances of intra-company duplicate enrollments at
issue in these NALs typically amount to less than 7% of each ETC's enrollments analyzed, which
is well under the 1.5% threshold set by the lmproper Payments Elimination and Recovery Act
("lPERA") for "significant improper payments" by a government agency program. Allegations of
failure to perfectly screen alleged duplicate enrollments in lOOo/o of cases should be addressed
by the established disbursement claim revisions process and not through an enforcement
proceeding based on strict liability and excessive fines.
The Lifeline Connects Coalition supports fair and equitable enforcement, however, the NALs
and the forfeiture structure announced in them do not represent a rational, fair or equitable
approach to enforcement.
Lifeline Connects 4y'aVe.tqy April2015
EXHIBIT 7
Post-NAL State ETC Approval Orders