Lifeline and Link Up Reform and Modernization, Federal-State Joint Board on Universal Service, Lifeline and Link Up, 38040-38046 [2011-16312]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 76, Number 125 (Wednesday, June 29, 2011)]
[Rules and Regulations]
[Pages 38040-38046]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16312]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

WC Docket No. 11-42, CC Docket No. 96-45, WC Docket No. 03-109; FCC 11-
97]


Lifeline and Link Up Reform and Modernization, Federal-State 
Joint Board on Universal Service, Lifeline and Link Up

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) takes immediate action to address potential waste in the 
universal service Lifeline and Link Up program (Lifeline/Link Up or the 
program) by preventing duplicative program payments for multiple 
Lifeline-supported services to the same individual. On March 4, 2011, 
the Commission released a Notice of Proposed Rulemaking to reform and 
modernize Lifeline/Link Up. In the Notice of Proposed Rulemaking, the 
Commission underscored its commitment to eliminating waste, fraud, and 
abuse in Lifeline/Link Up and presented a comprehensive set of 
proposals to better target support to needy consumers and maximize the 
number of Americans with access to modern communications services. To 
ensure that Lifeline support is limited to the amount necessary to 
provide access to telecommunications service to qualifying low-income 
consumers, we adopt measures to prevent, detect and resolve duplicative 
Lifeline claims for the same consumer. The near-term reforms we adopt 
here will reduce waste in the Fund and give the Commission flexibility 
to modernize the Low-Income Program in order to align it with changes 
in technology and market dynamics, such as the proposal we currently 
are reviewing to support broadband pilot projects for low-income 
consumers.

DATES: Effective July 29, 2011.

FOR FURTHER INFORMATION CONTACT: Kimberly Scardino, Attorney Advisor, 
at 202-418-1442, Telecommunications Access Policy Division, Wireline 
Competition Bureau.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order (Order) in WC Docket No. 11-42, CC Docket No. 96-45, WC 
Docket No. 03-109, FCC 11-97, released on June 21, 2011. The full text 
of this document is available for public inspection during regular 
business hours in the FCC Reference Center, Room CY-A257, 445 12th 
Street, SW., Washington, DC 20554.

I. Introduction

    1. In this order we take immediate action to address potential 
waste in the universal service Lifeline and Link Up program (Lifeline/
Link Up or the program) by preventing duplicative program payments for 
multiple Lifeline-supported services to the same individual. On March 
4, 2011, the Commission released a Notice of Proposed Rulemaking to 
reform and modernize Lifeline/Link Up. In the 2011 Lifeline and Link Up 
NPRM, 76 FR 16482, March 23, 2011, the Commission underscored its 
commitment to eliminating waste, fraud, and abuse in Lifeline/Link Up 
and presented a comprehensive set of proposals to better target support 
to needy consumers and maximize the number of Americans with access to 
modern communications services. We explained that, while we are 
considering broader reforms to the program, which we remain committed 
to complete as soon as possible, it may be necessary for the Commission 
to take action to address immediately the harm done to the Universal 
Service Fund (Fund) by duplicative claims for Lifeline support. To 
ensure that Lifeline support is limited to the amount necessary to 
provide access to telecommunications service to qualifying low-income 
consumers, we adopt measures to prevent, detect and resolve duplicative 
Lifeline claims for the same consumer. The near-term reforms we adopt 
here will reduce waste in the Fund and give the Commission flexibility 
to modernize the Low-Income Program in order to align it with changes 
in technology and market dynamics, such as the proposal we currently 
are reviewing to support broadband pilot projects for low-income 
consumers.
    2. In May 2010, the Commission asked the Federal-State Joint Board 
on Universal Service to review the low income program to ensure that it 
is effectively reaching eligible consumers and that oversight continues 
to be appropriately structured to minimize waste, fraud, and abuse. 
Meanwhile, under the Commission's oversight and pursuant to the 
Commission's rules, the Universal Service Administrative Company (USAC) 
has conducted a series of audits to test compliance with our low income 
program rules, including audits to determine if there was a problem 
with duplicative claims for Lifeline. The audits revealed that some 
low-income subscribers are receiving multiple Lifeline benefits 
contrary to our program restrictions. The agency already has taken 
steps to address the situation; in particular, the Office of the 
Managing Director (OMD) directed USAC to perform a significant number 
of in-depth data validations (IDVs), which are streamlined inquiries of 
Lifeline recipients targeted at uncovering duplicative claims for 
Lifeline support in select states. To ensure prompt action to eliminate 
duplicative Lifeline support, we not only make clear that qualifying 
low-income consumers may receive no more than a single Lifeline 
benefit; we also require an ETC, upon notification from USAC, to de-
enroll any subscriber that is receiving multiple benefits in violation 
of that rule. Further, we direct the Wireline Competition Bureau 
(Bureau) to send a letter to USAC to implement an administrative 
process to detect and resolve duplicative claims.

II. Discussion

    3. In this order, we amend Sec. Sec.  54.401 and 54.405 of the 
Commission's rules to codify the restriction that an eligible low-
income consumer cannot receive more than one Lifeline-supported service 
at a time. We also amend Sec.  54.405 of the Commission's rules to 
provide that, upon a finding by USAC that a low-income consumer is the 
recipient of multiple Lifeline subsidies, any ETC notified that it has 
not been selected to continue providing Lifeline-discounted service to 
the consumer shall de-enroll that subscriber from participation in that 
ETC's Lifeline program pursuant to the procedures described below. As 
noted below, we do not require a total termination of Lifeline 
discounts to the consumer in this situation, as the consumer will be 
permitted to maintain a single Lifeline service with one of the ETCs. 
We expect USAC to continue to perform in-depth data validations 
targeted at uncovering duplicative claims for Lifeline support, and we 
direct the Bureau to send a letter to USAC to implement a process to

[[Page 38041]]

detect and resolve duplicative claims that is consistent with the ETCs' 
proposed Industry Duplicate Resolution Process, as described below. The 
process we direct USAC to implement is an interim measure that is aimed 
at resolving duplicative claims in the near term while the Commission 
considers more comprehensive resolution of this and other issues raised 
in the 2011 Lifeline and Link Up NPRM.

A. One Discount per Eligible Consumer

    4. With limited exceptions, the Commission has not previously 
explicitly required ETCs to inquire whether a subscriber is receiving a 
Lifeline discount from another carrier. In light of the importance of 
ensuring that eligible low-income consumers continue to receive 
sufficient but not excessive Lifeline support, we now codify the 
limitation that an eligible consumer may receive only one Lifeline-
supported service. As noted above, recent audit results indicate that 
some consumers may be receiving Lifeline discounts for more than one 
service, resulting in potentially millions of dollars in wasteful, 
excessive support from the Fund. We therefore amend Sec.  54.401(a)(1) 
of the Commission's rules to adopt a definition of ``Lifeline'' that 
will ensure that consumers do not, whether inadvertently or knowingly, 
subscribe to multiple Lifeline-supported services:

    As used in this subpart, Lifeline means a retail local service 
offering * * * [t]hat is available only to qualifying low-income 
consumers, and no qualifying consumer is permitted to receive more 
than one Lifeline subsidy concurrently.

Similarly, multiple carriers may be seeking reimbursement for Lifeline-
supported services provided to a single subscriber, potentially unaware 
that the subscriber is already receiving Lifeline-supported services 
from another carrier. To prevent this, we also amend Sec.  54.405(a) of 
the Commission's rules to require ETCs to offer Lifeline service only 
to those qualifying low-income consumers who are not currently 
receiving another Lifeline service from that ETC or from another ETC:

    All eligible telecommunications carriers shall * * * [m]ake 
available one Lifeline service, as defined in Sec.  54.401, per 
qualifying low-income consumer that is not currently receiving 
Lifeline service from that or any other eligible telecommunications 
carrier.

    5. When the program rules were initially adopted, most consumers 
had only one option for telephone service: Their incumbent telephone 
company's wireline service. In light of the advent of multiple Lifeline 
options for consumers, we now find it necessary to establish this 
restriction in our rules to ensure that low-income support is being 
used for its intended purposes--to provide basic telephone service to 
low-income consumers, rather than to provide multiple supported 
services to such consumers. We emphasize the importance of ETCs 
communicating program rules with their subscribers pursuant to 47 CFR 
54.405(b). In particular, when enrolling new eligible low income 
consumers in Lifeline, we expect ETCs will explain in plain, easily 
comprehensible language that no consumer is permitted to receive more 
than one Lifeline subsidy. Some consumers may not adequately understand 
eligibility qualifications for Lifeline services, and may not 
understand that if they already subscribe to a Lifeline-supported 
offering they may not subscribe to another such service. It may be 
important that potential subscribers be made aware of the fact that not 
all Lifeline services are currently marketed under the name 
``Lifeline.''
    6. Further, Commission rules and orders specifically limit the 
amount of support available to qualifying subscribers. Section 
54.403(a) of the Commission's rules, for example, establishes the 
discount amount that ETCs receive for providing Lifeline service to an 
eligible low-income consumer. When the Commission adopted the first 
three tiers of Lifeline support in the Universal Service First Report 
and Order, 62 FR 32862, June 17, 1997, it noted that the selected 
discount amount would serve as a cap on the amount of support available 
to qualifying low-income consumers. To the extent that a low-income 
consumer receives discounts for multiple Lifeline-supported services, 
this would be inconsistent with the per-consumer support amount that 
ETCs are authorized to receive pursuant to Sec.  54.403(a).
    7. While some argue that the FCC should allow for multiple 
subsidies per residence, that particular issue is not addressed in this 
Order. This order instead focuses on a narrower problem--reducing 
duplicative Lifeline subsidies received by the same individual--and 
codifies that restriction in FCC rules. Therefore, this order should 
not be construed to address the one-per-residential address proposal in 
the NPRM.
    8. Most commenters responding to the 2011 Lifeline and Link Up NPRM 
stress the importance of resolving duplicative claims for Lifeline 
service. Several commenters note that a process to detect and resolve 
duplicative claims will provide an appropriate balance between 
providing services to eligible participants while guarding against 
waste, fraud, and abuse. Commenters are split, however, on the methods 
that should be implemented to detect and address duplicative claims. 
Many commenters, for example, recommend a national database as the best 
tool to detect duplicative claims for Lifeline support, while others 
support requiring ETCs to collect unique household-identifying or 
personal-identifying information from consumers. At the same time, many 
ETCs recognize the value in adopting a rule to immediately address 
potential duplicative claims, while we consider broader reforms.
    9. Commenters also have differing opinions on the appropriate 
remedy for resolving a duplicative claim that has been discovered. A 
number of commenters support the procedures for remedying duplicative 
claims set forth in the Bureau's January 21st guidance letter or the 
alternative procedures proposed in the 2011 Lifeline and Link Up NPRM. 
Other commenters urge the Commission to adopt the Industry Duplicate 
Resolution Process submitted by a group of ETCs subsequent to release 
of the 2011 Lifeline and Link Up NPRM. For example, the U.S. Telecom 
Association recommends that the Commission adopt the Industry Duplicate 
Resolution Process proposal, noting that the proposal would ``provide a 
mechanism for starting to address duplicate Lifeline accounts prior to 
the Commission adopting final rules pursuant to the Low-Income NPRM.'' 
Other commenters concur. We agree that it is important for the 
Commission to take immediate action to adopt a process for resolving 
duplicative claims identified by USAC. We, therefore, direct the Bureau 
to work with USAC to implement a process to resolve duplicative claims 
that is consistent with the ETCs' Industry Duplicate Resolution Process 
and also includes effective outreach to the subscribers identified by 
USAC as receiving duplicative support. As discussed further below, we 
require that consumers found to be receiving Lifeline supported 
services from two or more ETCs receive written notification of this 
fact and be given 3535 days from the date listed on the written 
notification to select one Lifeline service provider. In that notice, 
consumers also must be given information on how they can continue 
receiving service under the Lifeline program from the ETC of their 
choosing. Finally, the ETC(s) not chosen by the consumer or otherwise 
not chosen through the resolution process,

[[Page 38042]]

should the consumer not make a choice within the minimum 30-day 
timeframe, will have five business days to de-enroll the consumer upon 
receiving notification to do so from USAC.
    10. At this time, we decline to adopt certification requirements 
akin to those contained in certain ETC designation orders. We will 
continue to evaluate certification options in the context of broader 
reform contemplated in the 2011 Lifeline and Link Up NPRM.

B. De-Enrollment

    11. We also amend Sec.  54.405 of our rules and adopt a process for 
de-enrollment of a Lifeline subscriber for the limited near-term 
purpose of resolving currently known duplicative claims. The de-
enrollment process we adopt requires an ETC to de-enroll a subscriber 
from its Lifeline program within five business days of receiving de-
enrollment notification from USAC. An ETC may continue to serve the 
subscriber as a non-Lifeline subscriber. We note the importance of ETCs 
communicating clearly with the consumer that he or she will no longer 
receive a discounted service, but instead must pay the full price for 
the service and when such payments will be required. The ETC that de-
enrolls a subscriber shall not be entitled to receive federal or state 
Lifeline reimbursement pursuant to our rules following the date of de-
enrollment. We find that the adoption of an immediate de-enrollment 
rule is necessary to reduce the number of individual subscribers who 
are receiving Lifeline benefits from more than one service provider at 
the same time, pending fuller consideration of the issues raised in the 
2011 Lifeline and Link Up NPRM.
    12. Commenters expressing support for the Industry Duplicate 
Resolution Process proposal also support the de-enrollment procedure 
recommended therein. Other commenters recommend that we adopt a notice 
period--such as the 60 days provided for de-enrollment based on 
consumer ineligibility--during which consumers may be notified of their 
impending de-enrollment and, potentially, given an opportunity to cure 
the problem. In this instance, however, the Administrator (USAC) will 
send a letter to each subscriber found to be receiving duplicative 
service, giving them 355 days from the date listed on the letter, which 
should result in at least 30-days notice after mail-processing time, to 
choose between their current Lifeline providers or continue receiving 
service only from the ETC identified by USAC as the default ETC. Under 
the de-enrollment rule we adopt in this order, a subscriber will 
maintain a single Lifeline service because, following the minimum 30-
day notification period, he or she will only be de-enrolled from the 
Lifeline program by one of the ETCs from which the subscriber was 
receiving duplicative Lifeline service. Therefore, unlike the process 
of de-enrollment for reasons of ineligibility that is currently in 
place under Sec.  54.405(c), the rule we adopt today is not an ultimate 
termination of all Lifeline support. As such, we conclude that a notice 
period of at least 30 days is sufficient and will relieve the 
unnecessary burden on the Fund of providing duplicative support for 
individual Lifeline consumers.
    13. A few commenters note that states may have their own procedures 
governing de-enrollment of Lifeline consumers, and recommend that the 
Commission take these state laws into account. The record is unclear, 
however, on the scope of any potential conflict between the de-
enrollment procedures we adopt herein and state de-enrollment 
procedures. In situations where a consumer is found to be in receipt of 
two or more federal subsidies, we believe that a uniform rule 
applicable to federal Lifeline support will better provide clarity to 
both ETCs and consumers and will be consistent with our prior rules and 
orders. Accordingly, we adopt this de-enrollment process as an 
appropriate and necessary to step towards reducing waste, fraud, and 
abuse of the federal Lifeline program. Further, because duplicative 
claims are wasteful and burden the fund, we find that it is in the 
public interest to swiftly de-enroll consumers who are found to be 
receiving duplicative federal Lifeline discounts. To the extent that 
existing state de-enrollment procedures applicable to the federal 
Lifeline program are in conflict with or serve as an obstacle to 
implementation of the de-enrollment procedures we adopt herein, they 
would be preempted.
    14. Finally, we note that in the 2011 Lifeline and Link Up NPRM we 
asked for input regarding the de-enrollment process for several issues, 
including other administrative reasons. Specifically, we proposed that 
ETCs be required to de-enroll their Lifeline subscribers when the 
subscriber does not use his or her Lifeline-supported service for 60 
days and fails to confirm continued desire to maintain the service or 
the subscriber does not respond to the eligibility verification survey. 
The rule adopted today is not intended to address the issues of 
administrative disqualification based on non-usage or failure to 
respond during the verification process. We take this action today to 
protect the Fund while we continue to evaluate other appropriate 
proposals and until we adopt a more comprehensive package of reforms in 
response to the 2011 Lifeline and Link Up NPRM.

III. Procedural Matters

A. Paperwork Reduction Act Analysis

    15. This report and order adopts new or revised information 
collection requirements, subject to the Paperwork Reduction Act of 1995 
(``PRA''). These information collection requirements will be submitted 
to the Office of Management and Budget (``OMB'') for review under 
Section 3507(d) of the PRA. The Commission published a separate notice 
document elsewhere in this issue of the Federal Register inviting 
comment on the new or revised information collection requirement(s) 
adopted in this document. The requirement(s) will not go into effect 
until OMB has approved it, and the Commission has published a notice 
announcing the effective date of the information collection 
requirement(s). In addition, we note that pursuant to the Small 
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), we previously sought specific comment on how the 
Commission might ``further reduce the information collection burden for 
small business concerns with fewer than 25 employees.'' In this present 
document, we have reviewed the comments and assessed the effects of 
these information requirements, and find that the collection of 
information requirements will not have a significant impact on small 
business concerns with fewer than 25 employees.

B. Congressional Review Act

    16. The Commission will send a copy of this Report & Order to 
Congress and the Government Accountability Office pursuant to the 
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

C. Final Regulatory Flexibility Analysis

    17. As required by the Regulatory Flexibility Act of 1980 (RFA), as 
amended, an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Notice of Proposed Rule Making (NPRM) to this 
proceeding. The Commission sought written public comment on the 
proposals in the NPRM, including comment on the IRFA. The Commission 
received comments on the IRFA. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.

D. Need for, and Objectives of, the Order

    18. The Commission is required by section 254 of the 
Telecommunications

[[Page 38043]]

Act of 1996, as amended, to promulgate rules to implement the universal 
service provisions of the Act. Consistent with the requirements of the 
Act, the Commission adopted rules that reformed the universal service 
support mechanisms so that universal service is preserved and advanced 
as markets move toward competition. Among other programs, the 
Commission adopted a program to provide discounts that make basic, 
local telephone service affordable for low-income consumers. The 
Commission has not systematically re-examined the universal service 
Lifeline and Link Up program (Lifeline/Link Up or the program) since 
the passage of the 1996 Act. During this period, consumers have 
increasingly turned to wireless service, and Lifeline/Link Up now 
provides many participants discounts on wireless phone service.
    19. In this order we take immediate action to address potential 
waste in the program by preventing low-income consumers from receiving 
duplicative Lifeline-supported services. Specifically, we amend 
Sec. Sec.  54.401 and 54.405 of the Commission's rules to codify the 
restriction that an eligible low-income consumer cannot receive more 
than one Lifeline-supported service at a time. We also amend section 
54.405 of the Commission's rules to provide that, upon a finding by 
USAC that a low-income consumer is the recipient of multiple Lifeline 
subsidies, any eligible telecommunications carrier (``ETC'') that is 
not selected to continue providing Lifeline-discounted service to the 
consumer shall de-enroll that subscriber from participation in that 
ETC's Lifeline program.

E. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    20. In public comments filed in response to the IRFA, issues were 
raised regarding the Commission's proposal to remedy duplicative claims 
for Lifeline support and the proposal's effects on small businesses. 
The National Telecommunications Cooperative Association (NTCA) stated 
that the Commission's initial proposal to detect and remedy duplicative 
claims, as set forth in a January 21 guidance letter, would put the 
burden of eliminating duplicative claims primarily upon ETCs and would 
constitute an untenable position for small businesses. Specifically, 
NTCA stated that ``the ETCs must chase down the consumer and the 
consumer will receive at least two confusing notifications. Once the 
subscriber chooses a provider, that provider must notify USAC and the 
other ETC that it is the chosen one.'' In its Reply Comments, Montana 
Independent Telecommunications Systems (MITS), an association of rural 
telecommunications providers, asserted that the proposed rules would 
require small carriers to assume multiple roles as ``fact finders, 
decision makers, and enforcers,'' which would be ``costly and unduly 
burdensome to small telecommunications carriers.'' We have taken 
measures to address these concerns expressed by commenters.

F. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    21. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one that: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA). Nationwide, there are a total of approximately 
29.6 million small businesses, according to the SBA. A ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
Nationwide, as of 2002, there were approximately 1.6 million small 
organizations. The term ``small governmental jurisdiction'' is defined 
generally as ``governments of cities, towns, townships, villages, 
school districts, or special districts, with a population of less than 
fifty thousand.'' Census Bureau data for 2002 indicate that there were 
87,525 local governmental jurisdictions in the United States. We 
estimate that, of this total, 84,377 entities were ``small governmental 
jurisdictions.'' Thus, we estimate that most governmental jurisdictions 
are small.
1. Wireline Providers
    22. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census Bureau data for 
2007, which now supersede data from the 2002 Census, show that there 
were 3,188 firms in this category that operated for the entire year. Of 
this total, 3,144 had employment of 999 or fewer and 44 firms had had 
employment of 1,000 or more. According to Commission data, 1,307 
carriers reported that they were incumbent local exchange service 
providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or 
fewer employees and 301 have more than 1,500 employees. Consequently, 
the Commission estimates that most providers of local exchange service 
are small entities that may be affected by the rules and policies 
proposed in the Notice. Thus under this category and the associated 
small business size standard, the majority of these incumbent local 
exchange service providers can be considered small providers.
    23. Competitive Local Exchange Carriers (Competitive LECs), 
Competitive Access Providers (CAPs), Shared-Tenant Service Providers, 
and Other Local Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate size standard under SBA rules is for 
the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer and 44 firms had had employment of 1,000 employees or more. Thus 
under this category and the associated small business size standard, 
the majority of these Competitive LECs, CAPs, Shared-Tenant Service 
Providers, and Other Local Service Providers can be considered small 
entities. According to Commission data, 1,442 carriers reported that 
they were engaged in the provision of either competitive local exchange 
services or competitive access provider services. Of these 1,442 
carriers, an estimated 1,256 have 1,500 or fewer employees and 186 have 
more than 1,500 employees. In addition, 17 carriers have reported that 
they are Shared-Tenant Service Providers, and all 17 are estimated to 
have 1,500 or fewer employees. In addition, 72 carriers have reported 
that they are Other Local Service Providers. Seventy of which have 
1,500 or fewer employees and two have more than 1,500 employees. 
Consequently, the

[[Page 38044]]

Commission estimates that most providers of competitive local exchange 
service, competitive access providers, Shared-Tenant Service Providers, 
and Other Local Service Providers are small entities that may be 
affected by rules adopted pursuant to the Notice.
    24. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for providers of 
interexchange services. The appropriate size standard under SBA rules 
is for the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer, and 44 firms had had employment of 1,000 employees or more. Thus 
under this category and the associated small business size standard, 
the majority of these Interexchange carriers can be considered small 
entities. According to Commission data, 359 companies reported that 
their primary telecommunications service activity was the provision of 
interexchange services. Of these 359 companies, an estimated 317 have 
1,500 or fewer employees and 42 have more than 1,500 employees. 
Consequently, the Commission estimates that the majority of 
interexchange service providers are small entities that may be affected 
by rules adopted pursuant to the Notice.
    25. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2007 show that 1,523 firms provided resale 
services during that year. Of that number, 1,522 operated with fewer 
than 1,000 employees and one operated with more than 1,000. Thus under 
this category and the associated small business size standard, the 
majority of these local resellers can be considered small entities. 
According to Commission data, 213 carriers have reported that they are 
engaged in the provision of local resale services. Of these, an 
estimated 211 have 1,500 or fewer employees and two have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of local resellers are small entities that may be affected by 
rules adopted pursuant to the Notice.
    26. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2007 show that 1,523 firms provided resale 
services during that year. Of that number, 1,522 operated with fewer 
than 1,000 employees and one operated with more than 1,000. Thus under 
this category and the associated small business size standard, the 
majority of these resellers can be considered small entities. According 
to Commission data, 881 carriers have reported that they are engaged in 
the provision of toll resale services. Of these, an estimated 857 have 
1,500 or fewer employees and 24 have more than 1,500 employees. 
Consequently, the Commission estimates that the majority of toll 
resellers are small entities that may be affected by our action.
    27. Pre-paid Calling Card Providers. Neither the Commission nor the 
SBA has developed a small business size standard specifically for pre-
paid calling card providers. The appropriate size standard under SBA 
rules is for the category Telecommunications Resellers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census data for 2007 show that 1,523 firms provided resale services 
during that year. Of that number, 1,522 operated with fewer than 1,000 
employees and one operated with more than 1,000. Thus under this 
category and the associated small business size standard, the majority 
of these pre-paid calling card providers can be considered small 
entities. According to Commission data, 193 carriers have reported that 
they are engaged in the provision of pre-paid calling cards. Of these, 
an estimated all 193 have 1,500 or fewer employees and none have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of pre-paid calling card providers are small entities that may 
be affected by rules adopted pursuant to the Notice.
    28. 800 and 800-Like Service Subscribers. Neither the Commission 
nor the SBA has developed a small business size standard specifically 
for 800 and 800-like service (``toll free'') subscribers. The 
appropriate size standard under SBA rules is for the category 
Telecommunications Resellers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census data for 2007 show 
that 1,523 firms provided resale services during that year. Of that 
number, 1,522 operated with fewer than 1,000 employees and one operated 
with more than 1,000. Thus under this category and the associated small 
business size standard, the majority of resellers in this 
classification can be considered small entities. To focus specifically 
on the number of subscribers than on those firms which make 
subscription service available, the most reliable source of information 
regarding the number of these service subscribers appears to be data 
the Commission collects on the 800, 888, 877, and 866 numbers in use. 
According to our data, at of September 2009, the number of 800 numbers 
assigned was 7,860,000; the number of 888 numbers assigned was 
5,888,687; the number of 877 numbers assigned was 4,721,866; and the 
number of 866 numbers assigned was 7,867,736. The Commission does not 
have data specifying the number of these subscribers that are not 
independently owned and operated or have more than 1,500 employees, and 
thus are unable at this time to estimate with greater precision the 
number of toll free subscribers that would qualify as small businesses 
under the SBA size standard. Consequently, the Commission estimates 
that there are 7,860,000 or fewer small entity 800 subscribers; 
5,888,687 or fewer small entity 888 subscribers; 4,721,866 or fewer 
small entity 877 subscribers; and 7,867,736 or fewer small entity 866 
subscribers. We do not believe 800 and 800-Like Service Subscribers 
will be affected by our proposed rules, however we choose to include 
this category and seek comment on whether there will be an effect on 
small entities within this category.
2. Wireless Carriers and Service Providers
    29. Below, for those services subject to auctions, the Commission 
notes that, as a general matter, the number of winning bidders that 
qualify as small businesses at the close of an auction does not 
necessarily represent the number of small businesses currently in 
service. Also, the Commission does not generally track subsequent 
business size unless, in the context of assignments or transfers, 
unjust enrichment issues are implicated.
    30. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of Paging and Cellular and Other 
Wireless Telecommunications. Under the present and prior categories, 
the SBA has deemed a wireless business to be small if it has 1,500 or 
fewer employees. For the category of Wireless Telecommunications 
Carriers (except Satellite), Census data for 2007, which supersede data 
contained in the 2002

[[Page 38045]]

Census, show that there were 1,383 firms that operated that year. Of 
those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more 
than 100 employees. Thus under this category and the associated small 
business size standard, the majority of firms can be considered small. 
Similarly, according to Commission data, 413 carriers reported that 
they were engaged in the provision of wireless telephony, including 
cellular service, Personal Communications Service, and Specialized 
Mobile Radio Telephony services. Of these, an estimated 261 have 1,500 
or fewer employees and 152 have more than 1,500 employees. 
Consequently, the Commission estimates that approximately half or more 
of these firms can be considered small. Thus, using available data, we 
estimate that the majority of wireless firms can be considered small.
    31. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years. The SBA has approved 
these definitions. The Commission auctioned geographic area licenses in 
the WCS service. In the auction, which commenced on April 15, 1997 and 
closed on April 25, 1997, seven bidders won 31 licenses that qualified 
as very small business entities, and one bidder won one license that 
qualified as a small business entity.
    32. Satellite Telecommunications Providers. Two economic census 
categories address the satellite industry. The first category has a 
small business size standard of $15 million or less in average annual 
receipts, under SBA rules. The second has a size standard of $25 
million or less in annual receipts.
    33. The category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing telecommunications 
services to other establishments in the telecommunications and 
broadcasting industries by forwarding and receiving communications 
signals via a system of satellites or reselling satellite 
telecommunications.'' Census Bureau data for 2007 show that 512 
Satellite Telecommunications firms that operated for that entire year. 
Of this total, 464 firms had annual receipts of under $10 million, and 
18 firms had receipts of $10 million to $24,999,999. Consequently, the 
Commission estimates that the majority of Satellite Telecommunications 
firms are small entities that might be affected by our action.
    34. The second category, i.e., All Other Telecommunications, 
comprises ``establishments primarily engaged in providing specialized 
telecommunications services, such as satellite tracking, communications 
telemetry, and radar station operation. This industry also includes 
establishments primarily engaged in providing satellite terminal 
stations and associated facilities connected with one or more 
terrestrial systems and capable of transmitting telecommunications to, 
and receiving telecommunications from, satellite systems. 
Establishments providing Internet services or voice over Internet 
protocol (VoIP) services via client-supplied telecommunications 
connections are also included in this industry.'' For this category, 
Census Bureau data for 2007 show that there were a total of 2,383 firms 
that operated for the entire year. Of this total, 2,347 firms had 
annual receipts of under $25 million and 12 firms had annual receipts 
of $25 million to $49, 999,999. Consequently, the Commission estimates 
that the majority of All Other Telecommunications firms are small 
entities that might be affected by our action.
    35. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees. According to the 2008 Trends 
Report, 434 carriers reported that they were engaged in wireless 
telephony. Of these, an estimated 222 have 1,500 or fewer employees and 
212 have more than 1,500 employees. We have estimated that 222 of these 
are small under the SBA small business size standard.
3. Internet Service Providers
    36. The 2007 Economic Census places these firms, whose services 
might include voice over Internet protocol (VoIP), in either of two 
categories, depending on whether the service is provided over the 
provider's own telecommunications facilities (e.g., cable and DSL 
ISPs), or over client-supplied telecommunications connections (e.g., 
dial-up ISPs). The former are within the category of Wired 
Telecommunications Carriers, which has an SBA small business size 
standard of 1,500 or fewer employees. The latter are within the 
category of All Other Telecommunications, which has a size standard of 
annual receipts of $25 million or less. The most current Census Bureau 
data for all such firms, however, are the 2002 data for the previous 
census category called Internet Service Providers. That category had a 
small business size standard of $21 million or less in annual receipts, 
which was revised in late 2005 to $23 million. The 2002 data show that 
there were 2,529 such firms that operated for the entire year. Of 
those, 2,437 firms had annual receipts of under $10 million, and an 
additional 47 firms had receipts of between $10 million and 
$24,999,999. Consequently, we estimate that the majority of ISP firms 
are small entities.

G. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    37. This order has two components: clarification of the definition 
of Lifeline service and establishment of de-enrollment procedures for 
consumers receiving duplicative Lifeline supported services. These 
modifications of our rules are necessary to ensure that the statutory 
goals of section 254 of the Telecommunications Act of 1996 are met and 
to eliminate waste, fraud, or abuse in the Lifeline program.
    38. Clarification of the Definition of Lifeline & Carrier 
Obligation. In this order, we modify the definition of Lifeline service 
to clarify that no qualifying low-income consumer is permitted to 
receive more than one Lifeline subsidy concurrently. This clarification 
places no additional burdens upon ETCs.
    39. De-Enrollment Procedures for Duplicate Service. As part of the 
effort to reduce waste in the program, by this order, we adopt a rule 
requiring ETCs to de-enroll any Lifeline subscriber upon notification 
from the Universal Service Administrative Company (USAC) that the 
Lifeline subscriber should be de-enrolled from participation in that 
ETC's Lifeline program because the subscriber is receiving Lifeline 
service from another ETC. An ETC will be required to de-enroll a 
subscriber from its Lifeline program within five business days of 
receiving de-enrollment notification from USAC. Compliance with this 
requirement will place a burden on ETCs to de-enroll customers upon 
receiving notice from USAC. However, this burden will be minimal.

[[Page 38046]]

H. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    40. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its approach, which may 
include the following four alternatives, among others: (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    41. We sought to minimize the burdens imposed on small entities 
where doing so would not compromise the goals of the universal service 
low-income mechanism. In order to minimize the impact on ETCs, and 
under the advisement of a number of industry representatives, we have 
placed the burden of checking for duplicate claims upon USAC, rather 
than ETCs. Furthermore, the duplicate resolution process set forth in 
the order requires USAC to notify an ETC which customers should be de-
enrolled from the ETC's Lifeline program.

I. Report to Congress

    42. The Commission will send a copy of the order, including this 
FRFA, in a report to be sent to Congress and the Government 
Accountability Office pursuant to the Small Business Regulatory 
Enforcement Fairness Act of 1996. In addition, the Commission will send 
a copy of the order, including the FRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration. A copy of the order and 
FRFA (or summaries thereof) will also be published in the Federal 
Register.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 54 as follows:

PART 54--UNIVERSAL SERVICE

0
1. The authority citation for part 54 continues to read as follows:

    Authority: 47 U.S.C. Secs. 151, 154(i), 201, 205, 214, and 254 
unless otherwise noted.


0
2. Amend Sec.  54.401 by revising paragraph (a)(1) to read as follows:


Sec.  54.401  Lifeline defined.

    (a) * * *
    (1) That is available only to qualifying low-income consumers, and 
no qualifying consumer is permitted to receive more than one Lifeline 
subsidy concurrently.
* * * * *

0
3. Amend Sec.  54.405 by revising paragraph (a), and adding paragraph 
(e), to read as follows:


Sec.  54.405  Carrier obligation to offer Lifeline.

* * * * *
    (a) Make available one Lifeline service, as defined in Sec.  
54.401, per qualifying low-income consumer that is not currently 
receiving Lifeline service from that or any other eligible 
telecommunications carrier, and
* * * * *
    (e) De-enrollment. Notwithstanding Sec.  54.405(c) and (d) of this 
section, upon notification by the Administrator to any ETC in any state 
that a subscriber is receiving Lifeline service from another eligible 
telecommunications carrier and should be de-enrolled from participation 
in that ETC's Lifeline program, the ETC shall de-enroll the subscriber 
from participation in that ETC's Lifeline program within 5 business 
days. An ETC shall not be eligible for Lifeline reimbursement as 
described in Sec. Sec.  54.403 and 54.407 for any de-enrolled 
subscriber following the date of that subscriber's de-enrollment.

[FR Doc. 2011-16312 Filed 6-28-11; 8:45 am]
BILLING CODE 6712-01-P