Lifeline and Link Up Reform and Modernization, Telecommunications Carriers Eligible for Universal Service Support, Connect America Fund, 33025-33095 [2016-11284]
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Vol. 81
Tuesday,
No. 100
May 24, 2016
Part IV
Federal Communications Commission
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47 CFR Part 54
Lifeline and Link Up Reform and Modernization, Telecommunications
Carriers Eligible for Universal Service Support, Connect America Fund;
Final Rule
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Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Rules and Regulations
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 54
[WC Docket Nos. 11–42, 09–197, 10–90; FCC
16–38]
Lifeline and Link Up Reform and
Modernization, Telecommunications
Carriers Eligible for Universal Service
Support, Connect America Fund
Federal Communications
Commission.
ACTION: Final rule.
AGENCY:
In this document, the Federal
Communications Commission (the
Commission) fully modernizes the
Lifeline program so it supports
broadband services and obtains high
value from the expenditure of Universal
Service funds. This Order will increase
consumer choice and encourage
competition among Lifeline providers to
deliver supported broadband services.
DATES: Effective June 23, 2016 except for
§§ 54.101, 54.202(a)(6), (d), and (e),
54.205(c), 54.401(a)(2), (b), (c), and (f),
54.403(a), 54.405(e)(1) and (e)(3)
through (5), 54.407(a), (c)(2), and (d),
54.408, 54.409(a)(2), 54.410(b) through
(h), 54.411, 54.416(a)(3), 54.420(b), and
54.422(b)(3) which contain information
collection requirements that are not
effective until approved by the Office of
Management and Budget. The Federal
Communications Commission will
publish a separate document
announcing such approval and the
relevant effective date(s).
FOR FURTHER INFORMATION CONTACT:
Nathan Eagan, Wireline Competition
Bureau, (202) 418–7400 or TTY: (202)
418–0484.
SUPPLEMENTARY INFORMATION: This is a
summary of the Commission’s Third
Report and Order, Further Report and
Order, and Order on Reconsideration
(2016 Lifeline Order) in WC Docket Nos.
11–42, 09–197, 10–90; FCC 16–38,
adopted on March 31, 2016 and released
on April 27, 2016. 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 or at the
following Internet address: https://
apps.fcc.gov/edocs_public/attachmatch/
FCC-16-38A1.docx.
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SUMMARY:
I. Introduction
1. The time has come to modernize
Lifeline for the 21st Century to help
low-income Americans afford access to
today’s vital communications network—
the Internet, the most powerful and
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pervasive platform in our Nation’s
history. Accessing the Internet has
become a prerequisite to full and
meaningful participation in society. For
those Americans with access, the
Internet has the power to transform
almost every aspect of their lives,
including their ability to stay in contact
with work, friends, and family; to stay
abreast of news, to monitor important
civic initiatives, to look for a new home,
or to make essential financial decisions.
Households with schoolchildren access
the Internet to research issues, check
assignments, and complete homework,
while people with critical or even
routine health needs use the Internet to
access information about their condition
and stay in touch with health care
providers.
2. But not all Americans are able to
enjoy the benefits of broadband in
today’s society, even as the importance
of broadband grows. There are still 64.5
million people without a connection to
the Internet and that figure hits hardest
on those with the lowest incomes. The
biggest reason these Americans don’t
sign up for broadband today is cost.
Only half of all households in the
lowest income tier subscribe to a
broadband service and 43 percent say
the biggest reason for not subscribing is
the cost of the service. Of the lowincome consumers who have subscribed
to mobile broadband, over 40 percent
have to cancel or suspend their service
due to financial constraints.
Affordability remains the primary
barrier to broadband adoption.
3. In this Order, we adopt reforms to
make the Commission’s Lifeline
program a key driver of the solution to
our Nation’s broadband affordability
challenge. Intended initially as a
mechanism to reduce the cost of phone
service for low-income customers, the
Lifeline program has worked in lockstep
with telephone providers and
consumers to increase the uptake in
phone service throughout the country
and has kept pace with changes in
technology as the Nation moved from a
wireline world to one where the number
of mobile devices and services now
exceeds the population of the United
States. But at a time when our economy
and lives are increasingly moving online
and millions of Americans remain
offline, the Lifeline program must keep
pace with this technological evolution
to fulfill its core mission.
4. Our actions here are also compelled
by the Congressional directives that
guide our approach to all of universal
service. Congress expressed its intent in
the Communications Act of 1934 to
make available communications service
to ‘‘all the people of the United States’’
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and, more recently, in the
Telecommunications Act of 1996,
Congress asserted the principle that
rates should be ‘‘affordable,’’ and that
access should be provided to lowincome consumers in all regions of the
nation. Congress also recognized at the
same time that new technologies, in
addition to landline telephone service,
could provide telecommunication
services to consumers and that
‘‘[u]niversal service is an evolving level
of telecommunications services.’’ Given
the evolution of communications
technologies and the great strides the
Commission has made in improving the
performance of the Lifeline program, we
must modernize the Lifeline program so
it can play an essential and important
role in helping those low-income
Americans that most need access to
valuable broadband services.
5. The Order we adopt today focuses
the Lifeline program on broadband by
encouraging broadband providers to
offer supported broadband services that
meet standards we set to ensure
ratepayers supporting the program are
obtaining value for their contributions
and Lifeline subscribers can participate
fully in today’s society. We also take
important steps to improve the
management and design of the program
by streamlining program rules and
eliminating outdated program
obligations with the goal of providing
incentives for broadband providers to
participate and increasing competition
and meaningful broadband offerings to
Lifeline subscribers. Finally, we follow
through on the important and highly
effective reforms the Commission
initiated in 2012 by making several
additional changes to combat waste,
fraud, and abuse, including establishing
a National Lifeline Eligibility Verifier
(National Verifier) that will remove the
responsibility of determining Lifeline
subscriber eligibility from providers.
II. Executive Summary
6. To create a competitive Lifeline
broadband program, this Order takes a
variety of actions that work together to
encourage more Lifeline providers to
deliver supported broadband services as
we transition from primarily supporting
voice services to targeting support at
modern broadband services. We first
allow support for robust, standalone
fixed and mobile broadband services to
ensure meaningful levels of connectivity
and we continue to support bundled
voice and broadband services. We also
establish minimum service standards for
broadband and mobile voice services to
ensure those services meet the needs of
the consumers, and we recognize and
allow an exception in areas where fixed
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broadband providers do not meet the
minimum standards. Finally, in
recognition of the important operational
needs of Lifeline providers we
implement a five and one-half year
transition, during which we will
gradually increase mobile voice and
data requirements and gradually
decrease voice support levels. After
completion of this multi-year transition,
Lifeline funding will be focused on
supporting modern services.
7. We next take a step that will curb
abuse in the program and encourage
provider participation by creating the
National Verifier, which will transfer
the responsibility of eligibility
determination away from Lifeline
providers. By lowering Lifeline
providers’ costs of conducting
verification and reducing the risks of
facing a verification-related enforcement
action, the National Verifier will make
the Lifeline program more attractive to
providers. The National Verifier will
also remove many opportunities for
Lifeline providers to inappropriately
enroll subscribers. This step—taking
determination of eligibility out of the
hands of the same parties that stand to
benefit financially from a finding of
eligibility—is critical to preventing
waste, fraud, and abuse. At the same
time, we streamline the criteria for
Lifeline program qualification in
recognition of the way the vast majority
of Lifeline subscribers gain entry to the
program as well as through a new
program for veterans. We will allow
entry based on participation in SNAP,
Medicaid, SSI, Federal Public Housing
Assistance, and the Veterans Pension
benefit program, as well as all current
Tribal qualifying programs. We will
continue to allow low-income
consumers to qualify by demonstrating
income of less than 135 percent of the
federal poverty guidelines.
8. The Order also encourages entry of
new Lifeline providers to supply
broadband by creating a streamlined
federal Lifeline Broadband Provider
(LBP) designation process. (Since
Lifeline Broadband Providers will be a
subset of eligible telecommunications
carriers (ETCs) but ETCs that are not
LBPs may also be eligible to receive
reimbursement for offering Lifelinesupported broadband Internet access
service, some of our rules will apply
specifically to LBPs while others will
apply more broadly to all ETCs
participating in the Lifeline program. In
this Order we refer to LBPs specifically
when the rule being discussed applies
only to LBPs.) Working within the
statutory construct in Sections 214 and
254 limiting support to eligible
telecommunications carriers (ETCs), we
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establish a process by which broadband
providers may receive a designation
from FCC staff to provide broadband
Lifeline to qualifying low-income
consumers. This new LBP designation
process provides an additional
alternative to the current ETC
designation processes, which remain in
place. At the same time, we modernize
the obligations of broadband Lifeline
providers by interpreting and forbearing
from parts of the statute that are not
needed in the modern broadband
marketplace to ensure just and
reasonable rates and the protection of
consumers. In particular, we allow for
broadband-only provision of service,
flexibility in service areas, and
streamlining of the relinquishment
process. We also interpret Section
214(e)(1)(B) to minimize advertising
burdens on providers. We establish a
pathway for certain existing Lifeline
providers currently obligated to provide
voice services to obtain relief from such
obligations as clear, measurable
benchmarks are met. The benchmarks
are designed in such a way that
providers have strong incentives to
encourage uptake of broadband services.
9. We also recognize that increasing
digital inclusion means more than
addressing the affordability of
broadband service. To that end, we
require that Lifeline providers make
available Wi-Fi enabled devices when
providing such devices for use with the
Lifeline-supported service. We also
require Lifeline providers of mobile
broadband service to make available
hotspot-enabled devices. We believe
these measures will help to extend the
connectivity of the service Lifeline
supports. We also direct the Consumer
and Governmental Affairs Bureau (CGB)
to develop and execute a digital
inclusion plan that will bring together a
variety of stakeholders to determine
how Lifeline can best be leveraged.
10. This Order next recognizes the
importance of fiscal responsibility in the
program, establishes an annual budget
of $2.25 billion, and directs the Bureau
to submit a report to the Commission if
Lifeline disbursements in a year exceed
90 percent of this level, with an
expectation that the Commission will
act within six months of this report. It
is essential that we ensure the program
is designed to operate in an efficient,
highly accountable manner that obtains
great value from the expenditure of
ratepayer dollars. In establishing a
budget mechanism, we bring the
Lifeline program into alignment with
the other three programs of the
Universal Service Fund, each of which
operates within a budget.
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11. We also make a number of
changes to further improve the efficient
administration and accountability of the
Lifeline program. We implement
measures to evaluate the Lifeline
program to determine whether it is
achieving its objectives, we reform the
non-usage rules, we make recertification
a rolling process, we establish a 12month benefit port freeze for broadband
offerings, we take steps to increase
transparency in the program, and we
modify program forms to reduce
administrative burdens on providers.
III. Third Report and Order
A. Modernizing Lifeline To Support
Broadband
1. Broadband as a Supported Service
12. There is widespread consensus
among commenters that the time has
come for the Commission to modernize
the Lifeline program to support
broadband consistent with the national
policy of promoting universal service.
Based on the record before us, we take
the important step toward achieving one
of the express goals of the program by
amending the definition of Lifeline to
include broadband Internet access
service (BIAS) as a supported service in
the Lifeline program. Through our
actions today, we hereby amend
§ 54.101 to include BIAS as a supported
service. More specifically, our definition
of BIAS mirrors that under section 8.2(a)
of the Commission rules, which defines
BIAS as a mass-market retail service by
wire or radio that provides the
capability to transmit data to and
receive data from all or substantially all
Internet endpoints, including any
capabilities that are incidental to and
enable the operation of the
communications service, but excluding
dial-up Internet access service. Finally,
consistent with our change to Section
54.101, we also amend Section 54.401
in our Lifeline rules to include BIAS as
eligible for Lifeline support. (These
amendments to the Commission rules
will take effect on the same date as the
minimum service standards set forth in
Section 54.408 of the Commission rules.
See infra Section III.B.2. (Minimum
Service Standards). By adopting these
amendments as well as our forbearance
in Section III.E.2 (Lifeline Obligations
for Eligible Telecommunications
Carriers), we allow service providers to
provide BIAS as a standalone offering to
qualifying low-income consumers. The
obligations for receiving Lifeline
support for both BIAS and voice
telephony service are further defined
below.
13. Our actions today are consistent
with the universal service goals
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promulgated by Congress. Congress
articulated national goals in Section 254
of the Act that services should be
available at ‘‘affordable’’ rates and that
‘‘consumers in all regions of the nation,
including low-income consumers . . .
should have access to
telecommunications and information
services.’’ Congress also made clear in
Section 254(c) that ‘‘[u]niversal service
is an evolving level of
telecommunications services that the
Commission shall establish periodically
under this section, taking into account
advances in telecommunications and
information technologies and services.’’
As recently as 2009, Congress, in
directing the Commission to develop a
National Broadband Plan, specifically
dictated that such a plan must provide
a detailed strategy for achieving
affordability of broadband services.
14. Within the record before us, there
is ample evidence to find that BIAS
meets the standard set forth in Section
254(c) given the many ways that
individuals rely on broadband in their
daily lives, the significant percentage of
the population with means subscribing
to such services, and the deployment
and investment spent on infrastructure.
Taking these factors into account, we
conclude it is imperative for us to
include BIAS as a supported service.
15. More than 200 commenters
responded to the Commission’s 2015
Lifeline FNPRM with nearly all of them
urging the Commission to include
broadband in the Lifeline program.
There is widespread consensus from a
range of commenters including service
providers, state public utilities
commissions, academics, software
companies, and consumer advocates.
16. Moreover, objections to
modernizing the Lifeline program to
include support for broadband
principally concern collateral effects
that can be addressed without
sacrificing program modernization. We
do so elsewhere in this Order. For
example, both AT&T and Verizon have
expressed concern over amendments to
Section 54.101 to include BIAS as a
supported service on the theory that all
ETCs receiving high-cost support would
be obligated to offer BIAS throughout
their designated service areas, even in
those areas where they do not receive
high-cost support or have not deployed
broadband networks with the minimum
speed standards. We recognize that,
subsequent to the 1996 Act, state public
utilities commissions designated ILECs
as ETCs wherever they offered voice
telephony service in a state and defined
their designated service areas for
purposes of receiving federal universal
service support as such, including
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Census blocks where the provider does
not currently receive high-cost support
or is not obligated to build-out
broadband at 10 megabits per second
(Mbps) download/1 Mbps upload (10/1
Mbps) speeds pursuant to Commission
rules. As a result, ILECs have had the
Lifeline obligation to provide
discounted voice service throughout
their designated service area. (Existing
ETCs currently continue to have a
Lifeline voice obligation throughout
their designated service areas, regardless
of their receipt of high-cost support. In
this Order, however, we provide
conditional forbearance from this
obligation). We are sympathetic to
ILECs’ concerns about requiring them to
offer broadband in Census blocks within
their ETC designated service areas
where the provider is not obligated to
build-out broadband services pursuant
to our high-cost rules, where broadband
services are not commercially available,
and in those Census blocks where the
provider does not receive high-cost
support. To address these concerns, we
forbear from Section 214(e)(1) such that
ETCs are not required to offer Lifelinesupported broadband service in Census
blocks throughout their designated
service areas, but instead only where the
provider receives high-cost support and
is commercially providing broadband
consistent with the provider’s
obligations set forth in the
Commission’s high-cost rules and
requirements.
17. In addition, for recipients of highcost support, in those areas where the
provider receives high-cost support but
has not yet deployed a broadband
network consistent with the provider’s
high-cost public interest obligation to
offer broadband, the obligation to
provide Lifeline broadband services
does not begin until such time as the
provider has deployed a broadband
network and is commercially offering
service to that area. We also recognize
some carriers’ arguments that the
Commission should not impose a
Lifeline broadband obligation on ETCs
in areas where those carriers receive
frozen high-cost support, because the
frozen support program is an interim
program that will be eliminated after the
Commission conducts the Connect
America Fund Phase II competitive
bidding process and frozen support
recipients are not required to meet the
Lifeline program’s minimum speed
standards for BIAS offerings. We agree
that carriers’ receipt of frozen high-cost
support should not carry with it a
Lifeline broadband obligation, and we
therefore clarify that those ETCs
receiving frozen high-cost support—
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whether incumbent providers or
competitive ETCs—are not required to
offer Lifeline-supported broadband
services in their designated service areas
where they receive frozen support. (See
47 CFR 54.312(a); 54.313(c)(4)
(requirements for incumbent LECs
receiving Phase I frozen support); 47
CFR 54.307 (frozen support for
competitive ETCs). However, those
carriers serving non-contiguous areas
that elected to continue receiving their
existing high-cost support amounts in
lieu of model-based support for Connect
America Phase II will be subject to
Lifeline broadband obligations once the
Commission adopts their carrier-specific
Phase II obligations.) Finally, we also
clarify in that ETCs receiving high-cost
support are not required to offer
broadband services in Census blocks
where the ETC does not receive highcost support. We adopt these
requirements to ensure that all
consumers living in high-cost areas,
including low-income consumers, have
the option of subscribing to broadband
once it is commercially available.
18. Some parties, such as ITTA,
suggest that the Lifeline program should
be overhauled before providing support
for broadband. (Given the significant
changes we adopt within the Lifeline
program, we adopt a budget to continue
to reduce the contribution burden on
consumers). This argument, however,
overlooks the significant measures
already put in place over the last five
years to root out waste, fraud, and abuse
and, just as importantly, underestimates
the critical importance broadband plays
for individuals on a daily basis. Since
2012, when the Universal Service
Administrative Company (USAC), the
Administrator of the Fund, disbursed
more than $2.1 billion in Lifeline
support payments, reforms to improve
program integrity have reduced
disbursements by nearly a third, with
Lifeline support payments dropping
below $1.5 billion in 2015.
19. In modernizing the Lifeline
program to include broadband, we also
clarify that the current rule that
prohibits the collection of service
deposits ‘‘for plans that . . . [d]o not
charge subscribers additional fees for
toll calls,’’ applies only to standalone
voice services. Lifeline service providers
are not precluded from collecting
service deposits for eligible broadband
services. That rule plainly was written
with standalone voice service in mind,
and it does not have an analog in the
context of broadband offerings. For
these reasons, Section 54.401(c) is
amended to clarify that the prohibition
on collecting service deposits is limited
to voice-only service plans.
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2. Legal Authority
20. The principles listed in Section
254 of the Act make clear that
deployment of, and access to,
telecommunications and information
services are important components of a
robust and successful federal universal
service program, including the directive
to address low-income needs. In Section
254, Congress expressly recognized the
importance of ensuring that low-income
consumers ‘‘have access to
telecommunications and information
services, including . . . advanced
telecommunications and information
services’’ and that universal service is
an ‘‘evolving level of
telecommunications service.’’ Section
254 of the Act also sets forth the
principles that ‘‘[q]uality services
should be available at just, reasonable,
and affordable rates’’ and that ‘‘access to
advanced telecommunications and
information services should be provided
in all regions of the Nation.’’
21. Consistent with those statutory
objectives, we conclude that Section 254
authorizes us to support bundled voice
and BIAS as well as standalone BIAS by
defining BIAS as a supported service for
purposes of a Lifeline broadband
program. For purposes of a given
universal service program, Section
254(c)(1) authorizes the Commission to
define universal service as an evolving
level of telecommunications services
that the Commission establishes
periodically based on an analysis of
several factors. The BIAS that we define
as a supported service for the Lifeline
broadband program is a
telecommunications service that
warrants inclusion in the definition of
universal service in this context. (In the
Open Internet Order, the Commission
concluded that BIAS is a
telecommunications service subject to
our regulatory authority under Title II of
the Act regardless of the technological
platform over which the service is
offered. Even before that, however,
during the time the Commission had
classified BIAS as generally an
information service, it recognized the
possibility of broadband Internet access
transmission being offered on a common
carrier basis as a telecommunications
service. Thus, even beyond the
classification of BIAS generally, we
make clear that BIAS as the supported
service for the Lifeline broadband
program is a telecommunications
service.).
22. Based on the record before us, we
find there is ample evidence for us to
conclude that circumstances have
‘‘evolved’’ where BIAS can and should
be included as an element of universal
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service pursuant to Section 254(c) and
made available to Lifeline participants.
The criteria set forth in Section 254(c)
fully justify our finding. BIAS has,
indeed, become ‘‘essential to education,
public health and public safety. . . . ’’
(Low-income consumers should have
access to the same public safety features
as all Americans. Lifeline providers
offering a supported service must meet
any obligations generally applicable to
that service, including, for example,
with respect to Next Generation 911
Services. See generally 47 CFR 20.18.
We also make clear that Lifeline
providers offering texting services must
provide text-to-911 capability to
subscribers in accordance with
Commission rules. See 47 CFR 20.18(q).
Lifeline providers should not assess a
fee for texts or calls to 911.). As detailed
above, the Commission has a legal and
factual basis to include BIAS as a
supported service. The Commission also
previously has concluded that directly
applying Section 254 to BIAS will help
enable us to promote adoption of
broadband services and more flexibility
going forward. We thus conclude that
defining BIAS as the supported service
for purposes of the Lifeline broadband
program strongly advances the public
interest, convenience, and necessity
under Section 254(c)(1)(D).
23. Our approach is also supported by
Section 254(c)(1)(A). Under that
provision, the Commission considers
whether a given supported service is
‘‘essential to education, public health,
or public safety.’’ We explain above the
importance of BIAS to education and
healthcare, among other things, along
with the need for discounts in order to
enable low-income consumers to realize
those benefits. We therefore conclude
that BIAS is essential for education and
public health for low-income
Americans.
24. Section 254(c)(1)(B) directs the
Commission to consider whether the
service at issue has ‘‘through the
operation of market choices by
customers, been subscribed to by a
substantial majority of residential
customers.’’ As noted above, it is
reported that 84 percent of American
adults use the Internet and surveys have
shown that when households have the
means, they connect to the Internet at
home at rates upward of 95 percent with
approximately two-thirds of Americans
subscribing to broadband at home.
Based on this data, we find that a
substantial majority of residential
customers subscribe to broadband
services. Likewise, we find that BIAS is
widely ‘‘being deployed in public
telecommunications networks by
telecommunications carriers’’ under
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Section 254(c)(1)(C) given the billions of
dollars in capital investment that
broadband service providers have spent
on broadband networks over the last few
years.
25. We also conclude that our action
to include BIAS as a supported service
is consistent with and advances the
Congressional direction and goals set
forth under Section 706 of the 1996 Act.
Section 706(a) directs the Commission
to ‘‘encourage the deployment on a
reasonable and timely basis of advanced
telecommunications capability to all
Americans.’’ Section 706(b) requires the
Commission to determine whether
‘‘advanced telecommunications
capability is being deployed to all
Americans in a reasonable and timely
fashion. . . .,’’ and, if the Commission
concludes that it is not, to ‘‘take
immediate action to accelerate
deployment of such capability by
removing barriers to infrastructure
investment and by promoting
competition in the telecommunications
market.’’ The Commission has
determined that broadband deployment
is not proceeding in a reasonable and
timely manner, most recently in the
2016 Broadband Progress Report.
Providing support to service providers
to subsidize low-income consumers’
purchase of BIAS helps achieve our 706
objective of ‘‘removing barriers to
infrastructure investment.’’ The
Commission has recognized that a key
barrier to infrastructure investment is
lack of affordable broadband Internet
access service. The Commission has
previously recognized that providing
federal support for low-income
consumers’ purchase of BIAS will
broaden the base of consumers able to
purchase such services, thereby
increasing consumer demand and
incentives to deploy broadband in areas
where broadband is not yet available.
Given the Commission’s objective of
ensuring availability and affordability of
broadband services, and the importance
of broadband to consumers in the 21st
Century, providing support to Lifeline
providers to subsidize low-income
consumers’ purchase of broadband
services helps achieve our Section 706
objectives.
B. Characteristics of Lifeline Support
26. In Section III.A, Modernizing
Lifeline to Support Broadband, we take
the important step of amending our
rules to include BIAS as a supported
service. In this Section, we now act on
several proposals in the 2015 Lifeline
FNPRM directed at improving the
Lifeline program so that it better
supports robust service and strategically
targets valuable universal service funds
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in a way that is faithful to our mandate
to make services affordable to lowincome consumers. We are persuaded
that giving qualifying consumers the
choice of receiving support for either
fixed or mobile offerings will better
serve consumers as competitive forces
help to encourage all Lifeline providers
to make attractive offerings within the
Lifeline market. In particular, we
modify our Lifeline rules to direct
support over time to broadband
services. We also adopt minimum
service standards designed to ensure
robust service levels for Lifeline
subscribers and which can be updated
on a regular basis so that the support
provided by the Lifeline program
continues to meet our statutory mandate
to ensure ‘‘reasonable comparability’’ of
services. We also establish permanent
monthly support levels.
1. Supported Modes of Service
27. Discussion. In this Section, we
adopt several reforms to empower lowincome consumers with competitive
choices for robust, affordable Lifeline
services necessary for full participation
in today’s economy. First, to keep pace
with the marketplace and our goals of
ensuring the availability of broadband
and voice services, we hereby amend
our rules to permit Lifeline providers to
receive Lifeline support for standalone
mobile or fixed broadband service
offerings. Second, for both fixed and
mobile voice services, to ensure the
Lifeline program continues to focus its
funding on modern, future-facing
services for which affordability is an
issue, we phase in a requirement that to
be eligible for Lifeline support, a voice
service must include broadband service,
thereby phasing-out support for voice
service as a standalone option. In doing
this, we carve out an exception for the
phase-out of standalone voice service
provided by ETCs in those Census
blocks where the ETC is the only
Lifeline service provider in that given
Census block. To prevent undue
disruption and allow the marketplace to
adjust, we adopt a multi-year transition
and also direct the Bureau, near the end
of the transition, to review the Lifeline
market and submit a report to the
Commission recommending whether
action should be taken to revise the
approach to supported services that we
adopt today (State of the Lifeline
Marketplace Report). We expect the full
Commission will take appropriate
action if necessary to make changes to
the program within six months of
receiving the report, for example
adjusting support levels or minimum
service standards, so that the Lifeline
program continues to achieve its
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objectives. Barring further Commission
action, once this transition is complete,
we will require voice service to be
bundled with an eligible broadband
service in order for it to be supported.
Finally, we retain our approach to
permit support for bundled offerings
and our limit of one Lifeline
subscription per household.
28. Fixed and Mobile Broadband
Offerings. Given the importance of
broadband to consumers in our society
and how it is has become essential to
education, public health, and public
safety, we believe it is necessary to
provide Lifeline consumers the option
of applying the Lifeline benefit to a
standalone broadband offering.
Standalone broadband services are
increasingly popular as consumers
transition from bundled services to
broadband-only plans. In many areas, as
the communications market evolves,
broadband is replacing traditional
telephone service and providing
subscribers with voice and texting
options in addition to Internet access.
To close the digital divide and ramp up
digital readiness for all consumers in
the United States, we amend our rules
to give Lifeline providers the option of
offering standalone broadband services
as a Lifeline supported service. By
allowing support for standalone
broadband services with Lifeline, we
add an additional measure of consumer
choice as well as the opportunity for
innovative providers to serve lowincome consumers in new ways.
Supporting standalone broadband
offerings will not only allow consumers
to subscribe to offerings that work best
for their needs, but Lifeline providers
will also seek to find solutions that
work best for their customers. (We make
clear that ETCs receiving high-cost
support are required to offer a Lifelinesupported standalone broadband
offering where the ETC is required to
offer Lifeline-supported BIAS to ensure
that all low-income consumers,
including those living in high-cost
areas, have the option to subscribe to
standalone broadband offerings).
29. We allow Lifeline subscribers to
apply the discount to fixed or mobile
standalone broadband offerings. (In the
USF/ICC Transformation Order, the
Commission made clear that carriers
may not charge any Lifeline customers
an Access Recovery Charge (ARC). By
extension, as we include broadband as
a Lifeline-supported service, we make
clear that rate-of-return carriers are not
required to impute an amount equal to
their ARC rate for consumer broadbandonly loops provided to Lifeline
broadband customers.). We empower
consumers to make this choice. While
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fixed and mobile broadband services
both provide access to online services,
there are some key tradeoffs consumers
must consider regarding the utility of
each service. We recognize these
tradeoffs both in terms of technological
constraints and how each mode is
offered in the market. We also recognize
different households will have different
preferences for certain product
characteristics, such as mobility or data
usage allowance. Therefore, we find it
important to give qualifying consumers
the choice of receiving support for
either fixed or mobile broadband
service. This allows households a
choice as to which service to apply the
discount towards. Permitting a Lifeline
provider to offer standalone broadband
offerings will also ensure that Lifeline
consumers are not forced to purchase
services they may not want within a
bundle. We agree with many
commenters who argue that it is
important to enable low-income
consumers to choose the services that
best meet their needs, but at the same
time put measures in place to ensure
such Lifeline offerings are affordable
and comparable to what is currently
available in the market. For many
people, this includes the option of
subscribing to a standalone broadband
offering.
30. We are persuaded that giving
qualifying consumers the option of
receiving support for either fixed or
mobile standalone broadband will better
serve consumers as competitive forces
encourage Lifeline providers to make
valuable broadband offerings supported
by the Lifeline program. More attractive
offers which result in higher consumer
benefits will mean that the funds
provided by contributors will be used to
provide greater value. For example, we
envision a Lifeline provider seeking to
address various ‘‘digitally divided’’
consumers with attractive offers of
service unique to families with children
or the elderly.
31. Voice-only Offerings. As part of
our modernization efforts, and with a
keen view toward directing Lifeline
funds toward services in a way that
reflects the technological and
marketplace evolution toward data
services, we find that Lifeline services
must include a broadband offering after
the transition period set forth below. To
be sustainable and achieve our goals of
providing low-income consumers with
robust, affordable, and modern service
offerings, a forward-looking Lifeline
program must focus on broadband
services. Therefore, based on the record
before us, we conclude that it is
necessary that going forward the
Lifeline discount will no longer apply to
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a voice-only offering following an
extended transition period, except as
provided below in Census blocks with
only one Lifeline provider. We are
persuaded that it is necessary to use a
multi-year transition ending in 2021.
After this transition, we will continue to
support voice service when bundled
with a broadband service which meets
the minimum service standards set forth
below.
32. As a general matter, we adopt a
technologically neutral approach and
the schedule with respect to support for
standalone voice service will apply
equally to mobile and fixed providers of
voice services. We recognize, however,
that in some limited circumstances an
ETC that is providing voice service may
be the only Lifeline provider in a given
area when Lifeline support for
standalone voice service otherwise
would have been phased out. With
respect to any area where a provider is
the only Lifeline provider, consistent
with the transition described in detail
below, the provider will retain its ETC
obligations as a Lifeline provider and
may receive Lifeline support up to $5.25
per month for standalone voice service
provided to eligible subscribers. (See
infra Section III.B.3 (Support Levels).
This assumes that the ETC has not
qualified for the conditional forbearance
described in Section III.E.2 (Forbearance
Regarding the Lifeline Voice Service
Obligations) or relinquished its ETC
status in relevant part.
33. The animating principle of the
Lifeline program has always been
affordability. For years, Lifeline support
focused on making affordable fixed
residential voice services, providing a
discount that combined with a customer
contribution to help low-income
Americans connect to the telephone
network. In 2005, we expanded the
program to allow participation by nonfacilities-based providers, including
prepaid wireless resellers. Since then,
the marketplace for both Lifeline and
non-Lifeline voice offerings has evolved
dramatically. Indeed, non-Lifeline voice
rates have fallen drastically since the
2012 Lifeline Reform Order. (By the end
of 2011, an offering of 450 voice
minutes and unlimited text, would cost
$49.99. Today, one can subscribe to an
unlimited voice and text plan for $25
per month). Some observers have
pointed out that even though millions of
households are eligible for—but do not
participate in—the Lifeline program, the
vast majority of these non-participating
households still manage to obtain access
to voice communications. (USAC
reports that there are at least 39.7
million eligible Lifeline households in
the states and District of Columbia with
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a participation rate of 32 percent). In
contrast, broadband adoption among
low-income households remains well
below that of other groups, and
affordability is widely cited as one of
the primary reasons.
34. Our review of the record reveals
that voice service is declining in price
within the marketplace. This is
particularly true of mobile voice
services. Some voice-only plans run as
low as $10 per month. As we recognized
in the 2015 Lifeline FNPRM, the cost of
provisioning wireless voice service has
decreased significantly since the 2012
Lifeline Reform Order, and there are no
indications such cost decreases will
cease. Even outside the Lifeline
program, cost decreases have led to a
large variety of reasonably priced voice
options provided by providers. One
indication that voice service is declining
in price is that, as of January 2014,
mobile voice adoption rates exceeded 90
percent overall and 84 percent for lowincome adults. In the Eighteenth Mobile
Competition Report, the Wireless
Telecommunications Bureau reported
that the nationwide penetration for
mobile connections now exceeds 100
percent, meaning that the number of
connected devices exceeds the total
population of the United States. As of
September 2015, CTIA has reported over
355.4 million mobile phone subscribers.
The Eighteenth Mobile Competition
Report also noted that, according to
CTIA, reported annual minutes of use in
2014 reached over 2.45 trillion. In
contrast, the record reveals that data is
not as ubiquitous as voice and certainly
not as affordable. Pew Research Center
recently reported that home broadband
adoption appears to have plateaued
with 67 percent subscribing to such
service, down slightly from 70 percent
in 2013. Smartphone adoption is also
only 64 percent overall and 13 percent
of low-income Americans rely solely on
a smartphone for their Internet access.
(In the Eighteenth Mobile Competition
Report, the Wireless
Telecommunications Bureau noted that,
according to ComScore, approximately
77 percent of all mobile subscribers had
a smartphone in the third quarter of
2015, compared to approximately 51
percent in the third quarter of 2012).
Furthermore, as demonstrated by the
Pew Research Center, many Americans
experience difficulties in affording and
retaining service on smartphones. In
fact, those who rely the most on only
their smartphone for Internet access
have the most difficulty retaining
service given that such consumers
frequently reached their data caps as
part of their monthly plan.
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35. Technological evolution and
market dynamics have also resulted in
more choices and decreasing prices for
fixed voice service. The record reflects
that customers are increasingly opting
for voice services made possible through
fixed broadband connections, including
VoIP as well as over-the-top voice
applications. While some differences
between VoIP and traditional fixed
voice service remain, we agree with
commenters that note that such VoIP
services will likely improve and
introduce more competition into the
marketplace over time. Meanwhile, the
Consumer Price Index, maintained by
the Bureau of Labor Statistics, has found
that telephone services, including both
mobile and fixed offerings, have only
increased in price during one year from
2010 to 2014, while the price of all
goods and services generally increased
each year during the same time period.
We also recognize the nationwide trend
that consumers are increasingly
migrating away from fixed residential
voice service to mobile voice services,
which, as discussed above, have
decreased in price. This information
further supports our technologically
neutral conclusion that, while recent
trends in fixed and mobile voice service
offerings are not identical, both modes
of voice service are undergoing
significant change in response to
technological developments and new
competitive service offerings enabled by
those developments.
36. Affordability must remain a
central touchstone within the Lifeline
program. Mindful of Congress’s Section
254 mandate that ‘‘[q]uality services
should be available at just, reasonable
and affordable rates,’’ we believe that
the Lifeline program should directly
support those services that are
otherwise unaffordable to consumers,
but for a Lifeline discount. We also find
that continuing to support a voice-only
product that is reasonably priced will
result in a Lifeline program that fails to
deliver the ‘‘evolving level’’ of services
that ‘‘are being deployed’’ (emphasis
added). While much of the Lifeline
market is competitive, we are concerned
that continuing to support a voice-only
service would artificially perpetuate a
market with decreasing demand and
incent Lifeline providers to avoid
adjusting their business practices.
Instead, these Lifeline providers may
have an incentive to maintain the status
quo and avoid providing low-income
customers with modern services as
Congress intended. For these reasons,
we do not believe it is consistent with
Congress’ directive to continue
providing support to voice-only service
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within the Lifeline program outside of
the transition period discussed below.
37. Several commenters have argued
that the Commission should continue to
permit Lifeline providers to offer
standalone voice service. These parties
contend that the Commission should
retain support for standalone voice
service given that many low-income and
unemployed Americans rely on such
means of communication within their
daily lives. We agree with such
commenters that voice continues to be
an important resource for consumers to
utilize in communicating with others.
But we are not persuaded that such
service will no longer be available or
affordable if it is part of a bundle with
broadband services. We make this
judgment based on evidence of the
power of market forces in the
marketplace to compete and innovate to
meet consumer demand. We take it as
given that many consumers have
demanded and will continue to demand
voice communications. We predict that
Lifeline providers will be responsive to
this consumer demand by bundling
voice with data offerings and otherwise
ensuring consumers are able to easily
use a voice service with their data plan.
We believe that the innovative Lifeline
providers currently in the program will
be just as innovative in packaging
competitive voice offerings with the
supported broadband service. Indeed,
wireless Lifeline providers have already
recognized the increased demand for
broadband and as a result are starting to
include broadband options within their
Lifeline offerings.
38. We further recognize that, in the
existing Lifeline marketplace, Lifeline
providers have met consumers’
demands for texting, although it is not
a Lifeline-supported service. Many
Lifeline providers under their own
volition have offered unlimited texting
with the Lifeline voice service. Mobile
plans offered to non-Lifeline subscribers
are priced as low as $20 for unlimited
talk and text when bundled with data,
whereas some Lifeline plans offer as
much as approximately 500 voice
minutes and text. In the same way, we
would expect Lifeline providers would
be incentivized by competitive forces to
meet the demand for voice service and
make voice services available to
customers.
39. We emphasize that nothing in our
rule change will prevent a Lifeline
provider from offering a bundle of voice
and broadband service that delivers the
voice component over either non-IP or
IP technologies. In this way, we allow
for Lifeline providers to choose how,
whether, and when to transition to the
use of newer technologies for delivering
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voice service. As part of the overall
Lifeline modernization, this change sets
the stage for a full program
modernization where Lifeline providers
are delivering voice services to
customers over modern technologies in
a much more efficient way that benefits
consumers and provides more value to
the Fund.
40. In summary, to ensure that future
Lifeline offerings are sufficient for
consumers to participate in the 21st
Century economy at affordable rates,
and to obtain the most value possible
from the Lifeline benefit, we modify the
Lifeline rules to support voice services
only through a bundle that includes
broadband services pursuant to the
transition period detailed below. This
phase-out of support will not apply to
ETCs providing voice service in census
blocks where they are the only Lifeline
service provider. We are persuaded that
Lifeline must provide a robust,
affordable service and be forwardlooking so that as newer technologies
become more widely available, the
program can continue to deliver value to
the low-income subscriber and to the
ratepayers supporting the program.
Encouraging use of such voice-only
service indefinitely is inconsistent with
the Act’s guidance that ‘‘[u]niversal
service is an evolving level of
telecommunications services’’ that ‘‘are
being deployed in public
telecommunications networks.’’
41. Transition. We recognize,
however, that a transition is necessary
to avoid undue consumer disruption
and to allow Lifeline providers
sufficient time to adjust operations as
the Commission moves from a primarily
voice-only Lifeline program to a Lifeline
program embracing broadband services.
We believe the best way to conduct this
transition is by gradually reducing the
monthly support level for voice-only
service. At the same time, we will
phase-in higher mobile broadband
minimum service standards. As detailed
in Sections III.B.3 (Support Levels) and
III.B.2.b (Minimum Service Standards
for Lifeline Services), the support level
for voice-only service will decline over
a multi-year period while the minimum
service standard for mobile voice-only
service will be set at an initial level, and
will be increased until the minimum
standard will be 1,000 minutes per
month. Such a path to robust offerings
is in line with the fact that a
‘‘substantial majority’’ of non-Lifeline
subscribers already purchase plans with
1,000 or more minutes using either fixed
or mobile services. Given that fixed
voice service often already includes
unlimited minutes, we will not impose
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minimum service standards on fixed
voice service offerings.
42. This initial voice-only minimum
service standard will become effective
the later of December 1, 2016 or 60 days
after the date when the Commission
receives approval from the Office of
Management and Budget (OMB) for the
new information collection
requirements in this Order subject to the
Paperwork Reduction Act of 1995
(PRA), Public Law 104–13. At the same
time, beginning on the same date, a
phase-in of mobile broadband will
begin. As described below, this
transition is scheduled to continue until
December 1, 2021. During the initial
phase-in period, from December 1, 2016
through November 30, 2019, a voice and
broadband Lifeline bundle must include
at least one supported service meeting
the minimum service standards
applicable at that time. From December
1, 2019 to November 30, 2021, a voice
and broadband Lifeline bundle must
include a BIAS offering that meets the
broadband minimum service standards
applicable at that time in order to
receive the full $9.25 benefit. From
December 1, 2019 to November 30,
2021, a voice and broadband Lifeline
bundle with a broadband offering that
does not meet the applicable mobile
broadband minimum service standards
but does meet the mobile voice
minimum service standard may receive
the applicable support level for
standalone mobile voice.
43. Prior to December 1, 2019, voiceonly support will be set at $9.25 per
month. Beginning December 1, 2019 the
support amount will decline to $7.25
per month; beginning December 1, 2020,
it will decline further to $5.25 per
month. During that time period, we will
also phase-in increasing minimum
service standards for mobile voice
service. Beginning the later of December
1, 2016 or 60 days after PRA approval,
supported mobile voice offerings must
include at least 500 minutes per month;
beginning December 1, 2017, supported
mobile voice offerings must include at
least 750 minutes per month; and
beginning December 1, 2018, supported
mobile voice offerings must include
1000 minutes per month. Beginning
December 1, 2021, there will no longer
be support for voice-only service, or
voice service bundled with a broadband
offering that does not meet the
applicable minimum service standard
for BIAS, unless the Commission has
acted upon recommendations to do
otherwise presented in the State of the
Lifeline Marketplace Report. However,
voice service will continue to be
supported as long as it is offered with
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a broadband service meeting the
minimum service standards.
44. Over the same period for which
the voice-only support level declines for
fixed and mobile voice services, fixed
and mobile broadband will receive
$9.25 in monthly support and the
minimum service standard for mobile
broadband service will gradually
increase. Specifically, on the later of
December 1, 2016 or 60 days after the
Commission receives PRA approval of
the information collection requirements
in this Order, the mobile broadband
minimum service standards for data
usage allowance will be set at 500
megabytes (MB) monthly at 3G speeds.
The minimum data usage allowance
will increase to 1 gigabyte (GB) on
December 1, 2017 and to 2 GB on
December 1, 2018. On December 1,
2019, the minimum standard for mobile
data usage will be set based on a
forward-facing updating mechanism
using objective data as described below.
From December 1, 2016 to November
30, 2019, a voice and broadband Lifeline
bundle must include at least one
supported service meeting the minimum
service standard applicable at that time
for such supported service. (See infra
Section III.B.2.)
45. Minimum Service Standards. After
December 1, 2021, in order to receive
the full support amount of $9.25 for
mobile services, ETCs must provide the
minimum service standards for BIAS as
a Lifeline supported service to
qualifying low-income consumers. See
infra paras. 97–22). As discussed above,
from December 1, 2019 to November 30,
2021 a voice and broadband Lifeline
bundle must include a broadband
offering that meets the applicable
minimum service standard to be eligible
for the full $9.25 benefit.
46. However, given the inherent
uncertainty in the future Lifeline
marketplace, we also direct the Bureau
by June 30, 2021, to submit to the
Commission a State of the Lifeline
Marketplace Report. This report should
review the Lifeline marketplace for the
purpose of recommending to the
Commission whether the transition set
out in this Order should be completed
or whether the Commission should act
to continue delaying Lifeline’s
transition to chiefly supporting
broadband services. This report should
in particular consider the prevalence of
subscriptions to various service
offerings in the Lifeline program, the
affordability of both voice and
broadband services, the pace since
adoption of this Order at which voice
and data usage has changed, and the
associated net benefits of continuing to
support voice service as a standalone
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option. (The Bureau in the State of the
Lifeline Marketplace Report should in
particular follow the principles
presented in Part E of OMB Circular A–
4 for the purpose of determining
whether to continue support for voiceonly service. See OMB Circular A–4
https://www.whitehouse.gov/omb/
circulars_a004_a-4/). We expect the full
Commission will take appropriate
action if necessary to make changes to
the program within six months of
receiving the report, for example,
adjusting support levels or minimum
service standards, so that the Lifeline
program continues to achieve its
objectives. If the Commission does not
act following the recommendation(s) in
the State of the Lifeline Marketplace
Report then the transition will be
completed on December 1, 2021.
47. Bundled Service Offerings. We
continue to allow low-income
consumers to apply the Lifeline
discount to support fixed and mobile
bundles that include one or more of the
supported services so long as one of the
supported services offered satisfies the
minimum service standard
requirements. In other words, the
discount may be applied to a mobile
bundle of voice and data services so
long as either the voice service or the
data service meets the applicable
minimum service standard. Other nonsupported services (e.g., texting) may be
bundled with supported services and
the Lifeline discount may be applied to
the bundle. This does not represent a
change in policy as many Lifeline
providers have voluntarily offered nonsupported services to consumers
bundled with Lifeline-supported
services. We agree with commenters and
view such offerings as enhancing
consumer benefits. We recognize this as
an illustrative case whereby Lifeline
providers identify consumer demand for
a non-supported service such as texting
and voluntarily provide the service
consumers demand apart from any
regulation from the Commission.
48. One-Per-Household Rule. Through
our reforms today, we continue to
believe it is necessary to apply the oneper-household requirement within the
Lifeline program. Just as the
Commission concluded in the 2012
Lifeline Reform Order, we believe a oneper-person rule or one-per-service
rule—providing an individual
household an opportunity to receive one
supported service for both voice and
broadband—could increase the size of
the Lifeline program by a significant
percentage above the projected Fund
size. By limiting support to one Lifeline
offering and one household, we find
that continued implementation of the
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one-per-household rule strikes an
appropriate balance between ensuring
that support is available for eligible lowincome households against disbursing
universal service funds in a fiscally
prudent and sustainable way. By
continuing to enforce the one-perhousehold rule, we also decline to adopt
some commenters’ suggestions that a
household be able to receive more than
one discount to support multiple
services. Instead we take an alternate
path suggested by commenters,
providing consumers a choice as to
which service (or set of bundled
services) their Lifeline discount is used
to support.
2. Minimum Service Standards
a. Introduction
49. In the 2015 Lifeline FNPRM, we
proposed establishing minimum service
standards for all Lifeline service
offerings ‘‘to ensure the availability of
robust services for low-income
consumers,’’ and we proposed updating
the minimum service standards. We
now adopt detailed rules in line with
these proposals, and revise Section
54.408 of the rules. In order for Lifeline
customers to obtain the type of robust
service which is essential to participate
in today’s society, we conclude that
forward-looking minimum service
standards are required, and that those
standards must be updated on a regular
basis.
50. The minimum service standards
we adopt are rooted in the statutory
directives to ensure that quality services
are available at ‘‘just, reasonable, and
affordable rates,’’ and that advanced
telecommunications services, the
services which have ‘‘been subscribed to
by a substantial majority of residential
customers,’’ are available throughout the
nation. We interpret these directives as
requiring the Commission to ensure that
low-income consumers can both afford
and physically access services that are
available throughout the Nation. The
standards adopted below ensure that
Lifeline supports the type of service the
Act specifically requires, and the
updating mechanisms will give Lifeline
subscribers confidence that their
supported service will remain robust as
technology improves through a
predictable mechanism.
51. The minimum standards we
establish will also account for the need
for Lifeline service offerings to be
affordable. As we noted, ‘‘the Lifeline
program is specifically targeted at
affordability,’’ and it is necessary to
establish minimum service levels that
are both affordable and reasonably
comparable. Commenters also
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emphasized the importance of
affordability to facilitate broadband
adoption. The minimum standards that
we establish strike a balance between
the demands of affordability and
reasonable comparability by providing
consumers with services that allow
them to experience many of the
Internet’s offerings, but not mandating
the purchase of prohibitively expensive
offerings.
52. We first explain which services
will have minimum service standards.
We also set initial minimum service
standards and provide updating
mechanisms. Finally, we describe
exceptions made for providers who do
not offer services meeting our minimum
standards.
b. Minimum Service Standards for
Lifeline Services
53. Discussion. We now modify our
rules to establish minimum service
standards for all Lifeline supported
services based on services to which a
‘‘substantial majority’’ of consumers
have already subscribed. We also set
forth the data sources that will be used
to set and update minimum service
standards. We establish separate
standards covering speed and data usage
allowances for both fixed and mobile
services in recognition of each service’s
distinct characteristics, and we establish
minimum standards for mobile voice
service, until standalone mobile voice is
no longer a supported service.
54. Numerous commenters support
establishing minimum service standards
for broadband; they emphasize that
Lifeline customers should not need to
accept ‘‘second-tier’’ service, and that
functional Internet access is essential to
allow consumers to fully participate in
society. Broadband access can help
households meet their ‘‘basic needs for
education, health care, disabilities
access, and public safety.’’ While other
commenters argue that minimum
service standards are unnecessary, or
unduly burdensome, we generally
believe that, at a minimum, services that
are subscribed to by a substantial
majority of the nation’s consumers
should receive Lifeline funding. We are
unpersuaded by the argument that
minimum service standards are unduly
burdensome. As discussed in greater
detail, infra, we grant exemptions in
certain situations where a fixed
broadband provider does not currently
offer service meeting the minimum
standards.
55. In the 2015 Lifeline FNPRM, we
also sought comment on ‘‘whether and
how service levels would vary between
fixed and mobile broadband service.’’
While some commenters argued that the
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same standards should apply to fixed
and mobile broadband, we believe that
different standards are appropriate
because of the technological differences
between fixed and mobile broadband,
the two services’ different capacity
patterns, and the different constraints
on service. For example, mobile
broadband providers face spectrum
constraints that fixed providers do not,
and the speed mobile broadband
providers can deliver to consumers is
far more dependent on the consumer’s
location. For similar reasons, the
Commission has established different
minimum service standards for fixed
and mobile broadband when setting
carrier obligations in the Connect
America Fund (CAF). Based on all of
these factors, we conclude that different
minimum service standards for fixed
and mobile broadband are appropriate.
56. Finally, while setting initial
minimum service standards is necessary
to guarantee access to services that a
‘‘substantial majority’’ of residential
consumers have already subscribed to, it
is equally important to regularly update
those standards to make sure that
Lifeline continues to support an
evolving level of telecommunications
service. Because technology develops at
a rapid pace, any minimum standards
we set would quickly become outdated
without a timely updating mechanism.
Commenters also agree that any
minimum service level must be updated
regularly. Accordingly, we conclude
that minimum standards must be
updated on a regular basis to ensure that
consumers are able to continue to
receive sufficiently robust service
similar to what a substantial majority of
American consumers subscribe to. We
also conclude that the updating
mechanism will rely on an ‘‘objective,
data-based methodology,’’ as we
proposed in the 2015 Lifeline FNPRM.
Finally, we update Section 54.408 of our
rules in accordance with this
conclusion.
(i) Fixed Broadband
57. We first discuss the minimum
standards for fixed broadband service.
In the 2015 Lifeline FNPRM, we sought
comment on ‘‘establish[ing] an objective
standard that could be updated on a
regular basis simply by examining new
data about fixed broadband service.’’
Although we recognized that ‘‘the
prevailing benchmark for fixed
broadband is the speed of the service,’’
we also sought comment on data caps
and whether to set a minimum data
usage allowance for fixed broadband
service. While some commenters
opposed minimum service standards for
fixed broadband, many other
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commenters suggested that minimum
standards were necessary for both speed
and data usage allowance. We believe
that for consumers to fully benefit from
the same type of Internet service that
has ‘‘been subscribed to by a substantial
majority’’ of Americans, those
consumers must have access to services
of both sufficient speed and data usage
allowance. Accordingly, we establish
minimum service standards for both
speed and data usage allowance which
both must be met for providers to
receive Lifeline funds.
58. Data Sources. In response to the
2015 Lifeline FNPRM commenters
proposed various methods to set initial
minimum service standards for fixed
broadband: Some commenters proposed
using specific numerical thresholds;
others supported using existing
Commission testing mechanisms to
determine initial minimum service
standards; and a third group of
commenters supported ‘‘functional’’
minimum service standards with a focus
on making sure that consumers could
‘‘perform a full range of online
activities.’’
59. In the 2015 Lifeline FNPRM we
asked if we should ‘‘consider setting any
minimum standards based on the FCC
Form 477 (Form 477) data,’’ and several
commenters supported the idea. We also
sought comment on using CAF
standards in the Lifeline program. While
a few commenters opposed using CAF
standards because meeting the CAF
standards would be too expensive for
providers, or because the CAF standards
would not provide sufficient flexibility
for providers who do not currently meet
the standards, other commenters
supported using CAF standards to
determine the initial minimum
standards for fixed broadband.
60. We conclude that the minimum
service standards for fixed broadband
speed should be based on the service to
which a ‘‘substantial majority’’ of
consumers subscribe as determined
using available subscriber data reported
on the Form 477. As we discuss in
greater detail below, while we do not
formally define the term ‘‘substantial
majority’’ for all supported services, we
believe that 70 percent of consumers
constitutes a ‘‘substantial majority’’ in
the context of fixed broadband speeds.
(While we conclude that 70 percent of
consumers constitutes a ‘‘substantial
majority’’ as it relates to fixed
broadband speeds, we lack the data to
precisely determine what percent of
consumers subscribe to other modes of
services at particular service levels.
Despite this, we still set minimum
standards for other supported services at
levels that in our judgement constitute
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a substantial majority of consumers
based on the information available.).
61. We also conclude that focusing
solely on the ‘‘functionality’’ of a
consumer’s Internet service would not
provide a workable standard for the
Commission to use when updating
annual service standards because it
would require the Commission to
determine the numerical threshold of
‘‘functionality’’ on a regular basis. By
using numerical thresholds indexed to
what consumers actually subscribe to,
the Commission will allow consumer
usage to determine what speeds are
‘‘reasonably comparable.’’
62. Because providers already ‘‘report
extensively on their offerings’’ on Form
477 twice a year, it is an appropriate
repository for data to set and regularly
update the minimum service standard
for fixed broadband speeds.
Additionally, the Commission
previously emphasized that it uses Form
477 to ‘‘update our universal service
policies and monitor whether our
statutory universal service goals are
being achieved.’’ Because Form 477
provides an accurate picture of what
services American consumers actually
subscribe to, and because it is collected
on a regular basis, we conclude that
Form 477 provides the best data with
which to set and update the minimum
service standard for fixed broadband
speeds.
63. In addition, for the fixed
broadband data usage allowance
minimum service standard, we
conclude that the data usage allowance
standards currently used in the Connect
America Fund for rate of return carriers
electing A–CAM support are
appropriate. We base the initial data
usage allowance standard on this CAF
standard because we do not currently
have a source of available data that
could be used to determine what
percentage of subscribers purchase
offerings with certain data usage
allowance limits. We therefore set the
initial data usage allowance standard for
fixed broadband at the CAF rate-ofreturn standard for carriers electing A–
CAM support, which is 150 GB per
month for fixed broadband. We further
conclude that the minimum service
standards for data usage shall be
updated based on data in the
Commission’s Urban Rate Survey and
other appropriate and relevant data
sources. The Urban Rate Survey was
originally created as part of the
Commission’s Connect America Fund
initiative in part to allow the Bureau ‘‘to
specify an appropriate minimum for
data usage allowance allowances’’ in
CAF, and we believe it can serve a
similar purpose here. While we set the
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initial data usage allowance standard for
fixed broadband based on the CAF rateof-return standard for carriers electing
A–CAM support, we also believe the
Urban Rate Survey in the future will
help guide the Bureau to determine the
usage allowance most commonly offered
in the fixed broadband marketplace.
(We also encourage providers to explore
options for increasing usage allowances
for Lifeline consumers who are deaf,
hard of hearing, deaf-blind, or have a
speech disability and rely on video
connection for Video Relay Services and
point-to-point calls and other
bandwidth-intensive accessibility
functionalities.).
64. Initial Minimum Service
Standards. While we conclude that
Form 477 data will be used to set and
update the minimum standards for
download and upload speeds, we also
conclude that the Connect America
Fund rate-of-return standard is the best
starting point for setting minimum
service standards for data usage
allowance. Finally, we recognize that for
the purpose of updating the minimum
standard for capacity, the Urban Rate
Survey and potentially other data will
be useful sources for the Bureau to
consider.
65. Speed. We conclude that in order
to determine what fixed broadband
speeds a ‘‘substantial majority’’ of
Americans subscribe to, we will use the
30th percentile of subscribed speeds
based on Form 477 data. By using the
30th percentile, we arrive at a speed to
which 70 percent of Americans already
subscribe, and we conclude that 70
percent constitutes a substantial
majority. Although the Commission has
not previously defined what constitutes
a ‘‘substantial majority,’’ it has
concluded that it is more than a simple
majority. Based on the most recent Form
477 data, the 30th percentile of
subscribed fixed broadband speeds is
10/1 Mbps. Put differently, this means
that 70 percent of residential broadband
subscriptions already meet or exceed
10/1 Mbps speeds. (To order the
subscription data in Form 477 for the
purposes of determining percentiles,
residential subscriptions were ordered
lexicographically by download speed
and then upload speed.). Based on Form
477 data on what consumers actually
subscribe to, we set the initial minimum
service speed standards for fixed
broadband at 10 Mbps for download and
1 Mbps for upload. An offering must
meet both download and upload speed
minimums to be considered to meet the
minimum service standards.
66. Usage Allowance. As stated supra
we set the initial usage allowance
standard for fixed broadband at the CAF
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33035
rate-of-return standard, which is 150 GB
per month for fixed broadband.
67. Updating Minimum Service
Standards. We conclude that Form 477
will be used to update the minimum
service standard for fixed broadband
speed. When updating the minimum
service standards in the future, the
Bureau will use data from the most
recently available and usable Form 477.
Using Form 477, the 30th percentile
level of residential broadband service
speeds reported nationally will be used
as the speed component of the
minimum service standard. We find that
this benchmark represents a service
standard that is consistent with our
statutory directive in Section 254 of the
Act. Accordingly, we conclude that
using the 30th percentile of residential
broadband speed is appropriate, because
this level indicates that seventy percent
of Americans subscribe to it, or
something more robust.
68. For the fixed broadband minimum
service standards, the Bureau will, on
delegated authority, on an annual basis,
release a Public Notice on or before July
31 notifying the public of the updated
standard levels for speed and data usage
allowance to be effective on December
1 for the next twelve months. The
updated speed standard will be
calculated using the above specified
values from the most recent available
Form 477. In the event the Bureau does
not issue the Public Notice by July 31,
or if any of the data required by the
calculation are older than 18 months,
the minimum service level for fixed
broadband speed will be set at the
greater of either (1) its current level; or
(2) the fixed broadband speed standard
used in the Connect America Fund for
rate-of-return carriers. Because the
Connect America Fund is also designed
to provide advanced
telecommunications services to
America’s consumers, we conclude that
its fixed broadband speed standards
provide an acceptable alternative in the
event the Bureau does not complete its
update in a timely manner.
69. For the fixed broadband minimum
service data allowance usage standard,
the Bureau will, on delegated authority,
on an annual basis, release a Public
Notice on or before July 31 notifying the
public of the updated standard level to
be effective on December 1 for the next
twelve months. The updated fixed
broadband minimum service standard
for data allowance usage will be the
greater of (1) an amount the Bureau
concludes a ‘‘substantial majority’’ of
American consumers already subscribe
to; or (2) the Connect America Fund
data usage allowance standard set for
rate-of-return carriers.
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(ii) Mobile Broadband
70. We next discuss the minimum
service levels for mobile broadband
services in the Lifeline program and
revise Section 54.408 of the rules. In the
2015 Lifeline FNPRM, we sought
comment on whether minimum
standards were appropriate for mobile
broadband, and what criteria should be
used to set those standards. Multiple
commenters supported minimum
standards for mobile broadband, while
others were opposed. We agree with
commenters who argue that some
consumers only have access to mobile
broadband, and that low-income
consumers are particularly likely to only
have access to mobile broadband. For
these low-income consumers, it is vital
that the offered service provides
sufficient speed and capacity to allow
the user to utilize all that the Internet
has to offer. Accordingly, we conclude
that minimum standards for both speed
and data usage allowance are
appropriate.
71. Data Sources. In the 2015 Lifeline
FNPRM, we sought comment on setting
minimum service standards for mobile
broadband. We specifically sought
comment on setting a minimum
standard for capacity at 1.8 GB per
person per month, which is what the
average American consumer used in
2014. Some commenters believed that
requiring 1.8 GB would be too
expensive for providers, or would
require a significant charge for
consumers, while others argued that 1.8
GB per month per subscriber would be
insufficient for consumers without
access to fixed broadband. While most
commenters did not propose specific
numerical thresholds, one commenter
proposed requiring 1 GB of 4G data and
unlimited 3G data. We are mindful that
Lifeline is meant to support a
household, as opposed to an individual,
and we must take this into
consideration when setting the proper
minimum service standard for mobile
broadband. Accordingly, as we discuss
in more detail below, we conclude that
after an initial schedule of minimum
service standards, updated minimum
service standards for mobile broadband
data usage allowance will be based on
calculation of a mobile data usage level
by using data set forth in the
Commission’s annual Mobile
Competition Report and other available
data sources For the mobile broadband
minimum service standard for speed,
we rely on Form 477 data while also
incorporating industry mobile
technology generation (i.e. 3G, 4G).
72. Initial Schedule of Data Usage
Allowance. We conclude that, in order
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to allow the Lifeline market an
appropriate period to adjust to the
introduction of mobile broadband into
the program, we should adopt a phasedin schedule of minimum service
standards for mobile data usage
allowances. After the period of time
addressed in the schedule, the regular
updating mechanism for mobile
broadband service will apply unless the
Commission acts otherwise based on
recommendations in the State of the
Lifeline Marketplace Report. Beginning
on the later of December 1, 2016 or 60
days after PRA approval, the minimum
data usage allowance standard for
mobile broadband will be 500 MB per
month. Beginning December 1, 2017, the
minimum data usage allowance
standard for mobile broadband will
increase to 1 GB per month. Beginning
December 1, 2018, the minimum data
usage allowance standard for mobile
broadband will increase to 2 GB per
month. Beginning December 1, 2019, the
minimum data usage allowance
standard for mobile broadband will be
determined, and updated thereafter,
based on the procedures below.
73. Data Usage Allowance. We
conclude that after the phase-in of
mobile data usage allowance standards,
in order to update mobile broadband
standards for data usage allowance in
line with the principle of supporting
services that a ‘‘substantial majority’’ of
American consumers subscribe to, and
given the types of data that are
publically and regularly available, the
minimum service standard for mobile
broadband data usage allowance will be
70 percent of the calculated average
mobile data usage per household. These
values will be calculated as follows:
• First, the average number of mobile
subscriptions per household will be
determined by dividing the total
number of mobile-cellular subscriptions
in the United States, as reported in the
Mobile Competition Report or by CTIA,
by the total number of American
households, as determined by the U.S.
Census Bureau. This number will be
rounded to the hundredths place.
(Based on the most recent data, there are
3.03 mobile subscriptions per American
household. [355,400,000/117,259,427]).
• Second, the number of mobile
subscriptions per American household
will be multiplied by the percentage of
mobile subscribers who own a smart
phone, as reported by the Commission
in its annual Mobile Competition
Report, or other publicly available data
sources if necessary, in order to
determine the number of mobile
smartphone subscriptions per American
household. Because this value should
not include mobile subscriptions that
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are not data-capable, phones that are not
data-capable will not be used when
calculating the mobile broadband
minimum service standards.
Additionally, phones that are not datacapable have no impact on the average
household’s mobile data capacity. This
product will be rounded to the
hundredths place. (Based on the most
recent data, there are 2.33 smartphone
subscriptions per household. [3.03 *
.77]).
• Third, the calculated average
number of mobile smartphone
subscriptions per household will be
multiplied by the average data used per
mobile smartphone subscriber, as
reported by the Commission in its
annual Mobile Competition Report,
(Eighteenth Mobile Competition Report
30 FCC Rcd at 14609, Chart VII.B.2
(stating that the average smartphone
user uses 1.361 GB per month of data)
to determine the average mobile
broadband data usage per household.
This number will be rounded to the
hundredths place and then multiplied
by 0.7 (Based on the most recent data,
this currently amounts to 2.22 GB per
month per household [2.33 * 1.361 *
0.7]) to adjust for the fact that in these
circumstances a ‘‘substantial majority’’
of subscribers will use less than the
average.
• Fourth, to provide more simplicity
for providers, the per-household
capacity will be rounded down to the
nearest 250 MB. (Based on current data,
the 2.22 GB household capacity leads to
a minimum capacity standard of 2 GB
per month).
74. If applied today, the minimum
service standards for mobile data usage
allowance would be set at 2 GB per
month, however, as discussed supra, we
choose to adopt a more gradual phasein of this standard. After the phase-in,
in order to update the minimum
standard for mobile broadband capacity,
the Bureau will perform the same
calculations listed above with the
updated data from the Mobile
Competition Report and other specified
sources.
75. Speed. We now set the initial
value for the minimum speed standard
for mobile broadband. As stated above,
our initial mobile broadband speed
standard is based on technology
generation, while the updated standard
will incorporate Form 477 data. A
coalition of Lifeline providers indicated
that the Commission should require
mobile broadband providers to offer
speeds of 3G or better, and we agree. We
conclude that, to claim Lifeline support
for a mobile broadband service, a
provider must provide to the Lifeline
subscriber a service advertising at least
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3G mobile technology for at least the
amount of data usage allowance
specified by the minimum service
standards. (Many mobile offerings will
provide a certain amount of data at a
certain speed and then provide data
service beyond that amount at lower
speeds. The minimum service standard
requires the usage allowance standard
be met at the speed standard). We
believe this is an appropriate starting
point given the Commission’s actions in
the Mobility Fund, where funding was
limited to those who deployed networks
at 3G or higher. The initial mobile speed
minimum service standard will be
effective beginning on the later of
December 1, 2016 or 60 days after PRA
approval.
76. Updating Minimum Service
Standards. For the mobile broadband
minimum service standards, the Bureau
will on delegated authority, on an
annual basis, release a Public Notice on
or before July 31 notifying the public of
the updated standard to be effective on
December 1 of the same year for the next
12 months. After the phase-in of the
data usage allowance minimum
standards, the updated data usage
allowance standard will be calculated
using the above specified values from
the most recent versions available of
each required data source. In the event
the Bureau does not issue the Public
Notice by July 31, or if any of the data
sources required by the calculations are
older than 18 months, the minimum
service level for mobile broadband
capacity will automatically increase or
decrease on December 1 of the same
year from its previous level by the most
recent year-over-year percentage change
in smartphone data usage per
household, as reported in the two most
recent Mobile Competition Reports. The
value of the previous minimum service
level adjusted by the most recent yearover-year percentage change in
smartphone data usage per subscriber
will then be rounded up to the nearest
250 MB level. As an example, in 2013,
the average smartphone user used 1.152
GB per month. In 2014, the average
smartphone user used 1.361 GB per
month. This indicates an 18.1 percent
increase. If the Bureau did not issue the
required Public Notice performing the
calculations detailed above, the most
recent minimum standard would be
increased by 18.1 percent and rounded
up to the nearest 250 MB level.
77. We recognize that the minimum
service standards for mobile broadband
speeds may not need to be updated as
frequently as the mobile data usage
allowance standard given the pace at
which new mobile technology
generations are deployed. We therefore
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direct the Bureau to consider updating
the mobile broadband speed standard at
the same time it updates the minimum
service standard for mobile broadband
data usage allowance. The Bureau
should consider mobile Form 477 data
and other relevant sources to determine
whether the mobile speed standard
should be updated. Because we
recognize that the minimum standard
for mobile broadband speeds may not
need to be updated on an annual basis,
it will not be subject to an automatic
increase; instead, it will only be
adjusted if the Bureau determines that it
ought to be adjusted after determining
that, based on Form 477 data or other
relevant sources, the ‘‘substantial
majority’’ principle is best satisfied by
an adjusted speed standard. In any case,
the same Public Notice updating the
mobile broadband data usage allowance
standard should also establish the
mobile broadband speed standard in
effect beginning December 1, regardless
of whether it is adjusted from its
previous level.
(iii) Fixed Voice
78. In the 2015 Lifeline FNPRM, we
sought comment on how to ensure fixed
voice service is ‘‘reasonably
comparable’’ and affordable to lowincome consumers. After consideration
of the record, we decline to set
minimum service standards for fixed
voice service and instead maintain the
status quo in this portion of the Lifeline
market. It is not apparent that in this
segment of the market Lifeline
consumers are likely to be offered a less
robust service than non-Lifeline
consumers. In the fixed voice segment,
providers typically apply the Lifeline
discount to the price of the generally
available residential voice service. In
this way, the same services available to
non-Lifeline customers are made more
affordable to Lifeline customers.
Additionally, while numerous
commenters emphasize the need to
retain fixed voice as a supported
service, no commenters stated that
specific minimum service standards for
fixed voice service are necessary.
Accordingly, we see no need at this time
to intervene in such a situation.
(iv) Mobile Voice
79. In the 2015 Lifeline FNPRM, we
proposed establishing minimum service
levels for voice-only service, and we
sought comment on requiring providers
to offer unlimited talk and text to
consumers. Commenters emphasized
that voice-only service remained an
essential part of the program, at least
until the IP-enabled transition is
complete, and many other commenters
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33037
supported requiring providers to offer
unlimited talk and text. While some
providers argued that minimum
standards for mobile voice are
unnecessary or ‘‘uneconomical,’’ we
believe that requiring mobile voice
providers to offer 1,000 minutes to
consumers is consistent with our
statutory directive to ensure that
Lifeline consumers have access to the
same services to which a substantial
majority of American consumers
subscribe. While we conclude that
requiring providers to offer 1,000
minutes is appropriate, we are also
mindful of providers’ concerns about
the affordability and feasibility of
immediately requiring providers to offer
1,000 minutes and the resulting
disruption to current Lifeline
subscribers. Accordingly, we adopt a
transition period beginning with an
initial minimum standard of 500 voice
minutes per month increasing over time
to 1,000 minutes on December 1, 2018.
We also at this time decline to include
texting as a supported service, and thus
we also decline to follow some
commenters’ suggestion that we set a
minimum service standard for texting.
80. Based on recently available data,
it is clear that a ‘‘substantial majority’’
of American consumers already
subscribe to plans that offer 1,000 or
more minutes, because ‘‘none of the
smartphone plans for the United States
have limited minutes,’’ and 77 percent
of cell phones in the United States are
smartphones. Accordingly, we conclude
that Lifeline providers that seek support
for mobile voice-only service, after the
transition set out here, must provide
1,000 voice minutes in order to satisfy
the minimum service standards until
mobile voice is no longer a supported
standalone service. Because we will
require mobile voice providers to offer
at least 1,000 minutes beginning on
December 1, 2018, the mobile voice
minimum service standard will not be
updated annually after that date.
81. We therefore adopt the following
transition for mobile voice minimum
service requirements. The minimum
service standards for mobile voice are as
follows. Beginning the later of December
1, 2016 or 60 days after PRA approval,
providers will be required to offer at
least 500 minutes per month to mobile
voice consumers. Multiple providers
have indicated that they will be able to
offer consumers 500 minutes a month,
(To the extent that some of these
providers suggest we should not at this
time schedule any increase above 500
minutes, we disagree. Under the
schedule we have adopted, providers
will have well over 18 months to
prepare for a phase-in of the 750-minute
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minimum standard and another year to
prepare for the phase-in of the 1,000
minutes requirement); and we
accordingly conclude that this
requirement is not unduly burdensome.
Beginning December 1, 2017, providers
will be required to offer at least 750
minutes per month to mobile voice
consumers. Beginning December 1,
2018, and until voice telephony is no
longer a supported service, providers
will be required to offer at least 1000
minutes per month to mobile voice
consumers. We believe this provides a
gradual transition period that will allow
Lifeline providers and consumers to
adjust to the new mobile voice
minimum standards reflective of the
mobile voice plans offered to the
substantial majority of American
consumers.
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(v) Bundled Offerings
82. In the 2012 Lifeline Reform Order,
we amended our rules to allow
providers to offer bundled packages of
voice and data service. In the 2015
Lifeline FNPRM we sought comment on
how bundles should affect the Lifeline
support level. We now clarify that
providers remain free to offer bundled
offerings as a way to improve their
service offerings and attract consumers.
However, beginning December 1, 2019,
when support for voice-only service is
phased down, in order for Lifeline
providers to receive the full $9.25
reimbursement from the program for
services offered as part of a bundle, the
broadband component of the bundle
must meet the applicable minimum
service standards. (If the broadband
component does not meet the applicable
minimum service standard but the voice
offering does meet the applicable
minimum service standard, then the
provider may still receive the thenapplicable benefit provided for voiceonly service). We believe this
requirement is necessary to ensure that
Lifeline subscribers continue to receive
robust broadband service while
affording reasonable flexibility to the
provider and choice to the consumer.
c. Application of the Minimum Service
Standard
83. While numerous commenters
supported minimum service standards,
many commenters worried about
reduced consumer choice, or providers
being forced from the Lifeline market if
they could not offer services that meet
the minimum standard. We are mindful
of these issues, but we conclude that
allowing the Lifeline benefit to be used
on services that do not meet our
minimum service standards would lead
to the type of ‘‘second class’’ service
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that the minimum service standards are
meant to eliminate. One of the reasons
behind adopting minimum service
standards was our belief that such
standards would ‘‘remove the incentive
for providers to offer minimal, uninnovative services.’’ If providers were
able to collect support for services that
did not meet our standards, this would
lead providers to continue to offer lowquality services. For this reason, we
require, for fixed broadband, that any
Lifeline supported service meet both the
speed and data usage allowance
minimum standards.
84. We also decline to allow mobile
broadband services to be supported if
the service does not meet the minimum
service standards for both speed and
data usage allowance. We do not believe
that mobile broadband speeds of less
than 3G are sufficiently advanced to
warrant Lifeline funding. Further, we
believe the current wireless and Lifeline
marketplaces would allow mobile
service providers to structure their
offerings in such a way that the
minimum service standards would not
promote robust service. For this reason,
we require that any Lifeline mobile
broadband service meet both the speed
and data usage allowance minimum
service standards. For mobile voice-only
service, as long as it is supported as a
standalone service and subject to the
transition detailed above, the service
provided must meet the minimum
service standard.
85. In order to ensure that Lifeline
service meets the minimum service
standards, we require service providers
to annually certify compliance with the
applicable minimum service level rules.
Accordingly, we amend Section
54.422(b) to require carriers to certify
their compliance with these
requirements on our Form 481.
d. Exceptions Where Providers Do Not
Meet Minimum Service Standards
86. We next provide an exception to
our minimum standard requirements
targeted towards fixed providers who
have yet to deploy broadband capable
networks in specific geographic areas
that meet the minimum service
standards. While we are mindful of our
statutory directive to ensure that
residents of underserved areas have
access to services that are ‘‘reasonably
comparable to those services provided
in urban areas and that are available at
rates that are reasonably comparable to
rates charged for similar services in
urban areas,’’ we have also recognized
that many people, especially those
living in rural areas, might not yet have
access to broadband services that meet
our minimum service requirements.
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Many commenters have similarly
emphasized the different levels of
infrastructure present in rural areas. In
the 2016 Broadband Progress Report,
the Commission noted that 25 percent of
residents of rural areas did not have
access to download speeds of at least 10
Mbps.
87. We recognize that the necessary
infrastructure is not present in all areas,
and that there are providers which are
not currently capable of offering
services which meet or exceed the
minimum service standards.
Accordingly, we address commenters’
concerns with a limited exception to our
minimum service standards. This
approach maintains our objective of
providing robust service where available
while also not precluding a subscriber
from obtaining a Lifeline benefit in
situations where the infrastructure does
not yet support the minimum service
standard. Additionally, our conclusion
is consistent with Commission
precedent, as the Commission has
previously granted certain recipients of
Universal Service funding waivers from
our minimum service standards because
of infrastructure constraints. As we
explain in more detail below, the
exception applies in the following
circumstances.
88. First, we apply the exception only
to fixed broadband providers. (47 CFR
8.2(d) (defining a fixed broadband
service as a broadband Internet access
service that serves end users primarily
at fixed endpoints using stationary
equipment. Fixed broadband Internet
access service includes fixed wireless
services (including fixed unlicensed
wireless services, and fixed satellite
services.). We find the exception is only
appropriate for fixed broadband because
fixed broadband is the mode for which
there are still significant areas of the
country in which locations do not have
access to the minimum fixed broadband
standards. While we acknowledge that
some areas also do not have mobile
broadband coverage meeting the
minimum standards, there are far fewer
of these areas. Further, we are
concerned, given inherent differences in
mobile and fixed technologies and the
attendant business models of each, that
an exception for mobile service could
more easily be used to undercut our
objective of supporting robust service in
the Lifeline program. (More specifically,
for mobile services we find that the
business economics of the marketplace
mean a mobile broadband provider
could much more easily than a fixed
broadband provider craft a business
model with a set of very low usage
allowance offerings for the purpose of
triggering this exception to meeting the
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minimum service standards. We find
that allowing such behavior would
undercut this Order’s commitment to
funding meaningful levels of robust
service.).
89. Second, the exception applies
only where the provider does not offer
any generally available residential fixed
broadband packages which meet the
minimum service standards at a
prospective subscriber’s residence.
Because we do not believe Lifeline
funding should support ‘‘second-tier’’
service, we find that providers who
meet the minimum service standards
with a generally available residential
offering to a location should not be
eligible for the exception at the location
where they meet the minimum service
standards.
90. Third, the exception only applies
if the provider offers a generally
available residential fixed broadband
service to the prospective subscriber
with speeds meeting or exceeding 4
Mbps download and 1 Mbps upload. We
believe this requirement is necessary to
ensure that providers who offer
‘‘second-tier’’ service are not rewarded
for failing to upgrade their networks. We
delegate to the Bureau the rulemaking
authority to increase, but not decrease,
this speed floor as it determines is
appropriate.
91. A provider qualifying for this
exception may claim Lifeline support
for a household even when providing
service that does not meet the minimum
standards for fixed broadband as long as
the Lifeline discount is applied only to
the purchase of its highest performing
generally available residential offering
that meets or exceeds 4Mbps/1Mbps. A
provider will certify that it is providing
the service in accordance with
Commission rules, including that this
exception has been appropriately
applied. However, as always, the
Commission will retain its audit
authority and may use it to periodically
evaluate whether a provider is
complying with the rule.
92. Finally, while we do not at this
time provide an exception to the
minimum service standards for mobile
broadband, our longstanding waiver
rule permits the Commission to waive
any rule ‘‘in whole or in part, for good
cause shown.’’ We accordingly will
consider waivers on a case-by-case basis
for providers who do not meet our
minimum speed standard for mobile
broadband in particular areas. Pursuant
to our general waiver rule, waiver of the
mobile minimum service standards for
broadband would be appropriate only if
special circumstances warrant a
deviation from those standards, and
such a deviation will serve the public
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interest. We could envision that such
special circumstances and public
interest benefits would most likely be
present in cases in which a provider
seeks a waiver to apply the Lifeline
benefit to the fastest mobile broadband
product it offers, but that product does
not meet the minimum service
standards for mobile broadband due to
lack of a deployed network able to
achieve that standard.
3. Support Levels
93. Baseline Level of Support. In the
2015 Lifeline FNPRM, we tentatively
concluded that we should make
permanent the non-Tribal support
amount of $9.25 per month. We now
conclude that the non-Tribal support
amount will be up to $9.25 per month.
We believe that establishing a
permanent support amount provides an
additional amount of certainty for
interested parties, and it allows for
continued administrative simplicity by
enabling more accurate funding need
projections. While $9.25 will be the
permanent support level which will
apply to all modes of service other than
voice-only service, the non-Tribal
support level for voice-only service will
be adjusted as specified below.
94. Many commenters argue that the
current $9.25 support level may be
insufficient to cover the total cost of the
supported service. Other commenters
support the adoption of ‘‘tiered’’ service
levels, with the amount of Lifeline
support varying with the service
provided, and the provision of a greater
benefit for broadband service and a
smaller benefit for voice-only service.
We partially adopt such proposals,
because we conclude that a greater
benefit amount should be offered for
broadband providers to facilitate the
program’s transition to broadband.
95. Although we take no position on
whether $9.25 will be sufficient to
support the entire cost of supported
service, we emphasize that Lifeline was
created to provide affordable, rather
than free service, and past Commission
decisions have emphasized this point.
Additionally, we believe that other
changes made in today’s Order, such as
the creation of a National Verifier and
the streamlined eligibility determination
process, will lower Lifeline providers’
costs, and those savings can be passed
on to consumers.
96. Support for Voice-only Service.
For voice-only service, we adopt a
schedule indicating the level of Lifeline
support provided for voice-only service.
As discussed above, prior to December
1, 2019, voice-only service meeting the
minimum service standards shall be
supported by $9.25 per month. From
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33039
December 1, 2019 through November
30, 2020, voice-only service meeting the
minimum service standards shall be
supported by $7.25 per month. From
December 1, 2020 through November
30, 2021, voice-only service meeting the
minimum service standards shall be
supported by $5.25 per month. On
December 1, 2021, no support generally
shall be provided for voice-only service
except in certain circumstances
identified below, or unless the
Commission, having considered the
recommendations of State of the Lifeline
Marketplace Report, orders otherwise.
In all events, voice service may still be
provided in the context of an offering
receiving Lifeline support if bundled
with BIAS meeting the applicable
minimum service standards.
97. Although we decide generally to
phase-out Lifeline support for voiceonly service as of December 1, 2021, we
create an exception where particular
circumstances are met. Specifically, we
preserve the final phase-down level of
Lifeline support ($5.25) even after
December 1, 2021, for the provision of
voice-only service to eligible subscribers
by a provider that is the only Lifeline
provider in a Census block. In
particular, in any such Census block,
such a provider will continue to receive
$5.25 per month in federal Lifeline
support for providing voice telephony
service meeting the minimum standards
to eligible subscribers, and thus will
discount such voice service in the
amount of the support received in
accordance with our Lifeline rules.
98. Although we conclude that
Lifeline should transition to focus more
on broadband Internet access service
given the increasingly important role
that service plays in the marketplace,
we remain mindful of the importance
historically placed on voice service. We
also recognize that although we provide
a transition during which support is
phased down, consumer migration to
new technologies is not always uniform,
and certain measures to continue
addressing the affordability of voice
service may be appropriate consistent
with the objectives of Sections 254(b)(1),
(b)(3) and (i). At the same time, in
implementing Section 254 the
Commission has a ‘‘responsibility to be
a prudent guardian of the public’s
resources.’’ Collectively, this persuades
us that although it remains appropriate
to use some universal service resources
for Lifeline voice even after such
support otherwise generally has been
phased out, we should prioritize
supporting, in an administrable way,
those areas where we anticipate there to
be the greatest likely need for doing so.
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99. Balancing those objectives, we
conclude that the pre-December 1, 2021,
level of Lifeline support—$5.25—will
remain available even after December 1,
2021, for a provider to provide voiceonly service to eligible subscribers in
any Census block where it is the only
Lifeline provider. Although one
theoretically could imagine targeting
this continued Lifeline support for
voice-only service in other ways—e.g.,
to other geographies, on the basis of
certain demographic criteria, or
otherwise—we are not persuaded that
such other approaches would be as
readily administrable, either in terms of
identifying the area(s) or consumer(s) to
be served with discounted service in
implementing the Lifeline mechanism
and/or in terms of our ability to estimate
and predict Lifeline demand for
purposes of budget evaluations. (As
described below, data sufficient to
initiate the analysis required under our
approach will already be available to the
Commission as part of its
implementation of universal service
support.).
100. Further, having focused on these
areas, we conclude that it makes more
sense to provide any continued Lifeline
support for voice-only service to the
existing, single ETC serving the relevant
Census block, rather than necessitating
the designation of an entirely new ETC
simply to serve this post-phase out role,
particularly given that the Commission
is phasing out Lifeline support for
voice-only service more generally. With
respect to any such Census block,
Lifeline support for voice-only service
provided by the sole Lifeline provider
shall remain in place—together with the
ETC’s obligations as a Lifeline provider
(This assumes that the ETC has not
qualified for the conditional forbearance
described in Section III.E.2.c
(Forbearance Regarding the Lifeline
Voice Service Obligations) or
relinquished its ETC status in relevant
part)—until the first year after the
Commission (or the Bureau, acting on
delegated authority) announces that a
second Lifeline provider has begun
providing service in the Census block.
101. For purposes of identifying the
providers and Census blocks initially
subject to this rule, we direct the Bureau
to conduct a process to identify the
Census blocks where there only is one
Lifeline provider. The results of that
initial process should be announced at
least six months prior to the date on
which support for standalone voice is
scheduled to phase down to $0, i.e., by
June 1, 2021. The Bureau will have
substantial data available to it by the
time this process would need to occur
in order to identify proposed Census
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blocks, and providers, that would (or
would not) be encompassed by this
continued Lifeline support for voiceonly service. In particular, data will be
available from the NLAD, from states
that previously opted-out of the NLAD,
and from the National Verifier, among
others. This list shall be updated on an
annual basis, such that support for
standalone voice service provided by
the relevant provider—and thus any
accompanying obligation to offer service
discounted by passing through the
Lifeline support—shall end in a census
block as of December 1 of the year that
the Bureau identifies the census block
as being served by more than one
Lifeline provider.
102. Support for Bundled Service. For
a bundled voice and broadband service,
the support level will depend on
whether the voice and broadband
components meet the minimum service
standard effective at the time. If the
broadband component meets the
broadband minimum service standards
(both speed and data usage allowance)
then $9.25 per month of support shall
be provided. If the broadband
component does not meet the minimum
service standards but the voice
component meets the minimum service
standard, then support shall be
provided at the level in effect for voiceonly service as explained supra.
103. Other Issues. We also address
concerns raised by several providers
claiming that they are unable to process
any form of payment. While some
Lifeline providers currently operate as
prepaid wireless carriers, and therefore
do not have dedicated billing
departments, these providers
nevertheless collect revenue from both
Lifeline and non-Lifeline customers,
such as through the purchase of reload
cards, and they appear to be able to
receive funds either via online payment
or by mail. Many of these providers
partner with physical retailers who
provide locations for Lifeline providers
to sell such cards or even process
payments. In addition, we also highlight
the flexibility provided for providers
under the rules we adopt. Since the
$9.25 of monthly support must only be
applied to an eligible service provided
for a month’s time, and since we do not
mandate pricing or any terms of
payment for the Lifeline-supported
service, a provider has a wide range of
options for collecting additional
revenue from the consumer if it so
desires. For example, a provider may
choose to have the consumer make a
one-time payment upon enrollment,
monthly payments, or payments on a
more flexible schedule. A wide variety
of approaches are possible, thus
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allowing providers the ability to find
approaches to their business which
work best for their customers. In sum,
we are confident that a dynamic and
competitive Lifeline marketplace will
adapt to the changes we make.
104. Finally, we address the issue of
whether the Lifeline program should
support the cost of handsets or customer
premise equipment. In the 2015 Lifeline
FNPRM, we sought comment on
whether to include the cost of Consumer
Premise Equipment (CPE) when
determining a service’s affordability.
While many commenters stated that the
cost of CPE must be considered, and
that the Commission should provide a
subsidy to facilitate the purchase of the
equipment, we do not believe that such
a subsidy is warranted at this time. Past
Commission precedent makes it clear
that Lifeline, with the exception of a
brief period after Hurricane Katrina, has
been used to fund services, and not
equipment. At this time we see no
reason to deviate from that approach.
While we do not separately fund the
purchase of equipment, we encourage
the private sector to work
collaboratively with the Lifeline
program and Lifeline providers to help
make devices more available. We further
encourage Lifeline providers to explore
options for offering accessible devices
for consumers with disabilities.
C. National Lifeline Eligibility Verifier
105. In this Section, we establish a
National Lifeline Eligibility Verifier
(National Verifier) to make eligibility
determinations and perform a variety of
other functions necessary to enroll
eligible subscribers into the Lifeline
Program. The National Verifier is more
than simply a piece of technology; it is
a system relying on both human
resources and technological elements to
increase the integrity and improve the
performance of the Lifeline program for
the benefit of a variety of Lifeline
participants, including Lifeline
providers, subscribers, states,
community-based organizations, USAC,
and the Commission. As described
below, the National Verifier will have
both electronic and manual methods to
process eligibility determinations and
will have at its center a Lifeline
Eligibility Database (LED), which will
contain records of all subscribers
deemed eligible by the National Verifier.
The National Verifier will also engage in
a variety of other functions, such as, but
not limited to, enabling access by
authorized users, providing support
payments to providers, and conducting
recertification of subscribers, to add to
the efficient administration of the
Lifeline program. This Order directs
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USAC, with the oversight and approval
of the Bureau and OMD, to procure the
necessary parts to the National Verifier.
As described below, certain aspects of
the implementation will be overseen
mainly by the Bureau with additional
oversight by OMD, as necessary and
appropriate. We delegate to the Bureau
and OMD all aspects of the
development, implementation, and
performance management of the
National Verifier. We delegate to the
Bureau authority to provide any rule
clarifications or guidance with respect
to the National Verifier. Along with the
other important changes we make to the
program today, the National Verifier is
an integral part of our vision for the
future of this program. We revise
Sections 54.400 and 54.410 of the
Lifeline rules to incorporate the
National Verifier.
1. Objectives for the National Verifier
106. The Commission’s key objectives
for the National Verifier are to protect
against and reduce waste, fraud, and
abuse; to lower costs to the Fund and
Lifeline providers through
administrative efficiencies; and to better
serve eligible beneficiaries by
facilitating choice and improving the
enrollment experience.
107. Reducing Waste, Fraud, and
Abuse. As recognized by commenters,
the National Verifier will close one of
the main avenues historically leading to
fraud and abuse in the Lifeline program:
Lifeline providers determining
subscriber eligibility. Before 2008 when
the first non-facilities-based wireless
providers started to enter the program,
Lifeline was a traditional wireline voice
service program and consumer
eligibility determinations were
necessarily made by the providers.
Today, the Lifeline program is a
modern, dynamic, multi-provider
program with wireline, wireless, and
broadband service. Modern Lifeline
providers have varied business models
and some have a greater financial
interest in the eligibility determination,
as the more subscribers they enroll, the
higher the disbursement they will
receive from the Fund. Therefore,
commenters have noted that the
program should remove the
responsibility of determining eligibility
from an entity who is providing service
to the subscriber. Commenters agree that
given today’s modernization, adopting
the National Verifier eligibility process
to help enforce program rules and
address concerns with eligibility
determinations will greatly increase
Lifeline accountability.
108. Reducing Costs to Lifeline
Providers. As noted in the comments, by
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removing the responsibility of
determining eligibility from providers,
the Lifeline program will also be a more
attractive business opportunity as
providers recognize significant
reductions in administrative and
compliance costs. Commenters argue
that variation across states has made the
program more costly for multi-state
providers who have had to use and
comply with multiple eligibility systems
and that the overall costs most likely
exceed $600 million per year. By
providing a central point of verification,
Lifeline providers can avoid the
patchwork of systems currently required
to enroll subscribers in various states.
By reducing compliance costs and
burdens and attracting more Lifeline
providers, the program will benefit from
greater competition and, as a result,
deliver more value to subscribers. Once
implemented, the National Verifier
functionality will further reduce
administrative burdens for Lifeline
providers by streamlining the flow of
payments from USAC to providers.
Further, commenters note that the risk
of enforcement liability caused by the
actions of third parties prevents
providers from participating in the
Program. By adopting the National
Verifier, the risk of enforcement actions
against providers for eligibility related
issues will decline as the National
Verifier takes on the risk of determining
eligibility for subscribers. Overall,
transferring the eligibility certification
process away from providers will make
it easier on providers to comply with
the Lifeline rules.
109. Facilitating Consumer Choice
and Improving the Enrollment Process.
The National Verifier will also facilitate
subscriber choice, and serve as a single,
unified platform for administering the
new modernized Lifeline program.
Commenters note that Lifeline’s current
model of primarily determining
eligibility through ETCs places
significant limitations on the choices of
eligible subscribers. The existing model
leaves little room for participation by
third-party organizations, such as
schools, community-based
organizations, or digital literacy groups,
to assist eligible subscribers in
understanding the value of the Lifeline
benefit as well as navigating the process
of seeking an eligibility determination.
As we move to a broadband-supporting
Lifeline program, we agree with
commenters that it is critical to provide
maximum subscriber choice as well as
enlist the assistance of third-party
organizations to help subscribers get
and stay connected with broadband.
These comments note that organizations
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who do not have a financial interest in
the provision of Lifeline benefits and
have social motivations to help lowincome subscribers will improve the
integrity of and participation in the
program. A subscriber-focused National
Verifier will facilitate third-party
participation by allowing them to help
subscribers with eligibility questions
and in applying the benefit to a Lifelinesupported service.
2. Functions of the National Verifier
110. As supported by the record, we
establish the National Verifier and
explain how its core functions will
achieve each objective described above.
The National Verifier is a
comprehensive integrator of processes
and systems. The National Verifier will,
first and foremost, determine subscriber
eligibility for the Lifeline program. It
will also perform other necessary
functions, such as enabling Lifeline
providers to verify eligibility of a
subscriber, providing access to
authorized users, and providing support
payments to providers. At the core of
the National Verifier will be the Lifeline
Eligibility Database (LED), which will
contain a list of Lifeline eligible, nonduplicative potential subscribers. (As
described below, USAC may propose to
the Bureau how and whether the
information in the NLAD can or should
be used to populate the LED). While we
set forth the basic functions and
structure below, we direct USAC to
work with the Bureau, and OMD as
appropriate, to implement the National
Verifier and to make administrative and
efficiency improvements consistent
with the core elements described below.
111. Determination of Subscriber
Eligibility. A primary function of the
National Verifier will be to determine
eligibility for potential Lifeline
subscribers in a manner that is costeffective and administratively efficient.
As revised by this Order, subscribers
will demonstrate eligibility for the
Lifeline program by showing proof of
enrollment in specific Federal and
Tribal programs. These programs, such
as the Supplemental Nutrition
Assistance Program (SNAP) and
Medicaid, have extremely robust
program integrity and enrollment
procedures. By using these programs as
determinants of eligibility here, the
Lifeline program can draw upon their
vast fraud prevention and program
integrity capabilities. As recommended
by commenters, the eligibility
certification process will have both
manual and electronic components to
accommodate the needs of subscribers.
Manual certification will use human
review of documents and other
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information to assess eligibility, while
electronic certification will rely on
communications between the National
Verifier and other systems and
databases. (We direct USAC to propose
acceptable documentation for the
manual review to the Bureau. In
particular, USAC shall consider how the
National Verifier can address possible
misuse of eligibility documentation (e.g.
SNAP cards lacking identifying
information)). We agree with the
commenters that the program databases
checked should, to the extent possible,
include those owned by states, (For
example, the SNAP program uses
databases that are owned by the states),
those owned by Federal entities, or
those owned by other entities. (For
example, the Supplemental Security
Income program uses databases that are
owned by the Social Security
Administration). We expect that the
National Verifier will be able to
accommodate and utilize many of the
varying state databases available. We
also envision that the electronic
certification process will produce at
least near real-time results.
112. Both the manual and electronic
approaches will apply program rules,
including identity verification, as
necessary, to determine a subscriber’s
eligibility. (For example, if a state
administrator verifies identity in the
same robust manner as the federal
identification verification check, USAC
may propose to the Bureau to rely on
the state’s check). The National Verifier
will also check to ensure that the
subscriber is not a duplicate of any
existing subscriber already receiving a
Lifeline benefit. By checking this, the
National Verifier will reinforce and
build on the NLAD to enforce Lifeline’s
one-per-household rule, and prevent
duplicates. Subscribers will be able to
submit information about themselves
(e.g. such as verifying identity and
documenting the basis for eligibility) to
the National Verifier through a variety
of methods, such as via mail and an
online portal, and certify their
eligibility. (USAC currently maintains a
list of documents that can be used to
establish identity. Commenters have
suggested that improvements be made to
the documents used to establish
identity. Thus, we direct USAC to
review the Web site list and propose to
the Bureau changes to the list.). The
National Verifier will also have a
dispute resolution process whereby
subscribers found to be ineligible may
have an opportunity to dispute the
finding. (We direct USAC to propose a
process for dispute resolution to the
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Bureau for approval for the National
Verifier).
113. The National Verifier will have
both a manual and electronic
certification process. We agree with
commenters that our long-term goal
should be to determine the eligibility of
most subscribers through the more
efficient means of electronic
certification. We recognize that
electronic certification of eligibility will
generally have lower long-run costs
relative to labor-intensive manual
certification. We have streamlined the
programs used to determine eligibility
for Lifeline to those that have
substantial automation and electronic
process in place already. We direct
USAC to seek the most cost effective
and efficient means to incorporate
electronic eligibility certification into
the National Verifier wherever feasible.
We expect USAC and the Bureau to
work closely with the states, other
federal agencies, and Tribal Nations to
foster partnerships that will help the
National Verifier develop the most
efficient pathways to determining
subscriber eligibility. For example,
USAC should consider co-enrollment
with states, other federal entities, or
Tribal Nations or coordination with
other entities that have enrollment
responsibilities to more efficiently
determine eligibility. We believe such
actions based on electronic certification
will better support our objectives to
reduce the costs to the Fund and to
better serve subscribers with an
improved certification process.
114. The National Verifier will
implement a complete eligibility review
prior to providing a Lifeline benefit. We
believe that it is vital to deploy the
National Verifier with the expectation
that it will conduct comprehensive and
timely reviews. In the 2015 Lifeline
FNPRM, we sought comment on
whether we should implement a preapproval process to mitigate delays in
the review period. Commenters argued
that completing full reviews of
eligibility will reduce waste, fraud, and
abuse. We agree with the comments
filed and, at this time, do not adopt a
pre-approval process that would allow
Lifeline providers to claim Lifeline
support for a subscriber prior to a full
review. Only after a full review is
complete may the Lifeline provider
claim and receive support for the
subscriber. Lifeline supported service
must begin on the day that the Lifeline
provider certifies it will begin claiming
support for serving the subscriber. (Note
that a provider could ‘‘claim’’ a
subscriber in the Lifeline Eligibility
Database (LED) but not claim support
until a later time when service begins.
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The claiming process in the National
Verifier will make it clear when the
provider is certifying to providing
service and therefore eligible to collect
support for a subscriber.). If the
subscriber is not listed and claimed in
the Lifeline Eligibility Database (LED),
the Lifeline provider has no claim on
support.
115. Population of the Lifeline
Eligibility Database. The LED will
contain records of Lifeline-eligible
subscribers. As such, another important
function of the National Verifier will be
to allow for cost effective and
administratively efficient ways to
populate the LED. (For the purposes of
defining a framework for the National
Verifier, ‘‘database’’ is not intended to
have any technological meaning
requiring the National Verifier to follow
a specific path toward technically
implementing these requirements.
‘‘Database’’ is meant as a general term
denoting a collection of data organized
for rapid search and retrieval. The
Commission directs USAC to implement
the National Verifier in accordance with
this Section using the most appropriate
technological means.). The National
Verifier will populate the LED with all
necessary subscriber records after
determining the subscriber is eligible.
However, this need not be the only
method of populating the LED with
eligible subscribers. We envision
multiple other methods, including
utilizing state databases, which are
already being used today by current
Lifeline providers in a number of states,
and building on existing processes used
by states and/or community
organizations which interact regularly
with low-income subscribers. Our
objective is to provide multiple
pathways to populate the LED with
records associated with Lifeline-eligible
subscribers in order to simplify the
enrollment process for subscribers and
Lifeline providers. We therefore direct
USAC to work with the Bureau to
develop other efficient and reliable
methods of listing eligible subscribers in
the LED. Additionally, USAC must
develop processes regardless of the
pathway used, to obtain subscriber
consent to the collection, retention, use,
and sharing of a subscriber’s personally
identifiable information, including
information about their use of Lifeline
services with USAC, the National
Verifier, and other appropriate users. As
described further below, the LED will
also maintain information about the
supported services of the Lifeline
subscribers.
116. Access by Different Users. The
National Verifier will also function as
an interface for authorized users for
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many different activities. We agree with
commenters and anticipate that eligible
subscribers, Lifeline providers, states,
and Tribal Nations will require access to
establish or verify eligibility. We also
expect the National Verifier to have
varying interface methods to
accommodate these different groups of
users. (For example, the National
Verifier may have an interface that is
consumer-friendly and geared towards
subscribers. It may have another
interface that is geared toward providers
that may allow application
programming interfaces (machine-tomachine interaction). We direct USAC
to work with the Bureau to develop
interfaces that promote the objectives of
the National Verifier and serve the
needs of users in a cost-effective and
efficient manner.
117. Access by Lifeline Providers. For
Lifeline providers, the National Verifier
will support many functions, such as
allowing permissible queries to the LED
to verify if a subscriber is eligible, (The
National Verifier will only permit
queries which facilitate the purposes of
the Lifeline program. After obtaining
approval of the Bureau, USAC may
implement useful administrative queries
to facilitate the needs of the modernized
the program) allowing the claiming of a
subscriber as a Lifeline customer, and
allowing reimbursement based upon
subscribers served. For example, the
National Verifier will allow Lifeline
providers to easily confirm a
subscriber’s eligibility status in the LED
by using an appropriate set of personal
information provided by the subscriber.
After obtaining authorization from the
subscriber, Lifeline providers intending
to initiate a supported service will use
the LED to claim that subscriber as a
Lifeline customer. By claiming the
subscriber, the Lifeline provider will
certify that it will be providing a
Lifeline-supported service to the
subscriber in accordance with
Commission rules. Providers will be
able to enter into the LED the correct
support amount (non-Tribal or Tribal)
for the claimed subscriber. We also
agree with commenters who argue that
the National Verifier should also allow
Lifeline providers to relinquish
subscribers in the LED, thus
discontinuing support, in accordance
with Commission rules. We expect that
the technology used for the National
Verifier will allow claiming and
relinquishing either a single subscriber
record or batches of records. However,
irrespective of the technical abilities of
the National Verifier, service providers
must follow the Commission’s rules on
enrollment and de-enrollment.
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118. Access by Subscribers. The
National Verifier will also allow
potential subscribers (we use the term
potential subscribers here generally to
refer to both successful and
unsuccessful applicants to the Lifeline
program), to contact it directly to
initiate and complete eligibility
determinations and applications for
Lifeline service, to obtain information
about Lifeline providers and services,
and to resolve any issues through
dispute resolution as recommended by
commenters. The National Verifier may
use standardized forms and easy-to-use
processes to assist subscribers in
completing applications. It will have
internal controls and utilize document
management processes to aid the
submission of complete applications,
regardless of the submission method
used. (For example, applications
submitted via a secure Web site should
have standardized, mandatory fields
that require input and provide error
messages before advancing to the next
screen.). During the application and
certification process, the National
Verifier will communicate with
subscribers to notify them of application
status at relevant milestones in the
process. Subscribers will be notified of
either an affirmative or negative
eligibility determinations by the
National Verifier. Once a subscriber is
listed in the LED, he or she will be
notified, and be given information such
as, but not limited to, the manner in
which the Lifeline benefit may be used,
as well as information on services and
Lifeline providers in their area.
Subscribers must consent to providing
the information to the National Verifier,
should be made aware of what
information is being stored and used by
the National Verifier, and should also be
allowed to view and modify their
records in the National Verifier as
appropriate. The National Verifier may
also communicate with subscribers for
other purposes related to the efficient
administration of the program as
determined to be necessary by USAC,
with the approval of the Bureau.
119. We also expect the National
Verifier to use a variety of methods to
communicate with subscribers who
have limited means of connection, both
in terms of the mode used (such as mail,
telephone, text messages, email, etc.)
and in terms of form used (such as
various languages and access for
disabled individuals). The mode of
communication from the National
Verifier to the subscriber at a minimum
must be appropriate and commensurate
with the mode through which the
subscriber initiated contact with the
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National Verifier or requested to be
contacted. We also expect the National
Verifier to provide access to subscribers
with disabilities in accordance with all
applicable laws and to provide service
in multiple languages as directed by the
Bureau.
120. Access by States, Tribal
Governments and State/Tribal
Administrators. As recommended by
commenters, the National Verifier will
also support access by states, Tribal
governments, and state/Tribal
administrators and will also support
communications between it and the
states. Commenters note that some
states have already implemented
processes for determining Lifeline
eligibility for individuals in their states,
and we seek to cooperate with such
state efforts as we jointly continue to
protect the integrity of the program and
the subscriber experience with the
Lifeline eligibility certification process.
Recognizing that existing state efforts
will provide a way to more efficiently
and cost-effectively determine
eligibility, we direct USAC, as part of its
development and operation of the
National Verifier to consider
opportunities to coordinate and partner
with states. USAC should ensure any
partnership promotes the objectives of
the National Verifier to improve
administrative efficiency, better the
subscriber experience, and prevent
waste, fraud, and abuse in the program.
(One commenter suggested that
connection to a state database should
only be mandatory if the provider has
more than 5,000 subscribers in the state.
While we do not impose such a policy
here, we direct USAC to consider the
most efficient ways to partner with the
states). It is also imperative that a Tribal
or state eligibility determination is
congruent with the Commission’s rules.
Prior to initiating these Tribal or state
partnerships, USAC must submit a
proposed partnership plan to the Bureau
indicating how it is congruent with the
National Verifier and the Bureau must
approve of establishing such a
partnership as proposed by USAC.
121. Support Payments Based on the
National Verifier. The National Verifier
will also function as the default basis for
determining support payments to
providers. (After obtaining approval
from the Bureau, we also direct USAC
to implement administrative solutions
to resolving concerns with the accuracy
of the number of active subscribers in
the database. For example, subscribers
remain actively enrolled during the 30
day cure period following an initial 60
days of non-usage. Providers will be
paid based upon the records of claimed
subscribers in the LED absent some
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other basis for suspending, delaying or
declining to provide such support. (For
a provider to receive Lifeline support for
serving a claimed subscriber, not only
must there be a record of the claimed
subscriber in the LED, but the service
provider must be acting in compliance
with relevant applicable statutory
requirements and Lifeline program
rules. Moreover, Section 54.707 of the
rules authorizes USAC to suspend or
delay universal service support amounts
if a carrier fails to provide adequate
verification of its entitlement to such
support upon reasonable request or if
USAC is directed by the Commission to
suspend or delay universal service
support amounts. 47 CFR 54.707. In the
2012 Lifeline Reform Order, the
Commission provided guidance to
USAC regarding the procedures it
should follow in the Lifeline context
regarding the suspension or delay of
universal service support amounts if a
carrier fails to provide adequate
verification of its entitlement to such
support upon reasonable request under
Section 54.707 of the rules. As also
observed in the 2012 Lifeline Reform
Order, the Commission has
responsibilities to maintain the integrity
of the universal service fund and will
pursue recapture of funds and/or seek to
impose penalties where warranted.
Thus, in addition to the role of USAC
audits under Section 54.707 of the rules
and the associated guidance in the 2012
Lifeline Reform Order, the Commission
itself can direct USAC to suspend or
delay universal service support amounts
under Section 54.707 of the rules, as
noted above. In this context, we
anticipate that the Commission could
direct USAC to suspend or delay
universal service support amounts,
either wholly or in part, when the
Commission has proof, or credible
information, that leads it to reasonably
believe, based on the totality of the
information available, that all or part of
a payment would be in violation of the
statutes and regulations applicable to
the Lifeline program. Furthermore, in
extraordinary cases where advance
notice would likely cause significant
harm to the universal service fund, for
instance, by hindering the possibility of
recovering funds, the Commission
reserves the right to direct USAC to
initiate the suspension or delay of
Lifeline support amounts even in
advance of notice to the relevant service
provider.) This approach will serve to
enforce Commission rules and
significantly reduce duplicates,
ineligible subscribers, and improper
payments. We direct USAC to provide
the Bureau and OMD with a transition
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plan for phasing out the FCC Form 497,
currently used to seek Lifeline support.
With approval of the Bureau and OMD,
USAC will begin executing this plan
and moving to a system where support
payments are based on the records in
the LED. We also direct USAC to
propose to the Bureau and OMD
improved methods of providing
payment to the Lifeline providers that
will reduce costs and burdens to the
Fund and to Lifeline providers. For
example, we received comments from
AT&T suggesting that payments could
be received by providers as electronic
funds transfers. USAC should consider
comments such as these and provide
recommendations to the Bureau as to
whether the model of payment currently
in place is the most efficient method of
serving Lifeline subscribers.
122. Additionally, we direct USAC to
consider how the National Verifier
might facilitate initiatives that aggregate
eligible subscribers’ Lifeline benefits so
as to streamline the payment of benefits
and therefore encourage provider
participation. The Bureau will work
with USAC to establish procedures and
guidance USAC can use to coordinate
‘‘aggregation projects’’ in the Lifeline
program consistent with the objective of
preventing waste, fraud, and abuse. At
a minimum, to create an aggregation
project, the Lifeline provider must
certify that the aggregation project will
provide Lifeline eligible service directly
to the eligible low-income subscribers’
residences, describe the technologies
the Lifeline provider plans to utilize for
that specific project, and certify that the
service provided through the project
will otherwise comply with all other
Lifeline rules. We note here that
aggregated benefit programs must meet
the minimum standards set out in the
Lifeline rules, as measured by the
service provided to each individual
subscriber. We therefore amend § 54.401
to enable payment for providers’
servicing aggregation projects. Further,
we direct the Bureau to work with
USAC, as part of implementing the
National Verifier, to provide Lifeline
providers with guidance and procedures
for creating aggregation projects and for
enrolling subscribers in aggregation
projects. (USAC’s role will be to develop
processes to ease and streamline the
administration of aggregation projects
by implementing special systems,
technical support, and coordination
efforts. USAC will not fund consumer
outreach efforts but may provide
administration and expertise to
community-based organizations,
housing associations, and institutions
seeking to coordinate the aggregation of
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benefits). Finally, total reimbursement
distributed to the Lifeline provider will
be tied directly to the number of
subscribers affiliated with an
aggregation project who have been
determined eligible for a Lifeline
benefit.
3. Performance Management of the
National Verifier
123. In this Section, we direct USAC
to develop a robust performance
management system to advance the
objectives and to analyze, on an
ongoing-basis, the effectiveness of the
National Verifier. We recognize that our
success with the National Verifier is
integral to the Lifeline program. We
provide below a range of components to
be utilized in evaluating the
performance of the National Verifier.
Our list is not exhaustive, and we
expect USAC, in consultation with the
Bureau and OMD, to continue to update
the performance of the National Verifier
and its performance management
system.
124. Time of Review. We first discuss
the time it will take for the National
Verifier to review a subscriber’s
eligibility. We expect that both the
manual and electronic certification
processes will be completed in a
reasonable amount of time from the time
of application receipt by the National
Verifier to final eligibility determination
and population of the LED. We expect
that the National Verifier will develop
review processes that balance the needs
of subscribers to receive a decision
quickly with our responsibility to
conduct accurate eligibility reviews. To
the extent it would improve the
subscriber’s experience and improve
program efficiency, the National Verifier
may implement any solutions, such as
queuing, to manage demand. We also
require the National Verifier to forecast
and provide innovative solutions to
enrollment fluctuations that may affect
review times. At a minimum, the
National Verifier should use project
management processes, maximum
automation, and flexible staffing to
facilitate the rapid response time
required to best serve the stakeholder
community.
125. Performance of the LED. The LED
will, at a minimum, maintain a list of
subscribers for whom eligibility has
been confirmed for Lifeline-supported
services and a list of claimed
subscribers. Recognizing that some
providers and subscribers may have
concerns about the frequency with
which the LED is updated, we direct
USAC to have the National Verifier
modify and make available listings, delistings, and other record changes in the
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LED quickly, taking into account the
need for reliable information and cost
considerations of varying levels of
service.
126. Development Environment. The
National Verifier must include a
development environment that can be
used by interested parties to test the
components of the National Verifier
prior to the live date. The development
environment should allow the National
Verifier and stakeholders to test new
functionalities before the National
Verifier launches and as new functions
are added.
127. Use of the NLAD. In order to
build the National Verifier in an
efficient and timely manner, we permit
USAC to integrate or repurpose the
NLAD in whole or in part as necessary.
If the National Verifier has integrated
into it all the responsibilities and
functions of the NLAD, including but
not limited to subscriber duplicate
prevention and detection and identify
verification, then USAC may propose to
the Bureau to discontinue the NLAD.
Further, records currently contained in
the NLAD may be incorporated into the
National Verifier if such incorporation
promotes the operation of the National
Verifier. We delegate to the Bureau the
ability to revise the rules regarding the
NLAD, including but not limited to
Section 54.404, as necessary to allow for
the transition and implementation of the
National Verifier.
128. Use of Acceptable Documents for
Eligibility and Identity Certification. The
National Verifier will require
subscribers to submit documentation for
determination of eligibility. Given the
great diversity in types of
documentation available for establishing
identity and eligibility across the states,
territories, Tribal Nations, and eligibility
portals, the National Verifier will
maintain information on acceptable
documentation types and will provide
guidance about the types of
documentation that are acceptable for
establishing identity and eligibility for
the Lifeline program. We also delegate
to the Bureau to work with USAC to
develop new forms, update or revise
current forms, and/or retire forms if the
Bureau believes it appropriate and
necessary to aid program administration
and to facilitate the implementation of
the National Verifier.
129. Document and Data Retention by
the National Verifier. The National
Verifier will retain eligibility
information collected as a result of the
eligibility determination process.
Lifeline providers will not be required
to retain eligibility documentation for
subscribers who have been determined
eligible by the National Verifier.
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However, current Lifeline program rules
regarding record retention of eligibility
documentation will remain in effect for
Lifeline providers who have determined
the eligibility of a current subscriber
when enrolling that subscriber, as this is
necessary for Lifeline program
evaluations and audits.
130. Comprehensive Help Desk. The
National Verifier will have a help desk
equipped to handle inquiries from all
stakeholders, including subscribers,
Lifeline providers, states, and
aggregators. At a minimum, the help
desk will have the ability to interact
with stakeholders in multiple languages
and for specified time periods.
131. Training and User Support. We
direct USAC to develop and implement
a training plan and ongoing National
Verifier user support strategy. The
training should include, but not be
limited to, training for USAC and
National Verifier personnel, training for
Lifeline providers and states, and
outreach packets for state PUCs and
PSCs for subscribers and aggregators.
We direct USAC to develop on-going
training and user plans for all the
stakeholders as needed.
132. Security and Privacy of the
National Verifier. We direct USAC,
working with OMD and its Office of the
Chief Information Officer (OCIO), to
ensure that the National Verifier will
incorporate robust privacy and data
security best practices in its creation
and operation of the National Verifier.
USAC must ensure that the National
Verifier complies with all applicable
laws and Federal government guidance
on privacy and security and other
applicable technology requirements
such as those enacted by the Federal
Information Security Management Act
(FISMA), National Institute of Standards
and Technology (NIST) publications,
and the Privacy Act. As USAC seeks
vendors to build the National Verifier, it
should require that potential vendors
demonstrate and incorporate in their
proposals principles, including but not
limited to, privacy-by-design and
security-by-design principles for the
National Verifier. Potential vendors
must also include statements that allow
sharing their proposals with USAC and
the Commission for review and
discussion prior to beginning the work.
Any vendor selected must commit to
abiding by the principles described here
and must build and operate the National
Verifier using agile development
methodologies. We recognize that
privacy and data security best practices
change over time, so we direct USAC to
ensure that the National Verifier’s
privacy and data security practices
remain consistent with Federal
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government guidance, legal
requirements and best practices, and to
hire a third-party firm to independently
audit and verify the National Verifier’s
compliance with these policies annually
and provide recommendations based on
any audit findings. USAC should report
to the Commission annually the results
of this third-party audit and verification,
as well as its efforts to ensure
compliance with regards to its privacy
and data security practices. (USAC may
incorporate this annual reporting
requirement on privacy and data
security practices in the National
Verifier Annual Report).
133. The National Verifier must
follow the NIST guidance for secure,
encrypted methods for obtaining,
transmitting, storing, and disposal of
consumer and provider information.
The National Verifier should also follow
NIST guidance for firewalls, boundary
protections, protective naming
conventions, and adoption of strong
user authentication requirements and
usage restrictions to protect the
confidentiality of consumer and
provider information. (In discussing the
privacy of consumer information, we do
not limit it to active subscribers. The
Verifier must also protect information
gathered from applicants to the Lifeline
program, whether unsuccessful or
successful, and past subscribers.) We
further direct USAC to ensure that, per
NIST guidance, access to consumer and
provider data is limited and subject to
secure authentication systems for
Verifier personnel, (The personnel for
the Verifier, include but are not limited
to, personnel at USAC, personnel at an
entity procured by USAC to execute the
functions of the Verifier, or personnel
procured by USAC to support any of the
functions of the National Verifier) for
service providers and for other users
who will have access to consumer or
provider data in the possession or
control of the National Verifier. We also
direct USAC, per NIST guidance, to
ensure that Verifier personnel working
with consumer or provider data held by
the National Verifier receive USAC’s
yearly rules of behavior, regular privacy
and data security training. (We expect
that USAC annually will update its
rules of behavior as needed.) USAC
must maintain records of the trainings
and attendees. We further direct USAC,
per NIST guidance, to ensure that the
National Verifier limit its data collection
to information it needs to perform its
functions as National Verifier, and to
promptly and securely dispose of data
that it no longer needs. We direct USAC,
in accordance with NIST 800–53 (The
NIST 800–53 is a security publication
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issued by NIST) to ensure that the
National Verifier program has all of the
necessary documentation and
verification of authority to operate,
yearly updates, continuous monitoring,
plans of actions and milestones
(POAMS) (These are required by NIST)
and proper continuity and disaster
recovery plans. The National Verifier
must have subscriber notification
procedures in the event of breach that
are compliant with Department of
Homeland Security (DHS) and OMB
guidance. All these efforts and other
guidance on privacy and security as
FISMA NIST Publications, and the
Privacy Act should be independently
audited and verified by a third party,
hired by USAC to assess its annual
compliance with these policies annually
as well as provide recommendations
based on any audit findings. USAC must
also provide the Commission with
assistance and documentation should
any of the above items or aspects of the
National Verifier relate to audits or
investigations of the Commission’s
compliance with federal laws and
regulations.
134. Reporting and Internal Controls
Component. The National Verifier will
include a component responsible for
coordinating with USAC on audits of
internal controls to ensure consistency
with the Lifeline program rules, for
conducting surveys to ensure
satisfaction in the performance of
National Verifier personnel, and for
producing reports to Lifeline providers,
USAC, and the Commission. With
respect to the reports to the
Commission, the National Verifier must
also produce reports necessary to ensure
the Commission’s compliance with
federal rules and regulations pursuant to
direction from the Bureau and OMD.
The reporting capabilities will include
the use of data analytics and fraud
prevention software to help detect fraud
before improper payments are made to
Lifeline providers. In the event of data
and security breaches, it will inform
USAC and the Commission, and carry
out the process of subscriber
notification. We direct the Bureau to
work with USAC and determine the
appropriate reports to be incorporated
into the National Verifier.
135. Internal Controls and Procedures
Manual. We also direct USAC to create
written procedures for the National
Verifier, including but not limited to,
procedures for all functions, processes,
quality control standards, and internal
controls. Subject to Bureau and OMD
approval, USAC should use Government
Accountability Office’s (GAO) Green
Book to serve as a guide to developing
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internal controls for the National
Verifier.
136. Unforeseen Circumstances and
Clarifications. Given the complex nature
of the National Verifier and the
importance of developing it in an
efficient and timely manner, as stated
above, the Commission delegates to the
Bureau the role of providing USAC with
any needed clarifications or
interpretations of the Commission’s
orders for all aspects of the National
Verifier, including but not limited to
development, design, and maintenance
of the National Verifier. Further, the
Bureau may provide guidance to USAC
concerning the National Verifier in the
event of unforeseen circumstances. Any
such guidance must be in line with the
intentions of the Commission’s orders
for the National Verifier.
137. National Verifier Procurement
and Funding. We direct USAC, working
with the Bureau and OMD, to use
efficient and cost effective means to
manage the funding and procurement of
the National Verifier. USAC will be
primarily responsible for the
procurement of both the human
resources and the technological
components of the National Verifier
with oversight from the Bureau and
OMD. (USAC has already obtained
information from entities via its RFI
issued in 2015). USAC may also propose
to the Bureau and OMD to manage
certain activities in-house, if most cost
effective. We direct USAC to prepare a
procurement plan for the National
Verifier for review by the Bureau and
OMD. We direct USAC to incorporate,
as feasible, into the National Verifier
contract requirements, payment terms
and conditions that reasonably reduce
the risks inherent in the ambitious task
of developing the National Verifier and
that incent timely completion of tasks
while also considering cost
considerations. USAC may also as part
of developing and maintaining the
National Verifier, procure from other
entities (including other government
entities), access to or connection with
databases and systems if USAC
determines this is the most reasonable
approach, taking into consideration cost
and other factors, to achieve the
objectives of the National Verifier. In the
event of disagreement, the Bureau and
OMD will provide USAC with a final
determination. The USF will fund the
development and ongoing maintenance
of the National Verifier, including all
procurement of the various components,
testing environment, and its ongoing
activities.
138. Stakeholder Engagement. We
direct USAC, working with the Bureau,
to develop a plan to allow for
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meaningful collaboration from potential
users on the administrative aspects of
implementation of the National Verifier.
We expect that potential users, such as
service providers, states, Tribal Nations,
and others, who may have valuable
recommendations on a variety of
implementation areas, including but not
limited to, best practices for IT
requirements, efficient interface for
electronic and manual eligibility
pathways, effective payment pathways,
and effective communication strategies
for consumer beneficiaries. We therefore
encourage USAC to create a stakeholder
committee to advise USAC on the ‘‘Draft
National Verifier Plan’’ (described
below). After such collaborative efforts
conclude, USAC shall incorporate
stakeholder input and recommendations
into its ‘‘Draft National Verifier Plan’’,
which it submits to the Bureau. The
Bureau shall determine the appropriate
path forward after balancing factors,
such as but not limited to, cost,
administrative efficiency, and ease of
use. Overall, we believe that the
National Verifier system that is
developed with a high degree of
collaborative input from users will best
advance our goals.
139. Implementation Timeline and
Transition. Implementation of the
National Verifier is a considerable
undertaking and will require significant
resources from both the Commission
and USAC. We here establish
milestones to chart the implementation
of the National Verifier. If USAC
determines that additional time is
necessary, it will inform the Bureau and
OMD and request a reasonable
extension.
140. Before December 1, 2016, USAC
shall submit to the Bureau and OMD the
‘‘Draft National Verifier Plan’’ as the
first implementation milestone. This
plan will comprehensively describe the
National Verifier to be developed and
implemented. The plan will also set out
a proposed strategy, estimated timeline,
and estimated budget for progressively
deploying each part of the National
Verifier. As part of the strategy, this
plan will explain in detail how USAC
expects to procure services for the
National Verifier, to partner with states,
and to incorporate other federal
databases and systems into the National
Verifier. The Bureau and OMD will
work with USAC to make any necessary
revisions, and will approve the revised
‘‘National Verifier Plan.’’ (While the
National Verifier Plan is the official
vehicle for approving the planned
details of the National Verifier, USAC
from the effective date of this order may
begin taking actions in preparation for
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developing and implementing the
National Verifier).
141. After approval of the National
Verifier Plan, on or before July 31 and
January 31 of each year until the
National Verifier implementation is
complete, USAC will submit to the
Bureau and OMD a National Verifier
Implementation Update. This document
will provide regular information to the
Bureau and OMD on progress toward
the approved National Verifier Plan.
142. Given the complexity of the
National Verifier and wide variety of
databases and systems to which the
National Verifier may connect, we
provide flexibility in how and when
USAC chooses to incorporate such
systems. We require the NLAD opt-out
states to provide existing subscriber
information to USAC by December 1,
2016, and ongoing thereafter, including
any information regarding services that
Lifeline subscribers subscribe to as
described further below. (These states
include California, Texas, Oregon, and
Vermont. See Section III. E.2.c.ii.
(Increasing Competition for Lifeline
Consumers, ETCs that are not LifelineOnly)). We set as an expectation that
USAC will deploy the National Verifier
in at least 5 states by December 31,
2017. We further expect that between
January 1, 2018 and December 31, 2018
the National Verifier will be deployed in
an additional 20 states. By December 31,
2019, we expect Lifeline eligibility will
be determined in all states and
territories using the National Verifier.
We also expect that USAC may require
testing and trials of the National Verifier
prior to deployment and we allow this
with the approval of the Bureau.
143. National Verifier Deployment
and Notification Responsibilities.
Because deploying the National Verifier
in a state means the Lifeline eligibility
responsibilities will be transitioned
from ETCs or state administrators to the
National Verifier, the deployment must
be carefully managed and progressively
achieved. When USAC is ready to
deploy the National Verifier in a
particular state, USAC must inform the
Bureau of its deployment and transition
plans in that state, in addition to
providing sufficient advance notice to
the Lifeline providers, state
administrators and all other
participants. This process will allow for
a transparent, progressive and staggered
roll-out of the National Verifier across
the nation while retaining the
Commission’s oversight. Our rules
requiring National Verifier eligibility
certification will become effective in a
state when USAC deploys the National
Verifier in that state and we direct the
Bureau to issue a notification to all
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interested participants providing
information about effective dates and
any other relevant obligations. Such
notification will make clear which
Commission rules will no longer be
applicable in the state(s) where the
National Verifier is deployed.
144. National Verifier Annual Report
and Data. In addition to the specific
reports required of USAC as part of the
development and implementation of the
National Verifier, once the National
Verifier is fully operational in the first
states, USAC will submit to the Bureau
in January of each year a report on the
operations of the National Verifier. This
report will, at a minimum, provide a
current overview of the National
Verifier, including details and data
about National Verifier operations
consistent with our objective of making
transparent, to the greatest extent
possible, information about the Lifeline
program. The report should also
recommend improvements to the
National Verifier and should
particularly focus on ways to lower
costs, increase efficiency, and improve
the consumer and Lifeline provider
experiences. In its annual reports on the
National Verifier, we direct USAC to
assess whether the National Verifier is
effectuating the objectives described in
this Section and whether there are ways
to improve the performance of the
National Verifier for all of its users,
USAC and the Commission. Overall, we
require the National Verifier to have the
capability to report comprehensive
program data information to promote
transparency in the Lifeline program
and allow for effective program
evaluation.
D. Streamlining Eligibility for Lifeline
Support
145. We next take steps to streamline
eligibility for Lifeline support to
increase efficiency and improve the
program for consumers, Lifeline
providers, and other participants.
Beginning on the later of December 1,
2016 or 60 days following PRA
approval, low-income households who
qualify for and receive SNAP, Medicaid,
Supplemental Security Income (‘‘SSI’’),
Federal Public Housing Assistance
(‘‘FPHA’’), or the Veterans Pension
benefit will be eligible for enrollment in
the Lifeline program. (Consistent with
the new annual eligibility rules,
subscribers already enrolled prior to
December 1, 2016 under any of the
retired eligibility criteria will be eligible
until their next re-certification. We
direct USAC to communicate with
carriers and consumers as necessary to
provide information where a retired
eligibility program is being used.). We
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amend our rules to remove Low-Income
Home Energy Assistance Program
(‘‘LIHEAP’’); National School Lunch
Program’s free lunch program (‘‘NSLP’’);
and Temporary Assistance for Needy
Families (‘‘TANF’’) from the default
federal assistance eligibility for Lifeline.
Finally, we do not modify the incomebased eligibility nor the Tribal eligibility
criteria.
1. Criteria for Streamlining Lifeline
Eligibility
146. We make these reforms as part of
our modernization of the Lifeline
program to increase efficiency and
reduce burdens on participants. In the
2015 Lifeline FNPRM, we asked about
various changes to the way consumers
qualify for Lifeline in order to improve
the eligibility determination process. In
considering improvements, we first look
to the federal assistance programs most
used by low-income consumers who
enroll in the Lifeline program. In
choosing to focus on the programs most
utilized by Lifeline subscribers, we will
ensure continued access to Lifeline
through well-established and often-used
avenues. Moreover, in choosing
programs that currently represent the
highest enrollment rates in Lifeline,
Lifeline will be more administratively
efficient.
147. In evaluating the eligibility
criteria, we next focus on the ability to
develop long-term technological
efficiencies by easily accessing systems
and databases from other assistance
programs. An efficient eligibility
database to be used in the
administration of Lifeline will
streamline the program for consumers
and providers alike. The ability to
access eligibility databases for federal
assistance programs is key to the
success of the National Verifier. (For
example, the Commission and SNAP
have an existing data sharing agreement
that allows current ETCs to verify if a
low-income consumer is receiving
SNAP benefits after coordinating with
the state snap administrator.). In
streamlining eligibility programs, we
selected programs where a database or
data sharing agreement could likely be
achieved.
148. Finally, we remain committed to
preventing waste, fraud and abuse
within the Lifeline program. By relying
on highly accountable programs that
demonstrate limited eligibility fraud,
Lifeline will greatly reduce the potential
of waste, fraud, and abuse occurring due
to eligibility errors. Federal assistance
programs that have demonstrated
limited eligibility errors offer the ability
to leverage prevention efforts within
Lifeline. We recognize that fraud is a
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continuing concern within many federal
programs and tying eligibility to other
assistance programs that have limited
eligibility error rates reduces the
potential for problems within Lifeline.
a. Establishing Eligibility for LowIncome Veterans and Survivors
149. Today, we modify our rules to
grant eligibility for Lifeline to lowincome consumers receiving Veterans
Pension benefit or Survivors Pension
benefit. (Any reference to the Veterans
Pension benefit as a default federal
assistance program is meant to include
the Survivors Pension benefit as well).
The Veterans Pension benefit program is
a means-based program that supports
veterans and their spouses by providing
up to $13,855 annually minus any
countable family income.
150. Discussion. We add Veterans
Pension benefit or Survivors Pension
benefit to Lifeline’s eligibility program.
Providing assistance to America’s
veterans furthers the Commission’s
mission by specifically targeting a lowincome group lacking broadband and
voice access. To qualify for the Veterans
Pension benefit program, veterans must
have at least 90 days of active duty,
including one day during a wartime
period, and meet other means-tested
criteria such as low-income limits and
net worth limitations established by
Congress. (The other means-tested
criteria to qualify for pension benefits
include that a veteran must be: (1) Age
65 or older with limited or no income,
or; (2) totally and permanently disabled,
or; (3) a patient in a nursing home
receiving skilled nursing care, or; (4)
receiving Social Security Disability
Insurance, or (5) receiving
Supplemental Security Income).
Additionally, any surviving spouse or
dependent of a deceased eligible veteran
can qualify for the Survivors Pensions
benefit. The program includes income
and net wealth limitations to ensure the
funding is sufficiently targeted to
individuals in need. Further, many
commenters support this change and
have demonstrated an established need
for armed forces veterans to access
affordable phone service.
151. The Veterans Pension benefit
also allows the Commission to foster a
long-term technological solution to
verifying eligibility. By collaborating
with Veterans Affairs, the Commission
will be able to foster a similar database
access agreement as we have with the
USDA FNS. (Note also that the Veterans
Pension benefit can be used as an
eligibility pathway even prior to
incorporation of the VA’s database as
benefit recipients will already have or
are able to obtain documentation from
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the VA). The National Personnel
Records Center has digitized armed
service personnel records, which will
provide an efficient, streamlined
solution to verifying eligibility. The
Veterans Pension benefit also provides a
highly accountable program to further
help combat waste, fraud, and abuse
within the Lifeline program. (The VA
states that approximately 2.17 percent of
pension outlays are improper. It is
important to note that the improper
payment percentage includes both
under and overpayments. It is likely that
the true eligibility error rate is
marginally higher or lower than
improper payment rate attributable to
eligibility errors since payments may
not be proportionally related to
participation.). Further, Veterans Affairs
is currently implementing the Veterans
Benefits Management System (‘‘VBMS’’)
with the goal of improving processing
accuracy of all benefit claims to 98
percent. VBMS, once fully
implemented, will provide a completely
electronic solution to incrementally
validate application requirements,
processes, and administrative functions.
We find Lifeline will reduce waste,
fraud, and abuse by leveraging the
Veterans Pension benefits’
accountability rather than duplicating
eligibility determinations.
b. Relying on High-Participation Federal
Assistance Programs
152. In our evaluation of the existing
ways households may qualify for the
Lifeline program, we first consider
whether Lifeline eligibility programs are
being utilized by subscribers for
qualification and how many current
subscribers enroll in Lifeline using the
eligibility programs. The overwhelming
majority of current Lifeline consumers
enroll based on participation in SNAP,
Medicaid, and SSI, and we maintain
these programs in the Lifeline eligibility
criteria. As of November 2015, nearly 80
percent of all consumers participating in
Lifeline demonstrate eligibility by
participation in SNAP, Medicaid, or
SSI. Additionally, these programs
capture 80 percent of the eligible lowincome population under the existing
Lifeline eligibility rules. In streamlining
Lifeline to rely on the federal assistance
programs that are most frequently used
to provide access to Lifeline, we will
leverage eligibility efficiencies provided
by these programs. In sum, we conclude
that continuing to use SNAP, Medicaid,
and SSI as qualifying programs
recognizes the attractiveness of Lifeline
to SNAP, Medicaid, and SSI
participants, as well as the
administrative efficiencies. (While a
small percentage of subscribers
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currently enroll in Lifeline by
demonstrating participation in FPHA,
Lifeline’s goal is to provide meaningful
access to needed telecommunication
technology for low-income individuals
The balance of factors discussed below
demonstrate that FPHA provides highly
accountable and broad assistance to
low-income individuals with an
advanced, centralized database to
enable a long-term technological
solution to Lifeline eligibility
verification and recertification.).
153. We are persuaded that SNAP,
Medicaid, SSI, and FPHA will maintain
access to Lifeline support for those most
in need of the Lifeline service.
Specifically, SNAP assists 46 million
low-income Americans with the
majority of the households including
children, senior citizens, individuals
with disabilities, and working adults.
Two-thirds of SNAP benefits go to
households with children and threequarters of recipient households have a
child, an elderly member, or a disabled
individual. Medicaid provides
assistance to 40 million low-income
seniors and other adults. Of these
individuals, 11 million are non-elderly
adults with incomes below 133% of the
federal poverty guideline, and 8.8
million are individuals with disabilities.
SSI provides assistance to 8.2 million
low-income aged, blind, or disabled
individuals. 7.2 million are disabled
individuals under age 65, and 1.6
million individuals are either elderlydisabled or over 65 with an income less
than $733 per month. FPHA provides
assistance to 4.8 million low-income
households comprising 9.8 million
individuals. Of the 4.8 million assisted
households, one-half are headed by
elderly or disabled individuals. These
programs target a broad audience of
low-income households in need of
improved access to voice and broadband
services.
c. Fostering a Long-Term Technological
Solution for Lifeline Eligibility
154. It is also vitally important that
any qualifying federal assistance
program enables Lifeline to access
systems and databases in order to
develop a National Verifier. Through the
use of data sharing agreements and
database access, the National Verifier
must be able to effectively verify
eligibility of potential low-income
consumers without relying solely on
self-certification or documentation. The
existing databases for SNAP, Medicaid,
SSI, FPHA, and the Veterans Pension
benefit enable a long-term technological
solution to eligibility determination.
155. Moving to a technological
solution for Lifeline eligibility
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verification will reduce the burden for
low-income consumers in having to
provide additional documentation and
will reduce the potential risk to
consumers’ personal identifying
information. The incorporation of
existing database solutions will also
reduce waste, fraud, and abuse of the
program. While the transition to a
National Verifier will not be immediate,
our selection of qualifying assistance
programs that permit easy technological
solutions lays the groundwork for a
successful National Verifier.
156. SNAP, Medicaid, SSI, FPHA, and
the Veterans Pension benefit program all
provide the potential for streamlined
interactions between those programs’
systems and the National Verifier. The
current data sharing agreement with
SNAP, for example, demonstrates an
effective technological solution to
Lifeline eligibility determinations.
SNAP is administrated on the state level
with Federal monitoring and oversight
by the United States Department of
Agriculture, Food and Nutrition Service
(‘‘USDA FNS’’). The data sharing
agreement allows current ETCs to verify
if a low-income consumer is receiving
SNAP benefits after coordinating with
the state SNAP administrator and has
enabled a technological solution for the
verification of SNAP participation, for
Lifeline enrollment purposes, in many
states.
157. Medicaid, SSI, FPHA, and the
Veterans Pension benefit program also
have accessible systems and databases
the National Verifier will be able to use.
SNAP and Medicaid are often
administered by the same state agencies,
allowing for more efficient database
access solutions. By reaching
agreements with the state
administrators, the National Verifier
will be able to develop an electronic
verification system that will reduce the
administrative burden of the Lifeline
program. SSI is federally administered
by the Social Security Administration
and the Veterans Pension benefit is
administered by the Department of
Veterans Affairs. Both have
sophisticated computer matching and
communication capabilities that can be
utilized by the National Verifier to
benefit the Lifeline program. FPHA is
administered by the United States
Department of Housing and Urban
Development (‘‘HUD’’). HUD maintains
a federal database containing
participation information for all
individuals receiving FPHA that can
also be utilized by the National Verifier
for eligibility verification and
recertification.
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d. Protecting Against Waste, Fraud, and
Abuse by Utilizing Highly Accountable
Programs
158. By relying on highly accountable
programs that demonstrate limited
eligibility fraud, Lifeline will greatly
reduce the potential of waste, fraud, and
abuse occurring due to eligibility errors.
The Commission and stakeholders have
made substantial strides to create a more
efficient and effective Lifeline program
and that has transformed Lifeline into a
more accountable program that provides
vital telecommunications services to
low-income consumers. Lifeline’s
streamlined eligibility programs will
continue to guard against waste, fraud,
and abuse by allowing Lifeline to
leverage efficiencies from federal
programs with limited eligibility and
enrollment error rates.
159. Discussion. SNAP is a
meaningful assistance program for
Lifeline because it maintains one of the
lowest eligibility error rates of any
federal assistance program. SNAP has a
99 percent accuracy rate in its eligibility
determinations. (We distinguish
between eligibility problems, which
involve ineligible individuals enrolling
in SNAP and are minimal, and SNAP
trafficking problems, which occur when
individuals sell or purchase SNAP
benefits in exchange for cash or
equivalents and, while prevalent in the
last 15 years, have been greatly reduced
in large part due to aggressive
enforcement and prevention measures.
Trafficking fraud, however, is not
directly relevant to Lifeline’s use of
SNAP as an eligibility program because
Lifeline only relies on the eligibility
determination made by SNAP to
determine eligibility in Lifeline). SNAP
eligibility problems occur when an
individual receives benefits, but does
not meet the eligibility criteria for the
program. To combat this concern, SNAP
employs one of the most sophisticated
quality control systems of any federal
assistance program, ensuring that 99
percent of all recipients are eligible for
the program. We find that SNAP’s low
eligibility error rate provides a high
level of accountability that the
Commission should leverage.
160. Medicaid provides similar
efficiencies in eligibility determinations
for the Lifeline program. Like SNAP,
Medicaid has a low incidence of
eligibility fraud (Medicaid’s payment
error rate due to eligibility errors is only
2.3 percent), and the United States
Department of Health and Human
Services, Office of Inspector General
(‘‘HHS OIG’’) has instituted new tools to
combat waste, fraud, and abuse within
Medicaid. By using data analysis,
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33049
predictive analytics, trend evaluation,
and modeling approaches to analyze
and target fraudulent behavior, HHS
OIG has substantially affected payment
errors based on eligibility. Accordingly,
we find that conferring eligibility based
on Medicaid participation will support
the prevention of waste, fraud, and
abuse in Lifeline.
161. SSI demonstrates similar
accountability. The Social Security
Administration conducts routine audits
between its own systems and those of
other federal and state agencies to verify
eligibility and determine if an SSI
recipient’s information is accurate. SSI
has a limited overpayment rate resulting
from eligibility errors. (This figure
represents an estimate based on
publically available data as SSA only
reports overpayment (7.2%) and
underpayment rates (1.9%). SSA
additionally reports the major causes of
payment errors of which 89% are
attributable to eligibility errors.
Therefore, the effective overpayment
rate due to eligibility errors is
approximately 6.3%. It should be noted
that these error rates are based on
payment and not participation;
therefore, it is possible the eligibility
error rate is marginally higher or lower
as payments may not be directly
proportional to participation). SSI has
demonstrated continued accountability
and commitment to combating waste,
fraud, and abuse. For the same reasons
SNAP and Medicaid provide eligibility
and verification efficiencies, the
utilization of the SSI program’s robust
eligibility verification process will
benefit the Lifeline program.
162. Finally, HUD has undertaken
many steps to ensure that FPHA is
highly accountable. HUD actively
employs an Enterprise Income
Verification (EIV) system that matches
data from the Social Security
Administration and the National
Directory of New Hires to provide
income data. The EIV system is used to
verify annual income and benefit
information for FPHA participants, and
further enables measures to prevent
waste, fraud, and abuse within the
program by providing auditable
information to collect improper
payments. FPHA has limited improper
payments. (HUD reports an improper
payment percentage of 4.01% due to
eligibility errors.). HUD has
demonstrated continued accountability
and commitment to combating waste,
fraud, and abuse. FPHA’s accountable
eligibility determinations will benefit
Lifeline’s efforts to combat waste, fraud,
and abuse.
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2. Removing Eligibility Based on Certain
Federal Assistance Programs
163. We amend our rules to remove
LIHEAP, NSLP, and TANF from the
default federal assistance eligibility for
Lifeline. In streamlining the eligibility
criteria, we choose to remove these
programs in part due to low enrollment
in Lifeline. Further weighing our criteria
for selecting eligibility programs, these
programs do not offer the same
advantages in developing a federal
eligibility database, preventing waste,
fraud, and abuse, nor better targeting of
the neediest low-income households as
SNAP, Medicaid, SSI, FPHA, and the
Veterans Pension benefit.
164. Discussion. We amend our rules
to remove LIHEAP, NSLP, and TANF
from the default federal assistance
eligibility for Lifeline. In doing so, we
retain the programs used by the
overwhelming majority of current
Lifeline subscribers while retaining
eligibility for millions of low-income
consumers. (States will still be able to
condition eligibility for state-specific
lifeline payments, but will no longer be
able to broaden federal Lifeline
eligibility. This will allow states, like
California, to continue to provide
additional payments beyond current
Lifeline benefits and develop the
necessary state-specific eligibility
criteria). By streamlining eligibility
criteria, we will improve the
administrative efficiency of the program
and reduce the burden on consumers,
providers, and the Fund. Only 2.74
percent of current Lifeline consumers
enroll through LIHEAP, TANF, and
NSLP combined.
165. Commenters argue that the
elimination of these federal eligibility
programs will create ‘‘eligibility gaps’’
where a low-income consumer would be
eligible based on income, but other
restrictions prevent access. Many
commenters argue that limiting Lifeline
eligibility will prevent access to the
program by low-income consumers in
need of support and that Lifeline’s low
participation rate suggests that we need
to increase the number of eligibility
programs to capture more consumers.
However, we find that focusing on
federal assistance programs that serve a
broader range of the low-income
households will leverage the reach of
those programs. SNAP, Medicaid, SSI,
and FPHA have high adoption rates
among eligible households and
currently account for 80 percent of
program participation. Additionally, the
programs target a wide variety of lowincome consumers in different age and
life situations, thereby alleviating
commenters’ concerns of ‘‘eligibility
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gaps’’ resulting from limiting Lifeline
eligibility.
166. We disagree with those
commenters who caution against
removing NSLP and who argue that
providing community-based eligibility
or retaining federal assistance programs
that allow for such eligibility, such as
NSLP, increases administrative
efficiency or appropriately protects the
use of funds. First, eliminating NSLP as
a qualifying program will affect very few
participants since NSLP only accounts
for 0.31 percent of the total participation
in the Lifeline program. In addition,
because there is substantial overlap
between SNAP participation and NSLP
participation, with 87 percent of NSLP
students qualifying directly through
SNAP participation of the household,
we are confident there will be minimal
disruption to qualifying households.
167. Also, NSLP cannot be effectively
verified by a federal eligibility database.
The federal administration of NSLP
cannot authorize any access to the
databases that maintain participation
information. This would require
duplicative efforts of the Commission to
coordinate with state administrators to
verify eligibility, as it currently must
with SNAP and Medicaid. However,
this access is complicated by federal
regulations that would require written
consent from all students’ parents or
guardians in order to disclose any
information. The experience of state
commissions demonstrates that this
process is untenable and works against
streamlining the administration of
Lifeline.
168. Further, NSLP is currently
undergoing program overhauls and
transitioning to a community-based
approach that will complicate the
ability to determine individual
household eligibility. The Community
Eligibility Provision (‘‘CEP’’) allows for
participation in free or reduced meals
for an entire school district, group of
schools, or individual school if 40
percent of its students are ‘‘identified
students.’’ (‘‘Identified students’’ are
students that qualify without
application due to participation in lowincome assistance programs like SNAP,
or students that are considered at risk of
hunger due to a codified list of factors
that includes being homeless, or in
foster care). USDA adopted this change
to eliminate the burden of collecting
household applications to determine
eligibility for school meals, relying
instead on information from other
means-tested programs such as the
SNAP. This undoubtedly includes
households that are not low-income, but
still qualify for NSLP. Allowing Lifeline
eligibility based on NSLP’s CEP method
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could result in large numbers of nonlow-income households qualifying for
the Lifeline program and would greatly
undermine the targeting of support to
the low-income households. Given the
extremely low number of Lifeline
participants that use NSLP to establish
Lifeline eligibility, coupled with the
high overlap between NSLP and SNAP,
the balance of factors supports removing
NSLP as a qualifying Lifeline program.
169. We also have administrative
concerns with using LIHEAP and TANF
in the Lifeline program. Providers and
state commissions have experienced
difficulty in developing long-term,
technology-based solutions for these
federal eligibility programs. The
majority of providers and state
commissions choose only to provide
database eligibility verification for a
select group of programs, often SNAP,
Medicaid, and SSI, due to the lack of
centralized administration of many
federal assistance programs, the wide
varieties of documentation, differing
technologies, and complications
presented by controlling regulations. We
intend to foster a centralized,
technology-driven solution to eligibility
determination, certification, and
verification and the federal eligibility
programs need to enable a database
eligibility solution.
170. By using SNAP, Medicaid, SSI,
FPHA, and the VA Pension benefit as
eligibility avenues for Lifeline, the
Commission will modernize the
program while remaining committed to
providing support to low-income
consumers. Millions of low-income
households remain eligible under the
streamlined eligibility criteria while
allowing the Commission to reduce the
administrative burden to consumers,
providers, and itself. Currently, LIHEAP
eligibility accounts for only 1.23 percent
of Lifeline participants. TANF accounts
for only 1.20 percent. The retained
programs account for 80 percent of all
participants and enable 80 percent of all
eligible low-income consumers to
qualify with SNAP, Medicaid, SSI, or
FPHA. The retained programs will allow
the Commission to develop a long-term
technological solution to determining
and verifying Lifeline eligibility.
3. Independent Income-Based Eligibility
171. We next maintain our rules
regarding income-based eligibility as an
avenue to access Lifeline support. In
doing so, we acknowledge that
maintaining independent income
verification allows low-income
households to qualify for the program
without being required to receive
assistance from another program.
However, we amend the Lifeline
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definition of income to align with the
Internal Revenue Service’s (‘‘IRS’’)
definition of gross income to provide a
clearer standard for eligibility
determinations. By focusing
independent income verification efforts
by carriers and the National Verifier on
checking readily available income
verification sources and requiring
consumer certification, we will reduce
the potential for waste, fraud, and abuse
of the program resulting from
underreporting income.
172. In the 2015 Lifeline FNPRM, the
Commission sought comment on
whether low-income consumers should
be able to continue to qualify for
Lifeline support based on household
income. We recognized that, under the
current program, less than four percent
of Lifeline subscribers demonstrate
eligibility based on income level and we
questioned whether we could better
target the neediest consumers given the
relatively low number of consumers
using income as their qualifying
method.
173. Discussion. While a limited
number of participants demonstrate
eligibility through verifying their
income, the eligibility avenue remains
an important and independent access
route into the program. Currently, three
percent of Lifeline subscribers qualify
by demonstrating household income.
However, independent incomeeligibility remains the only stand-alone
avenue for access into the program. By
ensuring low-income consumers can
independently qualify for the Lifeline
program, qualifying subscribers will not
be denied access into the Lifeline
program simply for not seeking other
forms of assistance.
174. Maintaining income-eligibility
requires a focused approach to verifying
the low-income consumer’s complete
household income. Income verification
has typically been more onerous for
both the consumer and Lifeline provider
than establishing eligibility through
another program. Under the current
definition of income, verifying income
requires a provider to review
documentation that demonstrates the
household’s income. Income includes
all forms derived by all members of a
household, including payments
normally deductible from taxable
income, like child support. While
verifying income with the IRS can give
a baseline, (for example, the IRS
provides a system normally used by
mortgage lenders to verify income of
individuals with the individual’s signed
consent), the Lifeline provider must
look to all sources of income within the
household and sources that would be
excluded from taxable income to ensure
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compliance with Commission rules.
Thus, income verification is highly
susceptible to intentional or
unintentional underreporting of income.
Commenters agree with this concern,
noting the difficulty in ensuring that a
produced tax return accurately
represents income and that ‘‘virtually no
Lifeline applicants present their tax
returns to demonstrate eligibility’’
especially given the ease of
demonstrating program eligibility. The
consumer must present the household’s
income including ‘‘salary before
deductions for taxes, public assistance
benefits, social security payments,
pensions, unemployment compensation,
veteran’s benefits, inheritances,
alimony, child support payments,
worker’s compensation benefits, gifts,
lottery winnings, and the like.’’ The
only exceptions are for student financial
aid, military housing and cost-of-living
allowances, and irregular income from
occasional small jobs. Additionally, the
consumer must certify they have
presented all income for themselves and
their household.
175. We also amend the definition of
income in Section 54.400(f) of our
Lifeline rules to align with the Internal
Revenue Service’s (IRS) definition of
gross income. This revised definition of
income simplifies what a subscriber
must demonstrate for income-based
eligibility. Gross income, as defined by
the tax code, includes all income for
whatever source derived unless
specifically excluded. By relying on a
definition of income that subscribers
use every year, we will greatly reduce
instances of intentional or unintentional
underreporting of income and will
reduce the burden on the qualifying
low-income consumer by eliminating
the need for them to make additional
income calculations. Further, tax
information and employment
information can readily be determined
electronically through the IRS or thirdparty services. Aligning the Lifeline
definition of income to mirror the tax
definition of gross income, enables
electronic verification by utilizing
already reported information to a single
source where previously this was not
possible due to the expansive definition
of income. (The Commission stresses
the importance of verifying a complete
household income picture when income
eligibility is used. The Commission’s
rules have and continue to require that
a consumer establish income for both
themselves and for the rest of the
household. This may require a lowincome consumer to provide additional
documentation or information for other
individuals in the consumer’s
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household to verify household income.
These documents often contain
additional sensitive and personally
identifying information, and carriers
must continue to protect this
information in compliance with current
Lifeline document retention and
protection policies).
176. Continuing to allow incomebased eligibility is also essential for
Lifeline households in United States
Territories. Due to the unique
combination of high poverty rates (For
the United States Territories currently
receiving Lifeline support, the average
poverty rate of the population is: Puerto
Rico—45.4%; U.S. Virgin Islands—
23.3%; American Samoa—57.8%;
Guam—22.9%; Northern Mariana
Islands—31.4%), and non-uniform
federal assistance programs in the
United States Territories, the United
States Territories rely on income-based
eligibility. Lifeline serves low-income
consumers in all states as well as the
Territories (United States Territories
include all areas currently controlled by
the United States and specifically the
territories of the Commonwealth of
Puerto Rico, American Samoa, the
Commonwealth of Northern Mariana
Islands, the United States Virgin
Islands, and Guam), of the United
States. However, the Territories do not
have full access to the default federal
eligibility programs for several reasons.
For the United States Territories, the
USDA offers Nutrition Assistance Block
Grants (NABG) in lieu of operating
SNAP in these areas. The same is true
for Medicaid, which is operated
similarly to block grants with an annual
funding cap. Moreover, besides the
Northern Mariana Islands, SSI is not
available for individuals in the United
States Territories.
177. Puerto Rico’s
Telecommunications Regulatory Board
(‘‘TRBPR’’) cautions against limiting
program eligibility to only federal
assistance programs. The differing
administration and eligibility criteria for
SNAP, Medicaid, and SSI requires
income-verification remain in Puerto
Rico and other United States Territories.
For example, the income levels for the
Nutrition Assistance Program for Puerto
Rico (‘‘PAN’’) range between 23.9
percent and 35.3 percent of FPG, which
is substantially lower than SNAP. As a
result, participation in PAN is 30
percent lower than if the default federal
eligibility existed. Given the unequal
treatment of Puerto Rico in federal
assistance programs, TRBPR
recommends retaining income
verification. Retaining income-based
eligibility prevents ‘‘qualification gaps’’
between low-income consumers in
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states and those in the Territories. We
continue to allow income-based
eligibility for households with annual
incomes of less than 135 percent of the
FPG.
4. Tribal-Specific Eligibility Criteria
178. After careful consideration, we
maintain the current set of Tribalspecific eligibility programs. The
Commission embraced these Tribal
assistance programs to encourage
adoption among low-income residents
on Tribal lands. We agree with
commenters and find that the
disproportionately low adoption of
telecommunication services on Tribal
lands, especially those in remote and
underserved areas, makes clear that
there is much more progress to be made
in increasing penetration and adoption
of Lifeline services.
179. In the Lifeline Reform Order, the
Commission took specific steps to make
Lifeline more inclusive for consumers
living on Tribal lands. The Commission
noted that consumers on Tribal lands
did not qualify for Lifeline support
because many Tribal members chose to
participate in the Food Distribution
Program on Indian Reservations
(‘‘FDPIR’’) rather than SNAP. The
Commission added FDPIR as a
qualifying program because both SNAP
and FDPIR have similar income-based
eligibility criteria and that members of
more than 200 Tribes, especially Tribal
elders, currently receive benefits under
FDPIR.
180. In the 2015 Lifeline FNPRM, in
the context of exploring the idea of
streamlining eligibility for the program,
we also sought comment on whether to
remove eligibility based on federal
Tribal assistance programs and the
effect removing those programs would
have on low-income subscribers and the
Lifeline program. Specifically, we asked
about continuing to use FDPIR and,
more broadly, about overlap between
Tribal-specific assistance programs and
the other federal assistance programs
used in the Lifeline program.
181. Discussion. Low-income
consumers living on Tribal lands and
receiving Bureau of Indian Affairs
general assistance (‘‘BIA general
assistance’’), Tribally administered
Temporary Assistance for Needy
Families (‘‘TTANF’’), Head Start (only
those households meeting its income
qualifying standard), or FDPIR remain
eligible for Lifeline. BIA general
assistance, TTANF, and Head Start were
added in 2000 to encourage enrollment
of low-income Tribal households
because the programs were specifically
targeted to Tribal members, and the
addition of these programs helped
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remedy the barrier to Tribal
participation in Lifeline caused by the
other federal assistance program criteria.
Additionally, the programs are meanstested and target household incomes
similar to the other federal assistance
programs.
182. The retention of these Tribal
programs as Lifeline qualifying
programs allows continued access to a
specifically underserved group of
potential subscribers. The Commission
has noted previously that consumers
living on Tribal lands have limited
access to advanced telecommunications
technologies. We recognize that
retaining the programs may add
additional complications to developing
a uniform set of eligibility criteria to
enable a long-term technological
solution to eligibility determinations.
However, we find that continuing to
support low-income consumers living
on Tribal lands through these Tribalspecific eligibility programs outweighs
the limited administrative difficulties.
183. We make clear that our
determination here to retain Tribalspecific eligibility programs does not
prejudge a decision on any of the other
Tribal-related or other outstanding
issues for which the Commission sought
comment in the 2015 Lifeline FNPRM
and prior Commission-level notices in
these proceedings. For example, we are
not at this time modifying the enhanced
support amount or deciding whether to
restrict Lifeline and/or Link Up support
to certain carriers operating on Tribal
lands or carriers serving certain portions
of Tribal lands. These and other issues
for which the Commission has sought
comment and which are not addressed
in this order, remain open for
consideration in a future proceeding
more comprehensively focused on
advancing broadband deployment
Tribal lands. (We note that the
Commission recently sought comment
on adopting rules to increase support to
rate-of-return carriers in areas that
include Tribal lands. The Commission
will address related issues in both
proceedings to the extent that it deems
appropriate).
5. State-Specific Eligibility Criteria
184. We amend our rules to remove
state-specified eligibility criteria for
Lifeline support. While the Commission
has traditionally allowed states to
establish eligibility for the federal
program, we ultimately conclude that
Lifeline eligibility needs to be updated
to allow for more efficient
administration that enables
comprehensive eligibility verification to
continue to prevent waste, fraud, and
abuse.
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185. Discussion. We find that the
benefits to the federal Lifeline program
of removing state-specific eligibility
criteria outweigh concerns presented by
the states that object to this action. It is
important to note that the changes to
eligibility only apply to the federal
Lifeline program. Thus, a state
maintaining its own Lifeline fund will
still be free to adopt any eligibility
requirements it deems necessary. We
make this change to simplify the
administration of the Lifeline program.
Lifeline currently allows for unique
eligibility criteria depending on the
state in which the consumer resides.
(The Commission received comments
from multiple State Commissions
detailing that state’s Lifeline program
and the administration differences from
the default federal program). This
approach complicates administration at
a federal level. Allowing the states to
continue to develop tailored rules for
federal Lifeline assistance would
eliminate many of the efficiencies the
Commission gains by modernizing the
eligibility criteria. Streamlining the
default federal eligibility criteria allows
the Commission to transition the
program to modern approaches for
eligibility determinations, verification,
and annual recertification. The selected
list of federal assistance programs
allows for a technology-based system by
leveraging existing databases. Further,
the programs are tailored to allow the
Commission to reach needed data
sharing agreements with the
stakeholders in an efficient manner and
state-specific eligibility criteria would
minimize or eliminate the efficiencies
the Commission is working to achieve.
186. The size, scope, and technology
of the Lifeline program has changed
drastically from 1997 when the
Commission allowed state Lifeline
eligibility to grant eligibility in federal
Lifeline. The program has grown from
5.1 million households in 1997 to 13.1
million currently. Disbursements have
grown from $422 million in 1997 to $1.5
billion in 2015. In this Order, we have
instituted sweeping changes to the
Lifeline program regarding verification
of federal Lifeline eligibility on a
national level. These require us to
revisit the initial decision in 1997 to
allow states to determine if eligibility
verification was needed. Instituting a
National Verifier requires specifically
targeted federal assistance programs that
have demonstrated use by current lowincome consumers within the federal
Lifeline program. State eligibility often
relies on federal Lifeline eligibility
programs, proving the criteria
redundant in the majority of cases. In
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fact, the state-specific assistance
programs only account for 2.52% of
total Lifeline participation. The
administrative burden to verify each
individual program for a National
Verifier is not supported by the limited
adoption of state-specific eligibility
programs.
E. Increasing Competition for Lifeline
Consumers
187. We recognize that in order to
truly modernize the Lifeline
marketplace, it is incumbent on the
Commission to examine and reform
three key aspects of providers’
participation in the Lifeline program.
Specifically, we must update providers’
processes for entering the Lifeline
program, providers’ obligations as
Lifeline providers, and providers’
responsibilities when they may seek to
exit the program. These three aspects of
being a Lifeline provider—entry, service
obligations, and exit—are crucial to
providers’ decisions about whether to
participate in the program at all, and
they are accordingly fundamental pieces
of a revitalized Lifeline program. We
expect that our actions today will
encourage market entry and increase
competition among Lifeline providers,
which will result in better services for
eligible consumers to choose from and
more efficient usage of universal service
funds.
188. In this Section, we continue to
require Lifeline providers to be
designated as ETCs, but we take several
steps to modernize the processes and
obligations necessary to obtain and
maintain ETC status. We first establish
our authority to designate Lifeline
Broadband Provider (LBP) ETCs and
create a designation process for such
Lifeline Broadband Providers. This
action preserves states’ authority to
designate ETCs to receive Lifeline
reimbursement for qualifying voice and/
or broadband services, while adding to
that structure the option for carriers to
seek designation as Lifeline Broadband
Providers through the FCC.
189. We next establish reformed
service and relinquishment obligations
for different categories of ETCs. For
Lifeline Broadband Providers, we
establish a streamlined relinquishment
process that gives providers greater
certainty while retaining the
Commission’s ability to protect
consumers. For Lifeline-only ETCs,
those carriers that have received limited
designations to participate only in the
Lifeline program, we establish that such
ETCs are eligible to receive support for
broadband service but may choose to
only offer supported voice service
instead. For ETCs that are designated to
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receive high-cost support (High-Cost/
Lifeline ETCs), we establish that such
ETCs are also eligible to receive support
for broadband service and forbear from
requiring such High-Cost/Lifeline ETCs
to offer Lifeline-supported broadband
service, except in areas where the ETC
commercially offers broadband pursuant
to its high-cost obligations. We also
establish conditional forbearance from
existing ETCs’ Lifeline voice obligations
where certain objective competitive
criteria are met.
190. These reforms balance lowincome consumers’ reliance on existing
service providers while encouraging
new market entry in the Lifeline
program and creating a level playing
field for existing and new providers. We
expect that these reforms will unleash
increased competition in the Lifeline
marketplace, providing more choice and
better service for the consumers
benefitting from the program.
1. Creating a Lifeline Broadband
Provider Designation
191. As part of our comprehensive
modernization and reform of the
Lifeline program, we must address the
barriers potential Lifeline providers face
when attempting to enter the program
and the burdens existing providers
shoulder while participating in the
program. Through a number of actions,
in this Section we modernize carriers’
process for entering the Lifeline
program to become LBPs, their
obligations within the program, and the
process for relinquishing their
participation in the program. We also
take certain steps to streamline the LBP
designation process to encourage
broader provider participation in the
Lifeline program with the expectation
that increased participation will create
competition in the Lifeline market that
will ultimately redound to the benefit of
Lifeline-eligible consumers.
192. First, we decide that the Lifeline
program will continue to be limited to
providers that are ETCs. However, to
ease the burden of becoming an LBP
providing BIAS to eligible consumers,
we improve the designation process,
clarify LBP obligations, and modernize
the relinquishment process to better
reflect the modern competitive Lifeline
market. We establish our authority to
designate such ETCs pursuant to our
responsibility under Section 214(e)(6)
and take steps to streamline the LBP
designation process to encourage greater
nationwide participation in the
program.
a. Lifeline Participation Limited to ETCs
193. We first maintain the existing,
statutorily compelled paradigm for
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providing Lifeline service and continue
to require Lifeline providers be
designated as ETCs. At this time, we
decline to extend Lifeline participation
to non-ETCs. We find that continuing to
require providers to be ETCs to receive
reimbursement through the Lifeline
program will protect consumers and
facilitate continuing efforts to prevent
waste, fraud, and abuse. As discussed
below, however, we also take steps later
in this Section to streamline the ETC
designation process and ETC service
obligations to increase provider
participation in the Lifeline program.
194. In the 2015 Lifeline FNPRM, the
Commission sought comment on
various means to increase competition
among carriers serving Lifeline-eligible
households. Among other potential
ways to increase competition, the
Commission asked for comment on a
process for providers to participate in
Lifeline that is separate from the ETC
designation process required to receive
high cost universal service support to
encourage broader participation. The
Commission also sought comment on revisiting the Commission’s 1997 decision
not to provide Lifeline support to nonETCs to encourage broader participation
in the market, and its authority to
provide Lifeline support to non-ETCs.
195. In response to the 2015 Lifeline
FNPRM, several commenters urged the
Commission to eliminate the
requirement that recipients of Lifeline
support be ETCs through statutory
interpretation or forbearance under
Section 10 of the Act, arguing that such
a change would increase provider
participation in the Lifeline program.
Some commenters reasoned that
eliminating the ETC requirement would
enable more community-based
organizations to participate in the
Lifeline program. Other commenters
urged the Commission to retain the ETC
requirement, arguing that the ETC
requirement is necessary to prevent
waste, fraud, and abuse in the program.
Commenters opposing the elimination
of the ETC requirement also argued that
the Communications Act requires
providers participating in the Lifeline
program to be ETCs.
196. Regarding the Commission’s
authority to permit non-ETC providers
to receive Lifeline funds, AT&T argues
that Section 254(j) and Section 254(e) of
the Act permit the Commission to
expand Lifeline participation to nonETCs. Public Knowledge argues that the
Commission’s decisions in the 2004
Report and Order and TracFone
Forbearance Order are inconsistent with
the Universal Service First Report and
Order on the issue of the Commission’s
authority to permit non-ETCs to
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participate in the Lifeline program.
Public Knowledge also argues that the
Commission’s prior orders failed to state
that the Commission was departing from
its prior interpretation of Section 254, so
the Commission’s controlling
interpretation of Section 254 continues
to be that expressed in the Universal
Service First Report and Order. Some
commenters also argue that the
Commission may permit non-ETCs to
participate in the Lifeline program by
amending its rules or by forbearing from
rules that currently prevent non-ETCs
from participating in the Lifeline
program.
197. We agree with the commenters
who assert that the Commission should
continue to limit reimbursement
through the Lifeline program to ETCs,
but we take significant action to address
the concerns that animate suggestions
that we provide support to non-ETCs.
Requiring participating Lifeline
providers to be ETCs facilitates
Commission and state-level efforts to
prevent waste, fraud, and abuse in the
program, and serves the public interest
by helping the Commission and state
commissions ensure that consumers are
protected as providers enter and leave
the program. For federally-designated
ETCs, in implementing Section 214(e)(6)
of the Act, the Commission’s rules state
that common carriers must meet certain
requirements to obtain an ETC
designation, including certification to
the relevant service requirements for its
support, demonstrating the ability to
function in emergency situations,
satisfying consumer protection and
service quality standards, and
demonstrating financial and technical
capability to provide Lifeline service
(for Lifeline-only ETCs). For state
designations, states that retain the
relevant designating authority also
ensure that carriers have the financial
and technical means to offer service,
including 911 and E911, and have
committed to consumer protection and
service quality standards. These
structures that protect consumers and
ensure carriers meet service quality
standards ensure that the services
supported by the Lifeline program serve
the Commission’s goals of achieving
‘‘[q]uality services’’ offered at ‘‘just,
reasonable, and affordable rates.’’
Considering the protections and
standards already built into the ETC
designation framework, we find that
working within an updated ETC
framework is a more sound approach to
modernizing how carriers enter and exit
the Lifeline program than creating
entirely new registration processes and
requirements for Lifeline providers.
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198. We share commenters’ concerns
that requiring providers to obtain ETC
designation could limit provider
participation in the Lifeline program,
but we address this concern by the
targeted steps we take in this Order to
streamline the ETC designation process,
reduce compliance burdens, and
implement a National Verifier. (For
example, if a non-traditional provider
like a school, library, or other anchor
institution wishes to provide Lifelinesupported BIAS and can meet the
streamlined requirements to enter the
program and offer service as a Lifeline
Broadband Provider, such a provider
could seek designation to participate in
Lifeline just as any other qualifying
provider may). We are confident that
these changes will encourage provider
participation through reduced
administrative burdens. Finally, because
we decide not to permit non-ETCs to
receive reimbursement through the
Lifeline program at this time, we need
not decide the Commission’s authority
to do otherwise. We next revisit the
Commission’s authority to designate
ETCs offering BIAS in the Lifeline
program under Section 214(e).
b. Jurisdiction To Designate Under
Section 214(e)(6)
199. Having established that providers
must become ETCs to receive
reimbursement through the Lifeline
program, we now turn to the issue of
when the Commission retains authority
to designate ETCs for the purpose of
offering BIAS in the Lifeline program. In
addition to including BIAS as a
supported service in the Lifeline
program, we must also determine who
may provide that service. We establish
the Commission’s jurisdiction to
designate broadband Internet access
service providers as ETCs solely for the
purpose of receiving reimbursement
through the Lifeline program for
providing BIAS to eligible low-income
subscribers. We interpret Section 214(e)
to permit carriers to obtain ETC
designations specific to particular
mechanisms of the overall universal
service fund. We also find that state
designations for this new LBP ETC
designation would thwart federal
universal service goals and broadband
competition, and accordingly preempt
such designations.
200. To provide guidance regarding
our authority to designate LBPs under
Section 214(e)(6), we clarify that a
carrier need only provide some service
or services—not necessarily the
supported service—that constitute
‘‘telephone exchange service and
exchange access’’ to qualify for
designation by the Commission. Even
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though we anticipate that many
providers will be able to meet the
requirement of ‘‘providing telephone
exchange service and exchange access,’’
we also grant forbearance from the
provisions of Section 214(e)(6) that
require carriers to provide telephone
exchange service and exchange access
in order to seek designation as an ETC
by the Commission under that Section.
201. Accordingly, LBPs will be
designated by the Commission under
the authority granted to it in Section
214(e)(6) of the Act. (We note that, in
certain circumstances, we also have
authority under Section 214(e)(3)). We
find that these measures enable the
Commission to efficiently designate
LBPs and unlock the Lifeline program to
new innovative service providers and
robust broadband offerings for the
benefit of our Nation’s low-income
consumers.
(i) Carriers Not Subject to the
Jurisdiction of a State Commission
202. To facilitate the Lifeline
program’s goal of promoting
competition and facilitating new
services for eligible low-income
consumers, we preempt states from
exercising authority to designate
Lifeline-only broadband ETCs for the
purpose of receiving Lifeline
reimbursement for providing BIAS to
low-income consumers. (Some
commenters assert that although the
Commission has concluded that
broadband Internet access service is
interstate for regulatory purposes, at
least some states still could have
sufficient jurisdiction to perform an ETC
designation. This question is moot
insofar as we preempt any state
jurisdiction to perform ETC
designations specifically for Lifeline
broadband purposes, and thus we need
not, and do not, address the scope or
contours of any state authority regarding
broadband Internet access service.).
Accordingly, Section 214(e)(6) grants to
the Commission the responsibility to
resolve carriers’ requests for designation
as an ETC for the purposes of receiving
such Lifeline broadband support.
(Further, we need not establish the
Commission’s jurisdiction to designate
Tribally-owned and operated ETCs
seeking to serve within the external
boundaries of their Reservation, as that
jurisdiction has already been
established).
203. Discussion. Taking into
consideration the comments we have
received in the record on this issue, we
now create a unified, streamlined FCC
ETC designation process for providers
seeking to receive reimbursement for
providing BIAS. First, we find that it is
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reasonable to interpret Section 214(e) as
permitting the Commission to tailor the
ETC designation process and ETC
obligations to the particular element of
the USF from which the provider is
receiving funds. Next, we find that the
Commission has authority to preempt
states from designating LBPs and, in this
limited circumstance, we preempt states
from exercising any authority to
designate providers as LBPs.
204. Commission authority to
designate where states lack jurisdiction.
Section 214(e)(6) establishes the
Commission’s authority to designate a
common carrier ‘‘that is not subject to
the jurisdiction of a State commission’’
as an ETC. The circumstances in which
a carrier is ‘‘not subject to the
jurisdiction of a State commission’’
under Section 214(e)(6) is ambiguous
regarding whether the carrier must be
entirely outside the state commission’s
jurisdiction or only outside the state
commission’s jurisdiction with respect
to a particular service supported by
universal service mechanisms, even if
subject to state commission jurisdiction
in other respects. As previously
interpreted by the FCC, the
jurisdictional inquiry under Section
214(e)(6) ‘‘should include, but not be
limited to, whether a state commission
lacks jurisdiction over the particular
service or geographic area.’’
205. We interpret the inquiry as to
whether a carrier is ‘‘subject to the
jurisdiction of a State commission’’
under Section 214(e)(6) in light of the
merits analysis required for designating
a carrier as an ETC under either Section
214(e)(2) or (e)(6). In particular, the state
(under Section 214(e)(2)) or the
Commission (under Section 214(e)(6))
must find that the carrier seeking
designation as an ETC will comply with
the service obligations in Section
214(e)(1). In relevant part, Section
214(e)(1) requires ETCs to ‘‘offer the
services that are supported by Federal
universal service support mechanisms
under Section 254(c)’’ at least in part
using their own facilities ‘‘throughout
the service area for which the
designation is received.’’
206. To the extent that the
Commission previously interpreted
Section 214(e)(6) to only apply if the
relevant state commission had no
authority over any of the services
offered by the carrier—or any of the
services supported by the federal
universal service support mechanisms
(As originally implemented, ETC
designations were not specific to a
particular supported service or a
particular universal service support
mechanism, and thus, as interpreted
and implemented by the Commission,
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ETCs’ service obligations under Section
214(e)(1) encompassed the duty to offer
all the supported services designated
under Section 254(c)(1). Congress
initially provided only for state ETC
designations under Section 214(e) while
simultaneously recognizing in Section
214(e)(3) that universal services could
include interstate services.)—we now
revise that interpretation to more closely
match the services supported by federal
universal service support mechanisms.
In a 2014 Order, the Commission
adopted an interpretation of Section
254(c)(1) that enables it to define
universal service(s) under Section
254(c)(1) that differs among different
rules (e.g., among different universal
service mechanisms). The Commission
also has granted carriers forbearance
from the ‘own facilities’ requirement in
Section 214(e)(1) to enable pure
resellers to be designated as ETCs,
conditioned on them only obtaining
Lifeline universal service support.
Building on this, we conclude that
regardless of the scope of ETC
designations granted historically,
Section 214(e) permits carriers to seek,
and obtain, ETC designations specific to
particular elements of the overall
universal service fund. When they do
so, we further conclude that the ETC’s
service obligations under Section
214(e)(1) mirror the scope of universal
service(s) defined under Section
254(c)(1) for specific purposes of that
element of the overall universal service
fund (if there is a definition specific to
that element). In other words, the
Commission interprets ‘‘the services
that are supported by Federal universal
service support mechanisms under
Section 254(c)’’ to mean only those
services within the definition of
universal service—as stated in the
Commission’s rules and orders
implementing Section 254(c)—for
purposes of the specific mechanism or
mechanisms for which the relevant
carrier is designated an ETC.
207. Further, interpreting the relevant
scope of state jurisdiction under Section
214(e)(6) against the backdrop of the
above interpretation and
implementation of Sections 254(c)(1)
and 214(e)(1), the relevant state
jurisdiction would be jurisdiction
specific to that scope of services defined
as universal service for purposes of the
specific mechanism or mechanisms for
which the carrier is seeking designation
as an ETC. Insofar as there is a specific
mechanism or program within the
overall universal service fund that, for
instance, only has broadband Internet
access as the supported service, a carrier
that has obtained designation as an ETC
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33055
just in that narrow context would bear
service obligations that mirror that
program’s supported services, absent
any other forbearance, waiver, or
clarification by the Commission.
Alternatively, carriers would remain
free to seek broader ETC designations
that would involve designation by the
state commission.
208. We interpret Section 214(e)(1)’s
service obligation, which applies to ‘‘the
services that are supported by Federal
universal service support mechanisms
under Section 254(c),’’ to be limited to
the services that are supported by the
relevant Federal universal service
support mechanisms under Section
254(c). Such an interpretation makes
sense against the backdrop of the
Commission’s 2014 interpretation of
Section 254(c)(1) in the E-rate
Modernization Order. Insofar as the
defined universal service(s) can differ
among different elements of the overall
universal service program, it makes
logical sense for ETC designations and
the associated service obligations to be
able to be tailored to match—i.e., to be
able to designate carriers as ETCs for
purposes of specific elements of the
overall universal service fund and for
their service obligations to match the
supported services as defined for that
purpose.
209. Section 214(e)(1)(A)’s reference
to ‘‘mechanisms,’’ rather than a
‘‘mechanism,’’ does not prevent this
interpretation because we interpret
Section 214(e)(1)(A) to be drafted
broadly enough to encompass the
obligations of an ETC participating in
multiple universal service mechanisms
without demanding that the ETC
provide services that are supported by
universal service mechanisms in which
that ETC does not participate. To
interpret Section 214(e)(1)(A) otherwise
would point to the conclusion that
whenever the Commission exercised its
authority to designate additional
services for support in programs for
schools, libraries, and health care
providers, Section 214(e)(1)(A) would
require ETCs participating in the
Lifeline or High-Cost programs to also
offer those additional services as
services ‘‘supported by Federal
universal service support mechanisms
under 254(c).’’ Section 254(c)(3)’s
specific reference to particular
mechanisms within the overall
universal service fund counsel against
such a conclusion, and so we interpret
Section 214(e)(1)(A) inclusion of
‘‘mechanisms’’ to simply mean that, to
the extent that an ETC participates in
multiple universal service mechanisms,
its service obligations include the
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services supported by all of the relevant
mechanisms.
210. Section 254(e) bolsters this
interpretation by both requiring that, in
general, recipients of federal universal
service support must be ETCs
designated under Section 214(e) and
simultaneously limiting ETCs to using
the support they receive ‘‘only for the
provision, maintenance, and upgrading
of facilities and services for which the
support is intended.’’ At a high level,
then, Section 254(e) supports the view
that ETC designations (which generally
are required for support)—and the
associated service obligations under
Section 214(e)(1)—should be tailored to
the particular services ‘‘for which the
support is intended.’’
211. We find further support for this
interpretation in Section 214(e)(3). That
provision expressly recognizes the
possibility of carriers being designated
ETCs with respect to either interstate or
intrastate services, rather than more
generally. In addition to supporting the
general concept that ETC designations
need not encompass all possible
supported services, it also lends support
to the view that Section 214(e)(1)
service obligations can be specific to
particular services. Section 214(e)(1)
applies, by its terms, to ETCs designated
under Section 214(e)(3), as well as those
designated under (e)(2) or (e)(6).
Interpreting Section 214(e)(1) only to
impose service obligations associated
with the particular mechanism or
mechanisms for which a carrier is
designated an ETC seems most
consistent with the dual FCC and state
roles established under Section
214(e)(3). Where both interstate and
intrastate services are supported
services, the FCC identifies the carrier
best positioned to provide the interstate
services and the relevant state
commission identifies the carrier best
positioned to provide the intrastate
services. It is consistent with this
framework for the carrier designated for
interstate services by the FCC only to be
obligated to provide those services
under Section 214(e)(1). By the same
token, it is consistent with this
framework for the carrier designated for
intrastate services by the state
commission only to be obligated to
provide those services under Section
214(e)(1). A contrary reading of Section
214(e)(1) would mean that the carrier
designated an ETC by the FCC for
interstate services also would have to
provide the intrastate services even
where the state commission identified a
different carrier as best positioned to
provide those services (and vice versa).
Section 214(e)(3) appears designed to
ensure that there is one ETC providing
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each supported service in areas that
otherwise would have none, however.
But if any single ETC designated under
Section 214(e)(3) would have to provide
all the supported services—both
interstate and intrastate—the
requirement for separate designations by
the FCC (for interstate services) and the
state commission (for intrastate services)
would make little sense, since either
one of those carriers individually would
have to provide all the supported
services.
212. Finally, as an implementation
matter, we find that this interpretation
counsels in favor of creating a separate
element of the overall universal service
fund to support BIAS for eligible lowincome households in the Lifeline
program. As a separate subset of the
Lifeline mechanism in the overall
universal service fund, supporting BIAS
for low-income consumers, this separate
element of the Lifeline program will
help the Commission designate carriers
seeking to become ETCs only in the
specific context of Lifeline-supported
BIAS. (This could be seen as roughly
analogous to the current Rural Health
Care mechanism, which includes a
separate Telecommunications Program
and Healthcare Connect Fund program).
213. Preempting state designations for
Lifeline Broadband Provider ETCs. We
next find that state designations for
LBPs thwart federal universal service
goals and broadband competition, and
accordingly we preempt such
designations.(In accordance with this
preemption, we also amend Section
54.201 of the Commission’s rules to
clarify that a state commission shall not
designate a common carrier as a Lifeline
Broadband Provider. See 47 CFR
54.201(j)). In the absence of state
jurisdiction to designate providers as
LBPs providing BIAS through the
Lifeline program, the Commission has
authority to designate such ETCs under
Section 214(e)(6).
214. A robust and successful Lifeline
broadband program will serve the
purposes of Section 254(b) by enabling
the Commission to utilize universal
service funds to give eligible lowincome households affordable access to
advanced telecommunications services.
The success of that modernized
program, however, depends on
participation from providers to give
eligible low-income households a
choice between quality services. Many
providers that may be interested in
competing for Lifeline broadband funds
are not currently designated as ETCs,
and in particular larger providers with
infrastructure and market offerings that
span multiple states must be afforded a
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reasonable, clear pathway into the
Lifeline broadband program.
215. Preempting the states from
designating Lifeline Broadband
Providers and permitting carriers to seek
designation from the Commission for
multiple states at once would serve the
universal service principles of Section
254(b) by increasing low-income
consumers’ access to advanced
telecommunications and information
services at affordable rates. (In TOPUC
v. FCC, the Fifth Circuit found that
Section 254 was not such an
unambiguous grant of FCC authority
over intrastate matters to overcome the
restriction on Commission authority in
Section 2(b) of the Act. See also 47
U.S.C. 152(b) (expect as provided in
specified provisions, ‘‘nothing in this
chapter shall be construed to apply or
to give the Commission jurisdiction
with respect to (1) charges,
classifications, practices, services,
facilities, or regulations for or in
connection with intrastate
communication service by wire or radio
of any carrier, . . .’’). However, since
here the preempted state actions have
detrimental effects on the FCC’s
implementation of Section 254 as it
relates to interstate services, we find
this situation is distinguishable from the
facts the court faced in TOPUC.
Similarly, although Section 601(c)(1) of
the 1996 Act provides that ‘‘[t]his Act
and the amendments made by this Act
shall not be construed to modify,
impair, or supersede Federal, State, or
local law unless expressly so provided
in such Act or amendments,’’ Pub. L.
104–104, 601(c)(1), 110 Stat. 56 (1996),
that does not alter the normal
application of conflict preemption.).
With respect to carriers seeking ETC
designation in order to participate in a
reformed Lifeline program as LBPs, we
find that participation by such ETCs
will advance the objectives of Section
254, but potential Lifeline providers
would be deterred by a requirement to
undergo ETC designation proceedings
before dozens of state commissions and
the Commission in order to launch a
nationwide Lifeline broadband offering.
As commenters have explained, a
provider currently seeking ETC
designation from multiple state
commissions will likely face
designation procedures and time frames
that vary widely, lasting anywhere from
a few months to several years. The state
designation process may involve simply
responding to staff’s information
requests or may include formal
evidentiary hearings. Additionally, even
if the state and federal ETC designation
processes were entirely uniform, we are
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persuaded that even just the burden of
seeking designation from multiple states
and the Commission is sufficient to
discourage broadband service providers
from entering the Lifeline program to
introduce nationwide or similarly largescale broadband offerings, because such
a requirement means that a provider
that has calculated that it needs to
achieve a nationwide scale to justify
introducing a Lifeline offering will be
faced with potentially years of
uncertainty while it pursues the
necessary designations. We therefore
find that state designation of LBPs
conflicts with our implementation of the
universal service goals of Section 254(b)
in the Lifeline broadband rules adopted
in this Order. (Under the Supremacy
Clause, U.S. Const. art. VI, cl. 2, federal
law preempts any conflicting state laws
or regulatory actions that would
prohibit a private party from complying
with federal law or that ‘‘stand[] as an
obstacle to the accomplishment and
execution’’ of federal objectives.
Freightliner Corp. v. Myrick, 514 U.S.
280, 287 (1995) (internal quotation
marks omitted); Hillsborough County,
Fla. v. Automated Med. Labs., Inc., 471
U.S. 707, 713 (1985) (noting that ‘‘state
laws can be pre-empted by federal
regulations’’). Because state ETC
designations specifically for LBPs
would conflict with our rules
implementing Section 254, such
authority also is not preserved by
Section 254(f). See 47 U.S.C. 254(f)).
216. We find that the Commission
should not similarly preempt state ETC
designations for providers seeking
Lifeline-only ETC designations to
provide voice service, nor for providers
seeking broader ETC designations that
are not Lifeline-only and include highcost funding. Today, multiple providers
already serve the Lifeline voice market,
and the states’ traditional role in
designating voice ETCs argues in favor
of preserving the existing de-centralized
structure for designating ETCs other
than LBPs. We also note that Section
706 of the Telecommunications Act
directs us to focus our efforts on
removing barriers to investment in
‘‘advanced telecommunications
services.’’ We therefore focus our
streamlining efforts on broadband
services within the Lifeline program.
217. Additionally, the Commission
has previously found that Section 706 of
the 1996 Act authorizes preemption,
and that conclusion is applicable to our
current efforts to modernize the Lifeline
program to support BIAS. ‘‘In light of
Congress’s delegation of authority to the
Commission to ‘encourage’ and
‘accelerate’ the deployment of
broadband to all Americans, we
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interpret Sections 706(a) and (b) to give
us authority to preempt state laws that
stand as barriers to broadband
infrastructure investment or as barriers
to competition.’’ Section 706(a) grants
the Commission authority to ‘‘encourage
the deployment on a reasonable and
timely basis of advanced
telecommunications capability to all
Americans.’’ Indeed, Section 706(a)
specifically states that the Commission
‘‘shall’’ encourage such deployment,
using a variety of tools including
‘‘measures that promote competition in
the local telecommunications market’’
and ‘‘other regulating methods that
remove barriers to infrastructure
investment.’’ We find that our
preemption authority falls within these
categories listed by Section 706(a), and
the Commission therefore has authority
to preempt state laws that conflict with
Section 706(a) by preventing market
entry and competition in the Lifeline
program.
218. Additionally, the Commission’s
2016 Broadband Progress Report found
that ‘‘advanced telecommunications
capability is not being deployed to all
Americans in a reasonable and timely
fashion.’’ Accordingly, under Section
706(b), we are mandated by Congress to
‘‘take immediate action to accelerate
deployment of such capability by
removing barriers to infrastructure
investment and by promoting
competition in the telecommunications
market.’’ Here, we find that requiring
prospective Lifeline Broadband
Providers to seek separate designations
before many states and the Commission
constitutes a barrier to investment and
competition in the Lifeline market. The
greater carrier participation in Lifeline
that would be fostered by preemption of
state conditions unrelated to
compliance with the Lifeline rules on
relevant ETC designations would
encourage the deployment of advanced
telecommunications capability, such as
BIAS. We also find that preempting
these state conditions on ETC
designations would ‘‘promot[e]
competition in the telecommunications
market’’ insofar as such state conditions
otherwise would deter participation in
the marketplace for Lifeline-supported
broadband Internet access service.
219. More broadly, as the Commission
has previously found, broadband
Internet access service is jurisdictionally
interstate for regulatory purposes.
Although Section 214(e)(2) authorizes
states to perform ETC designations and,
under the TOPUC decision, does not
itself preclude state conditions on such
designations, there are indications in
the Fifth Circuit’s decision that it
anticipated that those conditions would
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33057
involve intrastate services subject to
states’ historical state law authority.
Further, although the Commission has
recognized state jurisdiction to collect
data regarding BIAS, that is materially
different from the imposition of
substantive obligations on broadband
Internet access service.
220. In addition to declaring that
states are preempted from exercising
authority to designate Lifeline
Broadband Providers, we adopt a
legislative rule consistent with that
outcome. As described above, the ETC
designation process is an important tool
to protect consumers and prevent waste,
fraud, and abuse in the Lifeline
program, but should not become a
barrier that discourages legitimate
carrier participation and inhibits
universal access to advanced
communications services. Accordingly,
for the reasons discussed above, the
Commission revises Section 54.201 of
its rules to prohibit state commissions
from designating Lifeline Broadband
Providers.
221. Some commenters have argued
that the Commission should not
preempt or limit states’ roles in ETC
designations. To that end, we note that
in this Order we do not preempt states’
authority to designate ETCs for Lifeline
voice service, nor to grant broader ETC
designations that are not Lifeline-only
and include support from the USF HighCost Program. (We also note that, to the
extent that state commissions have
declined to designate carriers as ETCs
over concerns about those carriers’ 911
services, this Order does not prevent
states from inquiring into such issues
for carriers offering voice service
seeking a non-Lifeline Broadband
Provider ETC designation). For those
areas in which states have traditionally
held a role and which more often
involve jurisdictionally intrastate
services, our preemption here does not
change states’ responsibility to
designate ETCs. (States will therefore
continue to be in a position to evaluate
issues like a non-LBP ETC’s ability to
meet ETC service and facilities
requirements. We find that the
Commission is capable of determining
whether common carriers seeking
designation as an LBP will be able to
fulfill those requirements, as detailed
below. We recognize that Section 254(i)
contemplates that ‘‘the Commission and
the States should ensure that universal
service is available at rates that are just,
reasonable, and affordable.’’ 47 U.S.C.
254(i). We do not here preempt any
otherwise permissible efforts, consistent
with state law, to provide state support).
Additionally, although some
commenters argue that Section 214(e)
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implicitly preserves any state authority
relevant to ETC designations, the
interrelationship between Section 214(e)
and Section 254—i.e., the purpose of a
Section 214(e) ETC designation is to
implement universal service support
mechanisms under Section 254—
supports our present preemption of state
designations of LBPs as conflicting with
the goals of Section 254.
222. Some commenters suggest the
FCC is ill-equipped to assume the
responsibility of designating broadband
providers for the Lifeline program. In
response, we expect our reforms to the
federal ETC designation process for
Lifeline Broadband Providers to prevent
petitions from pending longer than is
necessary to ensure the continued
integrity of the program and protection
of consumers. Other commenters argued
that the current ETC designation process
is not generally lengthy or onerous, and
is an important tool in combatting
waste, fraud, and abuse in the Lifeline
program. We find, however, that a
centralized LBP designation process can
further streamline the burdens of
seeking designation while continuing to
prevent waste, fraud, and abuse in the
program. Similar to the state measures
to prevent fraud that NARUC discusses,
Commission rules require annual
reporting, annual certifications, and
audits for Lifeline providers, the
Commission may deny an ETC
designation petition if the provider does
not meet the relevant requirements, and
the Commission’s Enforcement Bureau
is equipped to investigate and take
action against providers that violate the
Lifeline program’s rules. Some
commenters cautioned the Commission
to limit the extent to which it
streamlines or centralizes the
designation process, because of the
unique characteristics of the Lifeline
market. We note that our preemption
and forbearance actions in this Order
are tailored to ensure a more
competitive, effective program without
sacrificing the integrity of the program
or the Commission’s authority to act in
cases of waste, fraud, or abuse.
(ii) Carriers Providing Telephone
Exchange Service and Exchange Access
223. Having established our authority
to designate where state commissions
lack jurisdiction under Section
214(e)(6), we next turn to the question
of what types of carriers are eligible for
designation by the Commission under
214(e)(6).
224. Guidance regarding Section
214(e)(6). Under Section 214(e)(6) of the
Act, in order to seek designation as an
ETC by the Commission, a provider
must be ‘‘a common carrier providing
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telephone exchange service and
exchange access that is not subject to
the jurisdiction of a State commission.’’
We explain above why carriers seeking
ETC designation specifically as LBPs are
‘‘not subject to the jurisdiction of a State
commission’’ within the meaning of that
Section. We further clarify that a carrier
need only provide some service or
services—not necessarily the supported
service—that qualify as telephone
exchange service and exchange access
in order to seek a designation from the
Commission under Section 214(e)(6).
(We note that the Commission recently
declined to address whether broadband
Internet access service could constitute
telephone exchange service and/or
exchange access, nor do we address that
issue here).
225. The text of Section 214(e)(6) does
not require that the relevant supported
service or services for which the carrier
is being designated an ETC must
constitute telephone exchange service
and exchange access. Nor is there any
requirement in Section 254(c)(1) that
services must be telephone exchange
service or exchange access—let alone
both—in order to be included in the
definition of universal service. Insofar
as supported services need not be
telephone exchange service and/or
exchange access, we decline to interpret
Section 214(e)(6) to impose such a
requirement on carriers seeking
Commission designation under that
Section where the text does not itself
require it. (Interpreting Section 214(e)(6)
to mean that the telephone exchange
service and exchange access
requirement be met by the supported
service would lead to anomalous
results. As an illustrative example, if the
Commission were to establish a
universal service program with
telephone toll service as the supported
service under Section 254(c), it would
be impossible for a provider seeking
designation as an ETC to provide
telephone exchange service and
exchange access as the supported
service if that were needed to meet the
criteria of Section 214(e)(6). See 47
U.S.C. 153(20) (defining ‘‘exchange
access’’ and making clear that
‘‘telephone exchange service,’’
‘‘exchange access,’’ and ‘‘telephone toll
service’’ are distinct categories). If such
a carrier also were not subject to the
designation authority of a state
commission, it would be left with no
entity—state commission or this
Commission—that could designate it as
an ETC, which is at odds with the intent
of Section 214(e)(6)). Thus, a carrier
providing any service or services that
constitute telephone exchange service
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and exchange access in the area for
which it is seeking designation as an
ETC may seek designation from the
Commission where, as here, such
carriers are not subject to state ETC
designation jurisdiction within the
meaning of Section 214(e)(6).
226. We make clear that in
considering whether a carrier is
providing telephone exchange service
and exchange access for purposes of
Section 214(e)(6), we look beyond the
corporate entity that itself is seeking
designation as a Lifeline Broadband
ETC, and also consider affiliates of that
entity. This approach is consistent with
the Commission’s interpretation of
Section 214(e)(1), under which the
‘‘requirement that an ETC offer the
supported services through ‘its own
facilities or a combination of its own
facilities and resale of another carrier’s
service’ would be satisfied when service
is provided by any affiliate within the
holding company structure.’’ If the
duties of an ETC can be satisfied
through an affiliate, we find no reason
why the Commission, to find Section
214(e)(6) triggered, should have to adopt
a stricter interpretation of what entity
must provide telephone exchange
service and exchange access. This is
particularly true because, as explained
below, the telephone exchange service
and exchange access criteria in Section
214(e)(6) does not bear directly on the
carrier’s qualifications or
responsibilities as an ETC in providing
supported services. Further, Section
214(e) was codified as part of Section
214, and prior to the 1996 Act, certain
references to ‘‘carriers’’ in Section 214
were interpreted to extend beyond just
the relevant corporate entity itself.
(Thus, although the 1996 Act codified a
definition of ‘‘affiliate’’ in Section 3 of
the Act distinct from the definition of
‘‘common carrier’’ there, that does not,
by implication, undercut our
interpretation of Section 214 because
the 1996 ‘‘Act and the amendments
made by [the 1996] Act shall not be
construed to modify, impair, or
supersede Federal . . . law unless
expressly so provided in such Act or
amendments.’’ 1996 Act, 601(c). Indeed,
Commission rules implementing
Section 214(a) make clear that their use
of the term ‘‘carrier’’ includes affiliates
within the meaning of Section 3(1) of
the Act.). This further bolsters our
interpretation of Section 214(e)(6).
Thus, we expect that many carriers
likely already provide some telephone
exchange and exchange access services,
whether through the entity providing
broadband Internet access service or an
affiliate. For example, such services
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have included traditional telephone
service and commercial mobile radio
services (CMRS), which many carriers
already provide today. (We recognize
that we have not generally classified
VoIP as a telecommunications service or
information service, but we nonetheless
have recognized that providers might
elect to offer interconnected VoIP as a
telecommunications service. Insofar as a
carrier elected to offer VoIP on a
common carrier basis, we do not see a
reason based on the record here why
such service would not also be
classified as telephone exchange service
and exchange access to the same extent
as traditional voice telephone service.
We further note that in highlighting the
seemingly more straightforward case
where VoIP is offered as a
telecommunications service, we are not
prejudging the question of whether,
even if not a telecommunications
service, particular VoIP services could
constitute telephone exchange service
and exchange access, which remains
open regarding those scenarios, as well.
227. Furthermore, we interpret the
requirement that a carrier seeking
designation under Section 214(e)(6) be
‘‘providing’’ telephone exchange service
and exchange access in a broad and
flexible manner. The Commission in
other contexts has interpreted the term
‘‘providing’’ as more inclusive than the
offering of the relevant service. Thus,
we conclude that it is sufficient for
purposes of Section 214(e)(6) that a
carrier is making available telephone
exchange service and exchange access,
whether or not it actually has customers
for those services at the time of the ETC
designation.
228. In addition, in contrast to Section
214(e)(1)(A), which requires ETCs to
provide supported services at least in
part over their own facilities, there is no
analogous ‘‘facilities’’ requirement in
Section 214(e)(6) as to any nonsupported services relied on by the
carrier for its provision of telephone
exchange service and exchange access to
trigger that Section. Thus, we interpret
Section 214(e)(6) as enabling a carrier to
satisfy the ‘‘telephone exchange service
and exchange access’’ criteria through
pure resale of services that satisfy those
definitions.
229. The text of Section 214(e)(6) also
does not require the carrier to be
providing telephone exchange service
and exchange access for any particular
period of time before or after the
Commission invokes its Section
214(e)(6) designation authority. So we
further conclude that the relevant
requirement of Section 214(e)(6) can be
met by a service or services introduced
by the carrier in order to meet the
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Section 214(e)(6) criteria. We note as
well that carriers subject to dominant
carrier regulation likely otherwise
already are providing services that
constitute telephone exchange service
and exchange access (and, indeed, likely
already are designated as ETCs in
relevant respects), so any carriers
needing to introduce a new service to
satisfy the telephone exchange service
and exchange access criteria of Section
214(e)(6) are likely to be nondominant.
Thus, they generally are subject to
comparatively fewer, if any, ex ante
constraints on the rates and terms of
their offerings.
230. ‘Telephone exchange service and
exchange access’ forbearance. Even
though we anticipate that many
providers readily will be able to meet
the requirement of ‘‘providing telephone
exchange service and exchange access’’
and can seek Commission ETC
designation as LBPs under Section
214(e)(6), some providers could be
deterred from seeking such
designation—and thereby participating
in the Lifeline broadband program—
because of uncertainty whether they
satisfy that criteria. Although we also
have authority to designate ETCs under
Section 214(e)(3)—which does not
require providers to be providing
telephone exchange service and
exchange access—that authority does
not enable us to designate additional
LBPs in an area where a carrier already
present will provide the supported
Lifeline broadband Internet access
service. Thus, while an important
backstop, that Section 214(e)(3)
designation authority does not
necessarily enable us to have the type of
competitive environment for Lifeline
broadband Internet access service that
we conclude will most effectively
advance our statutory objectives.
231. As a result, pursuant to our
authority under Section 10 of the Act,
we grant certain forbearance from
applying the provision of Section
214(e)(6) requiring carriers to be
providing telephone exchange service
and exchange access. In particular, we
forbear from applying that provision to
carriers seeking designation from the
Commission as an LBP that do not
otherwise provide a service or services
already classified by the Commission as
telephone exchange service and
exchange access. We conclude that
doing so will help maximize the
potential for the widest possible
participation by broadband Internet
access service providers in a manner
targeted to our policy objectives in this
proceeding.
232. In pertinent part, Section 10
directs the Commission to ‘‘forbear from
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33059
applying . . . any provision of [the Act]
to a telecommunications carrier or . . .
class of telecommunications carriers
. . ., in any or some of its or their
geographic markets, if the Commission
determines that’’ three criteria are met.
Namely, such forbearance is authorized
if ‘‘the Commission determines that—(1)
enforcement of such regulation or
provision is not necessary to ensure that
the charges, practices, classifications, or
regulations by, for, or in connection
with that telecommunications carrier or
telecommunications service are just and
reasonable and are not unjustly or
unreasonably discriminatory; (2)
enforcement of such regulation or
provision is not necessary for the
protection of consumers; and (3)
forbearance from applying such
provision or regulation is consistent
with the public interest.’’ The basic
forbearance framework is discussed in
greater detail below.
233. We find that our forbearance
from applying the requirement that
carriers be ‘‘providing telephone
exchange service and exchange access’’
in the Section 214(e)(6) designation
process is a reasonable exercise of our
Section 10 authority for several reasons.
First, although not unambiguous, the
practical impact of that provision in
Section 214(e)(6) persuades us that it
imposes an obligation on carriers—
namely, carriers must provide telephone
exchange service and exchange access
in order to obtain an ETC designation
from the Commission under that
Section. The Commission in the past
has recognized that Congress intended
Section 10 to sweep broadly, (Cf.
Petition For Declaratory Ruling To
Clarify 47 U.S.C. 572 In The Context of
Transactions Between Competitive
Local Exchange Carriers and Cable
Operators; Conditional Petition For
Forbearance From Section 652 of the
Communications Act For Transactions
Between Competitive Local Exchange
Carriers and Cable Operators,
Memorandum Opinion and Order, 27
FCC Rcd 11532, 11543, para. 22 (2012)
(Section 652 Forbearance Order)
(interpreting the use of ‘‘any’’ in
referring to regulations and provisions
of the Act that the Commission can
forbear from applying to
telecommunications carriers or
telecommunications services as
revealing Congress’ broad intent that the
forbearance authority). Although the
focus in that proceeding was on whether
a provision in Title VI could be subject
to forbearance under Section 10, the
reasoning likewise persuades us more
generally to adopt a broad—though not
unlimited—view of the Commission’s
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forbearance under Section 10), and has
looked to the real-world consequences
of a provision to inform its
interpretation and application of
Section 10 to that provision. We do the
same here, and conclude under Section
10 that the Commission has authority to
forbear from applying that provision to
carriers that want an LBP designation
from the Commission but do not
provide a service or services that clearly
meet the ‘‘telephone exchange service
and exchange access’’ requirement and
thus can designate those carriers as
LBPs if the remaining Section 214(e)(6)
criteria are met. (We explained above
why a carrier seeking designation
specifically as an LBP is not subject to
the jurisdiction of a state commission
for purposes of Section 214(e)(6), and
beyond the requirement of providing
‘‘telephone exchange service and
exchange access’’ from which we
forbear here, the carrier still must
‘‘meet[] the requirements of’’ Section
214(e)(1) and be designated as an ETC
‘‘for a service area designated by the
Commission consistent with applicable
Federal and State law,’’ so long as the
designation is in the public interest).
234. Second, we conclude that this
grant of forbearance readily satisfies the
Section 10(a)(1)–(3) criteria. In
particular, we find that applying that
provision is not necessary to ensure just,
reasonable, and not unjustly or
unreasonably discriminatory rates and
practices under Section 10(a)(1) nor to
protect consumers under Section
10(a)(2). The text of Section 214(e)(6)
does not illuminate the purpose served
by the requirement that carriers seeking
ETC designations from the Commission
under Section 214(e)(6) be providing
telephone exchange service and
exchange access. As explained above,
because supported services need not be
telephone exchange service or exchange
access service (let alone both), there is
no inherent nexus between a carrier’s
provision of telephone exchange service
and exchange access and its ability to
satisfy the requirements for ETC
designation under Section 214(e)(1). Nor
is there any inherent nexus between a
carrier’s provision of those services and
the public interest analysis under
Section 214(e)(6). Thus, nothing in the
text of Section 214(e)(6) demonstrates
that the ‘‘providing telephone exchange
service and exchange access’’ provision
is intended to, or is likely to, have any
practical effect on carriers’ rates and
practices for purposes of Section
10(a)(1) or on the protection of
consumers under Section 10(a)(2).
235. Nor do we find in the context
specifically at issue here that our
application of the ‘‘providing telephone
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exchange service and exchange access’’
provision is necessary under the Section
10(a)(1) and (a)(2) criteria. To the
contrary, we conclude that forbearance
from applying that provision better
advances the objective of just and
reasonable rates and practices and
protection of consumers, by promoting
competition among Lifeline broadband
Internet access service providers. If we
continued to apply that provision in
full, given the concerns expressed about
the deterrent effect of the historical ETC
designation process in other respects,
we expect that carriers otherwise
willing to participate in the Lifeline
broadband program will be deterred at
least incrementally from seeking an LBP
designation from the Commission under
Section 214(e)(6) if they do not
otherwise provide a service or services
already clearly classified by the
Commission as telephone exchange
service and exchange access. (Section 10
permits the Commission to evaluate
forbearance assuming arguendo that it
applies). Providers might be less willing
to undertake the effort of seeking an LBP
designation in the face of uncertainty
regarding whether they meet the
threshold obligation of providing
telephone exchange service and
exchange access.
236. Granting forbearance from the
specified provision of Section 214(e)(6)
for carriers seeking designation as an
LBP that do not otherwise provide a
service or services already classified by
the Commission as telephone exchange
service and exchange access eliminates
uncertainty that otherwise risk deterring
those providers’ participation. This is
likely to promote competition for
Lifeline broadband Internet access
services, and the Commission
previously has found that competition
helps ensure just and reasonable rates.
Moreover, we anticipate that the
availability of competing LBPs will
better protect consumers receiving the
benefits of that increased competition.
We further observe that our evaluation
of what is necessary to ensure just and
reasonable and not unjustly or
unreasonably discriminatory rates under
Section 10(a)(1) and what is necessary
to protect consumers under Section
10(a)(2) is guided by the Commission’s
responsibilities under Section 254 of the
Act and Section 706 of the 1996 Act. As
we explain elsewhere, we are
modernizing our Lifeline efforts to
support broadband Internet access
service given its importance to
consumers, and ensuring the widest
possible participation in the Lifeline
broadband program is an important
element of those reforms.
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237. These same considerations
likewise persuade us that forbearance is
in the public interest under Section
10(a)(3). Indeed, Section 10(b) directs
the Commission, as part of the Section
10(a)(3) analysis, to consider whether
forbearance will promote competitive
market conditions and, if ‘‘forbearance
will promote competition among
providers of telecommunications
services, that determination may be the
basis for a Commission finding that
forbearance is in the public interest.’’ As
explained above, we anticipate that the
specified forbearance from applying the
‘‘providing telephone exchange service
and exchange access’’ provision in
Section 214(e)(6) will promote
competition among providers of Lifeline
broadband Internet access services.
Based on that, coupled with the forgoing
analysis, we conclude that forbearance
is in the public interest under Section
10(a)(3).
c. Lifeline Broadband Provider ETC
Designation Process
238. We next turn from the
Commission’s authority to designate
Lifeline Broadband Provider ETCs and
take steps to modernize the process by
which carriers can obtain such
designation. We take additional steps to
decrease the burdens of obtaining and
maintaining Lifeline Broadband
Provider ETC status, while still
protecting consumers. We therefore take
action to streamline the process by
which we will designate Lifeline
Broadband Providers to encourage
broader participation in the program.
(i) Streamlined Lifeline Broadband
Provider Designation Process
239. In this Section, we create a
streamlined ETC designation process for
carriers seeking designation as Lifeline
Broadband Providers, solely for the
purpose of receiving Lifeline support for
broadband service. We expect that this
streamlined process will facilitate
market entry and allow new
competition to enter the Lifeline market
while continuing to protect consumers
and the Fund. (Contrary to some
commenters’ claims, we expect that
increasing provider participation will
increase competition among providers
in the Lifeline program and incentivize
providers to offer better quality
services).
240. A broadband provider’s petition
for ETC designation as a Lifeline
Broadband Provider for the limited
purpose of receiving Lifeline support for
BIAS will be subject to expedited
review and will be deemed granted
within 60 days of the submission of a
completed filing provided that the
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provider meets certain criteria
demonstrating that it is financially
stable and experienced in providing
broadband services, unless the
Commission notifies the applicant that
the grant will not be automatically
effective. First, as of the date of the
filing, the carrier must serve at least
1,000 non-Lifeline customers with voice
telephone and/or BIAS service. Second,
the carrier must have offered broadband
services to the public for at least the 2
years preceding the filing, without
interruption. For purposes of this rule,
emergency service outages do not
constitute an ‘‘interruption’’ because the
purpose of this rule is to gauge whether
a provider has maintained a substantial
presence in the broadband services
market. Service quality concerns, if any,
will be duly considered by the
Commission in evaluating the provider’s
petition but do not determine whether
the provider qualifies the abovedescribed streamlined treatment. We
delegate to the Bureau the responsibility
for implementing this process and the
authority to clarify how carriers may
establish that they meet the criteria set
out in this framework.
241. Additionally, as part of our
efforts to encourage broadband service
on Tribal lands, we will apply the
above-described expedited review
process to petitions for designation as a
Lifeline Broadband Provider submitted
by Tribally-owned and -controlled
facilities-based providers that provide
service on Tribal lands, regardless of
whether they meet the above-discussed
prior service or existing customer
criteria. To qualify as a Tribally-owned
and -controlled, facilities-based
provider, the provider must be greater
than 50 percent owned and actually
controlled by one or more federallyrecognized Tribal Nation(s) or Tribal
consortia.
242. Once a provider has obtained
designation as an LBP, that provider
may expand their LBP service area
designation by submitting a letter to the
Commission identifying the service
areas in which the LBP plans to offer
Lifeline-supported service and a
certification that there has been no
material change to the information
submitted in the petition for which the
LBP received designation as an LBP.
Such a request shall be deemed granted
five business days after it is submitted
to the Commission, unless the Bureau
notifies the applicant that the grant will
not be automatically effective. We
therefore amend Section 54.202 of the
Commission’s rules to reflect these
changes. We expect that this process
will empower LBPs to rapidly expand
Lifeline-supported broadband service
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offerings to new areas, while retaining
the Commission’s ability to protect
consumers and the Fund.
243. We want to facilitate a robust
competitive marketplace for Lifeline
customers and therefore encourage
providers, including nontraditional
providers, that do not meet the
streamlined criteria to submit a request
to be an LBP. All such petitions will be
reviewed thoroughly and not
automatically deemed granted after a set
time, but the Bureau shall act on such
petitions within six months of the
submission of a completed filing.
Accordingly, we update Section 54.202
of the Commission’s rules to reflect
these targeted changes to the
Commission’s designation process for
the purpose of designating Lifeline
Broadband Provider ETCs. (Providers
seeking designation as an LBP that are
not facilities-based are not required to
obtain Commission approval of a
compliance plan prior to receiving
designation as an LBP. We find that the
designation process for LBPs is distinct
from the process set out for Lifelineonly ETCs in the 2012 Lifeline Reform
Order, and LBP designation criteria are
sufficient to prevent waste, fraud, and
abuse in the program, so a separate
obligation to obtain approval for a
compliance plan is not necessary). Our
revisions to Section 54.202 of the
Commission’s rules, as discussed in this
Section, will become effective upon
announcement of OMB approval under
the PRA, at which point providers may
begin submitting petitions for ETC
designation as a Lifeline Broadband
Provider.
244. A provider seeking designation
as an LBP should submit the following
information in its filing. First, the
provider must certify that it will comply
with the service requirements
applicable to the support that it
receives, including any applicable
minimum service standards. Second,
the provider must demonstrate its
ability to remain functional in
emergency situations, including a
demonstration that it has a reasonable
amount of back-up power to ensure
functionality without an external power
source, is able to reroute traffic around
damaged facilities, and is capable of
managing traffic spikes resulting from
emergency situations. Third, the
provider must demonstrate that it will
satisfy applicable consumer protection
and service quality standards. (A
commitment by wireless applicants to
comply with the Cellular
Telecommunications and Internet
Association’s Consumer Code for
Wireless Service will satisfy this
requirement). Fourth, the carrier must
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33061
demonstrate that it is financially and
technically capable of providing the
Lifeline service, which could be
satisfied in a number of ways, including
showing compliance with subpart E of
part 54 of the Commission’s rules.
245. Section 54.202(a) of the
Commission’s rules currently requires
common carriers seeking designation as
an ETC solely for the purpose of
receiving Lifeline support to ‘‘submit
information describing the terms and
conditions of any voice telephony
service plans offered to Lifeline
subscribers.’’ We now revise this rule to
also require such ETCs, including LBPs,
to submit information describing the
terms and conditions of any broadband
Internet access service plans offered to
Lifeline subscribers at the time of
designation. Such information should
include details regarding the speeds
offered, data usage allotments,
additional charges for particular uses, if
any, and rates for each such plan. While
this information should be filed at the
time of LBP designation, providers need
not refile or notify the Commission of
changes to their plans so long as they
certify compliance with the applicable
minimum standards. Providing this
snapshot of Lifeline offerings will allow
the Commission to better understand
and evaluate whether prospective ETCs,
including prospective LBPs, are seeking
to launch service offerings that comply
with the Lifeline program’s rules.
246. We find that this process for
prospective LBPs protects the integrity
of the Lifeline program and guards
against waste, fraud, and abuse, while
facilitating market entry and
encouraging competition. All LBPs,
regardless of whether they qualify for
streamlined treatment, must meet the
requirements for designation as a
Lifeline-only ETC established in Section
214(e) of the Act and §§ 54.201 and
54.202 of the Commission’s rules. (We
note that the requirement to submit a
five-year plan describing proposed
improvements or upgrades to the
provider’s network does not apply to
providers seeking designation solely for
the purpose of receiving support
through the Lifeline program, including
LBPs). The Commission will examine
all petitions for designation as an LBP
to ensure that petitioning carriers meet
the requirements in the Act and the
Commission’s implementing rules. The
Commission will use its authority to
deny petitions, remove petitions from
streamlined treatment, or both, if the
circumstances so require. Additionally,
LBPs must comply with the Lifeline
program rules and will be subject to
auditing and enforcement in accordance
with the Commission’s rules.
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247. We are also mindful of the many
existing Lifeline providers designated
by states and the FCC that intend to
offer standalone broadband to Lifeline
consumers. We note that, as set out
below, Lifeline-only ETCs may receive
Lifeline support for BIAS provided to
eligible low-income consumers but
existing ETCs also retain the option to
avail themselves of forbearance from the
obligation to offer broadband. Lifelineonly ETCs will thus be able to receive
support for BIAS through Lifeline
without re-submitting a petition for ETC
designation as a Lifeline Broadband
Provider.
d. Preserving a State Role in Lifeline
248. Nothing in this Order preempts
states’ ability to develop and manage
their own state Lifeline programs. Nor
does the creation of the LBP designation
disturb states’ current processes for
designating non-LBP ETCs, where they
retain jurisdiction. In these ways, states
will continue to play an important role
in the administration of state Lifeline
programs and traditional non-LBP ETC
designations, where state law grants
them authority to do so.
249. We recognize that a number of
states have put in place state Lifeline
programs that provide state-funded
subsidies to low-income consumers for
communications services. We applaud
these state programs for devoting
resources designed to help close the
affordability gap for communications
services. Nothing in this Order preempts
states’ ability to create or administer
such state-based Lifeline programs that
include state funding for Lifeline
support to support voice service, BIAS,
or both. States that do maintain state
Lifeline programs may therefore enact
their own rules for the administration of
those programs. For example, a state
may deem consumers eligible to
participate in that state’s Lifeline
program based on the consumer’s
participation in another state-based
program, even if that eligibility program
does not make the consumer eligible for
federal Lifeline support.
250. Additionally, we make clear that
states retain the ability to designate
Lifeline-only ETCs and ETCs that are
not Lifeline-only, to the extent that state
law grants them authority to do so. For
the reasons discussed above, our
preemption in this Order with regard to
LBPs does not impact states’ authority
to designate other categories of ETCs,
even if those ETCs receive designations
from states that are broad enough to
encompass Lifeline support for BIAS.
As a result, to the extent a provider
wants to receive state Lifeline funds in
addition to federal Lifeline support, the
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provider must seek approval and (to the
extent required by a state for receipt of
state funding) ETC designation from the
relevant state commission and comply
with any applicable state laws. To the
extent a provider only seeks the federal
LBP, however, providers are not
required to seek approval or designation
from the states.
251. We anticipate that preserving the
roles that states have traditionally
played in Lifeline will benefit lowincome consumers by enabling states to
offer their own support for services
provided to low-income households and
encouraging competition from non-LBP
ETCs that have traditionally been
designated by states.
2. Lifeline Obligations for Eligible
Telecommunications Carriers
252. In this Section, we turn to the
issue of what ETC service obligations
are appropriate and best suited for a
successful modernized Lifeline
program. We consider the substantive
obligations placed on ETCs through the
Act and the Commission’s rules, and
streamline certain of those obligations
through targeted forbearance and other
regulatory tools to encourage broader
participation and more robust
competition among providers in the
Lifeline market. We find that such
actions will further modernize the
Lifeline program to encourage market
entry by providers offering BIAS while
still protecting consumers and ensuring
the services Lifeline subscribers receive
are of high quality.
253. In the 2015 Lifeline FNPRM, we
sought comment on ways to increase
competition and encourage market entry
in the Lifeline program. Within that
inquiry, we sought comment on whether
certain requirements related to ETC
designation were ‘‘overly burdensome’’
and could be simplified or eliminated
while protecting consumers and the
Fund. We also inquired about
permitting ETCs to opt-out of providing
Lifeline supported service in certain
circumstances, and we sought comment
on the many other requirements new
Lifeline providers must meet to
participate in the program. We asked
whether there are specific state or
federal regulatory barriers that make it
difficult for carriers to enter or remain
in the Lifeline program, and how the
Commission can address them.
a. Forbearance Standard
254. Section 10 of the Act provides
that the Commission ‘‘shall’’ forbear
from applying any regulation or
provision of the Communications Act to
telecommunications carriers or
telecommunications services if the
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Commission determines that: (1)
Enforcement of such regulation or
provision is not necessary to ensure that
the charges, practices, classifications, or
regulations by, for, or in connection
with that telecommunications carrier or
telecommunications service are just and
reasonable and are not unjustly or
unreasonably discriminatory; (2)
enforcement of such regulation or
provision is not necessary for the
protection of consumers; and (3)
forbearance from applying such
provision or regulation is consistent
with the public interest.
255. In evaluating whether a rule is
‘‘necessary’’ under the first two prongs
of the three-part Section 10 forbearance
test, the Commission considers whether
a current need exists for a rule. In
particular, the current need analysis
assists in interpreting the word
‘‘necessary’’ in Sections 10(a)(1) and
10(a)(2). For those portions of our
forbearance analysis that require us to
assess whether a rule is necessary, the
D.C. Circuit concluded that ‘‘it is
reasonable to construe ‘necessary’ as
referring to the existence of a strong
connection between what the agency
has done by way of regulation and what
the agency permissibly sought to
achieve with the disputed regulation.’’
Section 10(a)(3) requires the
Commission to consider whether
forbearance is consistent with the public
interest, an inquiry that also may
include other considerations.
Forbearance is warranted under Section
10(a) only if all three of the forbearance
criteria are satisfied. The Commission
has found that nothing in the language
of Section 10 precludes the Commission
from proceeding on a basis other than
the competitiveness of a market where
warranted.
256. Also relevant to our analysis,
Section 706 of the 1996 Act ‘‘explicitly
directs the FCC to ‘utiliz[e]’ forbearance
to ‘encourage the deployment on a
reasonable and timely basis of advanced
telecommunications capability to all
Americans.’ ’’ In its most recent
Broadband Progress Report, the
Commission found ‘‘that advanced
telecommunications capability is not
being deployed to all Americans in a
reasonable and timely fashion.’’ This
finding, in turn, triggers a duty under
Section 706 for the Commission to ‘‘take
immediate action to accelerate
deployment of such capability by
removing barriers to infrastructure
investment and by promoting
competition in the telecommunications
market.’’ Within the statutory
framework that Congress established,
the Commission ‘‘possesses significant,
albeit not unfettered, authority and
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discretion to settle on the best
regulatory or deregulatory approach to
broadband.’’
257. Section 10(b) directs the
Commission to consider whether
forbearance will promote competitive
market conditions as part of its public
interest analysis under Section 10(a)(3).
However, we recognize that Section 10
does not compel us to treat a
competitive analysis as determinative
when we reasonably find, based on the
record, that other considerations are
more relevant to our statutory analysis.
We make our decision as to each
category of ETC requirements as they
relate to the provision of Lifelinesupported services based on the
information we deem most relevant to
the analysis prescribed from Section
10(a).
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b. Forbearance Regarding the Lifeline
Broadband Service Obligation
258. In streamlining Lifeline ETC
obligations for participating carriers, we
first turn to the broadband service
obligations of various categories of
ETCs. In this Section we use targeted
forbearance from certain ETC
obligations to encourage market entry
and competition while continuing to
protect consumers and the Fund.
259. For Lifeline-only ETCs, we
establish that such ETCs are eligible to
receive Lifeline support for broadband
service but may choose to only offer a
supported voice service instead. For
other ETCs that are not Lifeline-only, we
establish that such ETCs are also eligible
to receive Lifeline support for
broadband service and forbear from
requiring such ETCs to offer Lifelinesupported broadband service, except in
areas where the ETC commercially
offers broadband pursuant to its highcost obligations. For Lifeline Broadband
Providers, we establish a streamlined
relinquishment process that gives
providers greater certainty while
retaining the Commission’s ability to
protect consumers.
(i) Lifeline-Only ETCs
260. For Lifeline-only ETCs, we
interpret such carriers’ ETC
designations as broad enough to make
them eligible for Lifeline broadband
support. Lifeline-only ETCs may
therefore receive support for Lifelinediscounted BIAS provided to eligible
low-income subscribers within their
designated service areas without
receiving federal designation as Lifeline
Broadband Providers. However, we
forbear from Lifeline-only ETCs’
obligations to offer BIAS to permit such
ETCs to solely offer voice if they so
choose. (We note that when the Lifeline
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discount no longer applies to voice-only
offerings, a Lifeline-only ETC that does
not choose to offer Lifeline-discounted
fixed voice service will have the option
of seeking relinquishment of its
statutory obligation to offer supported
voice telephony service under Section
214(e)(4) of the Act and continuing to
receive Lifeline support for its BIAS
offerings. Alternatively, a Lifeline-only
ETC may obtain an ETC designation as
a Lifeline Broadband Provider, seek
relinquishment of its existing Lifelineonly ETC designation, and operate
solely as a federally-designated LBP). To
the extent that Lifeline-only ETCs elect
to also offer BIAS to eligible subscribers,
they may receive reimbursement for
such service through the Lifeline
program.
261. Eligibility to receive Lifeline
broadband support. We find that
Lifeline-only ETC designations, such as
exist today, are broad enough to make
Lifeline-only ETCs eligible to receive
reimbursement through the Lifeline
program for offering discounted BIAS to
eligible low-income subscribers. This is
consistent with past Commission
precedent. For example, when the
Commission simplified the core
functionalities of the supported services
for universal service support
mechanisms in the overarching concept
of ‘‘voice telephony service,’’ it clarified
that such a change was intended to
promote technological neutrality and
that many of the previously-enumerated
supported services would still be
offered as a function of voice telephony.
Accordingly, providers that obtained
ETC designation for the limited purpose
of receiving Lifeline support, even after
the USF/ICC Transformation Order,
received designation for a number of
different functionalities encompassed
within ‘‘voice telephony.’’ Now, as we
add BIAS as a supported service in this
Order, we find that Lifeline-only ETCs’
designations, which were broad enough
to encompass the nine supported
services before the USF/ICC
Transformation Order and broad
enough to encompass multiple
functionalities within the concept of
‘‘voice telephony,’’ are similarly broad
enough to include the addition of a
supported service for purposes of
offering Lifeline-supported BIAS.
262. Obligation to offer all supported
services. Based on our consideration of
the relevant statutory framework and
the record before us, we now conclude
that it is in the public interest to forbear,
pursuant to Section 10 of the Act, from
requiring existing Lifeline-only ETCs to
offer Lifeline-supported broadband
Internet access service. As a result of
this forbearance, existing Lifeline-only
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ETCs will be able to continue to offer
voice service, consistent with the
Lifeline program’s rules. At the same
time, Lifeline-only ETCs remain eligible
for Lifeline broadband support to the
extent that they elect to provide that
service. ETCs that seek to avail
themselves of this forbearance and
therefore offer only voice service must
file a notification with the Commission
that they are availing themselves of this
relief.
263. To facilitate program
administration, we require any ETC that
plans to not offer a Lifeline-discounted
BIAS offering under the reforms in this
Order to notify the Commission that it
is availing itself of the forbearance relief
granted in this Section. Such
notification must be filed by the later of
60 days after announcement of OMB
approval of this Order under the PRA or
30 days after receiving designation as a
Lifeline-only ETC. This notification
requirement, as a condition to our grant
of forbearance, is a critical element of
our actions today. To ensure that the
Commission is well informed about the
state of the marketplace of Lifeline
providers offering voice-only versus
Lifeline BIAS, we must impose this
notification requirement prior to ETCs
availing themselves of this forbearance.
264. We find that enforcement of this
requirement is not necessary to ensure
that the charges, practices,
classifications, or regulations by, for, or
in connection with this class of
telecommunications carrier and
telecommunications service are just and
reasonable and are not unjustly or
unreasonably discriminatory. We also
find that enforcement of this
requirement is not necessary for the
protection of consumers and that the
above-described forbearance is
consistent with the public interest.
265. We find that it is not necessary
to impose an obligation to offer Lifelinesupported BIAS within the Lifeline
marketplace for Lifeline-only ETCs and
that they should be permitted, but not
required, to offer Lifeline-discounted
BIAS when such ETCs give notice to the
Commission of their intent to limit
offerings to voice service. This
forbearance will not alter the
Commission’s authority over Lifelineonly ETCs’ charges, practices, and
classifications in providing Lifelinesupported voice service, nor will it
allow such ETCs to unjustly or
unreasonably discriminate in their voice
offerings. Lifeline-only ETCs will
continue to comply with all existing
regulations to protect consumers and
will, in many instances, face more
competition within the marketplace
from other Lifeline providers offering
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either or both voice and Lifelinesupported BIAS service offerings.
Existing regulations and competition
will also help keep Lifeline-only ETCs’
rates and other terms and conditions of
service just and reasonable and not
unjustly or unreasonably
discriminatory. As a result, the
obligation to offer BIAS for Lifeline-only
ETCs is not necessary to protect
consumers. The Commission has
recognized that granting forbearance
relief in light of other still-applicable
regulatory requirements is reasonable
and appropriate while both retaining
necessary safeguards and reducing
costs.
266. Preserving this option for
Lifeline-only ETCs is also consistent
with concerns raised by commenters. In
response to the Commission’s inquiries
about including broadband as a
supported service in the Lifeline
program and setting minimum service
levels for voice and broadband services,
several providers responded that the
Commission should preserve providers’
ability to offer a voice-only service
option. For example, Sprint argued that
‘‘the provision of Lifeline broadband
service should be voluntary, not
mandatory,’’ noting that some existing
Lifeline carriers may not be able to offer
broadband service because of the nature
of their existing resale agreements with
their underlying providers.
267. We also agree with commenters
that permitting Lifeline-only ETCs
offering voice service to participate in
Lifeline even if they do not offer BIAS
will give eligible low-income customers
more Lifeline-discounted options in the
market. (This decision is consistent with
the Commission’s decision to transition
Lifeline funding away from voice
service as a standalone option. While
Lifeline-only ETCs are able to receive
reimbursement for voice service they
may choose to focus on that service, but
when voice service as a standalone
option is no longer eligible for
reimbursement through the Lifeline
program those ETCs must choose
another supported service to offer or
seek to relinquish their ETC status
under Section 214(e)(4)). We expect that
permitting Lifeline-only ETCs offering
voice service to participate in Lifeline
even if they do not offer BIAS will give
eligible low-income customers more
Lifeline-discounted options in the
market. Accordingly, this forbearance,
while not preventing existing or future
Lifeline-only ETCs from offering
discounted BIAS, will permit those
ETCs to continue to offer a discounted
standalone voice option if they so
choose, which will preserve additional
options for consumers in addition to
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new BIAS options that we expect will
enter the Lifeline market. This increase
in competition will, in turn, lead to
higher quality service offerings at lower
prices for eligible low-income
subscribers.
268. We find this forbearance is not
necessary for the protection of
consumers so long as Lifeline-only ETCs
are required to notify the Commission of
their intent to avail themselves of this
forbearance. To ensure that the
Commission stays informed of the
Lifeline marketplace and knows the
number of providers offering voice
versus Lifeline-supported BIAS, it is
critical that the Commission is able to
stay informed of the Lifeline market and
consumer options. This notification
requirement will give the Commission
critical information in understanding
and evaluating the Lifeline market to
determine how well its regulatory
structure provides incentives for
participation in the Lifeline program.
269. Forbearance from this
requirement is consistent with the
public interest. Forbearance from the
requirement that a Lifeline-only ETC
offer Lifeline-supported BIAS allows
service providers to continue serving
the existing voice market while
permitting those ETCs (to the extent
they have not elected to avail
themselves of forbearance) to also easily
introduce new Lifeline-discounted BIAS
offerings. (As discussed above, this
forbearance also provides ETCs with
greater options to continue serving
eligible low-income consumers during
the transition to the point where voice
will no longer be supported by the
Lifeline program). These additional
options will promote competitive
market conditions by providing lowincome consumers with more Lifelinediscounted offerings and a diversity of
providers to serve them. With more
providers in the Lifeline marketplace,
this will open the Lifeline program to
innovative new service offerings that
will better meet the needs of eligible
subscribers and further modernize the
program by encouraging BIAS offerings
for Lifeline subscribers.
270. As an additional benefit, this
forbearance will serve the Lifeline
program’s purpose of ensuring
affordable access to high-quality
telecommunications services to eligible
low-income households. As detailed
above, we recognize that many
consumers rely on voice service as their
primary form of communication. This
forbearance will allow service providers
that do not intend to offer BIAS, to
continue to serving consumers this
supported service. As noted by
commenters, certain providers might be
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required to exit the market given their
limitations in offering BIAS. Those
providers that avail themselves of this
forbearance will have the option of
continuing to offer voice service.
(ii) ETCs That Are Not Lifeline-Only
271. For ETCs offering voice service
that are not Lifeline-only, we interpret
such carriers’ ETC designations as broad
enough to make them eligible for
Lifeline broadband support. Such ETCs
may therefore receive support for
Lifeline-discounted BIAS provided to
eligible low-income subscribers within
their designated service areas. However,
we forbear from these ETCs’ obligation
to offer Lifeline BIAS to permit such
ETCs to solely offer voice in the Lifeline
program, provided such ETCs file a
notification with the Commission that
they are availing themselves of this
relief. This forbearance, however, does
not apply to areas where ETCs
commercially offer broadband that
meets the Lifeline minimum service
standards pursuant to their high-cost
USF obligations, in which case they
remain subject to the Lifeline broadband
service obligation. (As detailed above,
we also require carriers receiving highcost support to provide Lifelinesupported broadband services in areas
where they receive high-cost support
and are already offering broadband
services at the minimum service levels).
To the extent that these ETCs elect to
also offer BIAS to eligible subscribers
even when not required, they may
receive reimbursement for such service
through the Lifeline program.
272. Eligibility to receive Lifeline
broadband support. We find that the
ETC designations of ETCs that are not
Lifeline-only are broad enough to make
those ETCs eligible to receive
reimbursement through the Lifeline
program for offering discounted BIAS to
eligible low-income subscribers. As
discussed above, this is consistent with
past Commission precedent of including
multiple functionalities even as it
updated the definition of services
supported by universal service support
mechanisms.
273. Obligation to offer all supported
services. Based on our consideration of
the relevant statutory framework and
the record before us, we now conclude
that it is in the public interest to forbear,
pursuant to Section 10 of the Act, from
requiring existing ETCs that are not
Lifeline-only to offer Lifeline-supported
BIAS in areas where they do not
commercially offer such service or do
not receive high-cost support.
Accordingly, ETCs that are not Lifelineonly will be able to continue to offer
voice-only service, consistent with the
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Lifeline program’s rules. At the same
time, such ETCs remain eligible for
Lifeline broadband support to the extent
that they elect to provide that service.
This forbearance does not extend to
areas where existing ETCs commercially
offer BIAS pursuant to their high-cost
USF obligations and such service meets
the Lifeline program’s minimum service
requirements, in which case ETCs
remain subject to the Lifeline broadband
service obligation. Those ETCs receiving
frozen high-cost support—whether
incumbent providers or competitive
ETCs—are not required to offer Lifelinesupported broadband services in their
designated service areas. Given that the
frozen support program is an interim
program that is due to be eliminated, we
agree with commenters that frozen
support recipients should not be
required to implement new processes to
offer BIAS as a supported service.
274. In the areas subject to
forbearance, existing ETCs remain
eligible for Lifeline broadband support
to the extent that they elect to provide
that service. As a result of this
forbearance, ETCs that are not Lifelineonly will only be required to offer
Lifeline BIAS in those areas where the
ETC commercially offers qualifying
BIAS pursuant to the ETC’s obligations
under the high-cost rules. ETCs that
seek to avail themselves of this
forbearance must file a notification with
the FCC that they are availing
themselves of this relief and to identify
those areas by Census block where they
intend to avail themselves of this
forbearance relief.
275. To facilitate program
administration, we require any ETC that
plans to not offer a Lifeline-discounted
BIAS offering under the reforms in this
Order to notify the Commission that it
is availing itself of the forbearance relief
granted in this Section and to identify
those areas by Census block where they
intend to avail themselves of this
forbearance relief. Such notification
must be filed by the later of 60 days
after announcement of OMB approval of
this Order under the PRA or 30 days
after receiving designation as an ETC.
This notification requirement, as a
condition to our grant of forbearance, is
a critical element of this grant of
forbearance. To ensure that the
Commission is well informed about the
state of the marketplace of Lifeline
providers offering voice-only service
versus Lifeline BIAS, we must impose
this notification requirement prior to
ETCs availing themselves of this
forbearance.
276. We find that enforcement of this
requirement is not necessary to ensure
that the charges, practices,
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classifications, or regulations by, for, or
in connection with this class of
telecommunications carrier and
telecommunications service are just and
reasonable and are not unjustly or
unreasonably discriminatory. We also
find that enforcement of this
requirement is not necessary for the
protection of consumers and that the
above-described forbearance is
consistent with the public interest.
277. With the exception discussed
below, we find that this forbearance
meets the criteria set out in Section
10(a) of the Act for much the same
reasons that led us to grant forbearance
to Lifeline-only ETCs in the prior
Section. This forbearance will not alter
the Commission’s authority over the
charges and practices of ETCs, nor will
it allow ETCs to unjustly or
unreasonably discriminate in offering
their Lifeline-supported services. The
Commission has recognized that
granting forbearance relief in light of
other still-applicable regulatory
requirements is reasonable and
appropriate while both retaining
necessary safeguards and reducing
costs.
278. Forbearance from this
requirement is consistent with the
public interest. We find that such
forbearance will create a level playing
field as between Lifeline-only ETCs and
ETCs that are not Lifeline-only where
the latter are not commercially offering
qualifying broadband service pursuant
to their high-cost obligations. Similar to
our analysis with Lifeline-only ETCs,
this forbearance serves the public
interest because it permits ETCs to focus
their Lifeline offerings on the voice
market where they are not able to offer
qualifying Lifeline-discounted BIAS,
while still permitting such ETCs to
easily introduce Lifeline-discounted
BIAS offerings if they so choose. We
find that this forbearance will give
eligible low-income consumers more
Lifeline-discounted choices in the
market, and will lead to higher quality
service offerings at lower prices.
279. Areas where ETCs commercially
offers BIAS pursuant to high-cost
obligations. As discussed above, after
the enactment of the 1996 Act,
incumbent LECs’ designated service
areas as ETCs were defined as wherever
they offered voice telephony service in
a state, including Census blocks where
the incumbent LECs do not currently
receive high-cost support or are not
obligated to offer broadband at 10/1
Mbps or greater speeds pursuant to
Commission rules. Some ETCs are
concerned that program changes would
require them to provide Lifelinesupported broadband in Census blocks
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where the provider is not obligated to
offer broadband services or does not
receive high-cost support. To address
these concerns, we first clarify, here and
in Section III.A, Modernizing Lifeline to
Support Broadband, that ETCs receiving
high-cost support are not required to
offer Lifeline-supported BIAS in Census
blocks where the ETC does not
commercially offer a broadband service
that meets the minimum service
standards of the Lifeline program
pursuant to its high-cost obligations.
Accordingly, we retain the obligation to
offer the Lifeline discount on all
qualifying services in areas where an
ETC receives high-cost support, has
deployed a network capable of
delivering service that meets the
Lifeline program’s minimum service
standards, and commercially offers such
service pursuant to its high-cost
obligations. (This obligation does not
apply to ETCs receiving frozen high-cost
support).
280. In areas where the provider
receives high-cost support but has not
yet deployed a broadband network
consistent with the provider’s high-cost
service obligations, the obligation to
provide Lifeline-supported BIAS begins
only when the provider has deployed a
high-cost supported broadband network
to that area and makes its BIAS
commercially available. (For example,
we recognize that many high-cost
recipients receiving CAF Phase II
support have not deployed broadband
capable networks in all of the Census
blocks where they receive high-cost
support, but are required to do so
pursuant to deadlines set forth in the
Commission’s high-cost rules). For
example, a rate-of-return carrier must
provide Lifeline-supported BIAS if it
deploys a network providing a
minimum of 10/1 Mbps upon
reasonable request from a qualified lowincome consumer in satisfaction of its
high-cost obligations. (In the event
speeds of 10/1 Mbps are not available,
such providers are required to offer
Lifeline-supported BIAS if speeds at 4
Mbps/1 or above are commercially
available). Or, as another example, a
price cap carrier that accepted Connect
America Phase II model-based support,
must provide Lifeline-supported BIAS
in an area where that price cap carrier
has already deployed broadband
facilities capable of providing the
minimum service levels set forth above
and is commercially offering service.
However, an authorized rural broadband
experiment bidder is not required to
provide Lifeline-supported BIAS until it
has deployed broadband-capable
facilities to the location of a qualified
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low-income consumer in satisfaction of
its high-cost deployment obligations.
We adopt these requirements to ensure
that all consumers living in high-cost
areas, including low-income consumers,
have the meaningful option of
subscribing to BIAS once it is
commercially available.
(iii) New Lifeline Broadband Providers
281. For providers that receive ETC
designation as Lifeline Broadband
Providers, such a designation makes
them eligible for Lifeline broadband
support, with the accompanying
obligation to offer Lifeline broadband
service. In this Section, we establish a
streamlined LBP relinquishment process
to further reduce the perceived risk of
entering the Lifeline broadband market.
282. In implementing the ETC
relinquishment process for LBPs, we
establish the streamlined
relinquishment procedures described
below, except for relinquishments by
LBPs also receiving high-cost universal
service support. (We note that this
relinquishment process will only apply
to LBPs designated under Section
214(e)(6) of the Act). We find that a
streamlined relinquishment process will
encourage new providers to enter the
Lifeline market by giving them clarity as
to how they may responsibly exit that
market, while fulfilling the
Commission’s responsibility to protect
consumers, ensure that subscribers will
continue to be served, and ensure that
subscribers are given sufficient notice.
We therefore revise Section 54.205 of
the Commission’s rules to create a
streamlined relinquishment process for
LBPs. Under this process, an LBP’s
advance notice of its intent to relinquish
its designation pursuant to Section
214(e)(4) shall be deemed granted by the
Commission 60 days after the notice is
filed, unless the Bureau notifies the LBP
that the relinquishment will not be
automatically effective. Consistent with
Congressional directives, the
Commission will issue such a
notification that the relinquishment will
not be automatically effective if an
automatic grant would violate any of the
criteria listed in Section 214(e)(4).
283. We expect that a streamlined
ETC relinquishment process for LBPs
will reduce the perceived risk for
broadband providers to enter the
Lifeline market. This will encourage
providers to offer Lifeline-supported
broadband services and increase
competition, which will, in turn, lead to
greater choices among affordable, higher
quality service offerings for eligible lowincome subscribers. Pursuant to the new
LBP relinquishment procedures, the
Commission will notify the relevant
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LBP if its relinquishment will not be
automatically effective in cases where,
for example, customers may need more
time to transition to a new carrier. As
a result, the Commission will still have
the authority and responsibility to at
least temporarily prevent a
relinquishment that would harm
consumers until an appropriate solution
can be found.
284. We find that a streamlined
relinquishment process for LBPs will
serve the Lifeline program’s purpose of
ensuring affordable access to highquality advanced telecommunications
services to eligible low-income
households. By giving providers greater
flexibility and encouraging investment
in the Lifeline market, this streamlined
process will open the Lifeline program
to innovative new service offerings that
will better meet the needs of eligible
subscribers and further modernize the
program by encouraging BIAS offerings
for Lifeline subscribers.
c. Forbearance Regarding the Lifeline
Voice Service Obligation
285. Having described the tailored
broadband service obligations of various
categories of ETCs in the previous
Section, we next turn to the Lifeline
voice service obligations. As to Lifelineonly ETCs, which historically
participated specifically in order to
provide Lifeline voice service, we do
not alter the preexisting voice service
obligation. Regarding existing ETCs that
are not Lifeline-only, we deny the
broadest requests for unconditional
forbearance from the Lifeline voice
obligation, but find it justified to grant
certain conditional forbearance
designed to promote broadband policy
goals while protecting Lifeline
consumers. We further make clear that
entities newly designated as ETCs
specifically for Lifeline broadband
purposes do not have any Lifeline voice
obligation under our interpretation of
Section 214(e).
(i) Lifeline-Only ETCs
286. We decline to forbear from
existing Lifeline-only ETCs’ obligations
to offer Lifeline-discounted voice
service. Lifeline-only ETCs were
designated as ETCs for the specific
purpose of providing Lifeline voice
service. (At the time existing Lifelineonly ETCs were designated, the only
service for which they could receive
support was voice service supported by
the Lifeline mechanism, including the
multiple functionalities that are
encompassed within voice telephony
service). The proposals for forbearance
or other relief from Lifeline voice
service obligations also have focused on
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ETCs that are not Lifeline-only, as we
discuss below. We thus find no basis in
the record here to conclude that existing
Lifeline-only ETCs are similarly situated
to the ETCs for which we grant some
relief from otherwise-applicable Lifeline
voice service obligations in the Section
below. As a result, existing Lifeline-only
ETCs remain subject to Lifeline voice
service obligations unless or until they
relinquish their designations or
otherwise seek—and justify—relief. Of
course, consistent with the Lifeline
reforms adopted in this Order, Lifelineonly ETCs not only can receive support
for providing voice telephony to
qualifying low-income subscribers, but
alternatively when they provide Lifeline
broadband Internet access service (with
or without voice). Given our phase-out
of Lifeline support for voice-only
service for many providers, we
recognize that such ETCs might well
take steps in response, such as
relinquishing their Lifeline voice ETC
designations, thereby eliminating any
obligation under Section 214(e)(1) and
our implementing rules to provide the
supported Lifeline voice telephony
service. Consistent with our
interpretation and implementation of
Sections 214(e) and 254, however, we
emphasize that ETCs have the option to
seek relinquishment of only their
Lifeline voice ETC designation, leaving
them still eligible to receive Lifeline
broadband support.
(ii) ETCs That Are Not Lifeline-Only
287. Conditional forbearance for
existing ETCs’ Lifeline voice obligation.
On several occasions, including in the
2015 Lifeline FNPRM, the Commission
has sought comment on the question of
whether, or under what circumstances,
carriers that currently are designated as
ETCs for purposes of receiving both
high-cost and Lifeline voice support
should get relief from Lifeline voice
service obligations (referred to here for
convenience as High-Cost/Lifeline
ETCs). Primarily, such requests for relief
have come from, or focused most
extensively on, incumbent LECs that
obtained ETC designations following the
1996 Act. (Existing High-Cost/Lifeline
ETCs can include carriers other than
price cap carriers or incumbent LECs,
and we do not find evidence or
arguments in the record here warranting
a materially different analysis in the
context of competitive ETCs that are not
Lifeline-only ETCs. Consequently, our
analysis below does not differentiate
among such High-Cost/Lifeline ETCs).
In the 2015 USTelecom Forbearance
Order, the Commission declined to
grant forbearance from such obligations
on the record there, observing among
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other things that the record in this
Lifeline rulemaking proceeding might
persuade the Commission to reach a
different result. We likewise decline to
grant the broadest forbearance from
Lifeline voice obligations under the
record here. In connection with the
reforms otherwise being adopted,
however, we are persuaded to grant
forbearance from Lifeline voice service
obligations targeted to areas where
certain conditions are met.
288. Although the Commission stated
in the 2015 USTelecom Forbearance
Order that the record in this Lifeline
rulemaking proceeding might persuade
the Commission to reach a different
result regarding forbearance from
Lifeline voice service obligations, the
record here does not convince us to
grant the broadest requests for
forbearance. In particular, we find
persuasive here the Commission’s
reasoning in the 2015 USTelecom
Forbearance Order regarding the
possibility of broadly forbearing from
Lifeline voice service obligations for
High-Cost/Lifeline ETCs. (The 2015
USTelecom Forbearance Order also
involved requests for other forbearance
from ETC designations and obligations
beyond the scope of this Lifeline
rulemaking proceeding. We thus focus
here on the analysis in the 2015
USTelecom Forbearance Order insofar
as it was relevant to the evaluation of
possible forbearance from ETCs’ Lifeline
service obligations).
289. With respect to the Section
10(a)(2) consumer protection inquiry,
the Commission, informed by the
consumer protection goals in Section
214(e)(4), found insufficient evidence to
persuade it that the Lifeline voice
service obligation for High-Cost/Lifeline
ETCs was unnecessary to protect
consumers. As a threshold matter, the
Commission was not persuaded that the
geographic areas subject to potential
forbearance were subject to the sort of
marketplace conditions that would give
it comfort with a less detailed analysis
of the sort previously used when
granting certain relief from high-cost
service obligations in the Dec. 2014 CAF
Order. Nor was the Commission
persuaded that other consumer
protection interests, such as broadband
policy interests, ‘‘would be controlling
or even instructive in the Commission’s
analysis.’’ As a result, the Commission
concluded that it needed to consider
detailed evidence of the ability of
consumers to be served in the absence
of the relevant ETC service obligation—
evidence that it found lacking on the
record there.
290. In this proceeding, we likewise
find it necessary to evaluate forbearance
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based on detailed marketplace evidence
as to forbearance from Lifeline voice
service obligations other than the
conditional forbearance we grant below.
For one, we cannot take sufficient
comfort in the marketplace conditions
to justify evaluating unconditional
forbearance from Lifeline voice service
obligations via the less detailed analysis
used in the Dec. 2014 CAF Order. As to
the geographic areas not within the
scope of the high-cost voice forbearance
in the Dec. 2014 CAF Order, we reach
that conclusion, like we did in the 2015
USTelecom Forbearance Order, because
these areas are not low-cost or served by
an unsubsidized provider. As to the
geographic areas that were subject to
high-cost voice forbearance in the Dec.
2014 CAF Order, we conclude that a
different approach is warranted for lowincome consumers. As the Commission
explained in the 2015 USTelecom
Forbearance Order, ‘‘[l]ow-income
consumers may lack the resources to
take advantage of alternative service
options from non-Lifeline providers,’’
and thus ‘‘we find it appropriate to
evaluate marketplace conditions for
low-income customers in a more
focused manner, even in areas where we
might naturally expect at least some
level of competitive provision of service
generally.’’
291. Likewise, outside the context of
the conditional forbearance we grant
below, we do not find other consumer
protection interests sufficient to counsel
in favor of a less detailed marketplace
analysis in granting forbearance. Absent
a condition like that imposed on the
forbearance we adopt below, we do not
find a basis to expect that forbearance
from Lifeline voice service obligations
necessarily will advance our broadband
policy goals. We thus reject speculative
assertions that unconditioned
forbearance will promote broadband
policy sufficient to warrant forbearance
in-and-of themselves or justify a less
detailed marketplace analysis to
evaluate forbearance.
292. Having concluded that a detailed
evaluation of the sort described in the
2015 USTelecom Forbearance Order is
needed to evaluate unconditional
forbearance from the Lifeline voice
obligation for High-Cost/Lifeline ETCs,
we likewise find the record insufficient
to justify forbearance on that basis.
(Given our identified need for detailed
marketplace information to evaluate
possible broad, unconditional
forbearance from the Lifeline voice
service obligation, we likewise reject
high-level claims that Lifeline reforms
are likely to increase competition and
obviate the need for Lifeline voice
service obligations. Although we design
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our reforms in a manner intended to
advance that objective, particularly in
the case of the Lifeline broadband
program, that does not constitute the
sort of detailed market place evidence
we have concluded is needed). In
particular, the Commission found the
evidence insufficient to grant
forbearance from Lifeline voice
obligations (among other ETC
obligations) in the 2015 USTelecom
Forbearance Order. Although the
Commission observed that additional
evidence adduced in the record here
might warrant a different conclusion,
the record does not reveal any
additional marketplace evidence that
would warrant a grant of forbearance
under such a detailed marketplace
analysis. Nor does the record include
evidence regarding particular bright-line
triggers or thresholds regarding numbers
or types of providers that the
Commission might rely on to grant
forbearance where that number and type
of provider is present.
293. Our conclusions regarding
unconditional forbearance from Lifeline
voice obligations in this proceeding
under Section 10(a)(1) likewise are in
accord with the Commission’s Section
10(a)(1) analysis in the 2015 USTelecom
Forbearance Order. Particularly against
the backdrop of our conclusions above
that a detailed marketplace evaluation is
needed to assess the effects of
unconditional forbearance from Lifeline
voice obligations, we agree that neither
the limited evidence regarding the
marketplace conditions nor the
regulatory protections cited in granting
certain high-cost voice forbearance in
the Dec. 2014 CAF Order would be
sufficient to justify forbearance under
Section 10(a)(1) here. Indeed, as the
Commission emphasized in the 2015
USTelecom Forbearance Order, ‘‘in all
census blocks, low-income consumers
could be at particular risk if there are
gaps in coverage within the area where
the price cap carrier previously offered
Lifeline service.’’ We thus likewise find
that unconditional forbearance from
Lifeline voice service obligations is not
warranted for High-Cost/Lifeline ETCs
under Section 10(a)(1).
294. We likewise find on the record
here that unconditional forbearance
from the Lifeline voice obligation for
High-Cost/Lifeline ETCs would not be
in the public interest under Section
10(a)(3). In large part, this conclusion
flows from the same considerations
underlying our findings above that
Sections 10(a)(2) and 10(a)(1) are not
satisfied as to such forbearance. Further,
insofar as commenters premise
arguments for forbearance on the costs
of complying with Lifeline rules, we
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note that we streamline those
requirements in various ways here (in
addition to certain conditional
forbearance from Lifeline voice service
obligations that we do grant below). We
also find applicable here the
Commission’s analysis rejecting
forbearance from, among other things,
Lifeline voice service obligations under
Section 10(a)(3) in the 2015 USTelecom
Forbearance Order. We note in
particular, as explained above, that we
are unpersuaded by speculative
arguments that unconditional
forbearance will promote broadband
policy goals. We thus conclude that
unconditional forbearance from the
Lifeline voice service obligation for
High-Cost/Lifeline ETCs is not in the
public interest under Section 10(a)(3).
295. Some commenters argue that for
competitive neutrality or other reasons,
existing ETCs with broad designations
should be allowed to choose whether or
not to provide Lifeline voice service, or
that participation in Lifeline should be
de-linked from participation in highcost. We are not persuaded that such
arguments are sufficient to justify
forbearance from Lifeline voice service
obligations. In particular, we are not
persuaded that such concerns are
sufficient to overcome our identified
need for detailed marketplace
information to evaluate unconditional
forbearance from the Lifeline voice
service obligation. Further, as the
Commission observed in the 2015
USTelecom Forbearance Order, the
Section 214(e)(4) relinquishment
process remains available to ETCs.
Indeed, as we explain above, we
interpret Section 214(e) to accommodate
ETC designations specific to particular
universal service mechanisms or
programs. Insofar as ETC designations
can be obtained on a mechanism- or
program-specific basis, we likewise find
it reasonable to interpret Section
214(e)(4) as allowing ETC designations
to be relinquished on a mechanism- or
program-specific basis. (Given the
Commission’s authority to interpret the
Act, our interpretation of Section 214(e)
governs all application of that provision,
whether by the Commission or by a
state). Thus, a High-Cost/Lifeline ETC
would, for instance, be free to seek to
relinquish just its ETC designation for
Lifeline purposes without relinquishing
its designation for high-cost purposes.
We thus find no basis to depart from our
conclusion above that unconditional
forbearance is not warranted on the
record here.
296. Conditional forbearance.
Although we reject arguments for
broader or different forbearance from
Lifeline voice service obligations under
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the theories described above, we do find
the Section 10(a) criteria met to grant
conditional forbearance from the
Lifeline voice obligation under a
different theory for existing ETCs with
designations enabling receipt of both
high-cost support and Lifeline voice
support. (By its terms, Section 214(e)(1),
in pertinent part, imposes service
obligations on telecommunications
carriers—namely, ETCs. See generally
47 U.S.C. 214(e)(1). Failure to meet any
applicable service obligations subjects
carriers to potential enforcement by the
Commission. See, e.g., 47 U.S.C. 208,
503. Thus, we conclude that the Section
214(e)(1) service obligations represent
provisions of the Act that the FCC can
forbear from applying to a
telecommunications carrier or class of
telecommunications carriers where it
finds the Section 10(a) criteria met, as
we do in various respects in this Order,
and as we have done in the past. We
thus reject arguments suggesting that the
Commission cannot grant ETCs relief
from those obligations. We also note
that an additional consequence of such
forbearance is that states are precluded
from applying the forborne-from
provisions. 47 U.S.C. 160(e)). In
particular, for such ETCs we grant
forbearance from the obligation to offer
and advertise Lifeline voice service
where the following conditions are met:
(a) 51% of Lifeline subscribers in a
county are obtaining BIAS; (b) there are
at least 3 other providers of Lifeline
BIAS that each serve at least 5% of the
Lifeline broadband subscribers in that
county; and (c) the ETC does not
actually receive federal high-cost
universal service support. Notably, this
condition allows us to reach a different
conclusion than we do above regarding
the impact of forbearance on our
broadband policy goals. Because we
conclude that this condition is likely to
result in forbearance that promotes our
broadband policy goals, our decision is
resolved based on higher-level weighing
and balancing of facts and policy
considerations, rather than following a
detailed marketplace evaluation as
described in the 2015 USTelecom
Forbearance Order and in our analysis
of unconditional forbearance above.
This forbearance from the obligation to
offer Lifeline voice service under
Section 214(e)(1)(A) and our
implementing rules also does not
encompass the High-Cost/Lifeline ETC’s
existing Lifeline voice service
subscribers served at the time the
condition is met, further ensuring that
consumers are adequately protected.
297. We conclude that such
conditional forbearance is, on net, in the
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public interest under Section 10(a)(3)
because it strikes the right balance
between creating additional incentives
for providers to promote the
deployment and availability of
broadband networks and services while
adequately protecting the interests of
low-income voice service users. In
particular, it is clear from the record
that a number of carriers that
historically have provided Lifeline voice
telephony service—particularly
incumbent LECs—no longer wish to do
so, at least not to the full extent they did
so in the past. When existing High-Cost/
Lifeline ETCs were designated, the
designations broadly encompassed both
high-cost and Lifeline voice
mechanisms by default, consistent with
the Commission’s policy intent at the
time—which we now depart from in
certain respects, as described in this
Order—and without the type of more
nuanced designations that are feasible
under our current interpretation and
implementation of Sections 214(e) and
254. These ETCs also commonly
provide both voice telephony service
and BIAS (among other services),
(Indeed, the provision of broadband
Internet access service now is a public
interest obligation associated with the
receipt of high-cost universal service
support), and it is our predictive
judgment that providing relief from
Lifeline voice service requirements
based on an area reaching a defined
level of Lifeline broadband
subscribership and competition will
give these providers strengthened
incentives to take steps to promote
subscribership, whether for their own
broadband Internet access service
offerings in particular or for broadband
Internet access service offerings more
generally.
298. Creating additional incentives for
providers to promote broadband
subscribership advances Section 254’s
goals of access to, and affordability of,
advanced telecommunications services.
The increased demand for, and usage of,
broadband Internet access service that
will be fostered by the broadband
providers’ efforts also will further
Section 706 of the 1996 Act. (The
Commission, for example, conducts its
Section 706(b) inquiry regarding
deployment and availability of
advanced telecommunications
capability under Section 706 by
considering factors such as such as
price, quality, and adoption by
consumers, as well as physical
network). We also are persuaded that
forbearance from Lifeline voice service
obligations also at least incrementally is
likely to free up service provider funds
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for broadband investment, while
conditioning such forbearance on an
area reaching a defined level of
broadband penetration helps better
ensure—in a way that unconditional
forbearance does not—that such service
provider funds are, in fact, used to
promote broadband deployment and
subscribership.
299. We recognize that the
Commission has in the past identified
the public interest benefits of promoting
affordable voice service for low-income
consumers, but we expect that any effect
on such consumers from the conditional
forbearance is likely to be limited, and
outweighed by the anticipated
broadband policy benefits. For one, we
conclude elsewhere in this item that the
need for such Lifeline-subsidized voice
service is substantially reduced, leading
us to phase out support for standalone
voice service more generally. (Although
we provide a multi-year phase-out for
Lifeline support for stand-alone mobile
voice generally, the potential for this
Lifeline voice forbearance to grant relief
from Lifeline voice service obligations
on a more rapid timeframe is offset as
to these consumers by the benefits in
promoting our broadband policy goals).
Moreover, as we explain there, we fully
expect increasingly lower-priced voice
service to continue to be available even
absent a Lifeline benefit for standalone
voice service, for example as part of
packages or bundles of services
including broadband Internet access
service, which will remain subject to
Lifeline support, and which this Lifeline
voice forbearance does not affect. We
thus conclude that the conditional
forbearance we grant is unlikely to harm
that set of consumers, nor, as to that
group of consumers, is conditional
forbearance likely to be in any tension
with the principle in Section 254(b) to
preserve and promote affordable service.
300. At the same time, we also
recognize that our policy judgment
about how best to transition the Lifeline
program to become more broadbandfocused envisions a continuing role for
some Lifeline voice support, more so in
the near term, but potentially even to
some degree over the longer term. Based
on the record, we cannot readily
quantify the anticipated broadband
policy benefits from this conditional
forbearance, nor can we readily quantify
any countervailing effects of forbearance
on any low-income consumers who
would prefer the Lifeline voice service
offerings that otherwise would be
available under our Lifeline rules if the
Lifeline voice service obligation
remained. (In particular, although we
cannot precisely quantify the
anticipated benefits of conditional
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forbearance in terms of broadband
deployment and availability, the record
also does not enable a price
quantification of any costs of
conditional forbearance. We thus weigh
these considerations in the best manner
feasible given the record and our
associated policy judgment as described
in the text. We note that the context of
our forbearance decision here is
different from that of a Section 10(c)
petition, where the petitioner bears the
burden of proof. Rather, our forbearance
decision is conducted under the general
reasoned decision making requirements
of the APA. Nonetheless, we are
persuaded that the public interest, on
net, counsels in favor of forbearance for
several reasons.
301. First, our conditional forbearance
does not grant relief from the Lifeline
voice service obligation as to those
Lifeline subscribers that the High-Cost/
Lifeline ETC serves at the time the
forbearance condition is met. Those
subscribers effectively are grandfathered
to avoid possible disruption that
otherwise might occur when
forbearance newly applies in the area
they live. We anticipate that this, in and
of itself, is likely to protect the interests
of many, if not most, Lifeline
subscribers who prefer the legacy
Lifeline voice service offerings, and
whose interests we recognize in our
broader Lifeline policy decisions. At the
same time, the High-Cost/Lifeline ETCs
have a discrete, well-defined remaining
Lifeline voice service obligation, and
can provide such subscribers incentives
to transition to new service offerings to
enable the ETCs to take full advantage
of the Lifeline voice service forbearance.
302. Second, if the Commission were
to deny conditional forbearance from
Lifeline voice service obligations as to
the remaining consumers—those who
are not subject to the grandfathering
described above—we expect that
providers would need to retain much, if
not all, of their infrastructure used to
serve Lifeline voice subscribers just to
potentially serve that narrower segment
of overall Lifeline subscribers, not
knowing if or when such subscribers
might seek service. The High-Cost/
Lifeline ETCs thus would continue
incurring costs that they otherwise
could direct to broadband investment.
(By this we mean not only physical
network infrastructure, but also other
infrastructure like that required for
billing and other administrative
functions associated with providing
Lifeline voice service). Insofar as the
benefit of forbearance to providers thus
would be substantially reduced, we
conclude that this likewise would
materially dampen—and in some cases,
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33069
entirely eliminate—what otherwise
would be increased incentives by those
providers to spur greater broadband
penetration.
303. Third, conditional forbearance
from the Lifeline voice service
obligation for High-Cost/Lifeline ETCs
does not preclude carriers from electing
to provide the supported Lifeline voice
service and from receiving universal
service support for doing so. Rather, it
simply eliminates that mandatory
obligation for them to do so under
Section 214(e)(1) and our implementing
rules. Further, as the Commission
observed in the Dec. 2014 CAF Order,
additional protections come from the
service discontinuance process under
Section 214(a) and the authority under
Section 214(e)(3) to require a carrier to
provide the supported service in a
community or portion thereof
requesting that service if no carrier will
do so. (At the same time, we do not
expect these regulatory backstops to
materially diminish the incentives for
existing High-Cost/Lifeline ETCs to
promote deployment and availability of
broadband Internet access in order to
obtain the conditional forbearance. The
Commission has considerable discretion
in how it makes a Section 214(a) public
interest finding, and as that process
enables us to guard against
unreasonable levels of customer
hardship, we also recognize our interest
in creating incentives for promoting
broadband policy goals. In particular,
the Commission traditionally considers
a number of factors in assessing Section
214(a) discontinuance applications,
including (1) the financial impact on the
common carrier of continuing to
provide the service; (2) the need for the
service in general; (3) the need for the
particular facilities in question; (4) the
existence, availability, and adequacy of
alternatives; and (5) increased charges
for alternative services, although this
factor may be outweighed by other
considerations. As observed in the prior
paragraph, for instance, we recognize
that a financial impact on the carrier of
continuing to provide service could
arise from the need to retain much, if
not all, of their infrastructure used to
serve Lifeline voice subscribers to serve
what might be a relatively small
segment of potential subscribers.
Likewise, under Section 214(e)(3) the
relevant regulatory authorities identify
the carrier or carriers are best able to
provide service to the relevant
community or portion thereof, which
need not be the carrier or carriers that
availed themselves of this conditional
forbearance. Insofar as our analysis is
informed in part by the Section
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214(e)(4) relinquishment mechanism
(while not formally bound by it), these
protections also give us comfort that we
can guard against the unlikely scenario
where no voice service at all ultimately
would be available in a manner
sufficient for purposes of the overall
weighing of policy considerations and
conclusions that conditional
forbearance is not contrary to the
interests of consumers and that
conditional forbearance is in the public
interest in this context). Moreover, this
forbearance from the Lifeline voice
service obligation does not alter the
regulatory framework established in this
order for Lifeline broadband service.
ETCs providing Lifeline broadband
service are likely to have incentives to
seek to attract customers to their
Lifeline broadband offerings and to
maximize the utilization of their
networks. Providing attractive voice
service offerings to subscribers of their
Lifeline broadband service is one way to
help achieve that. Such offerings will
provide further alternatives for lowincome consumers. (Thus, although
some commenters express concern
about whether such alternatives will be
sufficiently affordable, we find reason to
believe that providers are likely to have
incentives to make available affordable
offerings. Moreover, our forbearance
decision does not rest solely on this
ground, but relies on it as part of a
wider range of considerations, including
our tailoring of the scope of forbearance
to effectively grandfather an ETC’s
existing voice Lifeline subscribers, as
described above, which will protect
many of the relevant subscribers).
304. Fourth, we expect that the
actions broadband providers take to
promote broadband penetration in an
effort to gain relief from Lifeline voice
service obligations are likely to benefit
low-income consumers, as well as the
public more generally. In particular, we
expect that providers seeking to trigger
the conditional forbearance we grant are
likely to undertake a variety of efforts,
ranging from reducing the price and/or
increasing the capabilities of a service at
a given price point for retail broadband
Internet access service offerings, making
available attractive wholesale
broadband Internet access service
offerings, or undertaking other efforts
such as digital literacy training or other
measures to overcome barriers to
broadband adoption. As broadband
Internet access service becomes ever
more important for all consumers, such
efforts are likely to benefit many of the
same consumers who currently might
desire the otherwise-available Lifeline
voice service offerings. In this scenario,
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then, the effects of conditional
forbearance on such consumers
inherently are themselves mixed, with
benefits to those consumers coupled
with, at most, some potential risks for
those consumers.
305. Finally, we also expect that the
efforts providers undertake to trigger the
conditions necessary for Lifeline voice
forbearance are likely to promote
competitive market conditions for
broadband Internet access service. As
indicated above, we anticipate that by
making available this conditional
forbearance, providers will have
incentives to take steps such as reducing
the price and/or increasing the
capabilities of their broadband Internet
access service at a given price point to
spur adoption of their own broadband
Internet access service. Facilities-based
providers with a voice obligation may
also seek to offer attractive wholesale
data prices, for example, so other
Lifeline providers can also increase
broadband penetration. Where there are
alternative broadband Internet access
service providers to the existing ETCs,
such actions are likely to promote
competition. Under Section 10(b), the
Commission is directed, in making the
Section 10(a)(3) public interest
evaluation, to ‘‘consider whether
forbearance from enforcing the
provision or regulation will promote
competitive market conditions.’’ ‘‘If the
Commission determines that such
forbearance will promote competition
among providers of telecommunications
services, that determination may be the
basis for a Commission finding that
forbearance is in the public interest.’’
Our finding that forbearance is likely to
promote competitive market conditions
reinforces the remainder of our analysis
above, which persuades us that the
conditional forbearance we adopt is in
the public interest.
306. We are unpersuaded by claims
that forbearance would be contrary to
the public interest insofar as it might
reduce the number of Lifeline voice
service providers and/or competition for
Lifeline voice service customers.
Although competition for Lifeline
service can have benefits, that must be
evaluated in the context of other policy
considerations. As we explain above, we
are modernizing our Lifeline efforts to
support broadband Internet access
service given its importance to
consumers and consistent with the
Commission’s responsibilities under
Section 254 of the Act and Section 706
of the 1996 Act. At the same time, we
find an at least somewhat diminished
need for Lifeline-supported voice
service where the relevant conditions
are met. Moreover, we grandfather
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existing Lifeline voice service customers
obtaining service at the time forbearance
newly applies in a given county,
providing protection for the customers
at greatest potential risk of disruption.
In this context, and for the reasons
described above, we conclude that the
conditional forbearance we grant
properly weighs our various universal
service objectives and our broader
broadband policy goals, and that such
forbearance is in the public interest.
307. We also reject arguments
suggesting that the Act requires the
Commission to prioritize competition in
the provision of Lifeline-subsidized
service over all other considerations.
Although Section 214(e)(2) anticipates
multiple ETCs, at least in some areas,
ETC designation deals only with the
eligibility for support, and does not
actually guarantee the receipt of
support—and, consequently, does not
guarantee that all ETCs will provide
services discounted through the receipt
of universal service funding. We
therefore conclude that in evaluating
forbearance from the Lifeline voice
service obligation, Section 214(e) does
not require us to prioritize having a
greater number of providers over the
other policy considerations relevant in
this context under Section 254 of the
Act and Section 706 of the 1996 Act.
308. We also disagree that any
diminution in competition or loss of
options for voice service from
conditional forbearance from the
Lifeline voice obligation for High-Cost/
Lifeline ETCs necessarily will leave
only inferior or less desirable service
offerings so as to render conditional
forbearance contrary to the public
interest. As we explain above, the extent
to which the loss of competition or of
particular service offerings is, in fact,
likely to occur is itself speculative,
particularly against the backdrop of
other Lifeline reforms adopted in this
Order. Moreover, any comparison of
different service offerings involves some
trade-offs, and we are not persuaded
that the examples in the record
demonstrate that a particular offering is
inherently superior for all customers.
(We also find it speculative whether, or
to what extent, historical differences
cited in the record are material to our
analysis here and are likely to persist in
the future, given our Lifeline reforms).
We thus find no basis to depart from our
Section 10(a)(3) determination above
that conditional forbearance is in the
public interest.
309. Nor does our conditional
forbearance from the Lifeline voice
service obligation in Section 214(e)(1)
and our implementing rules interfere
with state interests in a manner that cuts
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against forbearance. Forbearance from
these requirements under federal law
does not alter regulatory obligations
imposed under state law authority, and
we thus reject arguments against
forbearance on those grounds. Further,
some commenters express concern that
the providers required to offer voice
service subsidized by state low-income
support programs might no longer be
providing federal Lifeline-supported
voice service as a result of forbearance.
Rather than trying to craft federal
universal service policy to mirror the
variations and nuances of state-adopted
universal service programs, however,
we conclude instead that it best serves
the public interest and our statutory
responsibilities to adopt the same
conditional forbearance that is available
in all areas of the nation where the
conditions are met. States remain free,
consistent with Section 254(f), to adopt
their own universal service policies not
inconsistent with those of the
Commission, including, to the extent
that they deem it warranted, modifying
their own state low-income support
programs to make funding available to
a wider range of providers or to increase
state support levels.
310. The forgoing analysis also
persuades us that retaining the Lifeline
voice service obligation in areas where
the Lifeline broadband subscribership
and competition condition is met is not
necessary for the protection of
consumers under Section 10(a)(2). For
the reasons described in the paragraphs
above, we conclude that consumers as a
whole are likely to benefit more from
our conditional forbearance than from
retaining the Lifeline voice service
obligation. Even as to low-income
consumers who desire the Lifeline voice
service offerings that otherwise would
remain available under our rules, the
result of forbearance appears to be at
most mixed, and under these
circumstances, particularly as guided by
policies of Section 706 of the 1996 Act,
we conclude that the Lifeline voice
requirement is not necessary to protect
consumers under Section 10(a)(2) where
the Lifeline broadband subscribership
and competition condition is met.
311. We also conclude that the
Lifeline voice service obligation is not
necessary to ensure just, reasonable, and
not unjustly or unreasonably
discriminatory rates and practices under
Section 10(a)(1). As relevant to Section
10(a)(1), commenters’ arguments appear
to center on the effect of forbearance
from the Lifeline voice service
obligation on rates. Thus, we focus our
Section 10(a)(1) analysis here by
considering whether the conditional
forbearance we grant from the Lifeline
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voice service obligation for High-Cost/
Lifeline ETCs would have a negative
effect on the justness and
reasonableness of rates. Because we are
dealing with obligations relating to
supported services under Section 254,
our interpretation of what is ‘‘just’’ and
‘‘reasonable’’ for purposes of Section
10(a)(1) is informed by Section 254.
Notably, under Section 254(b)(1) and
254(i), the question of whether rates are
‘‘just’’ and ‘‘reasonable’’ is distinct from
whether they are ‘‘affordable.’’ Given
the relevant overlay of Section 254 here,
in this context we therefore consider
under Section 10(a)(1) only whether the
Lifeline voice service obligation is
necessary to ensure just and reasonable
and not unjustly or unreasonably
discriminatory rates distinct from the
question of affordability (which we fully
consider in our analysis under other
prongs above). (In particular, we
consider possible effects on affordability
of the services within the definition of
universal service for Lifeline purposes
under our public interest and consumer
protection analyses above. We note that
in the 2015 Lifeline FNPRM the
Commission granted forbearance from
the ILECs’ Section 251(c) resale
obligation as it relates to Lifeline
service, citing in its Section 10(a)(1)
analysis the fact that ‘‘low-income
consumers will still be able to receive
Lifeline-supported services from both
wireless and wireline providers.’’ The
fact that such a finding could be
sufficient to demonstrate that Section
10(a)(1) is satisfied does not imply such
a finding is necessary to demonstrate
that Section 10(a)(1) is satisfied in the
Lifeline context, particularly given the
overlay of Section 254(b)(1) and (i) as
discussed above. Moreover, we also
reject arguments that granting such
forbearance undercuts the Section
251(c) Lifeline resale forbearance
previously granted, given our analysis
here that conditional forbearance from
the Lifeline voice service obligation is
warranted under the Section 10(a)
criteria without any presumption of a
particular level of marketplace
participation of Lifeline ETCs. For these
reasons, as well as those stated in the
text, in the context of our Section
10(a)(1) analysis here we reject
arguments suggesting that affordability
is an element of the justness and
reasonableness of rates).
312. On the record here, we are not
persuaded that the Lifeline voice service
obligation is necessary to ensure just
and reasonable rates or rates that are not
unjustly or unreasonably discriminatory
where the conditions on forbearance are
met. Some of these areas will remain
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33071
served by ETCs with high-cost voice
service obligations, requiring them to
offer and advertise voice telephony
service throughout their designated
service area. We find no basis in the
record here to conclude that the rates
charged for voice telephony services in
these areas are likely to be unjust,
unreasonable, or unjustly or
unreasonably discriminatory as relevant
to our Section 10(a)(1) inquiry here if
we forbear from the Lifeline voice
service obligation where the relevant
conditions are met.
313. As to the remaining areas, the
Commission granted forbearance from
high-cost voice service obligations only
after concluding that competition and
other regulatory protections were
adequate to, among other things, ensure
just and reasonable and not unjustly or
unreasonably discriminatory rates. We
find no basis on the record here to reach
a different conclusion regarding
forbearance from the Lifeline voice
service obligation in these areas under
Section 10(a)(1), insofar as the relevant
conditions on forbearance are satisfied.
314. As an overlay to the forgoing
analysis regarding voice telephony
service rates, we note that in evaluating
forbearance from applying Lifeline voice
service obligations to a class of
telecommunications carriers (carriers
that are ETCs for both high-cost and
legacy Lifeline voice purposes), Section
10(a)(1) speaks to the justness and
reasonableness of rates (and practices)
by those telecommunications carriers
generally. Although we consider
whether forbearance from the Lifeline
voice service obligation will affect the
justness and reasonableness of rates for
voice telephony service, we also
consider the effect of forbearance on
these ETCs’ broadband Internet access
service. As described above, we
anticipate that the potential to achieve
conditional forbearance will spur ETCs
to take actions that spur competition in
the marketplace for broadband Internet
access service. The Commission
previously has recognized that
competition helps ensure just and
reasonable rates. As part of our Section
10(a)(1) analysis, we thus include the
predictive judgment that, in the context
of broadband Internet access service,
forbearance is likely to have some effect
in promoting or enhancing just and
reasonable rates. Under the totality of
the analysis above, we therefore find
that the Lifeline voice service obligation
is not necessary to ensure just,
reasonable, and not unjustly and
unreasonably discriminatory rates and
practices under Section 10(a)(1).
315. Details of the forbearance
condition. We adopt a condition on
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forbearance from the Lifeline voice
service obligation for High-Cost/Lifeline
ETCs that we conclude is intended to
create incentives for those carriers to
promote broadband Internet access
service subscribership and competition,
targeted in this context to low-income
consumers. To this end, forbearance
from the Lifeline voice service
obligation is granted where the
following conditions are met: (a) 51% of
Lifeline subscribers in a county are
obtaining Lifeline broadband Internet
access service; (b) there are at least 3
other providers of Lifeline BIAS that
each serve at least 5% of the Lifeline
broadband subscribers in that county;
and (c) the ETC does not actually
receive federal high-cost universal
service support. (Because we find
forbearance warranted where these
readily-identifiable triggers are met, we
reject concerns that forbearance from
the Lifeline voice obligation would raise
administrability concerns that counsel
against such relief). As explained earlier
in this Section, a number of High-Cost/
Lifeline ETCs have argued that
application of the Lifeline voice
obligation to them is unnecessary given
other alternative voice options, and that
such regulatory relief would free up
resources to enable the advancement of
broadband policy goals. The condition
on forbearance that we adopt today
enables us to ensure—in a way that
those providers’ proposals themselves
did not—that regulatory relief from such
ETCs’ Lifeline voice service obligations
genuinely will advance our broadband
policy goals. We further expect that the
resulting broadband marketplace not
only will advance our broadband
policies but will itself foster additional
affordable options for voice service, as
well.
316. We adopt the first two elements
of our forbearance condition to advance
our policy goals of creating incentives to
promote broadband Internet access
service subscribership and competition,
particularly for low-income consumers,
but recognize that we are engaged in a
line-drawing exercise that cannot be
resolved by available data. Regarding
our subscribership criteria, we find that
a requirement that a county have at least
51 percent of Lifeline subscribers that
are subscribing to Lifeline broadband
Internet access service establishes a
threshold demonstrating that a
meaningful portion of Lifeline
subscribers are taking advantage of our
new Lifeline broadband program. (As
we explain elsewhere, given the
increasing importance of broadband
Internet access service today we are
modernizing our universal service
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policies for low-income subscribers to
reflect that increased importance, and
taking this step to further promote
broadband Internet access service
subscribership by low-income
consumers helps advance those overall
goals). At the same time, we recognize
that, because the Lifeline broadband
program is newly-established, setting
the threshold too high could result in
diminished or delayed incentives by
High-Cost/Lifeline ETCs to encourage
such subscribership and competition if
the threshold was viewed as
unattainable in any reasonable
timeframe. We believe the threshold we
adopt appropriately balances these
considerations.
317. Our competition criteria likewise
seeks to balance our goal of promoting
a meaningful level of competition for
Lifeline broadband Internet access
service subscribers, with the realities
that this is a new program. (As
explained earlier in this Section, we
conclude that it advances our universal
service policy implementation of
Section 254 of the Act to promote
competition for Lifeline broadband
services). A requirement that a county
have at least 3 other providers of
Lifeline BIAS besides the High-Cost/
Lifeline ETC that would avail itself of
our forbearance, with each of those
other Lifeline broadband providers
serving at least 5 percent of the Lifeline
broadband subscribers in the county
demonstrates some level of competition.
(The Commission has previously
acknowledged that competition between
even two providers theoretically can
result in meaningful competition in
some circumstances, but by adopting a
materially higher threshold for the
number of competitors we avoid such
questions. By requiring that each of the
other providers need only serve 5% of
the Lifeline broadband Internet access
service subscribers we are persuaded
that that this threshold remains
realistically attainable, while guarding
against the possibility of counting
purely de minimis providers in
identifying the counties where
forbearance applies. We emphasize that
in this context we seek to identify
readily-administrable bright-line
thresholds that establish meaningful
thresholds while balancing the need to
set them at feasibly attainable levels to
ensure appropriate incentives for HighCost Lifeline/ETCs to pursue steps that
result in regulatory relief. We therefore
caution that the particular thresholds
we adopt here do not necessarily reflect
how the Commission will evaluate
competition in any other context). It
also is our predictive judgment that,
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even though the Lifeline broadband
program is new, and some providers
thus will need to seek Lifeline
broadband ETC designations before
competing for those subscribers, this
threshold is likely to be realistically
attainable in many circumstances. (We
note in this regard that we take other
steps in this Order to facilitate
competition for Lifeline broadband
services).
318. The subscribership and
competition thresholds we adopt also
have the advantage of being calculations
we can make based on NLAD, state
administrator, or National Verifier data.
Those data will be readily available to
the Commission, making these
calculations readily administrable. In
the interim period of time before the
National Verifier is in place, we direct
USAC to obtain and have systems for
regularly updating the relevant data
from the NLAD or from the states that
have opted-out of the NLAD by
December 1, 2016. (One of the
requirements for any state that optedout of the NLAD was that it ensure that
the Commission and USAC would have
access to records as needed for oversight
purposes). In addition, because the
NLAD or National Verifier data (as well
as the state data) are, in the first
instance, used to guard against improper
universal service support
disbursements, there already is a strong
incentive to ensure that they are as
accurate and up-to-date as possible. We
also direct USAC, in coordination with
the Bureau, to collect as part of its
administrative function the information
necessary to determine whether Lifeline
consumers are receiving Lifelinesupported BIAS either on a standalone
basis or as part of a bundle so that the
necessary determinations called for can
be made.
319. We further conclude that
evaluating whether the condition is met
at the county level strikes a reasonable
balance in this context. Smaller
geographic areas could have more
widely variable numbers of Lifeline
subscribers, leading to anomalous
results under our subscribership and
competition thresholds that do not
accurately capture the policies we are
seeking to advance. (For example, as of
the end of 2015 USAC estimates that
there were approximately 13.1 million
subscribers participating in Lifeline.
Thus, on average, there are
approximately 172 Lifeline subscribers
per census tract. In practice, however,
we anticipate that there is likely to be
sufficient variability census tract-tocensus tract that some tracts could have
only an extremely small number of
Lifeline subscribers. Use of census tracts
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as the geography could, in those cases,
mean that the subscribership threshold
is met based on only an extremely small
number of Lifeline broadband Internet
access subscribers and/or that it might
be very difficult for three additional
providers to offer Lifeline service in that
tract and each have at least 5% share of
Lifeline broadband subscribers. These
problems would be exacerbated by
using even smaller geographic areas for
purposes of the condition). On the other
hand, larger geographies could
encompass sufficiently significant areas
outside a given High-Cost/Lifeline ETC’s
service territory as to render it much
more difficult for that ETC to promote
Lifeline broadband subscribership and
competition to a sufficient degree to
qualify for the forbearance from the
Lifeline voice service obligation. (Many
ILEC study areas are far smaller than a
state, for example). The less realistically
attainable the condition appears, the
less the provider will have incentives to
take the broadband-promoting actions
we seek to advance in an effort to realize
forbearance. Other geographies, such as
study areas or service areas, can vary
considerably provider-to-provider and
we are not persuaded that using such
geographic areas for applying our
condition would result in similarlysituated providers being treated
similarly. Although we have not
identified any single, ideal geographic
area to rely on for purposes of our
condition, we conclude that
calculations at the county level provides
a reasonable middle ground relative to
larger, smaller, or even more variable
alternatives. (Counties fall within the
range of geographies that the
Commission reports in the context of its
broadband progress reports, for
example).
320. In a county where the first two
criteria of our forbearance condition are
met, our forbearance from the Lifeline
voice service obligation is further
conditioned on the High-Cost/Lifeline
ETC not actually receiving federal highcost universal service support. Thus, for
any county where the first two criteria
of our forbearance condition are met,
our conditional forbearance from the
Lifeline voice obligation only applies in
those areas within the county where the
High-Cost/Lifeline ETC is not, in fact,
receiving federal high-cost universal
service support. In areas where the ETC
does receive federal high-cost universal
service support, the public, through the
federal universal service fund, is making
an ongoing investment in the ETC’s
provision of voice telephony service and
in the underlying broadband-capable
network used to offer that service. In
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that context, we are persuaded that
there is an ongoing, overriding policy
interest that such networks and
services—already being supported by
universal service support, with the
associated high-cost voice service
obligation—continue to be available to
advance our low-income voice policy
goals, as well. By contrast, where there
is no such ongoing federal high-cost
universal service investment, we are
persuaded that the potential to advance
our broadband policy goals tips the
balance in favor of forbearance for all
the reasons described in this Section
above. (In the context of the overall
balancing of policy interests with
respect to the conditional forbearance
we grant, we thus reject arguments that
high-cost ETCs should perpetually have
Lifeline voice service obligations
throughout their entire designated
service areas).
321. To effectuate this condition on
forbearance, we direct USAC, one year
after the effective date of this Order and
annually thereafter, to submit data to
the Bureau to enable the identification
of counties where the subscribership
and competition criteria are met. After
review, within thirty days of the receipt
of these data from USAC, we direct the
Bureau to issue a Public Notice
announcing the counties where the
subscribership and competition criteria
of our forbearance condition are met.
Sixty days after the release of that
Public Notice, forbearance from the
Lifeline voice service obligation will
apply to each High-Cost/Lifeline ETC in
the identified counties insofar as each
ETC is not receiving high-cost support.
This forbearance will continue to apply
in each county identified in the Public
Notice—subject to the high-cost support
condition—until sixty days after the
next year’s Public Notice. At that time,
the list of counties identified in the next
year’s public notice will govern,
including any additions of newlyqualifying counties or the elimination of
counties that no longer meet the criteria
(and thus no longer fall within the scope
of the conditional forbearance).
(iii) Lifeline Broadband Provider ETCs
322. As explained above, we interpret
Section 214(e)(1) to impose service
obligations on ETCs that mirror the
service defined as supported under
Section 254(c) in the context of the
specific universal service rules,
mechanisms, or programs for which
they were designated. Consequently,
providers that obtain an ETC
designation as an LBP receive a
designation that is specific to the
Lifeline broadband program and will
only have Section 214(e)(1) service
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33073
obligations for BIAS. Thus, by default,
providers do not have any Lifeline voice
service obligations as a result of their
designation specifically as an LBP.
d. Obligation To Advertise the
Availability of and Charges for Lifeline
Service
323. In addition to the actions
described above, we further encourage
competition and market entry in the
Lifeline program by interpreting ETCs’
obligation to advertise the availability of
Lifeline services and the charges thereof
for purposes of receiving reimbursement
from the Lifeline program. We find that
interpreting ETCs’ obligations under
Section 214(e)(1)(B) will provide clarity
and reduce burdens on providers,
making it easier to enter and remain in
the Lifeline program.
324. Under Section 214(e)(1)(B) of the
Act, an ETC must, among other
requirements, ‘‘advertise the availability
of such services and the charges therefor
using media of general distribution.’’
The requirement to advertise the
availability and price of service on
‘‘media of general distribution’’ creates
ambiguity that, added with other
obligations for ETCs, can discourage
providers from seeking designation and
entering the Lifeline program. This
ultimately harms Lifeline-eligible
consumers, who are left with few
choices among discounted services.
However, as Free Press and New
America’s Open Technology Institute
have argued, we acknowledge that the
requirement to advertise the availability
and price of service need not necessarily
be overly burdensome if implemented
properly.
325. We therefore find that, while the
requirement to advertise the availability
and price of service is a useful one, the
Commission can reduce the perhaps
unintended burden of this provision on
carriers by interpreting the phrase
‘‘media of general distribution’’ to
provide further clarity. Under Section
214(e)(1)(B), ‘‘media of general
distribution’’ is any media reasonably
calculated to reach the general public
or, for an LBP, the specific audience that
makes up the demographic for a
particular service offering. For example,
for an LBP partnering with a school to
offer Lifeline-discounted BIAS to that
school’s community, ‘‘media of general
distribution’’ may include flyers,
newspaper advertisements, or local
television advertisements in that
school’s geographic area. For a Lifelineonly broadband ETC offering a service
designed with eligible low-income
subscribers with hearing disabilities,
‘‘media of general distribution’’ may
include web advertisements reasonably
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calculated to reach the relevant
community, mail, email, or other textbased methods of advertising.
326. Combined with our other actions
in this Order to encourage provider
participation in the Lifeline program
and create a robust, competitive market
for Lifeline subscribers, we expect that
our interpretation of the requirement of
Section 214(e)(1)(B) will give clarity to
participating providers and remove one
more potential source of uncertainty to
encourage providers to enter the
program.
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F. Lifeline Service Innovation
327. To fully obtain the benefits of a
modernized Lifeline program, the
Commission and others must encourage
and facilitate the meaningful access and
adoption to quality advanced
telecommunications services among
low-income households. We recognize
that in order to access and adopt
advanced telecommunications services,
households will require devices that
enable them to bridge the digital divide.
We therefore require Lifeline providers
that provide both supported mobile
broadband service and devices to their
consumers to provide devices that are
Wi-Fi enabled, and we also require the
same providers to offer the choice to
Lifeline customers of devices that are
equipped with hotspot functionality.
We also require fixed broadband
Lifeline providers that provide devices
to their customers to provide devices
that are Wi-Fi enabled. The requirement
to provide Wi-Fi-enabled devices does
not apply to devices provided to
consumers prior to the effective date of
the requirement. Additionally, we direct
the Consumer and Governmental Affairs
Bureau (CGB) to develop a
comprehensive plan for the Commission
to better understand the non-price
barriers to digital inclusion and to
propose how the Commission can
facilitate efforts to address those
barriers.
1. Bridging the ‘‘Homework Gap’’ and
‘‘Digital Divide’’ With Wi-Fi and
Hotspot-Enabled Devices
328. In recognition of the need for
students, job applicants, and others to
access the Internet on multiple
platforms and in various ways we now
require Lifeline providers that provide
supported broadband service and
devices to their consumers to provide
devices that are Wi-Fi enabled, and to
offer devices that are equipped with
hotspot functionality. We adopt these
requirements because Wi-Fi enabled
phones are essential tools to help
individuals stay connected, and because
the hotspot requirement will help to
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ensure that households without fixed
Internet access will be able to share
their access to the Internet among
multiple members if so desired.
329. Discussion. In the 2015 Lifeline
FNPRM the Commission recognized the
need for forward-thinking, innovative
solutions to address the ‘‘digital divide’’
and the ‘‘homework gap,’’ and
emphasized that it was vital for lowincome consumers to ‘‘have access to
broadband-capable devices that provide
the ability to send and receive critical
information, as well as broadband
service with sufficient capacity,
security, and reliability to be
dependable in times of need.’’ In its
comments TracFone emphasized a
similar point, and stated that ‘‘Lifeline
providers offering no charge Lifeline
services can—and should be—required
to provide such Wi-Fi enabled devices.’’
We conclude that Lifeline providers
who make devices available with or
without charge for use with a Lifelinesupported fixed or mobile broadband
service must ensure that all such
devices are Wi-Fi enabled. (This
requirement does not apply to devices
provided to consumers prior to the date
that the new requirement goes into
effect.) Lifeline providers who make
devices available with or without charge
for use with a Lifeline-supported mobile
broadband service must also offer
devices that are capable of being used as
a hotspot. (We note that while we
decline to support devices as discussed
supra in para. 105, these requirements
are only conditions for receiving
support if the Lifeline provider chooses
to provide devices for the purpose of
extending the connectivity supported by
Lifeline. Lifeline providers retain the
flexibility to decide whether to provide
devices in general and if so, what
amount to charge, if any, for a device).
By conditioning support for Lifeline
services in this way, we seek to increase
the value of the supported connection
so that Lifeline consumers can regularly
and reliably access the Internet.
330. As explained in more detail in
the paragraphs that follow, this
condition on support under the Lifeline
broadband mechanism for providers
that make devices available to Lifeline
subscribers promotes Lifeline
subscribers’ access to advanced services
and the affordability of those services.
Importantly, the condition guards
against the risk that the Lifeline
subscribers and their households would
be hindered in their ability to avail
themselves of options for using the
Internet that are less expensive than
purchasing additional usage or
additional services as could be
necessitated if Lifeline providers only
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provided devices that lack the
capabilities required under this
condition. Adopting this condition on
the Lifeline broadband support
mechanism advances the objectives in
Section 254(b) and (i) of the Act, as well
as our responsibilities under Section
706 of the 1996 Act. The Commission
has invoked Section 254(b) of the Act
and Section 706 of the 1996 Act to place
conditions on the receipt of universal
service support in the past, and courts
likewise have affirmed conditions on
the receipt of universal service support
in other ways. Greater availability of
devices with the capabilities we require
under our condition also provides
greater incentives for the public to fund
advanced services to schools and
libraries, including those in low-income
areas, given that a larger proportion of
the students or patrons can avail
themselves of the opportunities made
available, thereby advancing additional
objectives of Section 254 of the Act and
Section 706 of the 1996 Act. We discuss
the specific elements of our condition
on Lifeline broadband funding in greater
detail below.
331. Wi-Fi Enabled. Wi-Fi enabled
devices help many of the most
vulnerable members of society stay
connected. Many public buildings, such
as schools and libraries, offer public WiFi access and a Lifeline consumer with
a Wi-Fi enabled device will be able to
take advantage of public Wi-Fi networks
and look for jobs, check email, or make
a doctor’s appointment, all without
using any mobile data. This ensures
consistent Internet access even when a
Lifeline consumer is away from home,
and it allows the consumer to save
money and avoid going over any data
caps, and it also helps to bridge the
homework gap, as students with Wi-Fi
enabled devices can utilize public
Internet networks to complete their
assignment. As we noted in the 2015
Lifeline FNPRM, in some communities
students must go to local restaurants to
use Wi-Fi to study. While this situation
is far from ideal, it highlights the vital
importance of Wi-Fi enabled devices as
a complement to a consumer’s primary
broadband service, because without
these devices many students would be
unable to access the Internet outside of
the classroom at all. Additionally, a
‘‘substantial majority’’ of American
consumers already own Wi-Fi enabled
smartphones, as 88 percent of new
phone purchases, and 77 percent of total
mobile phones, are Wi-Fi enabled
smartphones. Furthermore, Wi-Fi
enabled routers and modems for use
with fixed broadband service also
increase the value of the connection by
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allowing simultaneous use of multiple
devices of varying types.
332. Hotspot Functionality. Next, we
adopt a phased-in requirement that
recognizes the importance of devices
with hotspot functionality to help
connect households to the Internet.
Many of the most economically
vulnerable members of society do not
have fixed Internet access, and rely
solely on mobile devices. A recent
report indicates that 7 percent of
Americans are ‘‘smartphone
dependent,’’ meaning that a smartphone
provides their only access to the
Internet. In households without fixed
broadband, using a smartphone or other
device as a mobile hotspot can help to
partially alleviate this limitation and
permit others in that household to
access the Internet. The Commission
previously stated that tethering can
provide mobile broadband consumers
‘‘access to the same applications and
functionalities as consumers served
through fixed connections.’’ A typical
American household has 2.3
smartphones, along with additional
devices capable of accessing the
Internet. In a household with Wi-Fi
enabled devices and no fixed Internet
connection, a tethered connection can
help to ensure Internet access for
multiple family members. A student can
do research for a homework assignment
at the same time her parents send emails
or apply for jobs. This assists in bridging
the homework gap for those students,
helping make them competitive
academically and better preparing them
for the challenges of the 21st Century.
A hotspot enabled device also helps
bridge the digital divide, and efficiently
maximizes the value of a single mobile
broadband connection. Devices with
hotspot functionality are also becoming
increasingly ubiquitous, and in order for
a consumer to utilize the benefits of
mobile broadband, the consumer should
have to the choice of a device that
provides access to hotspot functionality.
Because devices that are equipped with
hotspot functionality are valuable tools
to keep individuals and families
connected to the Internet, we conclude
that Lifeline providers who provide
devices to their consumers should
include devices with this capability
among other offerings. (We clarify that
this does not require Lifeline providers
offering broadband service to
necessarily provide a device.
Furthermore, this requirement does not
prevent a subscriber using a device not
provided by the Lifeline provider of the
supported service. Rather, to the extent
the Lifeline provider, its affiliate(s), or
business partner make devices available
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to the Lifeline subscriber, such devices
must be Wi-Fi-enabled, and hotspotenabled devices must be offered if the
Lifeline provider is to receive Lifeline
support). In addition, because of the
importance of tethering to bridging the
‘‘digital divide,’’ providers may not
impose an additional cost on tethering
service for tethering that does not
exceed the relevant minimum service
standard for mobile broadband data
usage allowance. (As an example, if the
applicable minimum service standard
for mobile broadband data usage
allowance is 2 GB, a provider may not
impose a tethering-specific fee or
surcharge for tethering if the 2 GB data
usage allowance has not been reached.
Providers may charge consumers who
choose to purchase data above the
minimum data usage allowance).
333. To ensure that the market can
adjust and reflect the evolution of
available devices while also ensuring
that consumers have affordable choices,
we adopt a phase in transition for this
requirement. Beginning in December 1,
2016, we require that providers of
broadband Lifeline service that make
devices available include at least one
device that has hotspot capability.
Building on that, fifteen percent of the
devices a provider makes available from
December 1, 2017 to November 30, 2018
shall be hotspot enabled. Twenty
percent of the devices a provider makes
available from December 1, 2018 to
November 30, 2019, shall be hotspot
enabled. Twenty-five percent of the
devices a provider makes available from
December 1, 2019 to November 30, 2020
shall be hotspot enabled. Thirty-five
percent of the devices a provider makes
available from December 1, 2020 to
November 30, 2021 shall be hotspot
enabled. Forty-five percent of the
devices a provider makes available from
December 1, 2021 to November 30, 2022
shall be hotspot enabled. Fifty-five
percent of the devices a provider makes
available from December 1, 2022 to
November 30, 2023 shall be hotspot
enabled. Sixty-five percent of the
devices a provider makes available from
December 1, 2023 to November 30, 2024
shall be hotspot enabled. Seventy-five
percent of the devices a provider makes
available beginning December 1, 2024
onward shall be hotspot enabled. We
believe that this approach ensures that
consumers have robust choices—both
with and without hotspot functionality.
Accordingly, we amend Section
54.422(b) of our rules to require carriers
to certify their compliance with these
requirements on our Form 481.
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2. Importance of Digital Inclusion
334. In this Section, we direct the
Consumer and Governmental Affairs
Bureau (CGB) to develop a
comprehensive plan for the Commission
to better understand the non-price
barriers to digital inclusion and to
propose how the Commission can
facilitate efforts to address those
barriers. This plan should address
promoting digital inclusion generally
and also as it particularly relates to the
new Lifeline program established in this
Order. CGB should specifically work
with other bureaus and offices, as well
as USAC, to ensure all Lifeline
stakeholders’ views are incorporated
into this effort. We direct CGB to submit
this plan to the Commission within six
months of the effective date of the order.
Through this effort, we initiate an
ongoing campaign to build the
Commission’s digital literacy capacity
and to keep us apprised and abreast of
the state of digital inclusion across the
country.
335. Lowering non-price barriers to
digital inclusion is an important
component of increasing the availability
of broadband service for low-income
consumers. As explained above, the key
purpose of our actions in this order is
to increase the affordability of
broadband service, which remains the
chief impediment to broadband
adoption among low-income consumers.
We nonetheless recognize, and concur
with, the findings of other governmental
and private researchers that there are
multiple barriers to digital inclusion
among low-income consumers. (Digital
inclusion includes but reaches beyond
broadband adoption and affordability).
Notably, lack of digital literacy and
perceived relevance are significant nonprice barriers. All of these barriers are
interrelated. Recent studies confirm that
consumers may consider broadband
service to be relevant if other barriers,
such as digital literacy and price are
overcome. The fact that a consumer may
not be able to afford broadband service
may also reduce the relevance of
broadband service to that consumer.
Many low-income consumers that are
online may not be able to take advantage
of all that the Internet has to offer. By
one estimate, approximately 36 million
Americans don’t use the Internet at all
and approximately 70 million
Americans have low digital skills. Based
on the foregoing, we believe that lowcost broadband coupled with strategic,
effective digital inclusion efforts will
significantly impact the lives of millions
of consumers across the Nation,
particularly those with lower incomes
and in key demographic groups, such as
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seniors, veterans, persons with
disabilities, rural communities, and
those living on Tribal lands, many of
which may also have an increased need
for access to educational, public health
and/or public safety services.
Accordingly, we find that the public
interest would be served by building
upon earlier efforts by the Commission
and others to study and monitor the
impact of digital inclusion efforts.
336. We recognize the important role
consumer groups, community and
philanthropic organizations, local
government, and industry stakeholders
play in assisting consumers in
overcoming the non-price barriers to
digital inclusion. Therefore, CGB’s plan
should include proposals for
engagement of these groups to explore
strategies for promoting increased
broadband adoption as well as increased
digital literacy of low-income and other
consumers. In its plan, CGB should
explore how to connect efforts to
increase the availability of affordable
service and equipment, digital literacy
training, and relevance programming to
make digital inclusion a reality in light
of the modernized regulatory
framework.
337. In addition, we encourage
Lifeline providers to work with schools,
libraries, community centers and other
organizations such as food banks and
senior citizen centers that serve lowincome consumers to increase
broadband adoption and address nonprice barriers to adoption. Providers
should make available contact
information for Lifeline subscribers as
part of their outreach. CGB’s plans
should further this objective. Broadband
can be a critical tool for seniors to
realize many economic and health gains
as well as increased socialization, but
seniors lag behind other demographic
groups in terms of adoption and digital
inclusion. Education and awareness
programs targeting seniors can be
effective in overcoming these barriers
and increasing broadband adoption
among low-income seniors.
338. CGB’s plan should propose how
it will convene stakeholders, including
both Lifeline and non-Lifeline
broadband providers, community and
philanthropic organizations, local
governments, and anchor institutions to
explore how digital inclusion efforts can
be tailored to local conditions by trusted
community-based partners to maximize
their effect. Digital inclusion
organizations have found that the most
successful training is provided through
a trusted, community-based partner that
provides the social support necessary
for increasing broadband access.
Moreover, local social and demographic
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conditions may make one solution work
in one place while another approach is
more appropriate elsewhere. Based on
their experience, many digital inclusion
organizations have moved from classes
to one-on-one training to improve
outcomes. One-on-one training can be
the most effective in part because it
helps lower the barrier of perceived
relevance; each consumer learns how
the Internet can assist them accomplish
tasks of particular importance to them.
CGB’s plan should address how digital
inclusion organizations can share their
experience in tailoring digital inclusion
efforts to local conditions.
339. In addition, CGB’s plan should
address information and studies
available from digital inclusion experts
regarding best practices for increasing
the digital skills of those already online
and how those best practices can be
spread throughout the digital inclusion
community. Digital literacy efforts can
increase the digital inclusion of those
who already have access to the Internet
to be fully ‘‘digitally ready.’’ Schools,
libraries, and community organizations
across the country have already begun
developing digital learning curriculums
that have enabled low-income
populations to more meaningfully
engage with all the Internet has to offer.
Some of the same community-based,
grass-roots approaches to increasing
digital inclusion for those who do not
have access may also be useful in
closing the digital readiness gap among
those that already have access to
broadband. As with programs promoting
digital inclusion generally, a ‘‘one-sizefits all’’ solution to increasing digital
skills may not be the most efficient or
effective approach. CGB’s plan should
propose how to facilitate
communication among these
organizations regarding how to tailor
digital inclusion efforts to deepen the
value of broadband to those already
online.
3. Lifeline Service Stability
340. To further incentivize investment
in high-qualify Lifeline service
offerings, we implement Lifeline benefit
port freezes—of 12 months for data
services and 60 days for voice services—
that will give providers greater certainty
when planning new or updated Lifeline
offerings. Providers may not seek or
receive reimbursement through the
Lifeline program for service provided to
a subscriber who used the Lifeline
benefit to enroll in a qualifying Lifelinesupported BIAS offering with another
Lifeline provider within the previous 12
months. Providers also may not seek or
receive reimbursement through the
Lifeline program for service provided to
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a subscriber who used the Lifeline
benefit to enroll in a qualifying Lifelinesupported voice telephony service
offering with another Lifeline provider
within the previous 60 days. These port
freeze rules for both BIAS and voice
service will be subject to certain
conditions to ensure Lifeline consumers
are sufficiently protected.
341. Twelve-month benefit port freeze
for Lifeline-supported broadband
service. To facilitate market entry for
Lifeline-supported BIAS offerings,
provide additional consumer benefits,
and encourage competition, we now
establish that providers may not seek or
receive reimbursement through the
Lifeline program for service provided to
a subscriber who used the Lifeline
benefit to enroll in a qualifying Lifelinesupported BIAS offering with another
Lifeline provider within the previous 12
months, except as explained below. (For
the purposes of this Section, the use of
the term ‘‘transfer’’ is meant to include
any mechanism to move a subscriber
from one carrier to another, and the 12month period will be measured from the
subscriber’s service initiation date. As a
function of the 12-month port freeze,
USAC will determine the best method
and practices to handle carrier deenrollments to prevent improper
practices by carriers to circumvent the
port freeze.) We find that allowing
broadband providers the security of a
longer term relationship with
subscribers will incentivize greater upfront investments from providers. Those
investments in broadband-capable
devices and broadband services should
improve the quality of new offers for
subscribers and further spur
competition among providers to offer
more innovative services. While we
acknowledge that this rule will decrease
Lifeline providers’ incentive to compete
for customers that have recently signed
up with another Lifeline provider, we
find that Lifeline-eligible consumers
will nonetheless benefit more from a
Lifeline market in which a benefit port
freeze gives providers stronger incentive
to vigorously compete for eligible
customers through better broadband
service offerings and outreach.
342. Except in circumstances
described below, providers may not
seek or receive reimbursement through
the Lifeline program for service
provided to a subscriber who used the
Lifeline benefit to enroll with another
Lifeline provider for qualifying Lifelinesupported BIAS service within the
previous 12 months. For a subscriber to
continue receiving the Lifeline benefit
after the subscriber has received
Lifeline-supported service from a
provider for 12 months, the subscriber
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must be recertified as eligible, at which
point the subscriber may choose to
receive Lifeline-supported service from
the same Lifeline provider month-tomonth, being recertified every 12
months. If, however, the subscriber
switches to a different Lifeline provider
after the initial 12-month period, a new
initial 12-month period will begin with
the new Lifeline provider. (If the
subscriber opts to continue receiving
service from her current Lifeline
provider at the end of the initial 12month period, that provider may not
temporarily ‘‘terminate’’ the subscriber’s
service for purposes of obtaining a
second 12-month port freeze
immediately following the first.
Additionally, as part of the transfer of
the subscriber’s benefit, the new Lifeline
provider will follow the same subscriber
enrollment rules for a new subscriber,
such as verifying eligibility and
beginning a new 12-month
recertification cycle). Lifeline
disbursements will be made by USAC to
the Lifeline provider each month, as in
the current program, and we expect this
eligibility modification to encourage
Lifeline providers to offer more robust
services in light of the additional
customer certainty this rule change
provides.
343. A provider that enrolls Lifelineeligible subscribers cannot materially
change the initial terms or conditions of
that service offering without the consent
of the subscriber until the end of the 12
months, except to increase the offering’s
speeds or usage allowances. Changes
that lower the quality or speed of
service, lower the offering’s usage
allowance, or increase the service’s
price are presumptively material
changes to the terms or conditions of
service, even if such changes are made
in response to an amendment to the
Commission’s rules or a change to the
Lifeline program’s minimum service
standards. If a subscriber cancels service
or is de-enrolled for non-usage, the
Lifeline provider cannot continue to
receive reimbursement for that
subscriber, nor can the subscriber reenroll in the program with another
provider until the end of the initial 12month period. Where permitted by the
terms and conditions of the service
offering, a Lifeline subscriber at any
time may move their Lifeline benefit to
a different qualifying Lifeline service
offered by the same provider, whether
broadband, voice, or a bundled offering
so long as the service is eligible for
support by the Lifeline program.
However, if the subscriber switches to
another plan offered by the Lifeline
provider that offers Lifeline qualifying
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voice telephony service but not Lifeline
qualifying BIAS, the subscriber’s 12month port freeze will end immediately
and the subscriber will instead be
subject to a 60-day benefit port freeze.
344. Sixty-day benefit port freeze for
Lifeline-supported voice telephony
service. A Lifeline provider also may not
seek or receive reimbursement through
the Lifeline program for service
provided to a subscriber who used the
Lifeline benefit to enroll in a qualifying
Lifeline-supported voice telephony
service offering with another Lifeline
provider within the previous 60 days,
except in circumstances explained
below. (For the purposes of the 60-day
port freeze, the period will begin to run
from the subscriber’s service initiation
date). We find that, for the reasons
described above, a benefit port freeze
will encourage provider investment and
high-quality service offerings in voice
telephony service as well as BIAS.
However, since the service and device
costs associated with standalone voice
telephony service are generally lower
than costs for comparable broadband
offerings, the benefit port freeze for
Lifeline-supported offerings that do not
meet the program’s minimum service
standards for BIAS need not be a full 12
months. Instead, we find that the
existing 60-day period administered by
USAC is sufficient to encourage
investment and quality offerings for
voice services, and we accordingly
codify that period in our rules.
345. Exceptions to the BIAS and voice
telephony Lifeline benefit port freezes.
In certain circumstances, however, an
eligible low-income subscriber may
transfer their Lifeline benefit to another
provider prior to completion of the 12month period. A subscriber may transfer
their Lifeline benefit to another provider
prior to completion of the 12-month
period if:
• The subscriber moves their
residential address;
• the provider ceases operations or
otherwise fails to provide service;
• the provider has imposed late fees
for non-payment related to the
supported service(s) greater than or
equal to the monthly end-user charge for
service; or
• the provider is found to be in
violation of the Commission’s rules
during the benefit year and the
subscriber is impacted by such
violation.
346. In any of the above
circumstances, Lifeline subscribers may
cancel service and receive a new
Lifeline-supported service with another
provider until the end of the original 12month period. In these circumstances,
the subscriber is not required to re-
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33077
verify eligibility until the end of the
original 12-month period. In such cases,
we direct USAC to implement a process
for facilitating the necessary sharing of
information between the Lifeline
providers so the subscriber’s benefit can
be transferred to the new provider in
accordance with Commission rules. We
also direct USAC to make necessary
modifications to the NLAD for enforcing
these rules and to incorporate such
functionality into the National Verifier.
We also require states that have optedout of the NLAD, in coordination with
USAC, to update their systems and
processes to implement this rule. We
insert Section 54.411 of our rules to
establish when and under what
circumstances a subscriber may transfer
his or her Lifeline benefit to a new
provider. Our addition of Section 54.411
of the Commission’s rules, as discussed
in this Section, will become effective 60
days after announcement in the Federal
Register of OMB approval of the subject
information collection requirements or
December 1, 2016, whichever is later.
G. Managing Program Finances
347. In the 2015 Lifeline FNPRM, we
sought comment on establishing a
budget for the Lifeline program, and
determining an appropriate budget
amount. While many commenters
supported instituting a budget, some
worried that a budget would lead to
eligible consumers being denied Lifeline
support or being placed on waiting lists.
Still others argued that sufficient data to
set a budget for the program is not
available and the Commission should
decline to adopt a budget at this time.
We conclude that a budget mechanism,
implemented as described below, will
ensure the financial stability of the
Lifeline program and guarantee access
to all eligible consumers, and we revise
Section 54.423 the rules. Given the
significant changes we adopt today, we
find it prudent to apply this budget to
the Lifeline program at this time rather
than wait until after implementation of
the changes. In so doing, we must
balance the need to ensure that the
Lifeline program continues to reduce
the contribution burden on the nation’s
ratepayers, will continue to support
service to eligible consumers, and will
provide information to the Commission
as it monitors the Lifeline program’s
growth following such significant
programmatic changes.
348. Initial Budget Amount. We adopt
an initial annual budget of $2.25 billion
based on our projections of how the
program will be updated once BIAS is
a supported service. This budget will
apply for the calendar year beginning
January 1, 2017. We arrive at this level
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by considering current participation
rates, possible growth of the program as
we seek to raise awareness of its
benefits, and the safeguards already in
place to reduce waste, fraud, and abuse.
349. Currently, approximately 13.1
million households are enrolled in
Lifeline, and USAC estimates a 32
percent participation rate. As occurred
after the last major expansion of
Lifeline, we can expect program
participation to increase. We note,
however, that the Commission has
instituted many significant safeguards
against waste, fraud, and abuse in the
last five years and that some measures
we adopt in this item today—such as
the imposition of new minimum service
standards that may result in higher
subscriber out-of-pocket costs versus
today’s program—may depress demand
for Lifeline services in the near term.
For the purpose of establishing a budget
for this program, we prepare for
participation in the program to increase.
A $2.25 billion budget would allow over
20 million households to participate in
the program with basic support for an
entire year before the budget is reached.
We believe this budget establishes a
ceiling with appropriate room for
organic growth in the modernized,
accountable Lifeline program we adopt
today. (While some Lifeline subscribers
will receive enhanced tribal support, it
is difficult to forecast the number well
in light of other changes that we make
to the program).
350. Reporting on Budget. While we
believe this budget level will provide
ample room for new households to
enroll in the program, we must also
monitor the program and account for the
reasons for growth in the program in
order to make adjustments, if necessary.
We therefore direct the Bureau to issue
a report to the Commission by July 31
of the following year if total Lifeline
disbursements exceeded 90 percent of
the budget in the previous calendar
year. For example, if in calendar year
2017, when the budget is set at $2.25
billion, the total disbursements for 2017
totaled $2 billion, equal to 90.9 percent
of $2.25 billion, then by July 31, 2018
the Bureau would be required to issue
such a report. This report should offer
an evaluation of program
disbursements, including the causes of
program growth, an evaluation of the
different services and technologies
supported by Lifeline, disbursement
amounts by state or other geographic
areas, and any other information
relevant to the Commission’s necessary
oversight of the Lifeline program. The
report should also make
recommendations about what should be
done, for example, including making
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adjustments to the minimum service
standards, changing the support levels,
altering other requirements, or
modifying the budget amount. We
expect the full Commission will take
appropriate action to address the
Lifeline budget within six months of
receiving the report.
351. Indexing the Budget for Inflation.
The budget amount will be indexed to
inflation in accordance with the
Consumer Price Index for all items from
the Department of Labor, Bureau of
Labor Statistics. The budget for the next
calendar year beginning January 1 shall
be announced in a Public Notice on or
before July 31 of each year.
H. Efficient Program Administration
1. Program Evaluation
352. In this Section, we clarify our
goals and goal measurements to better
align them with the modernized Lifeline
program. We also direct the Bureau,
working with USAC, to conduct a
program evaluation of the newly
reformed program so that the
Commission and the public may have
better information about the operation
and effectiveness of the program.
353. Discussion. This order creates a
revitalized broadband-centered Lifeline
program. In light of these changes, we
revise our program goals and call for
evaluating the efficacy and efficiency of
our newly revamped program in
reaching its goals.
354. First, we explicitly include
affordability of voice and broadband
service as a component of our first and
second program goals and separately
measure progress towards that goal
component. We clarify that the Lifeline
program includes as its goal ensuring
the affordability of voice and broadband
service. We will measure progress
toward this component of our first two
goals by measuring the extent to which
voice and broadband service
expenditures exceed two percent of lowincome consumers’ disposable
household income as compared to the
next highest income group. (This
approach is similar to the approach
taken in other measures of affordability.
We note that the United Nations set a
goal for developing countries that, by
2015 ‘‘entry level’’ broadband Internet
access should account for no more than
5% of disposable income. The most
recent data from 2014 indicates that for
the poorest 20 percent of U.S.
households, a fixed broadband
connection constitutes 2.47 percent of
monthly disposable income while a
500MB month mobile broadband plan is
4.94 percent of disposable income). We
direct the Bureau to implement the
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details of this measurement, examine
the available data, and publish the
results in the annual Universal Service
Monitoring Report.
355. Second, we begin a thorough,
long-term process of evaluating the
newly revitalized Lifeline program.
Within 12 months of Federal Register
publication of this Order, we direct
USAC to begin a procurement process
for an outside, independent, third-party
evaluator to complete a program
evaluation of the Lifeline program’s
design, function, and administration.
The evaluation should be consistent
with current GAO guidance on program
evaluations. If appropriate, the
evaluation should discuss ways in
which resources and data from other
agencies can be helpful in evaluating
the program. The outside evaluator must
complete the evaluation and USAC
must submit the findings to the
Commission by December 31, 2020 so
that the evaluation can be incorporated,
as appropriate, into the State of the
Lifeline Marketplace Report, due June
30, 2021. The Commission will make
the final evaluation publicly available to
the extent not otherwise precluded by
law. We believe that an extended period
until completion of the final report is
necessary to evaluate whether the newly
revised Lifeline program is operating
efficiently and effectively in fulfillment
of its goals.
356. Our direction here is consistent
with prior direction given to USAC to
undertake reviews of the extent to
which our universal service rules, as
implemented, are advancing relevant
program goals. Because a key element of
this forthcoming review will involve the
evaluation of whether the
implementation of the modified Lifeline
rules is achieving our program goals, we
follow a similar approach here. We also
note that the efficacy of the legacy voice
program has already been studied in
depth by third parties, and therefore
find that limited USF funds should be
better spent designing and
implementing, as soon as possible to
enable a full analysis of a revamped
program, an evaluation of the Lifeline
program, which includes analysis of its
effectiveness in meeting its newly
revised goals.
2. Non-Usage Reforms
357. We next provide additional
flexibility for those Lifeline subscribers
and service providers who must
demonstrate that the subscriber has
used the service within the established
time frame, while still maintaining
fiscal responsibility. In the 2012 Lifeline
Reform Order, as a measure intended to
reduce waste in the program, the
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Commission introduced a requirement
that a Lifeline service provider who did
not assess and collect from its
subscribers a charge (e.g., a pre-paid
provider) could not receive support for
subscribers who had either not initiated
service, or who had not used the service
for a consecutive 60-day period. In this
way, service providers would only
receive support for eligible low-income
subscribers who actually use the
service. The Commission established
ways in which a subscriber could
establish ‘‘usage’’ for purposes of the
rule.
358. In the 2015 Lifeline FNPRM, we
proposed to amend Section 54.407(c)(2)
of our rules to allow the sending of a
text message by a subscriber to
constitute ‘‘usage.’’ We recognized that,
while text messaging was not a
supported service, it is widely used by
wireless consumers for their basic
communications needs. Moreover, there
was an indication that there is
increasing reliance on text messaging by
individuals who are deaf, hard of
hearing, or have difficulty with speech.
We also asked whether it was
appropriate to base a subscriber’s
intention to use a supported service on
that subscriber’s use of a non-supported
service. The 2015 Lifeline FNPRM also
sought comment on the conclusion not
to allow the receipt of text messages to
qualify as usage. Finally, the 2015
Lifeline FNPRM proposed to reduce the
non-usage interval from 60 to 30 days,
as part of our ongoing efforts to reduce
waste and inefficiency in the Lifeline
program.
359. All those who commented on
whether to allow the sending of text
messages to constitute usage for
purposes of Section 54.407(c)(2) of our
rules supported this broadening of our
requirements. Many commenters stated
that for many of today’s wireless
consumers, including Lifeline
subscribers, text messaging is the
prevalent means of communication.
Sprint, for example, stated that a
significant percentage of Assurance
Wireless customers used their Lifeline
handset for text messaging even when
they did not have any voice usage.
Several commenters also highlighted
that texting is the primary means by
which many people with disabilities
communicate.
360. Based on our review of the
record and the communications
landscape overall, we conclude that it is
appropriate to allow the sending of a
text message by the subscriber to qualify
as ‘‘usage’’ for purposes of Section
54.407(c)(2). (This determination should
not be confused with any decision
regarding the regulatory status of texting
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service. Likewise, we make no decisions
at this time regarding whether text
messaging qualifies as a Lifelinesupported service). Our decision is
based on the reality that many
consumers today view texting, voice,
and broadband as interchangeable
means of communication and often use
text messages as the sole or primary
means of communication. Many Lifeline
subscribers may assume that using any
of the services available from the device
provided by their Lifeline service
provider will qualify as usage, and it
seems unnecessarily burdensome to
require them to distinguish among the
services to ensure compliance with the
program’s usage requirement. While
TracFone continues to urge the
Commission to allow both the sending
and receipt of texts to qualify as
‘‘usage,’’ we conclude, consistent with
the 2015 Lifeline FNPRM, that only the
sending of texts from the subscriber’s
device will qualify as sufficient
indication of usage. We will, therefore,
modify Section 54.407(c)(2) of our rules
to reflect the inclusion of outbound
texts as a means for establishing
‘‘usage.’’ In addition, given this Order’s
inclusion of BIAS as a supported
service, we also make certain
modifications to § 54.407(c)(2)(i) and (ii)
of our rules to account for the inclusion
of broadband service as a supported
service.
361. Broadening the list of services
that can be used to demonstrate ‘‘usage’’
for purposes of Section 54.407(c)(2) of
our rules should greatly ease consumers’
ability to show their desire to retain
Lifeline service. Consequently, we find
it appropriate at this time to shorten the
non-usage period from 60 to 30 days,
along with a corresponding reduction in
the time allotted for service providers to
notify their subscribers of possible
termination from 30 to 15 days. Under
this scheme, Lifeline service providers
must notify subscribers of possible
termination on the 30th day and
terminate service if, during the
subsequent 15 days, the subscriber has
not used the service. In this way, the
subscriber will have a total of 45 days
in which to demonstrate ‘‘usage.’’ In
making this determination, we are
mindful of the concerns raised by
commenters such as Sprint who assert
that decreasing the time period may
lead to a higher number of deenrollments. We note, however, that
such assessments are based on a
scenario in which the Commission did
not permit texting, one of the most
prevalent means of wireless
communications, to be used as a basis
for demonstrating usage. Moreover, we
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expect that Lifeline service providers
will educate their subscribers about the
usage requirements and de-enrollment
that will result from non-usage. Hence,
we will modify Section 54.405(e)(3) of
our rules to reflect the change in the
non-usage interval. Finally, we
emphasize that only if a carrier bills on
a monthly basis and collects or makes
a good faith effort to collect any money
owned within a reasonable amount of
time will the carrier not be subject to the
non-usage requirements. Carriers that
fail to take such steps and do not deenroll subscribers pursuant to the nonusage requirements may be subject to
enforcement action or withholding of
support.
3. Rolling Recertification
362. In the 2015 Lifeline FNPRM, we
also sought comment on whether we
should make any changes to the
recertification process as we modernize
the administration of the Lifeline
program. We find that requiring Lifeline
customers’ eligibility to be recertified
every 12 months, as measured from the
subscriber’s service initiation date, will
result in administrative efficiencies and
avoid imposing undue burdens on
providers, USAC, or the National
Verifier. Previously, Lifeline providers
were required to annually recertify all
subscribers except in states where the
state Lifeline administrator or other
state agency is responsible for
recertification.’’ Recertification was
considered complete when a carrier
had, by December 31, de-enrolled all
subscribers who did not respond to
recertification efforts.
363. We find that, particularly as the
National Verifier is launched in
multiple states, annually recertifying
subscribers on a rolling basis, based on
the subscriber’s service initiation date,
will prevent the entity responsible for
recertification from processing
recertification and potential deenrollment procedures for all
subscribers at the same time. This will
make the recertification process more
manageable and result in a
recertification process that reflects the
amount of time the subscriber has
actually been enrolled in the Lifeline
program. We also expect that this
change will enable providers and the
National Verifier to respond to any
customers who need assistance in the
recertification process without being
overwhelmed by customer service
requests.
364. Prior to the implementation of
the National Verifier in a state, to
prevent the enrollment of ineligible
customers, we require providers to
conduct an initial eligibility
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determination for every enrolling
customer, regardless of whether that
customer had previously received
Lifeline-discounted service from
another provider. That provider must
then recertify the customer’s eligibility
12 months after the subscriber’s service
initiation date with that provider.
However, after the National Verifier has
been implemented in a state, the
National Verifier’s eligibility records for
a subscriber will permit the National
Verifier to only recertify the subscriber’s
eligibility every 12 months after the
subscriber’s first initiation of a Lifelinediscounted service. Thus, even if a
subscriber changes Lifeline providers
during the course of the year, the
National Verifier will only need to
recertify eligibility 12 months after the
subscriber’s first service initiation date,
and every 12 months thereafter. We
therefore revise Section 54.410(f) of our
rules to reflect this change. The rules
establishing and related to rolling
recertification will be effective for all
enrollments made beginning the later of
January 1, 2017 or upon PRA approval.
Subscribers enrolled on or after such
date will be subject to recertification
requirements at the end of the 12-month
period that begins with their service
initiation date. (Subscribers already
enrolled prior to January 1, 2017 will be
subject to rolling recertification based
on their current service initiation date.
We direct USAC to communicate with
carriers and consumers as necessary to
provide information on each
subscriber’s relevant date). For
subscribers enrolled prior to January 1,
2017, recertification for 2016 will be
conducted in accordance with current
Lifeline practices and require
recertification by December 31, 2016.
Additionally for subscribers enrolled
prior to January 1, 2017, rolling
recertification will begin July 1, 2017.
Beginning July 1, 2017, all subscribers
enrolled prior to January 1, 2017 will
need to be recertified on a rolling basis
based on the subscriber’s service
initiation date. (We recognize that in
this interim period subscribers will be
recertified in a period ranging from six
months to 18 months from the
subscriber’s last recertification. This
interim period is required to effectively
transition the program to rolling
recertification. The period from January
1, 2017 to July 1, 2017 is meant to
provide the appropriate transition for
ETCs and subscribers, while preventing
immediate recertification of subscribers
with service initiation dates during
those six months. Additionally, the
transition to rolling recertification for
existing subscribers needs to begin
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promptly to maintain program integrity
and guard against improper payments).
365. We also revise Section 54.410(f)
to clarify that the entity responsible for
recertifying subscribers must first query
the appropriate state or federal database
to determinate on-going eligibility prior
to using other means to recertify
subscribers. In the 2012 Lifeline Reform
Order, the Commission specifically
required ‘‘in instances where ongoing
eligibility [could] not be determined
through access to a qualifying database
either by the ETC or the state,’’ service
providers could then recertify
subscribers using other methods,
including in person, in writing, by
phone, by text message, by email or
otherwise through the Internet to
confirm continued eligibility.’’ The
revised recertification rules reflect the
Commission’s determination.
366. Further, we revise Section
54.405(e)(4) to require a subscriber be
given 60 days to respond to
recertification efforts, and consistent
with our other de-enrollment rules, nonresponsive subscribers will be deenrolled within five days following the
expiration of the 60-day response
window. We take this step to ease the
recertification burden for providers and
the National Verifier. Expanding the
recertification period will allow
batching of daily subscriber
recertification deadlines into more
manageable weekly or monthly
groupings.
367. Finally, we revise Section
54.405(e)(1) to require de-enrollment
within five business days after the
expiration of the subscriber’s time to
demonstrate eligibility. In so doing, we
add consistency to the various
provisions in Section 54.405 related to
de-enrollment due to ineligibility. We
also adopt Section 54.405(e)(5) to
require service providers to de-enroll a
subscriber who has requested deenrollment within two business days
after making such a request. We take
this action to ensure that subscriber deenrollment requests are resolved in a
timely manner.
4. Publishing Lifeline Subscriber Counts
368. Discussion. We direct USAC
before December 1, 2016 to modify its
online Lifeline tool to make available to
the public information about the
Lifeline program, such as the total
number of subscribers for which a
provider seeks support for each SAC,
including how many subscribers are
receiving enhanced Tribal support.
Although the public can already derive
the Lifeline subscriber counts by
referencing information from USAC’s
Web site and Quarterly Reports,
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relatively simple changes to USAC’s
systems can make this and other
information about the Lifeline program
far easier to access. Moreover, having
USAC directly publish subscriber
counts increases transparency and
continues to promote accountability in
the program. USAC shall also make
available information about the number
of subscribers receiving support for each
of the supported services. Commenters
also agree that publishing the amount of
subscribers served by providers will
increase transparency.
369. We direct USAC to work with the
Bureau and OMD to formulate a plan for
making available additional Lifeline
information consistent with the
Commission’s historical commitment to
transparency as well as taking into
consideration any valid concerns about
divulging non-public information.
USAC should consider how other useful
information can be made publically
available, such as by using the National
Verifier. In addition, we direct USAC to
consider new ways in which states or
other government entities may be given
increased access to the National Verifier
or NLAD for the purposes of better
program administration. Before giving
such access, USAC should obtain
approval from the Bureau.
5. Audits
370. In this Section, we adopt our
proposal to revise Section 54.420 of our
rules requiring all Lifeline providers to
undergo an audit within their first year
of receiving Lifeline disbursements.
Adopting the revised Section 54.420
will allow the Commission flexibility to
determine the appropriate and most cost
effective time to audit entities that are
new providers in the Lifeline program.
371. Discussion. We now modify our
rule to delegate to OMD, in its role
overseeing the USF audit programs, to
work with USAC to identify those
audits of first-year Lifeline providers
that will be conducted within the oneyear deadline and those that will be
audited after the one-year deadline.
Given the three years of experience
auditing these carriers, we have found
that many new providers have not yet
had a sufficient number of subscribers
to draw conclusions regarding
compliance with the program rules. To
be clear, this approach is a
strengthening of the audit process
because it will allow USAC to more
efficiently direct audit resources to
audit providers that have a higher risk
of non-compliance and/or receive a
larger percentage of the total Lifeline
program disbursements, rather than
being required to conduct audits that
may be of little practical value. Further,
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we do not expect such audit flexibility
to result in these entities not being
audited, and we delegate to OMD,
working with USAC, to determine the
most cost-effective time to audit an
entity when it has sufficient data to
conduct a meaningful audit, to provide
OMD with recommendations on which
first-year service providers would be
cost effective to audit after their first
year, and which service providers
should be audited after their first year.
We direct USAC to provide all first-year
service providers notice within 30 days
of their one-year deadline regarding
whether the audit will or will not be
conducted.
372. We also believe that the overall
audit program should include a check
on whether the service was provided
and whether the service provided met
the standards articulated in this Order.
We delegate to OMD working with
USAC to include such performance
auditing in its overall audit plan. We
view our audit program as a key factor
in promoting program integrity and
direct USAC working with OMD to
continue to improve and focus the
overall program on providers for whom
the risk of non-compliance is high and
whose non-compliance would have a
large impact on the overall fund.
6. Universal Consumer Certification,
Recertification, and Household
Worksheet Forms
373. In this Section we delegate to the
Bureau to create uniform, standardized
Lifeline forms approved by the Office of
Management and Budget (OMB) for all
subscribers receiving a federal Lifeline
benefit, if it believes that doing so will
aid program administration.
374. Discussion. In this Order, we
delegate to the Bureau to propose to
OMB Lifeline forms for certification,
recertification and the one-perhousehold requirement, if it believes
that doing so will aid program
administration. (We also delegate to the
Bureau the ability to phase out and/or
combine forms as needed. With
implementation of the National Verifier,
many forms may need to be adjusted,
phased-out, or combined). We revise
Section 54.410 to reflect the use of
certification and recertification forms,
and one-per-household worksheets for
the Lifeline program, if such forms are
implemented. (Our revisions to the rule
recognize that certification and
recertification forms and one-perhousehold worksheets are used by
entities enrolling subscribers. Currently,
such forms are developed by service
providers and must include the items
required by Section 54.410 and the 2012
Lifeline FNPRM). We believe that the
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enormous benefits to the program, such
as increased understanding and
compliance by both subscribers and
providers, outweigh any concerns with
the standardized approach. (While we
create federal forms by this order, states
are free to require subscribers to
complete additional state forms to assist
with state programs). If the Bureau
moves forward on uniform forms, it may
use the forms that we sought comment
on, displayed on USAC’s Web site, as
such forms contain the information on
eligibility and certification, the one-perhousehold requirement, the obligations
of the subscriber, that should be
included at a minimum on these
Lifeline forms. We will continue to
require that subscribers sign the forms
under penalty of perjury, regardless of
whether they are forms created by the
service providers or by the Bureau.
However, we expect that if the Bureau
adopts forms, any such forms will
explain the meaning and import of those
terms to the subscriber and the
consequences of providing false and
misleading information. We expect that
the above-mentioned concepts will be
contained in any Bureau form and we
delegate to the Bureau the ability to
create wording and formatting that is
easily understood by the consumer and
improves program compliance, if it
chooses to adopt such forms. We also
delegate to the Bureau to amend the
forms as necessary as changes in the
program are made, such as the
deployment of the National Verifier.
(Once deployed, we direct the National
Verifier to adapt the OMB-approved
forms to the methods available to
consumers to contact the National
Verifier, such as paper and electronic
versions). Recognizing that there may
continue to be relevant program
differences across states and territories,
we direct the Bureau to account for such
differences in any standardized forms,
as necessary. In this way, we seek to be
responsive to some concerns that a
uniform approach may not fit every
situation. We expect that, if the Bureau
creates standardized forms, the forms
will be responsive to evolving program
needs and that the Bureau can and
should propose changes to OMB as
needed.
I. Delegation to the Bureau
375. Given the complexities
associated with modifying existing rules
as well as other reforms adopted in this
Order, we delegate authority to the
Wireline Competition Bureau to make
any further rule revisions as necessary
to ensure the reforms adopted in this
Order are reflected in the rules. This
includes correcting any conflicts
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33081
between the rules and this Order. If any
such rule changes are warranted, the
Bureau shall be responsible for such
change, but in no event shall such
change create new or different policy
than that articulated by this Order. We
note that any entity that disagrees with
a rule change made on delegated
authority will have the opportunity to
file an Application for Review by the
full Commission.
IV. Further Report and Order
376. In the Map Implementation
Order, released on February 2, 2016, the
Wireline Competition Bureau (Bureau)
granted a request for extension of time
for the implementation of the Oklahoma
Historical Map until June 8, 2016, in
order to complete the consultation
process with Tribal leaders and allow
providers time to implement the map
and appropriately notify customers. In
the Map Implementation Order, the
Bureau specifically emphasized the
need to further discuss the status of the
Cherokee Outlet, and whether it should
remain as a ‘‘former reservation in
Oklahoma’’ for purposes of the Lifeline
Program. The Bureau also released a
shapefile containing the boundaries of
the Cherokee Outlet in order to give
potentially affected parties advance
notice of any potential changes. After
completing consultations, and upon
recommendation from the Bureau as
required by the 2015 Lifeline FNPRM,
we are convinced that the Cherokee
Outlet, due to its long history of usage
by the Cherokee Nation, is properly
defined as a ‘‘former reservation in
Oklahoma’’ for our purposes of defining
areas eligible for enhanced Lifeline
support. Accordingly, residents of the
Cherokee Outlet will remain eligible for
enhanced Tribal support. The Oklahoma
Historical Map will become effective on
June 8, 2016.
V. Order On Reconsideration
377. In this Section, we grant
petitions filed by GCI, USTelecom,
TracFone and Sprint asking that we
reconsider three rules, adopted in the
2012 Lifeline Reform Order, related to
the reporting of temporary addresses.
These rules were put in place to ensure
that the often mobile Lifeline
population can obtain service while
protecting the fund against waste, fraud
and abuse from duplicative support.
However, based on our experience, we
find that the burden of these rules
outweighs any countervailing benefit.
Existing measures, including the robust
identify verification and checks for
duplicative support already built into
the NLAD that do not rely on the
temporary address rules, as well as the
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actions we take in this order, including
the establishment of the National
Verifier, provide adequate protections
against waste and abuse in the absence
of the temporary address rules. While
Lifeline providers may still enroll
eligible subscribers using a temporary
address, those subscribers will no longer
be required to certify to the temporary
address every 90 days and those
providers will no longer be required
recertify the temporary address every 90
days. (We note that this temporary
address recertification process is
separate from subscriber recertification
of program or income eligibility).
378. Discussion. On reconsideration,
we now eliminate § 54.410(g) and
(d)(3)(v) and the portion of Section
54.405(e)(4) related to temporary
addresses. As explained by the parties
seeking reconsideration of this rule, we
conclude that these rules impose a
burden on providers without a
significant benefit. While these rules
were put in place to prevent possible
waste, fraud and abuse from customers
representing a ‘‘small portion of an
ETC’s Lifeline subscriber base,’’
experience has shown that, in fact, the
other subscriber data (e.g. address at
time of application, name, last four
digits of social security number and date
of birth) collected by USAC has been
sufficient to verify subscriber’s identity
and check for duplicative support.
Additional protections put in place in
this order, including the establishment
of a National Verifier, further reduce the
need for these rules. As explained
elsewhere in this order, we conclude
that the elimination of unnecessary and
burdensome requirements will increase
the incentive and likelihood of
additional providers entering the
Lifeline marketplace. We therefore
conclude that elimination of these rules
is in the public interest. We will,
however, continue to require
subscribers to indicate on their
certification forms whether the address
is permanent or temporary. We find that
this requirement assists the Commission
and USAC by providing important
demographic information about the
Lifeline subscriber-base. (USAC data
indicates that, as of March 2016, almost
6 percent (or approximately 700,000) of
Lifeline subscribers in the NLAD) have
temporary addresses, underscoring the
critical benefit that Lifeline provides to
the most vulnerable Americans).
VI. Severability
379. All of the Lifeline rules that are
adopted in this Order are designed to
work in unison to make
telecommunications services more
affordable to low-income households
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and to strengthen the efficiency and
integrity of the program’s
administration. However, each of the
separate Lifeline reforms we undertake
in this Order serve a particular function
toward those goals. Therefore, it is our
intent that each of the rules adopted
herein shall be severable. If any of the
rules is declared invalid or
unenforceable for any reason, it is our
intent that the remaining rules shall
remain in full force and effect.
VII. Procedural Matters
A. Final Regulatory Flexibility Analysis
380. As required by the Regulatory
Flexibility Act of 1980 (RFA), the
Commission has prepared a Final
Regulatory Flexibility Analysis (FRFA)
relating to this Third Report and Order,
Further Report and Order, and Order on
Reconsideration. The FRFA is set forth
in in section VII.D of this document.
B. Paperwork Reduction Act Analysis
381. This Third Report and Order,
Further Report and Order, and Order on
Reconsideration contains new
information collection requirements
subject to the Paperwork Reduction Act
of 1995 (PRA), Public Law 104–13. It
will be submitted to the Office of
Management and Budget (OMB) for
review under Section 3507(d) of the
PRA. OMB, the general public, and
other Federal agencies will be invited to
comment on the revised information
collection requirements contained in
this proceeding. In addition, we note
that pursuant to the Small Business
Paperwork Relief Act of 2002, Public
Law 107–198, the Commission
previously sought specific comment on
how it might further reduce the
information collection burden on small
business concerns with fewer than 25
employees.
C. Congressional Review Act
382. The Commission will include a
copy of this Third Report and Order,
Further Report and Order, and Order on
Reconsideration in a report to be sent to
Congress and the Government
Accountability Office (GAO) pursuant to
the Congressional Review Act, see 5
U.S.C. 801(a)(1)(A).
D. Final Regulatory Flexibility Analysis
383. As required by the Regulatory
Flexibility Act of 1980, as amended
(RFA), the Federal Communications
Commission (Commission) included an
Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant
economic impact on a substantial
number of small entities by the policies
and rules proposed in the Lifeline
Second FNPRM in WC Docket Nos. 11–
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42, 09–197, 10–90. The Commission
sought written public comment on the
proposals in the Lifeline Second
FNPRM, including comment on the
IRFA. This Final Regulatory Flexibility
Analysis (FRFA) conforms to the RFA.
1. Need for, and Objectives of, the Final
Rules
384. The Commission is required by
section 254 of the Communications Act
of 1934, as amended, to promulgate
rules to implement the universal service
provisions of section 254. The Lifeline
program was implemented in 1985 in
the wake of the 1984 divestiture of
AT&T. On May 8, 1997, the Commission
adopted rules to reform its system of
universal service support mechanisms
so that universal service is preserved
and advanced as markets move toward
competition. Since the 2012 Lifeline
Reform Order, the Commission has
aggressively addressed waste, fraud and
abuse in the Lifeline program and
improved program administration and
accountability. In this Third Report and
Order, Further Report and Order, and
Order on Reconsideration (Order), we
recognize the importance of broadband
access in today’s world. Those who
have access use the Internet to, among
other things, connect with family, work,
and friends, stay abreast of the news,
monitor important civic activities,
research issues, stay in contact with
healthcare providers. However, not all
American can access the Internet and
enjoy the benefits of broadband access
in today’s society. In this Order, we
therefore take measures to reform the
Lifeline program to become part of the
solution to the Nation’s broadband
affordability challenge by focusing the
Lifeline program on broadband and
encouraging broadband providers to
offer supported broadband services that
meet specific Commission established
standards. We also take steps to improve
the management and design of the
Lifeline program by streamlining
program rules and eliminating outdated
obligations with the goal of providing
incentives for broadband providers to
participate and increasing meaningful
broadband offerings to Lifeline
subscribers.
385. Specifically, in this Order, to
create a competitive Lifeline broadband
program, we take a variety of actions to
encourage more Lifeline providers to
deliver supported broadband services.
Most significantly, we allow support for
robust, standalone fixed and mobile
broadband services to ensure
meaningful levels of connectivity. At
the same time, we transition the Lifeline
program from primarily supporting
voice services to targeting support at
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modern broadband services.
Additionally, to encourage entry of new
Lifeline providers to supply broadband,
we create a streamlined Lifeline
Broadband Provider designation
process, and modernize the obligations
of broadband providers by
reinterpreting parts of the statute and
granting providers forbearance from
parts of the statute in order to ensure
just and reasonable rates and the
protection of consumers.
386. Additionally, in order to ensure
that the Lifeline program is designed to
operate in an efficient, and highly
accountable manner with the
reorientation of the Lifeline program to
broadband, we take a number of
additional actions in this Order to
reform the program. Most significantly,
we set minimum service standards for
broadband and mobile services to
ensure those services meet the needs of
consumers; create a National Lifeline
Eligibility Verifier (National Verifier) to
transfer the responsibility of making
eligibility determinations away from
Lifeline providers and remove the
opportunities for Lifeline providers to
inappropriately enroll subscribers;
streamline the criteria for Lifeline
program qualification in recognition of
the way the vast majority of Lifeline
subscribers gain entry to the program;
require Lifeline providers to make
available Wi-Fi enabled devices and
hotspot capable devices when providing
devices for use with Lifeline-supported
service; and adopt a budget for the
Lifeline program to bring the Lifeline
program in to alignment with the other
three universal service fund programs,
each of which operates within a budget,
and to ensure that the program is
designed to operate in an efficient,
highly accountable manner. We also
take several other measures to improve
the efficient administration and
accountability of the Lifeline program,
such as establishing an annual
eligibility process, imposing a port
freeze on Lifeline services, revising the
audit procedures, and creating
standardized Lifeline forms. We believe
that these new rules and reforms, taken
together, will greatly expand the reach
of the Lifeline program to all consumers
and further increase utilization of the
Lifeline program.
2. Summary of Significant Issues Raised
by Public Comments to the IRFA
387. We received one comment
specifically addressing the IRFA from
the Small Carriers Coalition (Coalition).
In the 2015 Lifeline Second FNPRM, in
order to increase eligible
telecommunications carrier (ETC)
accountability and compliance with the
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Lifeline rules, we proposed a
requirement that all company
employees and third-party agents
interfacing with customers receive
sufficient training on the Lifeline rules,
and that such persons receive training
annually. The Coalition notes that the
Commission’s analysis of the
compliance burden of this requirement
on small entities was insufficient.
Specifically, the Coalition asserts that,
while the burden of executing a
certification that appropriate training
has been received may be minor, the
burden of arranging and paying for such
training, and requiring employees and
agents to undergo such training, is much
higher. The Coalition asserts that the
burden of arranging and paying for such
training was not addressed as well as
the burden of requiring a 24-hour
customer service call center requirement
for the sole purpose of de-enrolling
Lifeline customers. The Coalition
recommends that the training
requirement be eliminated, or, if
retained for small carriers, reduced such
that only one supervisory employee be
required to undergo training. The
Coalition asserts that, by tailoring this
requirement, it would more closely
align the burden of training with the
limited public interest benefit of
requiring training for carriers with few
Lifeline customers. The Coalition also
recommends that the 24-hour customer
service requirement not be applied to
small carriers, because such
requirement dwarfs the potential public
interest benefit.
388. In this Order, we do not adopt
this proposal as a final rule. We
recognize the additional compliance
burden and cost imposed upon small
entities of this requirement. As an
alternative measure to increase eligible
telecommunications carrier (ETC)
accountability and compliance with the
Lifeline rules, in this Order, we have
established the National Verifier with its
primary function being to verify
customer eligibility for Lifeline support.
The National Verifier will also perform
a variety of other functions necessary to
enroll eligible subscribers into the
Lifeline program, such as, but not
limited to, enabling access by
authorized users, providing support
payments to providers, and conducting
recertification of subscribers, to add to
the efficient administration of the
Lifeline program. Additionally, we have
streamlined eligibility for Lifeline
support to increase efficiency and
improve the program for consumers,
Lifeline providers, and other
participants. By relying on highly
accountable programs that demonstrate
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limited eligibility fraud, we will reduce
the potential of waste, fraud, and abuse
occurring due to eligibility errors. These
alternative measures therefore will help
ensure compliance with the
Commission’s rules and reduce the
potential risk for error when interfacing
with customers while at the same time
limiting any additional burden upon
small businesses.
3. Response to Comments by the Chief
Counsel for Advocacy of the Small
Business Administration
389. Pursuant to the Small Business
Jobs Act of 2010, which amended the
RFA, the Commission is required to
respond to any comments filed by the
Chief Counsel of the Small Business
Administration (SBA), and to provide a
detailed statement of any change made
to the proposed rule(s) as a result of
those comments.
390. The Chief Counsel did not file
any comments in response to the
proposed rule(s) in this proceeding.
4. Description and Estimate of the
Number of Small Entities to Which the
Final May Apply
391. 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 28.2
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.’’
392. Small Entities, Small
Organizations, Small Governmental
Jurisdictions. Our actions, over time,
may affect small entities that are not
easily categorized at present. We
therefore describe here, at the outset,
three comprehensive small entity size
standards that could be directly affected
herein. As of 2014, according to the
SBA, there were 28.2 million small
businesses in the U.S., which
represented 99.7 percent of all
businesses in the United States.
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Additionally, a ‘‘small organization is
generally any not-for-profit enterprise
which is independently owned and
operated and not dominant in its field’’.
Nationwide, as of 2007, there were
approximately 1,621,215 small
organizations. Finally, 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 2011 indicate
that there were 90,056 local
governmental jurisdictions in the
United States. We estimate that, of this
total, as many as 89,327 entities may
qualify as ‘‘small governmental
jurisdictions’’. Thus, we estimate that
most local governmental jurisdictions
are small.
a. Wireline Providers
393. 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 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 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. Thus under this
category and the associated small
business size standard, the majority of
these incumbent local exchange service
providers can be considered small.
394. 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 category for
this service is the category Wired
Telecommunications Carriers. Under
the category of Wired
Telecommunications Carriers, such a
business is small if it has 1,500 or fewer
employees. Census Bureau data for 2007
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
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firms had 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
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.
395. Interexchange Carriers. Neither
the Commission nor the SBA has
developed a small business size
standard specifically for providers of
interexchange services. The appropriate
category for Interexchange Carriers is
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.
396. Operator Service Providers
(OSPs). Neither the Commission nor the
SBA has developed a small business
size standard specifically for operator
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service providers. The appropriate
category for Operator Service Providers
is the category Wired
Telecommunications Carriers. Under
that size standard, such a business is
small if it has 1,500 or fewer employees.
Under that size standard, such a
business is small if it has 1,500 or fewer
employees. Census Bureau data for 2007
show that there were 3,188 firms in this
category that operated for the entire
year. Of the 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, 33 carriers have
reported that they are engaged in the
provision of operator services. Of these,
an estimated 31 have 1,500 or fewer
employees and 2 have more than 1,500
employees. Consequently, the
Commission estimates that the majority
of OSPs are small entities that may be
affected by our proposed action.
397. 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 1000
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.
398. 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 1000
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.
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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.
399. 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 1000
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 prepaid 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.
400. 800 and 800-Like Service
Subscribers. (We include all toll-free
number subscribers in this category,
including those for 888 numbers.)
Neither the Commission nor the SBA
has developed a small business size
standard specifically for 800 and 800like service (‘‘toll free’’) subscribers. The
appropriate category for these services is
the category Telecommunications
Resellers. Under that category and
corresponding 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 1000
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.
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According to our data, as 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.
b. Wireless Carriers and Service
Providers
401. Wireless Telecommunications
Carriers (except Satellite). This industry
comprises establishments engaged in
operating and maintaining switching
and transmission facilities to provide
communications via the airwaves.
Establishments in this industry have
spectrum licenses and provide services
using that spectrum, such as cellular
phone services, paging services,
wireless Internet access, and wireless
video services. The appropriate size
standard under SBA rules is for the
category Wireless Telecommunications
Carriers. The size standard for that
category is that a business is small if it
has 1,500 or fewer employees. For this
category, census data for 2007 show that
there were 11,163 establishments that
operated for the entire year. Of this
total, 10,791 establishments had
employment of 999 or fewer employees
and 372 had employment of 1000
employees or more. (Available census
data do not provide a more precise
estimate of the number of firms that
have employment of 1,500 or fewer
employees; the largest category
provided is for firms with ‘‘100
employees or more.’’). Thus under this
category and the associated small
business size standard, the Commission
estimates that the majority of wireless
telecommunications carriers (except
satellite) are small entities that may be
affected by our proposed action.
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402. 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 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.
403. Satellite Telecommunications
Providers. Two economic census
categories address the satellite industry.
The first category has a small business
size standard of $32.5 million or less in
average annual receipts, under SBA
rules. The second has a size standard of
$32.5 million or less in annual receipts.
404. 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.
405. 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
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connections are also included in this
industry.’’ The SBA has developed a
small business size standard for All
Other Telecommunications, which
consists of all such firms with gross
annual receipts of $ 32.5 million or less.
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.
406. Common Carrier Paging. As
noted, since 2007 the Census Bureau
has placed paging providers within the
broad economic census category of
Wireless Telecommunications Carriers
(except Satellite).
407. In addition, in the Paging Second
Report and Order, the Commission
adopted a size standard for ‘‘small
businesses’’ for purposes of determining
their eligibility for special provisions
such as bidding credits and installment
payments. A small business is an entity
that, together with its affiliates and
controlling principals, has average gross
revenues not exceeding $15 million for
the preceding three years. The SBA has
approved this definition. An initial
auction of Metropolitan Economic Area
(‘‘MEA’’) licenses was conducted in the
year 2000. Of the 2,499 licenses
auctioned, 985 were sold. Fifty-seven
companies claiming small business
status won 440 licenses. A subsequent
auction of MEA and Economic Area
(‘‘EA’’) licenses was held in the year
2001. Of the 15,514 licenses auctioned,
5,323 were sold. One hundred thirtytwo companies claiming small business
status purchased 3,724 licenses. A third
auction, consisting of 8,874 licenses in
each of 175 EAs and 1,328 licenses in
all but three of the 51 MEAs, was held
in 2003. Seventy-seven bidders claiming
small or very small business status won
2,093 licenses.
408. Currently, there are
approximately 74,000 Common Carrier
Paging licenses. According to the most
recent Trends in Telephone Service, 291
carriers reported that they were engaged
in the provision of ‘‘paging and
messaging’’ services. Of these, an
estimated 289 have 1,500 or fewer
employees and two have more than
1,500 employees. We estimate that the
majority of common carrier paging
providers would qualify as small
entities under the SBA definition.
409. Wireless Telephony. Wireless
telephony includes cellular, personal
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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 2010 Trends Report,
413 carriers reported that they were
engaged in wireless telephony. Of these,
an estimated 261 have 1,500 or fewer
employees and 152 have more than
1,500 employees. We have estimated
that 261 of these are small under the
SBA small business size standard.
c. Internet Service Providers
410. 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 $32.5
million or less.
5. Description of Projected Reporting,
Recordkeeping, and Other Compliance
Requirements for Small Entities
411. A number of our rule changes
will result in additional reporting,
recordkeeping, or compliance
requirements for small entities. For all
of those rule changes, we have
determined that the benefit the rule
change will bring for the Lifeline
program outweighs the burden of the
increased requirement/s. Other rule
changes decrease reporting,
recordkeeping, or compliance
requirements for small entities. We have
noted the applicable rule changes below
impacting small entities.
a. Increase in Projected Reporting,
Recordkeeping and Other Compliance
Requirements
412. Compliance burdens. All of the
rules we implement impose some
compliance burdens on small entities by
requiring them to become familiar with
the new rules to comply with them. For
several of the new rules, such as the
new budget and the revised audit
procedures, the burden of becoming
familiar with the new rule in order to
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comply with it is the only additional
burden the rule imposes.
413. Broadband as a Supported
Service. Expanding the Lifeline program
to support broadband Internet access
service (BIAS) at a discounted rate by
Lifeline providers will increase
recordkeeping and compliance burdens
for small entities since they will now be
required to revise their business plans
and make any necessary IT changes to
account for the delivery of broadband
services and the gradual reduction in
monthly support for voice-only service.
Additionally, small entities seeking
designation as a Lifeline Broadband
Provider will also be subject to
additional reporting and compliance
requirements, such as submitting
information describing the terms and
conditions of any BIAS plans offered to
Lifeline subscribers. However, the
benefit of providing a robust, affordable
broadband service offering to lowincome consumers who may not
otherwise be able to afford and utilize
the service outweighs any additional
recordkeeping or compliance
obligations upon small businesses.
Moreover, an overwhelming majority of
commenters support the inclusion of
broadband in the Lifeline program as
broadband access is of critical
importance for consumers of all
incomes.
414. Minimum Service Standards.
Requiring broadband providers claiming
Lifeline support to certify compliance
with the minimum service standards
and making them subject to the
Commission’s audit authority increases
recordkeeping, reporting, and
compliance requirements for those fixed
broadband providers claiming Lifeline
support. These certification and
compliance requirements are necessary,
however, in order to ensure that Lifeline
customers obtain the type of robust
service which is essential to participate
in today’s society. Additionally, these
standards ensure that service offerings
will be affordable for small entities.
415. Wi-Fi Enabled Devices. Requiring
Lifeline providers who make devices
available with or without charge for use
with a Lifeline-supported fixed or
mobile broadband service to ensure that
all such devices are Wi-Fi enabled, and
requiring Lifeline providers who make
devices available with or without charge
for use with a Lifeline-supported mobile
broadband service to also offer devices
that are capable of being used as a
hotspot, will increase the compliance
and reporting burdens upon small
businesses. This requirement will
require businesses to offer certain
products that they may not have
otherwise provided to consumers and
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certify to such compliance consistent
with our rules. Conditioning support for
Lifeline services in this way, however,
will increase the value of the supported
connection so that Lifeline consumers
can regularly and reliably access the
Internet. Additionally, in order to
reduce the immediate burden upon
small businesses, we have provided for
a transition period for complying with
this requirement.
416. De-enrollment. In revising our
rules regarding de-enrollment to add
consistency and clarity, we now require
de-enrollment within five business days
after the expiration of the subscriber’s
time to demonstrate eligibility. This
change may increase the compliance
burden on small entities where
previously their systems did not have to
track the timeframe for de-enrollment.
This burden, however, is outweighed by
the benefit this rule change will bring to
the Lifeline program by ensuring that
subscriber de-enrollment requests are
resolved on a timely basis.
b. Decrease in Projected Reporting,
Recordkeeping and Other Compliance
Requirements
417. Annual Recertification.
Requiring Lifeline providers to annually
recertify all subscribers on a rolling
basis, based on the subscriber’s date of
enrollments, decreases the burden of the
recordkeeping requirement for small
businesses by eliminating the need to
process recertification and potential deenrollment procedures for all
subscribers at the same time. Thus,
making the recertification process more
manageable for small businesses and
enable providers (and the National
Verifier) to respond to any customers
who need assistance in the
recertification process without being
overwhelmed by customer service
requests.
418. Eliminating the Reporting of
Temporary Addresses. Eliminating
certain sections of the Commission’s
rules related to requiring service
providers to recertify the temporary
addresses of their subscribers will
reduce reporting and recordkeeping
burden upon small entities. The
elimination of these unnecessary and
burdensome requirements should also
increase the incentive and likelihood of
additional small businesses entering the
Lifeline marketplace.
419. National Lifeline Eligibility
Verifier. The establishment of a National
Verifier to make eligibility
determinations and perform a variety of
other functions necessary to enroll
eligible subscribers into the Lifeline
Program will lessen the recordkeeping
and compliance burden on small
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entities by relieving them of the
obligation to conduct eligibility
determinations. Further, the
establishment of the National Verifier
will, among other things, help to not
only lower costs to the Fund but also to
Lifeline providers, including small
businesses, through increasing
administrative efficiencies.
420. Streamlining Lifeline Eligibility.
Streamlining eligibility for Lifeline
support by eliminating certain programs
from the default federal assistance
eligibility and removing income-based
eligibility and state-specified eligibility
criteria as avenues to access Lifeline
support will reduce the recordkeeping
burden upon small entities to make
eligibility determinations, and increase
efficiency and improve the Lifeline
program for not only consumers but also
providers.
421. Program Audits. Allowing the
Office of Managing Director (OMD) to
determine if a Lifeline provider should
be audited within the first year of
receiving Lifeline benefits in the state in
which it was granted ETC status, rather
than requiring all first-year Lifeline
providers to undergo an audit within
the first year of receiving Lifeline
benefits, will minimize the burden on a
substantial number of small entities
within the first year of receiving Lifeline
benefits to respond to requests for
information as part of an audit. This
requirement, while reducing the number
of audits conducted within the first year
of receiving Lifeline benefits,
nonetheless, is essential in promoting
program integrity and ensuring
compliance with the Commission’s
rules.
422. Universal FCC Forms. The
implementation of standardized FCC
Forms that all ETCs, where applicable,
must use in order to certify a
consumers’ eligibility for Lifeline
benefits and the one-per-household
requirements should decrease
recordkeeping and compliance burdens
upon small entities by having the
Commission develop Lifeline forms for
the use by providers and subscribers.
Ultimately, this standardized approach
will increase overall compliance with
the Commission’s rules and facilitate
administration of the Lifeline program.
6. Steps Taken To Minimize the
Significant Economic Impact on Small
Entities, and Significant Alternatives
Considered
423. The RFA requires an agency to
describe any significant, specifically
small business, alternatives that it has
considered in reaching its proposed
approach, which may include the
following four alternatives (among
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33087
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 and reporting requirements
under the rule for such 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 such small entities.’’
424. This rulemaking could impose
minimal additional burdens on small
entities. We considered alternatives to
the rulemaking changes that increase
projected reporting, recordkeeping and
other compliance requirements for small
entities.
a. Alternatives Permitted
425. Lifeline Obligations for ETCs
(Lifeline Voice Service Obligation). We
grant a conditional forbearance from the
Lifeline voice service obligation for
existing ETCs that are not Lifeline-only
ETCs.
426. Lifeline Obligations for ETCs
(Lifeline Broadband Service Obligation).
We also grant a forbearance to Lifelineonly ETCs from the requirement to offer
BIAS to allow such ETCS to solely offer
voice service. Further, we grant a
forbearance to ETCs that are not
Lifeline-only from the requirement to
offer Lifeline-BIAS to allow such ETCs
to solely offer voice service in the
Lifeline program.
427. While the above forbearances
could have a significant impact on small
entities insofar as it would make this
conditional forbearance theoretically
available to many small entities (all rateof-return incumbent local exchange
carriers (ILECs), for instance), it would
be a benefit to small entities, not a
burden. However, it is unclear how
many small entities (vs. large entities
like price cap ILECs) actually will take
advantage of the forbearances provided.
b. Alternatives Considered and Rejected
428. Minimum service standards
(Fixed Broadband). The best source of
subscriber data to obtain minimum
service standards for fixed broadband is
the FCC Form 477. Although there were
other proposed methods provided by
commenters, such as specific numeric
thresholds and existing Commission
testing mechanisms, providers are
already required to report extensively
on their offerings on the FCC Form 477
twice a year; therefore, it is the less
burdensome method to acquire data to
set and regularly update the minimum
service standards for fixed broadband
speeds.
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429. Minimum service standards
(Mobile Broadband). The best source of
data to set and update minimum service
standards for mobile broadband data
usage is data set forth in the
Commission’s annual Mobile
Competition Report. Although a
commenter proposed a method utilizing
a numeric threshold, this report is
updated annually with mobile
subscriber data; therefore, it is the less
burdensome method to calculate and
regularly update the mobile data usage
level for mobile broadband standards.
430. Report to Congress: The
Commission will send a copy of this
Third Report and Order, Further Report
and Order, and Order on
Reconsideration, including this FRFA,
in a report to be sent to Congress
pursuant to the SBREFA. In addition,
the Commission will send a copy of this
Third Report and Order, Further Report
and Order, and Order on
Reconsideration, including the FRFA, to
the Chief Counsel for Advocacy of the
SBA. A copy of the Third Report and
Order, Further Report and Order, and
Order on Reconsideration, and the
FRFA (or summaries thereof) will also
be published in the Federal Register.
VIII. Ordering Clauses
431. Accordingly, it is ordered, that
pursuant to the authority contained in
sections 1 through 4, 201 through 205,
254, 303(r), and 403 of the
Communications Act of 1934, as
amended, 47 U.S.C. 151 through 154,
201 through 205, 254, 303(r), and 403,
and Section 706 of the
Telecommunications Act of 1996, 47
U.S.C. 1302, this Third Report and
Order, Further Report and Order, and
Order on Reconsideration is adopted
effective June 23, 2016, except to the
extent provided herein and expressly
addressed below.
432. It is further ordered, that
pursuant to the authority contained in
Sections 1 through 4, 201 through 205,
254, 303(r), and 403 of the
Communications Act of 1934, as
amended, 47 U.S.C. 151 through 154,
201 through 205, 254, 303(r), and 403,
and Section 706 of the
Telecommunications Act of 1996, 47
U.S.C. 1302, part 54 of the
Commission’s rules, 47 CFR part 54, is
amended, and such rule amendments to
Sections 54.201, 54.400, and 54.423
shall be effective 30 days after
announcement in the Federal Register
of OMB approval of the subject
information collection requirements or
December 1, 2016, whichever is later.
433. It is further ordered that,
pursuant to the authority contained in
Sections 1 through 4, 201 through 205,
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254, 303(r), and 403 of the
Communications Act of 1934, as
amended, 47 U.S.C. 151 through 154,
201 through 205, 254, 303(r), and 403,
and Section 706 of the
Telecommunications Act of 1996, 47
U.S.C. 1302, part 54 of the
Commission’s rules, 47 CFR part 54,
that the rule amendments to Sections
54.202(a)(6), (d), and (e) and 54.205(c)
are subject to the PRA and will become
effective immediately upon
announcement in the Federal Register
of OMB approval of the subject
information collection requirements.
434. It is further ordered that,
pursuant to the authority contained in
Sections 1 through 4, 201 through 205,
254, 303(r), and 403 of the
Communications Act of 1934, as
amended, 47 U.S.C. 151 through 154,
201 through 205, 254, 303(r), and 403,
and Section 706 of the
Telecommunications Act of 1996, 47
U.S.C. 1302, part 54 of the
Commission’s rules, 47 CFR part 54,
that the rule amendments to §§ 54.101,
54.401(a)(2), (b), (c), and (f), 54.403(a),
54.405(e)(1) and (e)(3) through (5),
54.407(a), (c)(2), and (d), 54.408,
54.409(a)(2), 54.410(b) through (e) and
(g) through (h), 54.411, 54.416(a)(3),
54.420(b), and 54.422(b)(3) are subject to
the PRA and will become effective 60
days after announcement in the Federal
Register of OMB approval of the subject
information collection requirements or
December 1, 2016, whichever is later.
435. It is further ordered that,
pursuant to the authority contained in
sections 1 through 4, 201 through 205,
254, 303(r), and 403 of the
Communications Act of 1934, as
amended, 47 U.S.C. 151 through 154,
201 through 205, 254, 303(r), and 403,
and Section 706 of the
Telecommunications Act of 1996, 47
U.S.C. 1302, part 54 of the
Commission’s rules, 47 CFR part 54,
that the rule amendment to § 54.410(f) is
subject to the PRA and will become
effective 60 days after announcement in
the Federal Register of OMB approval of
the subject information collection
requirements or January 1, 2017,
whichever is later.
436. It is further ordered that,
pursuant to the authority contained in
Sections 1 through 5 and 254 of the
Communications Act of 1934, as
amended, 47 U.S.C. 151 through 155
and 254, and § 1.429 of the
Commission’s rules, 47 CFR 1.429, the
Petitions for Reconsideration filed by
GCI on April 2, 2012, Sprint Nextel on
April 2, 2012, and the Petitions for
Reconsideration and Clarification filed
by TracFone on April 2, 2012 and
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USTelecom on April 2, 2012 are
granted.
437. It is further ordered that the
Commission shall send a copy of this
Third Report and Order, Further Report
and Order and Order on
Reconsideration to Congress and to the
Government Accountability Office
pursuant to the Congressional Review
Act, see 5 U.S.C. 801(a)(1)(A).
438. It is further ordered that the
Commission’s Consumer and
Governmental Affairs Bureau, Reference
Information Center, shall send a copy of
the Third Report and Order, Further
Report and Order, and Order on
Reconsideration, including the Final
Regulatory Flexibility Analysis, to the
Chief Counsel for Advocacy of the Small
Business Administration.
List of Subjects in 47 CFR Part 54
Communications common carriers,
Reporting and recordkeeping
requirements, Telecommunications,
Telephone.
Federal Communications Commission.
Gloria J. Miles,
Federal Register Liaison Officer, Office of the
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
1. The authority citation for part 54
continues to read as follows:
■
Authority: Section 1, 4(i), 5, 201, 205, 214,
219, 220, 254, 303(r), and 403 of the
Communications Act of 1934, as amended,
and section 706 of the Communications Act
of 1996, as amended; 47 U.S.C. 151, 154(i),
155, 201, 205, 214, 219, 220, 254, 303(r), 403,
and 1302 unless otherwise noted.
■
2. Revise § 54.101 to read as follows:
§ 54.101 Supported services for rural,
insular and high cost areas.
(a) Services designated for support.
Voice telephony services and broadband
service shall be supported by federal
universal service support mechanisms.
(1) Eligible voice telephony services
must provide voice grade access to the
public switched network or its
functional equivalent; minutes of use for
local service provided at no additional
charge to end users; access to the
emergency services provided by local
government or other public safety
organizations, such as 911 and
enhanced 911, to the extent the local
government in an eligible carrier’s
service area has implemented 911 or
enhanced 911 systems; and toll
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limitation services to qualifying lowincome consumers as provided in
subpart E of this part.
(2) Eligible broadband Internet access
services must provide the capability to
transmit data to and receive data by
wire or radio from all or substantially all
Internet endpoints, including any
capabilities that are incidental to and
enable the operation of the
communications service, but excluding
dial-up service.
(b) An eligible telecommunications
carrier eligible to receive high-cost
support must offer voice telephony
service as set forth in paragraph (a)(1) of
this section in order to receive federal
universal service support.
(c) An eligible telecommunications
carrier (ETC) subject to a high-cost
public interest obligation to offer
broadband Internet access services and
not receiving Phase I frozen high-cost
support must offer broadband services
as set forth in paragraph (a)(2) of this
section within the areas where it
receives high-cost support consistent
with the obligations set forth in this part
and subparts D, K, L and M of this part.
(d) Any ETC must comply with
subpart E of this part.
■ 3. Amend § 54.201 by adding
paragraph (j) to read as follows:
§ 54.201 Definition of eligible
telecommunications carriers, generally.
*
*
*
*
*
(j) A state commission shall not
designate a common carrier as a Lifeline
Broadband Provider eligible
telecommunications carrier.
■ 4. Amend § 54.202 by adding
paragraph (a)(6) and adding paragraphs
(d) and (e) to read as follows:
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§ 54.202 Additional requirements for
Commission designation of eligible
telecommunications carriers.
(a) * * *
(6) For common carriers seeking
designation as an eligible
telecommunications carrier for purposes
of receiving support only under subpart
E of this part, submit information
describing the terms and conditions of
any broadband Internet access service
plans offered to Lifeline subscribers,
including details on the speeds offered,
data usage allotments, additional
charges for particular uses, if any, and
rates for each such plan. To the extent
the eligible telecommunications carrier
offers plans to Lifeline subscribers that
are generally available to the public, it
may provide summary information
regarding such plans, such as a link to
a public Web site outlining the terms
and conditions of such plans.
*
*
*
*
*
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(d) A common carrier seeking
designation as a Lifeline Broadband
Provider eligible telecommunications
carrier must meet the requirements of
paragraph (a) of this section. The
Commission should process such
petitions for designation as follows:
(1) If the petitioning common carrier
has offered broadband Internet access
service to the public for at least two
years before the date of the filing and
serves at least 1,000 non-Lifeline
customers with voice telephony and/or
broadband Internet access service as of
the date of the filing, the common
carrier’s petition for designation as a
Lifeline Broadband Provider eligible
telecommunications carrier shall be
deemed granted within 60 days of the
submission of a completed filing unless
the Commission notifies the common
carrier that the grant will not be
automatically effective.
(2) If the petitioning common carrier
provides service on Tribal lands and is
a facilities-based provider more than 50
percent owned by one or more federally
recognized Tribal Nations or Tribal
consortia and actually controlled by one
or more federally recognized Tribal
Nations or Tribal consortia, the common
carrier’s petition for designation as a
Lifeline Broadband Provider eligible
telecommunications carrier shall be
deemed granted within 60 days of the
submission of a completed filing unless
the Commission notifies the common
carrier that the grant will not be
automatically effective.
(3) If the petitioning common carrier
does not qualify under paragraph (d)(1)
or (2) of this section, the common
carrier’s petition for designation as a
Lifeline Broadband Provider eligible
telecommunications carrier shall be
acted upon within six months of the
submission of a completed filing.
(e) A provider designated as a Lifeline
Broadband Provider (LBP) may obtain
designation as an LBP in additional
service areas by submitting to the
Commission a request identifying the
service areas in which the LBP plans to
offer Lifeline-supported service and a
certification that there has been no
material change to the information
submitted in the petition for which the
LBP received designation as an LBP.
Such a request shall be deemed granted
five business days after it is submitted
to the Commission, unless the
Commission notifies the applicant that
the grant will not be automatically
effective.
5. Amend § 54.205 by adding
paragraph (c) as follows:
■
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§ 54.205
service.
33089
Relinquishment of universal
*
*
*
*
*
(c) In the case of a Lifeline Broadband
Provider eligible telecommunications
carrier, a Lifeline Broadband Provider’s
notice of relinquishment shall be
deemed granted by the Commission 60
days after the notice is filed, unless the
Commission notifies the Lifeline
Broadband Provider that the
relinquishment will not be
automatically effective. This paragraph
(c) shall not apply to Lifeline Broadband
Providers that also receive high-cost
universal service support.
■ 6. Amend § 54.400 by revising
paragraphs (f) and (j) and adding
paragraphs (l) through (o) to read as
follows:
§ 54.400
Terms and definitions.
*
*
*
*
*
(f) Income. ‘‘Income’’ means gross
income as defined under section 61 of
the Internal Revenue Code, 26 U.S.C. 61,
for all members of the household. This
means all income actually received by
all members of the household from
whatever source derived, unless
specifically excluded by the Internal
Revenue Code, Part III of Title 26, 26
U.S.C. 101 et seq.
*
*
*
*
*
(j) Qualifying assistance program. A
‘‘qualifying assistance program’’ means
any of the federal or Tribal assistance
programs the participation in which,
pursuant to § 54.409(a) or (b), qualifies
a consumer for Lifeline service,
including Medicaid; Supplemental
Nutrition Assistance Program;
Supplemental Security Income; Federal
Public Housing Assistance; Veterans
and Survivors Pension Benefit; Bureau
of Indian Affairs general assistance;
Tribally administered Temporary
Assistance for Needy Families (Tribal
TANF); Head Start (only those
households meeting its income
qualifying standard); or the Food
Distribution Program on Indian
Reservations (FDPIR).
*
*
*
*
*
(l) Broadband Internet access service.
‘‘Broadband Internet access service’’ is
defined as a mass-market retail service
by wire or radio that provides the
capability to transmit data to and
receive data from all or substantially all
Internet endpoints, including any
capabilities that are incidental to and
enable the operation of the
communications service, but excluding
dial-up service.
(m) Voice telephony service. ‘‘Voice
telephony service’’ is defined as voice
grade access to the public switched
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network or its functional equivalent;
minutes of use for local service
provided at no additional charge to end
users; access to the emergency services
provided by local government or other
public safety organizations, such as 911
and enhanced 911, to the extent the
local government in an eligible carrier’s
service area has implemented 911 or
enhanced 911 systems; and toll
limitation services to qualifying lowincome consumers as provided in
subpart E of this part.
(n) Supported services. Voice
Telephony services and broadband
Internet access services are supported
services for the Lifeline program.
(o) National Lifeline Eligibility
Verifier. The ‘‘National Lifeline
Eligibility Verifier’’ or ‘‘National
Verifier’’ is an electronic and manual
system with associated functions,
processes, policies and procedures, to
facilitate the determination of consumer
eligibility for the Lifeline program, as
directed by the Commission.
■ 7. Amend § 54.401 by revising
paragraphs (a)(2) and (b) and paragraph
(c) introductory text and adding
paragraph (f) to read as follows:
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§ 54.401
Lifeline defined.
(a) * * *
(2) That provides qualifying lowincome consumers with voice telephony
service or broadband Internet access
service as defined in § 54.400. Toll
limitation service does not need to be
offered for any Lifeline service that does
not distinguish between toll and nontoll calls in the pricing of the service. If
an eligible telecommunications carrier
charges Lifeline subscribers a fee for toll
calls that is in addition to the per month
or per billing cycle price of the
subscribers’ Lifeline service, the carrier
must offer toll limitation service at no
charge to its subscribers as part of its
Lifeline service offering.
(b) Eligible telecommunications
carriers may allow qualifying lowincome consumers to apply Lifeline
discounts to any residential service plan
with the minimum service levels set
forth in § 54.408 that includes fixed or
mobile voice telephony service,
broadband Internet access service, or a
bundle of broadband Internet access
service and fixed or mobile voice
telephony service; and plans that
include optional calling features such
as, but not limited to, caller
identification, call waiting, voicemail,
and three-way calling.
(1) Eligible telecommunications
carriers may permit qualifying lowincome consumers to apply their
Lifeline discount to family shared data
plans.
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(2) Eligible telecommunications
carriers may allow qualifying lowincome consumers to apply Lifeline
discounts to any residential service plan
that includes voice telephony service
without qualifying broadband Internet
access service prior to December 1,
2021.
(3) Beginning December 1, 2016,
eligible telecommunications carriers
must provide the minimum service
levels for each offering of mobile voice
service as defined in § 54.408.
(4) Beginning December 1, 2021,
eligible telecommunications carriers
must provide the minimum service
levels for broadband Internet access
service in every Lifeline offering.
(c) Eligible telecommunications
carriers may not collect a service
deposit in order to initiate Lifeline for
voice-only service plans that:
*
*
*
*
*
(f) Eligible telecommunications
carriers may aggregate eligible
subscribers’ benefits to provide a
collective service to a group of
subscribers, provided that each
qualifying low-income consumer
subscribed to the collective service
receives residential service that meets
the requirements of paragraph (a) of this
section and § 54.408.
■ 8. Amend § 54.403 by revising
paragraph (a)(1), redesignating
paragraph (a)(2) as paragraph (a)(3),
adding a new paragraph (a)(2), removing
and reserving paragraph (b)(2), and
removing paragraph (c) to read as
follows:
§ 54.403
Lifeline support amount.
(a) * * *
(1) Basic support amount. Federal
Lifeline support in the amount of $9.25
per month will be made available to an
eligible telecommunications carrier
providing Lifeline service to a
qualifying low-income consumer,
except as provided in paragraph (a)(2) of
this section, if that carrier certifies to the
Administrator that it will pass through
the full amount of support to the
qualifying low-income consumer and
that it has received any non-federal
regulatory approvals necessary to
implement the rate reduction.
(2) For a Lifeline provider offering
either standalone voice service, subject
to the minimum service standards set
forth in § 54.408, or voice service with
broadband below the minimum
standards set forth in § 54.408, the
support levels will be as follows:
(i) Until December 1, 2019, the
support amount will be $9.25 per
month.
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(ii) From December 1, 2019 until
November 30, 2020, the support amount
will be $7.25 per month.
(iii) From December 1, 2020 until
November 30, 2021, the support amount
will be $5.25 per month.
(iv) On December 1, 2021, standalone
voice service, or voice service not
bundled with broadband which meets
the minimum standards set forth in
§ 54.408, will not be eligible for Lifeline
support unless the Commission has
previously determined otherwise.
(v) Notwithstanding paragraph
(a)(2)(iv) of this section, on December 1,
2021, the support amount for standalone
voice service, or voice service not
bundled with broadband which meets
the minimum standards set forth in
§ 54.408, provided by a provider that is
the only Lifeline provider in a Census
block will be the support amount
specified in paragraph (a)(2)(iii) of this
section.
*
*
*
*
*
■ 9. Amend § 54.405 by revising
paragraphs (e)(1), (3), and (4) and
adding paragraph (e)(5) to read as
follows:
§ 54.405
Carrier obligation to offer Lifeline.
*
*
*
*
*
(e) * * *
(1) De-enrollment generally. If an
eligible telecommunications carrier has
a reasonable basis to believe that a
Lifeline subscriber no longer meets the
criteria to be considered a qualifying
low-income consumer under § 54.409,
the carrier must notify the subscriber of
impending termination of his or her
Lifeline service. Notification of
impending termination must be sent in
writing separate from the subscriber’s
monthly bill, if one is provided, and
must be written in clear, easily
understood language. A carrier
providing Lifeline service in a state that
has dispute resolution procedures
applicable to Lifeline termination that
requires, at a minimum, written
notification of impending termination,
must comply with the applicable state
requirements. The carrier must allow a
subscriber 30 days following the date of
the impending termination letter
required to demonstrate continued
eligibility. A subscriber making such a
demonstration must present proof of
continued eligibility to the carrier
consistent with applicable annual recertification requirements, as described
in § 54.410(f). An eligible
telecommunications carrier must deenroll any subscriber who fails to
demonstrate eligibility within five
business days after the expiration of the
subscriber’s time to respond. A carrier
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providing Lifeline service in a state that
has dispute resolution procedures
applicable to Lifeline termination must
comply with the applicable state
requirements.
*
*
*
*
*
(3) De-enrollment for non-usage.
Notwithstanding paragraph (e)(1) of this
section, if a Lifeline subscriber fails to
use, as ‘‘usage’’ is defined in
§ 54.407(c)(2), for 30 consecutive days a
Lifeline service that does not require the
eligible telecommunications carrier to
assess or collect a monthly fee from its
subscribers, an eligible
telecommunications carrier must
provide the subscriber 15 days’ notice,
using clear, easily understood language,
that the subscriber’s failure to use the
Lifeline service within the 15-day notice
period will result in service termination
for non-usage under this paragraph.
Eligible telecommunications carriers
shall report to the Commission annually
the number of subscribers de-enrolled
for non-usage under this paragraph.
This de-enrollment information must be
reported by month and must be
submitted to the Commission at the time
an eligible telecommunications carrier
submits its annual certification report
pursuant to § 54.416.
(4) De-enrollment for failure to recertify. Notwithstanding paragraph
(e)(1) of this section, an eligible
telecommunications carrier must deenroll a Lifeline subscriber who does
not respond to the carrier’s attempts to
obtain re-certification of the subscriber’s
continued eligibility as required by
§ 54.410(f); or who fails to provide the
annual one-per-household recertifications as required by § 54.410(f).
Prior to de-enrolling a subscriber under
this paragraph, the eligible
telecommunications carrier must notify
the subscriber in writing separate from
the subscriber’s monthly bill, if one is
provided, using clear, easily understood
language, that failure to respond to the
re-certification request will trigger deenrollment. A subscriber must be given
60 days to respond to recertification
efforts. If a subscriber does not respond
to the carrier’s notice of impending deenrollment, the carrier must de-enroll
the subscriber from Lifeline within five
business days after the expiration of the
subscriber’s time to respond to the recertification efforts.
(5) De-enrollment requested by
subscriber. If an eligible
telecommunications carrier receives a
request from a subscriber to de-enroll, it
must de-enroll the subscriber within
two business days after the request.
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10. Amend § 54.407 by revising
paragraphs (a), (c)(2), and (d) to read as
follows:
■
§ 54.407
Lifeline.
Reimbursement for offering
(a) Universal service support for
providing Lifeline shall be provided
directly to an eligible
telecommunications carrier based on the
number of actual qualifying low-income
customers it serves directly as of the
first day of the month. After the
National Verifier is deployed in a state,
reimbursement shall be provided to an
eligible telecommunications carrier
based on the number of actual
qualifying low-income customers it
serves directly as of the first day of the
month found in the National Verifier.
*
*
*
*
*
(c) * * *
(2) After service activation, an eligible
telecommunications carrier shall only
continue to receive universal service
support reimbursement for such Lifeline
service provided to subscribers who
have used the service within the last 30
days, or who have cured their non-usage
as provided for in § 54.405(e)(3). Any of
these activities, if undertaken by the
subscriber, will establish ‘‘usage’’ of the
Lifeline service:
(i) Completion of an outbound call or
usage of data;
(ii) Purchase of minutes or data from
the eligible telecommunications carrier
to add to the subscriber’s service plan;
(iii) Answering an incoming call from
a party other than the eligible
telecommunications carrier or the
eligible telecommunications carrier’s
agent or representative;
(iv) Responding to direct contact from
the eligible communications carrier and
confirming that he or she wants to
continue receiving Lifeline service; or
(v) Sending a text message.
(d) In order to receive universal
service support reimbursement, an
officer of each eligible
telecommunications carrier must certify,
as part of each request for
reimbursement, that:
(1) The eligible telecommunications
carrier is in compliance with all of the
rules in this subpart; and
(2) The eligible telecommunications
carrier has obtained valid certification
and recertification forms to the extent
required under this subpart for each of
the subscribers for whom it is seeking
reimbursement.
*
*
*
*
*
■ 11. Add § 54.408 to read as follows:
§ 54.408
Minimum service standards.
(a) As used in this subpart, with the
following exception of paragraph (a)(2)
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of this section, a minimum service
standard is:
(1) The level of service which an
eligible telecommunications carrier
must provide to an end user in order to
receive the Lifeline support amount.
(2) The minimum service standard for
mobile broadband speed, as described
in paragraph (b)(2)(i) of this section, is
the level of service which an eligible
telecommunications carrier must both
advertise and provide to an end user.
(b) Minimum service standards for
Lifeline supported services will take
effect on December 1, 2016. The
minimum service standards set forth
below are subject to the conditions in
§ 54.401. The initial minimum service
standards, as set forth in paragraphs
(b)(1) through (3) of this section, will be
subject to the updating mechanisms
described in paragraph (c) of this
section.
(1) Fixed broadband will have
minimum service standards for speed
and data usage allowance, subject to the
exceptions in paragraph (d) of this
section.
(i) The minimum service standard for
fixed broadband speed will be 10
Megabits per second downstream/1
Megabit per second upstream.
(ii) The minimum service standard for
fixed broadband data usage allowance
will be 150 gigabytes per month.
(2) Mobile broadband will have
minimum service standards for speed
and data usage allowance.
(i) The minimum service standard for
mobile broadband speed will be 3G.
(ii) The minimum service standard for
mobile broadband data usage allowance
will be:
(A) From December 1, 2016 until
November 30, 2017, 500 megabytes per
month;
(B) From December 1, 2017, until
November 30, 2018, 1 gigabyte per
month;
(C) From December 1, 2018 until
November 30, 2019, 2 gigabytes per
month; and
(D) On and after December 1, 2019,
the minimum standard will be
calculated using the mechanism set
forth in paragraphs (c)(2)(ii)(A) through
(D) of this section. If the data listed in
paragraphs (c)(2)(ii)(A) through (D) do
not meet the criteria set forth in
paragraph (c)(2)(iii) of this section, then
the updating mechanism in paragraph
(c)(2)(iii) will be used instead.
(3) The minimum service standard for
mobile voice service will be:
(i) From December 1, 2016, until
November 30, 2017, 500 minutes;
(ii) From December 1, 2017, until
November 30, 2018, 750 minutes; and
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(iii) On and after December 1, 2018,
the minimum standard will be 1000
minutes.
(c) Minimum service standards will
be updated using the following
mechanisms:
(1) Fixed broadband will have
minimum service standards for speed
and data usage allowance. The
standards will updated as follows:
(i) The standard for fixed broadband
speed will be updated on an annual
basis. The standard will be set at the
30th percentile, rounded up to the
nearest Megabit-per-second integer, of
subscribed fixed broadband downstream
and upstream speeds. The 30th
percentile will be determined by
analyzing FCC Form 477 Data. The new
standard will be published in a Public
Notice issued by the Wireline
Competition Bureau on or before July
31, which will give the new minimum
standard for the upcoming year. In the
event that the Bureau does not release
a Public Notice, or the data are older
than 18 months, the minimum standard
will be the greater of:
(A) The current minimum standard;
or
(B) The Connect America Fund
minimum speed standard for rate-ofreturn fixed broadband providers, as set
forth in 47 CFR 54.308(a).
(ii) The standard for fixed broadband
data usage allowance will be updated on
an annual basis. The new standard will
be published in a Public Notice issued
by the Wireline Competition Bureau on
or before July 31, which will give the
new minimum standard for the
upcoming year. The updated standard
will be the greater of:
(A) An amount the Wireline
Competition Bureau deems appropriate,
based on what a substantial majority of
American consumers already subscribe
to, after analyzing Urban Rate Survey
data and other relevant data; or
(B) The minimum standard for data
usage allowance for rate-of-return fixed
broadband providers set in the Connect
America Fund.
(2) Mobile broadband will have
minimum service standards for speed
and capacity. The standards will be
updated as follows:
(i) The standard for mobile broadband
speed will be updated when, after
analyzing relevant data, including the
FCC Form 477 data, the Wireline
Competition Bureau determines such an
adjustment is necessary. If the standard
for mobile broadband speed is updated,
the new standard will be published in
a Public Notice issued by the Wireline
Competition Bureau.
(ii) The standard for mobile
broadband capacity will be updated on
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Jkt 238001
an annual basis. The standard will be
determined by:
(A) Dividing the total number of
mobile-cellular subscriptions in the
United States, as reported in the Mobile
Competition Report by the total number
of American households, as determined
by the U.S. Census Bureau, in order to
determine the number of mobile-cellular
subscriptions per American household.
This number will be rounded to the
hundredths place and then multiplied
by;
(B) The percentage of Americans who
own a smartphone, according to the
Commission’s annual Mobile
Competition Report. This number will
be rounded to the hundredths place and
then multiplied by;
(C) The average data used per mobile
smartphone subscriber, as reported by
the Commission in its annual Mobile
Competition Report. This number will
be rounded to the hundredths place and
then multiplied by;
(D) Seventy (70) percent. The result
will then be rounded up to the nearest
250 MB interval to provide the new
monthly minimum service standard for
the mobile broadband data usage
allowance.
(iii) If the Wireline Competition
Bureau does not release a Public Notice
giving new minimum standards for
mobile broadband capacity on or before
July 31, or if the necessary data needed
to calculate the new minimum standard
are older than 18 months, the data usage
allowance will be updated by
multiplying the current data usage
allowance by the percentage of the yearover-year change in average mobile data
usage per smartphone user, as reported
in the Mobile Competition Report. That
amount will be rounded up to the
nearest 250 MB.
(d) Exception for certain fixed
broadband providers. Subject to the
limitations in paragraphs (d)(1) through
(4) of this section, the Lifeline discount
may be applied for fixed broadband
service that does not meet the minimum
standards set forth in paragraph (b)(1) of
this section. If the provider, in a given
area:
(1) Does not offer any fixed broadband
service that meets our minimum service
standards set forth in paragraph (b)(1) of
this section; but
(2) Offers a fixed broadband service of
at least 4 Mbps downstream/1 Mbps
upstream in that given area; then,
(3) In that given area, a fixed
broadband provider may receive
Lifeline funds for the purchase of its
highest performing generally available
residential offering, lexicographically
ranked by:
(i) Download bandwidth;
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(ii) Upload bandwidth; and
(iii) Usage allowance.
(4) A fixed broadband provider
claiming Lifeline support under this
section will certify its compliance with
this section’s requirements and will be
subject to the Commission’s audit
authority.
(e) Except as provided in paragraph
(d) of this section, eligible
telecommunications carriers shall not
apply the Lifeline discount to offerings
that do not meet the minimum service
standards.
(f) Equipment requirement. (1) Any
fixed or mobile broadband provider,
which provides devices to its
consumers, must ensure that all such
devices provided to a consumer are WiFi enabled.
(2) A provider may not institute an
additional or separate tethering charge
for any mobile data usage that is below
the minimum service standard set forth
in paragraph (b)(2) of this section.
(3) Any mobile broadband provider
which provides devices to its consumers
must offer at least one device that is
capable of being used as a hotspot. This
requirement will change as follows:
(i) From December 1, 2017 to
November 30, 2018, a provider that
offers devices must ensure that at least
15 percent of such devices are capable
of being used as a hotspot.
(ii) From December 1, 2018 to
November 30, 2019, a provider that
offers devices must ensure that at least
20 percent of such devices are capable
of being used as a hotspot.
(iii) From December 1, 2019 to
November 30, 2020, a provider that
offers devices must ensure that at least
25 percent of such devices are capable
of being used as a hotspot.
(iv) From December 1, 2020 to
November 30, 2021, a provider that
offers devices must ensure that at least
35 percent of such devices are capable
of being used as a hotspot.
(v) From December 1, 2021 to
November 30, 2022, a provider that
offers devices must ensure that at least
45 percent of such devices are capable
of being used as a hotspot.
(vi) From December 1, 2022 to
November 30, 2023, a provider that
offers devices must ensure that at least
55 percent of such devices are capable
of being used as a hotspot.
(vii) From December 1, 2023 to
November 30, 2024, a provider that
offers devices must ensure that at least
65 percent of such devices are capable
of being used as a hotspot.
(viii) On December 1, 2024, a provider
that offers devices must ensure that at
least 75 percent of such devices are
capable of being used as a hotspot.
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12. Amend § 54.409 by revising
paragraph (a)(2) and removing
paragraph (a)(3) to read as follows:
■
§ 54.409
Lifeline.
Consumer qualification for
(a) * * *
(2) The consumer, one or more of the
consumer’s dependents, or the
consumer’s household must receive
benefits from one of the following
federal assistance programs: Medicaid;
Supplemental Nutrition Assistance
Program; Supplemental Security
Income; Federal Public Housing
Assistance; or Veterans and Survivors
Pension Benefit.
*
*
*
*
*
■ 13. Amend § 54.410 by
■ a. Revising paragraphs (b)(1)
introductory text, (b)(1)(i)(B), (b)(1)(ii),
(b)(2) introductory text, (b)(2)(i), (c)(1)
introductory text, (c)(1)(ii), (c)(2)
introductory text, (c)(2)(i), (d)
introductory text, (d)(1) introductory
text, (d)(2) introductory text, and (d)(3)
introductory text;
■ b. Removing paragraph (d)(3)(v);
■ c. Redesignating paragraphs (d)(3)(vi)
through (ix) as paragraphs (d)(3)(v)
through (viii);
■ d. Revising paragraphs (e), (f)(1), and
(f)(2)(ii) and (iii);
■ e. Adding paragraph (f)(2)(iv);
■ f. Revising paragraphs (f)(3)
introductory text, (f)(3)(ii) and (iii), (f)(4)
and (5), and (g); and
■ g. Adding paragraph (h).
The revisions and additions read as
follows:
§ 54.410 Subscriber eligibility
determination and certification.
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*
*
*
*
*
(b) * * *
(1) Except where the National
Verifier, state Lifeline administrator or
other state agency is responsible for the
initial determination of a subscriber’s
eligibility, when a prospective
subscriber seeks to qualify for Lifeline
using the income-based eligibility
criteria provided for in § 54.409(a)(1) an
eligible telecommunications carrier:
(i) * * *
(B) If an eligible telecommunications
carrier cannot determine a prospective
subscriber’s income-based eligibility by
accessing income databases, the eligible
telecommunications carrier must review
documentation that establishes that the
prospective subscriber meets the
income-eligibility criteria set forth in
§ 54.409(a)(1). Acceptable
documentation of income eligibility
includes the prior year’s state, federal,
or Tribal tax return; current income
statement from an employer or
paycheck stub; a Social Security
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Jkt 238001
statement of benefits; a Veterans
Administration statement of benefits; a
retirement/pension statement of
benefits; an Unemployment/Workers’
Compensation statement of benefit;
federal or Tribal notice letter of
participation in General Assistance; or a
divorce decree, child support award, or
other official document containing
income information. If the prospective
subscriber presents documentation of
income that does not cover a full year,
such as current pay stubs, the
prospective subscriber must present the
same type of documentation covering
three consecutive months within the
previous twelve months.
(ii) Must securely retain copies of
documentation demonstrating a
prospective subscriber’s income-based
eligibility for Lifeline consistent with
§ 54.417, except to the extent such
documentation is retained by National
Verifier.
(2) Where the National Verifier, state
Lifeline administrator, or other state
agency is responsible for the initial
determination of a subscriber’s
eligibility, an eligible
telecommunications carrier must not
seek reimbursement for providing
Lifeline service to a subscriber, based on
that subscriber’s income eligibility,
unless the carrier has received from the
National Verifier, state Lifeline
administrator, or other state agency:
(i) Notice that the prospective
subscriber meets the income-eligibility
criteria set forth in § 54.409(a)(1); and
*
*
*
*
*
(c) * * *
(1) Except in states where the
National Verifier, state Lifeline
administrator, or other state agency is
responsible for the initial determination
of a subscriber’s program-based
eligibility, when a prospective
subscriber seeks to qualify for Lifeline
service using the program-based criteria
set forth in § 54.409(a)(2) or (b), an
eligible telecommunications carrier:
*
*
*
*
*
(ii) Must securely retain copies of the
documentation demonstrating a
subscriber’s program-based eligibility
for Lifeline, consistent with § 54.417,
except to the extent such documentation
is retained by the National Verifier.
(2) Where the National Verifier, state
Lifeline administrator, or other state
agency is responsible for the initial
determination of a subscriber’s
eligibility, when a prospective
subscriber seeks to qualify for Lifeline
service using the program-based
eligibility criteria provided in
§ 54.409(a)(2) or (b), an eligible
telecommunications carrier must not
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33093
seek reimbursement for providing
Lifeline to a subscriber unless the
carrier has received from the National
Verifier, state Lifeline administrator or
other state agency:
(i) Notice that the subscriber meets
the program-based eligibility criteria set
forth in § 54.409(a)(2) or (b); and
*
*
*
*
*
(d) Eligibility certification form.
Eligible telecommunications carriers
and state Lifeline administrators or
other state agencies that are responsible
for the initial determination of a
subscriber’s eligibility for Lifeline must
provide prospective subscribers Lifeline
certification forms that provide the
information in paragraphs (d)(1) through
(3) of this section in clear, easily
understood language. If a Federal
eligibility certification form is available,
entities enrolling subscribers must use
such form to enroll a qualifying lowincome consumer into the Lifeline
program.
(1) The form provided by the entity
enrolling subscribers must provide the
information in paragraphs (d)(1)(i)
through (vi) of this section:
*
*
*
*
*
(2) The form provided by the entity
enrolling subscribers must require each
prospective subscriber to provide the
information in paragraphs (d)(2)(i)
through (viii) of this section:
*
*
*
*
*
(3) The form provided by the entity
enrolling subscribers shall require each
prospective subscriber to initial his or
her acknowledgement of each of the
certifications in paragraphs (d)(3)(i)
through (viii) of this section
individually and under penalty of
perjury:
*
*
*
*
*
(e) The National Verifier, state
Lifeline administrators or other state
agencies that are responsible for the
initial determination of a subscriber’s
eligibility for Lifeline must provide each
eligible telecommunications carrier with
a copy of each of the certification forms
collected by the National Verifier, state
Lifeline administrator or other state
agency for that carrier’s subscribers.
(f) * * *
(1) All eligible telecommunications
carriers must re-certify all subscribers
12 months after the subscriber’s service
initiation date and every 12 months
thereafter, except for subscribers in
states where the National Verifier, state
Lifeline administrator, or other state
agency is responsible for the annual recertification of subscribers’ Lifeline
eligibility.
(2) * * *
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(ii) Querying the appropriate income
databases, confirming that the
subscriber continues to meet the
income-based eligibility requirements
for Lifeline, and documenting the
results of that review.
(iii) If the subscriber’s program-based
or income-based eligibility for Lifeline
cannot be determined by accessing one
or more state databases containing
information regarding enrollment in
qualifying assistance programs, then the
National Verifier, state Lifeline
administrator, or state agency may
obtain a signed certification from the
subscriber on a form that meets the
certification requirements in paragraph
(d) of this section. If a Federal eligibility
recertification form is available, entities
enrolling subscribers must use such
form to re-certify a qualifying lowincome consumer.
(iv) In states in which the National
Verifier has been implemented, the
eligible telecommunications carrier
cannot re-certify subscribers not found
in the National Verifier by obtaining a
certification form from the subscriber.
(3) Where the National Verifier, state
Lifeline administrator, or other state
agency is responsible for re-certification
of a subscriber’s Lifeline eligibility, the
National Verifier, state Lifeline
administrator, or state agency must
confirm a subscriber’s current eligibility
to receive a Lifeline service by:
*
*
*
*
*
(ii) Querying the appropriate income
databases, confirming that the
subscriber continues to meet the
income-based eligibility requirements
for Lifeline, and documenting the
results of that review.
(iii) If the subscriber’s eligibility for
Lifeline cannot be determined by
accessing one or more databases
containing information regarding
enrollment in qualifying assistance
programs, then the National Verifier,
state Lifeline administrator, or state
agency may obtain a signed certification
from the subscriber on a form that meets
the certification requirements in
paragraph (d) of this section. If a Federal
eligibility recertification form is
available, entities enrolling subscribers
must use such form to recertify a
qualifying low-income consumer.
(4) Where the National Verifier, state
Lifeline administrator, or other state
agency is responsible for re-certification
or subscribers’ Lifeline eligibility, the
National Verifier, state Lifeline
administrator, or other state agency
must provide to each eligible
telecommunications carrier the results
of its annual re-certification efforts with
respect to that eligible
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Jkt 238001
telecommunications carrier’s
subscribers.
(5) If an eligible telecommunications
carrier is unable to re-certify a
subscriber or has been notified by the
National Verifier, a state Lifeline
administrator, or other state agency’s
inability to re-certify a subscriber, the
eligible telecommunications carrier
must comply with the de-enrollment
requirements provided for in
§ 54.405(e)(4).
(g) One-Per-Household Worksheet.
The prospective subscriber will
complete a form certifying compliance
with the one-per-household rule upon
initial enrollment. Such form will
provide an explanation of the one-perhousehold rule; include a check box
that the applicant can mark to indicate
that he or she lives at an address
occupied by multiple households; a
space for the applicant to certify that he
or she shares an address with other
adults who do not contribute income to
the applicant’s household and share in
the household’s expenses or benefit
from the applicant’s income; and the
penalty for consumer’s failure to make
the required one-per-household
certification, i.e. de-enrollment. At recertification, if there are changes to the
subscriber’s household that would
prevent the subscriber from accurately
certifying to § 54.410(d)(3)(vi), then the
subscriber must complete a new OnePer-Household Worksheet. If a Federal
One Per Household Form is available,
entities enrolling subscribers must use
such form.
(h) National Verifier transition. As the
National Verifier is implemented in a
state, the obligations in paragraphs (b)
through (g) of this section with respect
to the National Verifier and eligible
telecommunications carriers will also
take effect.
■ 14. Add § 54.411 to read as follows:
§ 54.411
Lifeline benefit portability.
(a) A provider shall not seek or
receive reimbursement through the
Lifeline program for service provided to
a subscriber who has used the Lifeline
benefit to enroll in a qualifying Lifelinesupported broadband Internet access
service offering with another Lifeline
provider within the previous 12 months.
(b) A provider shall not seek or
receive reimbursement through the
Lifeline program for service provided to
a subscriber who has used the Lifeline
benefit to enroll in a qualifying Lifelinesupported voice telephony service
offering with another Lifeline provider
within the previous 60 days.
(c) Notwithstanding paragraphs (a)
and (b) of this section, a provider may
seek and receive reimbursement through
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the Lifeline program for service
provided to a subscriber prior to the
completion of the 12-month period
described in paragraph (a) of this
section or the 60-day period described
in paragraph (b) of this section if:
(1) The subscriber moves their
residential address;
(2) The subscriber’s current provider
ceases operations or otherwise fails to
provide service;
(3) The provider has imposed late fees
for non-payment greater than or equal to
the monthly end-user charge for the
supported service; or
(4) The subscriber’s current provider
is found to be in violation of the
Commission’s rules during the 12month period and the subscriber is
impacted by such violation.
(d) If a subscriber transfers his or her
Lifeline benefit pursuant to paragraph
(c) of this section, the subscriber’s
Lifeline benefit will apply to the newly
selected service until the end of the
original 12-month period. In these
circumstances, the subscriber is not
required to re-certify eligibility until the
end of the original 12-month period.
The subscriber’s original provider must
provide the subscriber’s eligibility
records to either the subscriber’s new
provider or the subscriber to comply
with the 12-month service period.
■ 15. Amend § 54.416 by adding
paragraph (a)(3) to read as follows:
§ 54.416 Annual certifications by eligible
telecommunications carriers.
(a) * * *
(3) An officer of the eligible
telecommunications carrier must certify
that the carrier is in compliance with
the minimum service levels set forth in
§ 54.408. Eligible telecommunications
carriers must make this certification
annually to the Administrator as part of
the carrier’s submission of recertification data pursuant to this
section.
*
*
*
*
*
■ 16. Amend § 54.420 by revising
paragraph (b) to read as follows:
§ 54.420
Low income program audits.
*
*
*
*
*
(b) Audit requirements for new
eligible telecommunications carriers.
After a company is designated for the
first time in any state or territory, the
Administrator will audit that new
eligible telecommunications carrier to
assess its overall compliance with the
rules in this subpart and the company’s
internal controls regarding these
regulatory requirements. This audit
should be conducted within the carrier’s
first twelve months of seeking federal
low-income Universal Service Fund
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support, unless otherwise determined
by the Office of Managing Director.
■ 17. Amend § 54.422 by revising
paragraph (b)(3) to read as follows:
§ 54.422 Annual reporting for eligible
telecommunications carriers that receive
low-income support.
*
*
*
*
*
(b) * * *
(3) Certification of compliance with
applicable minimum service standards,
as set forth in § 54.408, service quality
standards, and consumer protection
rules;
*
*
*
*
*
■ 18. Add § 54.423 to read as follows:
§ 54.423
Budget.
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(a) Amount of the annual budget. The
initial annual budget on federal
universal support for the Lifeline
program shall be $2.25 billion.
(1) Inflation increase. In funding year
2016 and subsequent funding years, the
$2.25 billion funding cap on federal
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Jkt 238001
universal service support for Lifeline
shall be automatically increased
annually to take into account increases
in the rate of inflation as calculated in
paragraph (a)(2) of this section.
(2) Increase calculation. To measure
increases in the rate of inflation for the
purposes of paragraph (a) of this section,
the Commission shall use the Consumer
Price Index for all items from the
Department of Labor, Bureau of Labor
Statistics. To compute the annual
increase as required by this paragraph
(a), the percentage increase in the
Consumer Price Index from the previous
year will be used. For instance, the
annual increase in the Consumer Price
Index from 2015 to 2016 would be used
for the 2017 funding year. The increase
shall be rounded to the nearest 0.1
percent by rounding 0.05 percent and
above to the next higher 0.1 percent and
otherwise rounding to the next lower
0.1 percent. This percentage increase
shall be added to the amount of the
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33095
annual funding cap from the previous
funding year. If the yearly average
Consumer Price Index decreases or stays
the same, the annual funding cap shall
remain the same as the previous year.
(3) The Wireline Competition Bureau
shall issue a public notice on or before
July 31 containing the results of the
calculations described in § 54.403(a)(2)
and setting the budget for the upcoming
year beginning on January 1.
(b) If spending in the Lifeline program
meets or exceeds 90 percent of the
Lifeline budget in a calendar year, the
Wireline Competition Bureau shall
prepare a report evaluating program
disbursements and describing the
reasons for the program’s growth along
with any other information relevant to
the operation of the Lifeline program.
The Bureau shall submit the report to
the Commission by July 31st of the
following year.
[FR Doc. 2016–11284 Filed 5–23–16; 8:45 am]
BILLING CODE 6712–01–P
E:\FR\FM\24MYR2.SGM
24MYR2
Agencies
[Federal Register Volume 81, Number 100 (Tuesday, May 24, 2016)]
[Rules and Regulations]
[Pages 33025-33095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11284]
[[Page 33025]]
Vol. 81
Tuesday,
No. 100
May 24, 2016
Part IV
Federal Communications Commission
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47 CFR Part 54
Lifeline and Link Up Reform and Modernization, Telecommunications
Carriers Eligible for Universal Service Support, Connect America Fund;
Final Rule
Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Rules
and Regulations
[[Page 33026]]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket Nos. 11-42, 09-197, 10-90; FCC 16-38]
Lifeline and Link Up Reform and Modernization, Telecommunications
Carriers Eligible for Universal Service Support, Connect America Fund
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Federal Communications Commission (the
Commission) fully modernizes the Lifeline program so it supports
broadband services and obtains high value from the expenditure of
Universal Service funds. This Order will increase consumer choice and
encourage competition among Lifeline providers to deliver supported
broadband services.
DATES: Effective June 23, 2016 except for Sec. Sec. 54.101,
54.202(a)(6), (d), and (e), 54.205(c), 54.401(a)(2), (b), (c), and (f),
54.403(a), 54.405(e)(1) and (e)(3) through (5), 54.407(a), (c)(2), and
(d), 54.408, 54.409(a)(2), 54.410(b) through (h), 54.411, 54.416(a)(3),
54.420(b), and 54.422(b)(3) which contain information collection
requirements that are not effective until approved by the Office of
Management and Budget. The Federal Communications Commission will
publish a separate document announcing such approval and the relevant
effective date(s).
FOR FURTHER INFORMATION CONTACT: Nathan Eagan, Wireline Competition
Bureau, (202) 418-7400 or TTY: (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third
Report and Order, Further Report and Order, and Order on
Reconsideration (2016 Lifeline Order) in WC Docket Nos. 11-42, 09-197,
10-90; FCC 16-38, adopted on March 31, 2016 and released on April 27,
2016. 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 or at the following
Internet address: https://apps.fcc.gov/edocs_public/attachmatch/FCC-16-38A1.docx.
I. Introduction
1. The time has come to modernize Lifeline for the 21st Century to
help low-income Americans afford access to today's vital communications
network--the Internet, the most powerful and pervasive platform in our
Nation's history. Accessing the Internet has become a prerequisite to
full and meaningful participation in society. For those Americans with
access, the Internet has the power to transform almost every aspect of
their lives, including their ability to stay in contact with work,
friends, and family; to stay abreast of news, to monitor important
civic initiatives, to look for a new home, or to make essential
financial decisions. Households with schoolchildren access the Internet
to research issues, check assignments, and complete homework, while
people with critical or even routine health needs use the Internet to
access information about their condition and stay in touch with health
care providers.
2. But not all Americans are able to enjoy the benefits of
broadband in today's society, even as the importance of broadband
grows. There are still 64.5 million people without a connection to the
Internet and that figure hits hardest on those with the lowest incomes.
The biggest reason these Americans don't sign up for broadband today is
cost. Only half of all households in the lowest income tier subscribe
to a broadband service and 43 percent say the biggest reason for not
subscribing is the cost of the service. Of the low-income consumers who
have subscribed to mobile broadband, over 40 percent have to cancel or
suspend their service due to financial constraints. Affordability
remains the primary barrier to broadband adoption.
3. In this Order, we adopt reforms to make the Commission's
Lifeline program a key driver of the solution to our Nation's broadband
affordability challenge. Intended initially as a mechanism to reduce
the cost of phone service for low-income customers, the Lifeline
program has worked in lockstep with telephone providers and consumers
to increase the uptake in phone service throughout the country and has
kept pace with changes in technology as the Nation moved from a
wireline world to one where the number of mobile devices and services
now exceeds the population of the United States. But at a time when our
economy and lives are increasingly moving online and millions of
Americans remain offline, the Lifeline program must keep pace with this
technological evolution to fulfill its core mission.
4. Our actions here are also compelled by the Congressional
directives that guide our approach to all of universal service.
Congress expressed its intent in the Communications Act of 1934 to make
available communications service to ``all the people of the United
States'' and, more recently, in the Telecommunications Act of 1996,
Congress asserted the principle that rates should be ``affordable,''
and that access should be provided to low-income consumers in all
regions of the nation. Congress also recognized at the same time that
new technologies, in addition to landline telephone service, could
provide telecommunication services to consumers and that ``[u]niversal
service is an evolving level of telecommunications services.'' Given
the evolution of communications technologies and the great strides the
Commission has made in improving the performance of the Lifeline
program, we must modernize the Lifeline program so it can play an
essential and important role in helping those low-income Americans that
most need access to valuable broadband services.
5. The Order we adopt today focuses the Lifeline program on
broadband by encouraging broadband providers to offer supported
broadband services that meet standards we set to ensure ratepayers
supporting the program are obtaining value for their contributions and
Lifeline subscribers can participate fully in today's society. We also
take important steps to improve the management and design of the
program by streamlining program rules and eliminating outdated program
obligations with the goal of providing incentives for broadband
providers to participate and increasing competition and meaningful
broadband offerings to Lifeline subscribers. Finally, we follow through
on the important and highly effective reforms the Commission initiated
in 2012 by making several additional changes to combat waste, fraud,
and abuse, including establishing a National Lifeline Eligibility
Verifier (National Verifier) that will remove the responsibility of
determining Lifeline subscriber eligibility from providers.
II. Executive Summary
6. To create a competitive Lifeline broadband program, this Order
takes a variety of actions that work together to encourage more
Lifeline providers to deliver supported broadband services as we
transition from primarily supporting voice services to targeting
support at modern broadband services. We first allow support for
robust, standalone fixed and mobile broadband services to ensure
meaningful levels of connectivity and we continue to support bundled
voice and broadband services. We also establish minimum service
standards for broadband and mobile voice services to ensure those
services meet the needs of the consumers, and we recognize and allow an
exception in areas where fixed
[[Page 33027]]
broadband providers do not meet the minimum standards. Finally, in
recognition of the important operational needs of Lifeline providers we
implement a five and one-half year transition, during which we will
gradually increase mobile voice and data requirements and gradually
decrease voice support levels. After completion of this multi-year
transition, Lifeline funding will be focused on supporting modern
services.
7. We next take a step that will curb abuse in the program and
encourage provider participation by creating the National Verifier,
which will transfer the responsibility of eligibility determination
away from Lifeline providers. By lowering Lifeline providers' costs of
conducting verification and reducing the risks of facing a
verification-related enforcement action, the National Verifier will
make the Lifeline program more attractive to providers. The National
Verifier will also remove many opportunities for Lifeline providers to
inappropriately enroll subscribers. This step--taking determination of
eligibility out of the hands of the same parties that stand to benefit
financially from a finding of eligibility--is critical to preventing
waste, fraud, and abuse. At the same time, we streamline the criteria
for Lifeline program qualification in recognition of the way the vast
majority of Lifeline subscribers gain entry to the program as well as
through a new program for veterans. We will allow entry based on
participation in SNAP, Medicaid, SSI, Federal Public Housing
Assistance, and the Veterans Pension benefit program, as well as all
current Tribal qualifying programs. We will continue to allow low-
income consumers to qualify by demonstrating income of less than 135
percent of the federal poverty guidelines.
8. The Order also encourages entry of new Lifeline providers to
supply broadband by creating a streamlined federal Lifeline Broadband
Provider (LBP) designation process. (Since Lifeline Broadband Providers
will be a subset of eligible telecommunications carriers (ETCs) but
ETCs that are not LBPs may also be eligible to receive reimbursement
for offering Lifeline-supported broadband Internet access service, some
of our rules will apply specifically to LBPs while others will apply
more broadly to all ETCs participating in the Lifeline program. In this
Order we refer to LBPs specifically when the rule being discussed
applies only to LBPs.) Working within the statutory construct in
Sections 214 and 254 limiting support to eligible telecommunications
carriers (ETCs), we establish a process by which broadband providers
may receive a designation from FCC staff to provide broadband Lifeline
to qualifying low-income consumers. This new LBP designation process
provides an additional alternative to the current ETC designation
processes, which remain in place. At the same time, we modernize the
obligations of broadband Lifeline providers by interpreting and
forbearing from parts of the statute that are not needed in the modern
broadband marketplace to ensure just and reasonable rates and the
protection of consumers. In particular, we allow for broadband-only
provision of service, flexibility in service areas, and streamlining of
the relinquishment process. We also interpret Section 214(e)(1)(B) to
minimize advertising burdens on providers. We establish a pathway for
certain existing Lifeline providers currently obligated to provide
voice services to obtain relief from such obligations as clear,
measurable benchmarks are met. The benchmarks are designed in such a
way that providers have strong incentives to encourage uptake of
broadband services.
9. We also recognize that increasing digital inclusion means more
than addressing the affordability of broadband service. To that end, we
require that Lifeline providers make available Wi-Fi enabled devices
when providing such devices for use with the Lifeline-supported
service. We also require Lifeline providers of mobile broadband service
to make available hotspot-enabled devices. We believe these measures
will help to extend the connectivity of the service Lifeline supports.
We also direct the Consumer and Governmental Affairs Bureau (CGB) to
develop and execute a digital inclusion plan that will bring together a
variety of stakeholders to determine how Lifeline can best be
leveraged.
10. This Order next recognizes the importance of fiscal
responsibility in the program, establishes an annual budget of $2.25
billion, and directs the Bureau to submit a report to the Commission if
Lifeline disbursements in a year exceed 90 percent of this level, with
an expectation that the Commission will act within six months of this
report. It is essential that we ensure the program is designed to
operate in an efficient, highly accountable manner that obtains great
value from the expenditure of ratepayer dollars. In establishing a
budget mechanism, we bring the Lifeline program into alignment with the
other three programs of the Universal Service Fund, each of which
operates within a budget.
11. We also make a number of changes to further improve the
efficient administration and accountability of the Lifeline program. We
implement measures to evaluate the Lifeline program to determine
whether it is achieving its objectives, we reform the non-usage rules,
we make recertification a rolling process, we establish a 12-month
benefit port freeze for broadband offerings, we take steps to increase
transparency in the program, and we modify program forms to reduce
administrative burdens on providers.
III. Third Report and Order
A. Modernizing Lifeline To Support Broadband
1. Broadband as a Supported Service
12. There is widespread consensus among commenters that the time
has come for the Commission to modernize the Lifeline program to
support broadband consistent with the national policy of promoting
universal service. Based on the record before us, we take the important
step toward achieving one of the express goals of the program by
amending the definition of Lifeline to include broadband Internet
access service (BIAS) as a supported service in the Lifeline program.
Through our actions today, we hereby amend Sec. 54.101 to include BIAS
as a supported service. More specifically, our definition of BIAS
mirrors that under section 8.2(a) of the Commission rules, which
defines BIAS as a mass-market retail service by wire or radio that
provides the capability to transmit data to and receive data from all
or substantially all Internet endpoints, including any capabilities
that are incidental to and enable the operation of the communications
service, but excluding dial-up Internet access service. Finally,
consistent with our change to Section 54.101, we also amend Section
54.401 in our Lifeline rules to include BIAS as eligible for Lifeline
support. (These amendments to the Commission rules will take effect on
the same date as the minimum service standards set forth in Section
54.408 of the Commission rules. See infra Section III.B.2. (Minimum
Service Standards). By adopting these amendments as well as our
forbearance in Section III.E.2 (Lifeline Obligations for Eligible
Telecommunications Carriers), we allow service providers to provide
BIAS as a standalone offering to qualifying low-income consumers. The
obligations for receiving Lifeline support for both BIAS and voice
telephony service are further defined below.
13. Our actions today are consistent with the universal service
goals
[[Page 33028]]
promulgated by Congress. Congress articulated national goals in Section
254 of the Act that services should be available at ``affordable''
rates and that ``consumers in all regions of the nation, including low-
income consumers . . . should have access to telecommunications and
information services.'' Congress also made clear in Section 254(c) that
``[u]niversal service is an evolving level of telecommunications
services that the Commission shall establish periodically under this
section, taking into account advances in telecommunications and
information technologies and services.'' As recently as 2009, Congress,
in directing the Commission to develop a National Broadband Plan,
specifically dictated that such a plan must provide a detailed strategy
for achieving affordability of broadband services.
14. Within the record before us, there is ample evidence to find
that BIAS meets the standard set forth in Section 254(c) given the many
ways that individuals rely on broadband in their daily lives, the
significant percentage of the population with means subscribing to such
services, and the deployment and investment spent on infrastructure.
Taking these factors into account, we conclude it is imperative for us
to include BIAS as a supported service.
15. More than 200 commenters responded to the Commission's 2015
Lifeline FNPRM with nearly all of them urging the Commission to include
broadband in the Lifeline program. There is widespread consensus from a
range of commenters including service providers, state public utilities
commissions, academics, software companies, and consumer advocates.
16. Moreover, objections to modernizing the Lifeline program to
include support for broadband principally concern collateral effects
that can be addressed without sacrificing program modernization. We do
so elsewhere in this Order. For example, both AT&T and Verizon have
expressed concern over amendments to Section 54.101 to include BIAS as
a supported service on the theory that all ETCs receiving high-cost
support would be obligated to offer BIAS throughout their designated
service areas, even in those areas where they do not receive high-cost
support or have not deployed broadband networks with the minimum speed
standards. We recognize that, subsequent to the 1996 Act, state public
utilities commissions designated ILECs as ETCs wherever they offered
voice telephony service in a state and defined their designated service
areas for purposes of receiving federal universal service support as
such, including Census blocks where the provider does not currently
receive high-cost support or is not obligated to build-out broadband at
10 megabits per second (Mbps) download/1 Mbps upload (10/1 Mbps) speeds
pursuant to Commission rules. As a result, ILECs have had the Lifeline
obligation to provide discounted voice service throughout their
designated service area. (Existing ETCs currently continue to have a
Lifeline voice obligation throughout their designated service areas,
regardless of their receipt of high-cost support. In this Order,
however, we provide conditional forbearance from this obligation). We
are sympathetic to ILECs' concerns about requiring them to offer
broadband in Census blocks within their ETC designated service areas
where the provider is not obligated to build-out broadband services
pursuant to our high-cost rules, where broadband services are not
commercially available, and in those Census blocks where the provider
does not receive high-cost support. To address these concerns, we
forbear from Section 214(e)(1) such that ETCs are not required to offer
Lifeline-supported broadband service in Census blocks throughout their
designated service areas, but instead only where the provider receives
high-cost support and is commercially providing broadband consistent
with the provider's obligations set forth in the Commission's high-cost
rules and requirements.
17. In addition, for recipients of high-cost support, in those
areas where the provider receives high-cost support but has not yet
deployed a broadband network consistent with the provider's high-cost
public interest obligation to offer broadband, the obligation to
provide Lifeline broadband services does not begin until such time as
the provider has deployed a broadband network and is commercially
offering service to that area. We also recognize some carriers'
arguments that the Commission should not impose a Lifeline broadband
obligation on ETCs in areas where those carriers receive frozen high-
cost support, because the frozen support program is an interim program
that will be eliminated after the Commission conducts the Connect
America Fund Phase II competitive bidding process and frozen support
recipients are not required to meet the Lifeline program's minimum
speed standards for BIAS offerings. We agree that carriers' receipt of
frozen high-cost support should not carry with it a Lifeline broadband
obligation, and we therefore clarify that those ETCs receiving frozen
high-cost support--whether incumbent providers or competitive ETCs--are
not required to offer Lifeline-supported broadband services in their
designated service areas where they receive frozen support. (See 47 CFR
54.312(a); 54.313(c)(4) (requirements for incumbent LECs receiving
Phase I frozen support); 47 CFR 54.307 (frozen support for competitive
ETCs). However, those carriers serving non-contiguous areas that
elected to continue receiving their existing high-cost support amounts
in lieu of model-based support for Connect America Phase II will be
subject to Lifeline broadband obligations once the Commission adopts
their carrier-specific Phase II obligations.) Finally, we also clarify
in that ETCs receiving high-cost support are not required to offer
broadband services in Census blocks where the ETC does not receive
high-cost support. We adopt these requirements to ensure that all
consumers living in high-cost areas, including low-income consumers,
have the option of subscribing to broadband once it is commercially
available.
18. Some parties, such as ITTA, suggest that the Lifeline program
should be overhauled before providing support for broadband. (Given the
significant changes we adopt within the Lifeline program, we adopt a
budget to continue to reduce the contribution burden on consumers).
This argument, however, overlooks the significant measures already put
in place over the last five years to root out waste, fraud, and abuse
and, just as importantly, underestimates the critical importance
broadband plays for individuals on a daily basis. Since 2012, when the
Universal Service Administrative Company (USAC), the Administrator of
the Fund, disbursed more than $2.1 billion in Lifeline support
payments, reforms to improve program integrity have reduced
disbursements by nearly a third, with Lifeline support payments
dropping below $1.5 billion in 2015.
19. In modernizing the Lifeline program to include broadband, we
also clarify that the current rule that prohibits the collection of
service deposits ``for plans that . . . [d]o not charge subscribers
additional fees for toll calls,'' applies only to standalone voice
services. Lifeline service providers are not precluded from collecting
service deposits for eligible broadband services. That rule plainly was
written with standalone voice service in mind, and it does not have an
analog in the context of broadband offerings. For these reasons,
Section 54.401(c) is amended to clarify that the prohibition on
collecting service deposits is limited to voice-only service plans.
[[Page 33029]]
2. Legal Authority
20. The principles listed in Section 254 of the Act make clear that
deployment of, and access to, telecommunications and information
services are important components of a robust and successful federal
universal service program, including the directive to address low-
income needs. In Section 254, Congress expressly recognized the
importance of ensuring that low-income consumers ``have access to
telecommunications and information services, including . . . advanced
telecommunications and information services'' and that universal
service is an ``evolving level of telecommunications service.'' Section
254 of the Act also sets forth the principles that ``[q]uality services
should be available at just, reasonable, and affordable rates'' and
that ``access to advanced telecommunications and information services
should be provided in all regions of the Nation.''
21. Consistent with those statutory objectives, we conclude that
Section 254 authorizes us to support bundled voice and BIAS as well as
standalone BIAS by defining BIAS as a supported service for purposes of
a Lifeline broadband program. For purposes of a given universal service
program, Section 254(c)(1) authorizes the Commission to define
universal service as an evolving level of telecommunications services
that the Commission establishes periodically based on an analysis of
several factors. The BIAS that we define as a supported service for the
Lifeline broadband program is a telecommunications service that
warrants inclusion in the definition of universal service in this
context. (In the Open Internet Order, the Commission concluded that
BIAS is a telecommunications service subject to our regulatory
authority under Title II of the Act regardless of the technological
platform over which the service is offered. Even before that, however,
during the time the Commission had classified BIAS as generally an
information service, it recognized the possibility of broadband
Internet access transmission being offered on a common carrier basis as
a telecommunications service. Thus, even beyond the classification of
BIAS generally, we make clear that BIAS as the supported service for
the Lifeline broadband program is a telecommunications service.).
22. Based on the record before us, we find there is ample evidence
for us to conclude that circumstances have ``evolved'' where BIAS can
and should be included as an element of universal service pursuant to
Section 254(c) and made available to Lifeline participants. The
criteria set forth in Section 254(c) fully justify our finding. BIAS
has, indeed, become ``essential to education, public health and public
safety. . . . '' (Low-income consumers should have access to the same
public safety features as all Americans. Lifeline providers offering a
supported service must meet any obligations generally applicable to
that service, including, for example, with respect to Next Generation
911 Services. See generally 47 CFR 20.18. We also make clear that
Lifeline providers offering texting services must provide text-to-911
capability to subscribers in accordance with Commission rules. See 47
CFR 20.18(q). Lifeline providers should not assess a fee for texts or
calls to 911.). As detailed above, the Commission has a legal and
factual basis to include BIAS as a supported service. The Commission
also previously has concluded that directly applying Section 254 to
BIAS will help enable us to promote adoption of broadband services and
more flexibility going forward. We thus conclude that defining BIAS as
the supported service for purposes of the Lifeline broadband program
strongly advances the public interest, convenience, and necessity under
Section 254(c)(1)(D).
23. Our approach is also supported by Section 254(c)(1)(A). Under
that provision, the Commission considers whether a given supported
service is ``essential to education, public health, or public safety.''
We explain above the importance of BIAS to education and healthcare,
among other things, along with the need for discounts in order to
enable low-income consumers to realize those benefits. We therefore
conclude that BIAS is essential for education and public health for
low-income Americans.
24. Section 254(c)(1)(B) directs the Commission to consider whether
the service at issue has ``through the operation of market choices by
customers, been subscribed to by a substantial majority of residential
customers.'' As noted above, it is reported that 84 percent of American
adults use the Internet and surveys have shown that when households
have the means, they connect to the Internet at home at rates upward of
95 percent with approximately two-thirds of Americans subscribing to
broadband at home. Based on this data, we find that a substantial
majority of residential customers subscribe to broadband services.
Likewise, we find that BIAS is widely ``being deployed in public
telecommunications networks by telecommunications carriers'' under
Section 254(c)(1)(C) given the billions of dollars in capital
investment that broadband service providers have spent on broadband
networks over the last few years.
25. We also conclude that our action to include BIAS as a supported
service is consistent with and advances the Congressional direction and
goals set forth under Section 706 of the 1996 Act. Section 706(a)
directs the Commission to ``encourage the deployment on a reasonable
and timely basis of advanced telecommunications capability to all
Americans.'' Section 706(b) requires the Commission to determine
whether ``advanced telecommunications capability is being deployed to
all Americans in a reasonable and timely fashion. . . .,'' and, if the
Commission concludes that it is not, to ``take immediate action to
accelerate deployment of such capability by removing barriers to
infrastructure investment and by promoting competition in the
telecommunications market.'' The Commission has determined that
broadband deployment is not proceeding in a reasonable and timely
manner, most recently in the 2016 Broadband Progress Report. Providing
support to service providers to subsidize low-income consumers'
purchase of BIAS helps achieve our 706 objective of ``removing barriers
to infrastructure investment.'' The Commission has recognized that a
key barrier to infrastructure investment is lack of affordable
broadband Internet access service. The Commission has previously
recognized that providing federal support for low-income consumers'
purchase of BIAS will broaden the base of consumers able to purchase
such services, thereby increasing consumer demand and incentives to
deploy broadband in areas where broadband is not yet available. Given
the Commission's objective of ensuring availability and affordability
of broadband services, and the importance of broadband to consumers in
the 21st Century, providing support to Lifeline providers to subsidize
low-income consumers' purchase of broadband services helps achieve our
Section 706 objectives.
B. Characteristics of Lifeline Support
26. In Section III.A, Modernizing Lifeline to Support Broadband, we
take the important step of amending our rules to include BIAS as a
supported service. In this Section, we now act on several proposals in
the 2015 Lifeline FNPRM directed at improving the Lifeline program so
that it better supports robust service and strategically targets
valuable universal service funds
[[Page 33030]]
in a way that is faithful to our mandate to make services affordable to
low-income consumers. We are persuaded that giving qualifying consumers
the choice of receiving support for either fixed or mobile offerings
will better serve consumers as competitive forces help to encourage all
Lifeline providers to make attractive offerings within the Lifeline
market. In particular, we modify our Lifeline rules to direct support
over time to broadband services. We also adopt minimum service
standards designed to ensure robust service levels for Lifeline
subscribers and which can be updated on a regular basis so that the
support provided by the Lifeline program continues to meet our
statutory mandate to ensure ``reasonable comparability'' of services.
We also establish permanent monthly support levels.
1. Supported Modes of Service
27. Discussion. In this Section, we adopt several reforms to
empower low-income consumers with competitive choices for robust,
affordable Lifeline services necessary for full participation in
today's economy. First, to keep pace with the marketplace and our goals
of ensuring the availability of broadband and voice services, we hereby
amend our rules to permit Lifeline providers to receive Lifeline
support for standalone mobile or fixed broadband service offerings.
Second, for both fixed and mobile voice services, to ensure the
Lifeline program continues to focus its funding on modern, future-
facing services for which affordability is an issue, we phase in a
requirement that to be eligible for Lifeline support, a voice service
must include broadband service, thereby phasing-out support for voice
service as a standalone option. In doing this, we carve out an
exception for the phase-out of standalone voice service provided by
ETCs in those Census blocks where the ETC is the only Lifeline service
provider in that given Census block. To prevent undue disruption and
allow the marketplace to adjust, we adopt a multi-year transition and
also direct the Bureau, near the end of the transition, to review the
Lifeline market and submit a report to the Commission recommending
whether action should be taken to revise the approach to supported
services that we adopt today (State of the Lifeline Marketplace
Report). We expect the full Commission will take appropriate action if
necessary to make changes to the program within six months of receiving
the report, for example adjusting support levels or minimum service
standards, so that the Lifeline program continues to achieve its
objectives. Barring further Commission action, once this transition is
complete, we will require voice service to be bundled with an eligible
broadband service in order for it to be supported. Finally, we retain
our approach to permit support for bundled offerings and our limit of
one Lifeline subscription per household.
28. Fixed and Mobile Broadband Offerings. Given the importance of
broadband to consumers in our society and how it is has become
essential to education, public health, and public safety, we believe it
is necessary to provide Lifeline consumers the option of applying the
Lifeline benefit to a standalone broadband offering. Standalone
broadband services are increasingly popular as consumers transition
from bundled services to broadband-only plans. In many areas, as the
communications market evolves, broadband is replacing traditional
telephone service and providing subscribers with voice and texting
options in addition to Internet access. To close the digital divide and
ramp up digital readiness for all consumers in the United States, we
amend our rules to give Lifeline providers the option of offering
standalone broadband services as a Lifeline supported service. By
allowing support for standalone broadband services with Lifeline, we
add an additional measure of consumer choice as well as the opportunity
for innovative providers to serve low-income consumers in new ways.
Supporting standalone broadband offerings will not only allow consumers
to subscribe to offerings that work best for their needs, but Lifeline
providers will also seek to find solutions that work best for their
customers. (We make clear that ETCs receiving high-cost support are
required to offer a Lifeline-supported standalone broadband offering
where the ETC is required to offer Lifeline-supported BIAS to ensure
that all low-income consumers, including those living in high-cost
areas, have the option to subscribe to standalone broadband offerings).
29. We allow Lifeline subscribers to apply the discount to fixed or
mobile standalone broadband offerings. (In the USF/ICC Transformation
Order, the Commission made clear that carriers may not charge any
Lifeline customers an Access Recovery Charge (ARC). By extension, as we
include broadband as a Lifeline-supported service, we make clear that
rate-of-return carriers are not required to impute an amount equal to
their ARC rate for consumer broadband-only loops provided to Lifeline
broadband customers.). We empower consumers to make this choice. While
fixed and mobile broadband services both provide access to online
services, there are some key tradeoffs consumers must consider
regarding the utility of each service. We recognize these tradeoffs
both in terms of technological constraints and how each mode is offered
in the market. We also recognize different households will have
different preferences for certain product characteristics, such as
mobility or data usage allowance. Therefore, we find it important to
give qualifying consumers the choice of receiving support for either
fixed or mobile broadband service. This allows households a choice as
to which service to apply the discount towards. Permitting a Lifeline
provider to offer standalone broadband offerings will also ensure that
Lifeline consumers are not forced to purchase services they may not
want within a bundle. We agree with many commenters who argue that it
is important to enable low-income consumers to choose the services that
best meet their needs, but at the same time put measures in place to
ensure such Lifeline offerings are affordable and comparable to what is
currently available in the market. For many people, this includes the
option of subscribing to a standalone broadband offering.
30. We are persuaded that giving qualifying consumers the option of
receiving support for either fixed or mobile standalone broadband will
better serve consumers as competitive forces encourage Lifeline
providers to make valuable broadband offerings supported by the
Lifeline program. More attractive offers which result in higher
consumer benefits will mean that the funds provided by contributors
will be used to provide greater value. For example, we envision a
Lifeline provider seeking to address various ``digitally divided''
consumers with attractive offers of service unique to families with
children or the elderly.
31. Voice-only Offerings. As part of our modernization efforts, and
with a keen view toward directing Lifeline funds toward services in a
way that reflects the technological and marketplace evolution toward
data services, we find that Lifeline services must include a broadband
offering after the transition period set forth below. To be sustainable
and achieve our goals of providing low-income consumers with robust,
affordable, and modern service offerings, a forward-looking Lifeline
program must focus on broadband services. Therefore, based on the
record before us, we conclude that it is necessary that going forward
the Lifeline discount will no longer apply to
[[Page 33031]]
a voice-only offering following an extended transition period, except
as provided below in Census blocks with only one Lifeline provider. We
are persuaded that it is necessary to use a multi-year transition
ending in 2021. After this transition, we will continue to support
voice service when bundled with a broadband service which meets the
minimum service standards set forth below.
32. As a general matter, we adopt a technologically neutral
approach and the schedule with respect to support for standalone voice
service will apply equally to mobile and fixed providers of voice
services. We recognize, however, that in some limited circumstances an
ETC that is providing voice service may be the only Lifeline provider
in a given area when Lifeline support for standalone voice service
otherwise would have been phased out. With respect to any area where a
provider is the only Lifeline provider, consistent with the transition
described in detail below, the provider will retain its ETC obligations
as a Lifeline provider and may receive Lifeline support up to $5.25 per
month for standalone voice service provided to eligible subscribers.
(See infra Section III.B.3 (Support Levels). This assumes that the ETC
has not qualified for the conditional forbearance described in Section
III.E.2 (Forbearance Regarding the Lifeline Voice Service Obligations)
or relinquished its ETC status in relevant part.
33. The animating principle of the Lifeline program has always been
affordability. For years, Lifeline support focused on making affordable
fixed residential voice services, providing a discount that combined
with a customer contribution to help low-income Americans connect to
the telephone network. In 2005, we expanded the program to allow
participation by non-facilities-based providers, including prepaid
wireless resellers. Since then, the marketplace for both Lifeline and
non-Lifeline voice offerings has evolved dramatically. Indeed, non-
Lifeline voice rates have fallen drastically since the 2012 Lifeline
Reform Order. (By the end of 2011, an offering of 450 voice minutes and
unlimited text, would cost $49.99. Today, one can subscribe to an
unlimited voice and text plan for $25 per month). Some observers have
pointed out that even though millions of households are eligible for--
but do not participate in--the Lifeline program, the vast majority of
these non-participating households still manage to obtain access to
voice communications. (USAC reports that there are at least 39.7
million eligible Lifeline households in the states and District of
Columbia with a participation rate of 32 percent). In contrast,
broadband adoption among low-income households remains well below that
of other groups, and affordability is widely cited as one of the
primary reasons.
34. Our review of the record reveals that voice service is
declining in price within the marketplace. This is particularly true of
mobile voice services. Some voice-only plans run as low as $10 per
month. As we recognized in the 2015 Lifeline FNPRM, the cost of
provisioning wireless voice service has decreased significantly since
the 2012 Lifeline Reform Order, and there are no indications such cost
decreases will cease. Even outside the Lifeline program, cost decreases
have led to a large variety of reasonably priced voice options provided
by providers. One indication that voice service is declining in price
is that, as of January 2014, mobile voice adoption rates exceeded 90
percent overall and 84 percent for low-income adults. In the Eighteenth
Mobile Competition Report, the Wireless Telecommunications Bureau
reported that the nationwide penetration for mobile connections now
exceeds 100 percent, meaning that the number of connected devices
exceeds the total population of the United States. As of September
2015, CTIA has reported over 355.4 million mobile phone subscribers.
The Eighteenth Mobile Competition Report also noted that, according to
CTIA, reported annual minutes of use in 2014 reached over 2.45
trillion. In contrast, the record reveals that data is not as
ubiquitous as voice and certainly not as affordable. Pew Research
Center recently reported that home broadband adoption appears to have
plateaued with 67 percent subscribing to such service, down slightly
from 70 percent in 2013. Smartphone adoption is also only 64 percent
overall and 13 percent of low-income Americans rely solely on a
smartphone for their Internet access. (In the Eighteenth Mobile
Competition Report, the Wireless Telecommunications Bureau noted that,
according to ComScore, approximately 77 percent of all mobile
subscribers had a smartphone in the third quarter of 2015, compared to
approximately 51 percent in the third quarter of 2012). Furthermore, as
demonstrated by the Pew Research Center, many Americans experience
difficulties in affording and retaining service on smartphones. In
fact, those who rely the most on only their smartphone for Internet
access have the most difficulty retaining service given that such
consumers frequently reached their data caps as part of their monthly
plan.
35. Technological evolution and market dynamics have also resulted
in more choices and decreasing prices for fixed voice service. The
record reflects that customers are increasingly opting for voice
services made possible through fixed broadband connections, including
VoIP as well as over-the-top voice applications. While some differences
between VoIP and traditional fixed voice service remain, we agree with
commenters that note that such VoIP services will likely improve and
introduce more competition into the marketplace over time. Meanwhile,
the Consumer Price Index, maintained by the Bureau of Labor Statistics,
has found that telephone services, including both mobile and fixed
offerings, have only increased in price during one year from 2010 to
2014, while the price of all goods and services generally increased
each year during the same time period. We also recognize the nationwide
trend that consumers are increasingly migrating away from fixed
residential voice service to mobile voice services, which, as discussed
above, have decreased in price. This information further supports our
technologically neutral conclusion that, while recent trends in fixed
and mobile voice service offerings are not identical, both modes of
voice service are undergoing significant change in response to
technological developments and new competitive service offerings
enabled by those developments.
36. Affordability must remain a central touchstone within the
Lifeline program. Mindful of Congress's Section 254 mandate that
``[q]uality services should be available at just, reasonable and
affordable rates,'' we believe that the Lifeline program should
directly support those services that are otherwise unaffordable to
consumers, but for a Lifeline discount. We also find that continuing to
support a voice-only product that is reasonably priced will result in a
Lifeline program that fails to deliver the ``evolving level'' of
services that ``are being deployed'' (emphasis added). While much of
the Lifeline market is competitive, we are concerned that continuing to
support a voice-only service would artificially perpetuate a market
with decreasing demand and incent Lifeline providers to avoid adjusting
their business practices. Instead, these Lifeline providers may have an
incentive to maintain the status quo and avoid providing low-income
customers with modern services as Congress intended. For these reasons,
we do not believe it is consistent with Congress' directive to continue
providing support to voice-only service
[[Page 33032]]
within the Lifeline program outside of the transition period discussed
below.
37. Several commenters have argued that the Commission should
continue to permit Lifeline providers to offer standalone voice
service. These parties contend that the Commission should retain
support for standalone voice service given that many low-income and
unemployed Americans rely on such means of communication within their
daily lives. We agree with such commenters that voice continues to be
an important resource for consumers to utilize in communicating with
others. But we are not persuaded that such service will no longer be
available or affordable if it is part of a bundle with broadband
services. We make this judgment based on evidence of the power of
market forces in the marketplace to compete and innovate to meet
consumer demand. We take it as given that many consumers have demanded
and will continue to demand voice communications. We predict that
Lifeline providers will be responsive to this consumer demand by
bundling voice with data offerings and otherwise ensuring consumers are
able to easily use a voice service with their data plan. We believe
that the innovative Lifeline providers currently in the program will be
just as innovative in packaging competitive voice offerings with the
supported broadband service. Indeed, wireless Lifeline providers have
already recognized the increased demand for broadband and as a result
are starting to include broadband options within their Lifeline
offerings.
38. We further recognize that, in the existing Lifeline
marketplace, Lifeline providers have met consumers' demands for
texting, although it is not a Lifeline-supported service. Many Lifeline
providers under their own volition have offered unlimited texting with
the Lifeline voice service. Mobile plans offered to non-Lifeline
subscribers are priced as low as $20 for unlimited talk and text when
bundled with data, whereas some Lifeline plans offer as much as
approximately 500 voice minutes and text. In the same way, we would
expect Lifeline providers would be incentivized by competitive forces
to meet the demand for voice service and make voice services available
to customers.
39. We emphasize that nothing in our rule change will prevent a
Lifeline provider from offering a bundle of voice and broadband service
that delivers the voice component over either non-IP or IP
technologies. In this way, we allow for Lifeline providers to choose
how, whether, and when to transition to the use of newer technologies
for delivering voice service. As part of the overall Lifeline
modernization, this change sets the stage for a full program
modernization where Lifeline providers are delivering voice services to
customers over modern technologies in a much more efficient way that
benefits consumers and provides more value to the Fund.
40. In summary, to ensure that future Lifeline offerings are
sufficient for consumers to participate in the 21st Century economy at
affordable rates, and to obtain the most value possible from the
Lifeline benefit, we modify the Lifeline rules to support voice
services only through a bundle that includes broadband services
pursuant to the transition period detailed below. This phase-out of
support will not apply to ETCs providing voice service in census blocks
where they are the only Lifeline service provider. We are persuaded
that Lifeline must provide a robust, affordable service and be forward-
looking so that as newer technologies become more widely available, the
program can continue to deliver value to the low-income subscriber and
to the ratepayers supporting the program. Encouraging use of such
voice-only service indefinitely is inconsistent with the Act's guidance
that ``[u]niversal service is an evolving level of telecommunications
services'' that ``are being deployed in public telecommunications
networks.''
41. Transition. We recognize, however, that a transition is
necessary to avoid undue consumer disruption and to allow Lifeline
providers sufficient time to adjust operations as the Commission moves
from a primarily voice-only Lifeline program to a Lifeline program
embracing broadband services. We believe the best way to conduct this
transition is by gradually reducing the monthly support level for
voice-only service. At the same time, we will phase-in higher mobile
broadband minimum service standards. As detailed in Sections III.B.3
(Support Levels) and III.B.2.b (Minimum Service Standards for Lifeline
Services), the support level for voice-only service will decline over a
multi-year period while the minimum service standard for mobile voice-
only service will be set at an initial level, and will be increased
until the minimum standard will be 1,000 minutes per month. Such a path
to robust offerings is in line with the fact that a ``substantial
majority'' of non-Lifeline subscribers already purchase plans with
1,000 or more minutes using either fixed or mobile services. Given that
fixed voice service often already includes unlimited minutes, we will
not impose minimum service standards on fixed voice service offerings.
42. This initial voice-only minimum service standard will become
effective the later of December 1, 2016 or 60 days after the date when
the Commission receives approval from the Office of Management and
Budget (OMB) for the new information collection requirements in this
Order subject to the Paperwork Reduction Act of 1995 (PRA), Public Law
104-13. At the same time, beginning on the same date, a phase-in of
mobile broadband will begin. As described below, this transition is
scheduled to continue until December 1, 2021. During the initial phase-
in period, from December 1, 2016 through November 30, 2019, a voice and
broadband Lifeline bundle must include at least one supported service
meeting the minimum service standards applicable at that time. From
December 1, 2019 to November 30, 2021, a voice and broadband Lifeline
bundle must include a BIAS offering that meets the broadband minimum
service standards applicable at that time in order to receive the full
$9.25 benefit. From December 1, 2019 to November 30, 2021, a voice and
broadband Lifeline bundle with a broadband offering that does not meet
the applicable mobile broadband minimum service standards but does meet
the mobile voice minimum service standard may receive the applicable
support level for standalone mobile voice.
43. Prior to December 1, 2019, voice-only support will be set at
$9.25 per month. Beginning December 1, 2019 the support amount will
decline to $7.25 per month; beginning December 1, 2020, it will decline
further to $5.25 per month. During that time period, we will also
phase-in increasing minimum service standards for mobile voice service.
Beginning the later of December 1, 2016 or 60 days after PRA approval,
supported mobile voice offerings must include at least 500 minutes per
month; beginning December 1, 2017, supported mobile voice offerings
must include at least 750 minutes per month; and beginning December 1,
2018, supported mobile voice offerings must include 1000 minutes per
month. Beginning December 1, 2021, there will no longer be support for
voice-only service, or voice service bundled with a broadband offering
that does not meet the applicable minimum service standard for BIAS,
unless the Commission has acted upon recommendations to do otherwise
presented in the State of the Lifeline Marketplace Report. However,
voice service will continue to be supported as long as it is offered
with
[[Page 33033]]
a broadband service meeting the minimum service standards.
44. Over the same period for which the voice-only support level
declines for fixed and mobile voice services, fixed and mobile
broadband will receive $9.25 in monthly support and the minimum service
standard for mobile broadband service will gradually increase.
Specifically, on the later of December 1, 2016 or 60 days after the
Commission receives PRA approval of the information collection
requirements in this Order, the mobile broadband minimum service
standards for data usage allowance will be set at 500 megabytes (MB)
monthly at 3G speeds. The minimum data usage allowance will increase to
1 gigabyte (GB) on December 1, 2017 and to 2 GB on December 1, 2018. On
December 1, 2019, the minimum standard for mobile data usage will be
set based on a forward-facing updating mechanism using objective data
as described below. From December 1, 2016 to November 30, 2019, a voice
and broadband Lifeline bundle must include at least one supported
service meeting the minimum service standard applicable at that time
for such supported service. (See infra Section III.B.2.)
45. Minimum Service Standards. After December 1, 2021, in order to
receive the full support amount of $9.25 for mobile services, ETCs must
provide the minimum service standards for BIAS as a Lifeline supported
service to qualifying low-income consumers. See infra paras. 97-22). As
discussed above, from December 1, 2019 to November 30, 2021 a voice and
broadband Lifeline bundle must include a broadband offering that meets
the applicable minimum service standard to be eligible for the full
$9.25 benefit.
46. However, given the inherent uncertainty in the future Lifeline
marketplace, we also direct the Bureau by June 30, 2021, to submit to
the Commission a State of the Lifeline Marketplace Report. This report
should review the Lifeline marketplace for the purpose of recommending
to the Commission whether the transition set out in this Order should
be completed or whether the Commission should act to continue delaying
Lifeline's transition to chiefly supporting broadband services. This
report should in particular consider the prevalence of subscriptions to
various service offerings in the Lifeline program, the affordability of
both voice and broadband services, the pace since adoption of this
Order at which voice and data usage has changed, and the associated net
benefits of continuing to support voice service as a standalone option.
(The Bureau in the State of the Lifeline Marketplace Report should in
particular follow the principles presented in Part E of OMB Circular A-
4 for the purpose of determining whether to continue support for voice-
only service. See OMB Circular A-4 https://www.whitehouse.gov/omb/circulars_a004_a-4/). We expect the full Commission will take
appropriate action if necessary to make changes to the program within
six months of receiving the report, for example, adjusting support
levels or minimum service standards, so that the Lifeline program
continues to achieve its objectives. If the Commission does not act
following the recommendation(s) in the State of the Lifeline
Marketplace Report then the transition will be completed on December 1,
2021.
47. Bundled Service Offerings. We continue to allow low-income
consumers to apply the Lifeline discount to support fixed and mobile
bundles that include one or more of the supported services so long as
one of the supported services offered satisfies the minimum service
standard requirements. In other words, the discount may be applied to a
mobile bundle of voice and data services so long as either the voice
service or the data service meets the applicable minimum service
standard. Other non-supported services (e.g., texting) may be bundled
with supported services and the Lifeline discount may be applied to the
bundle. This does not represent a change in policy as many Lifeline
providers have voluntarily offered non-supported services to consumers
bundled with Lifeline-supported services. We agree with commenters and
view such offerings as enhancing consumer benefits. We recognize this
as an illustrative case whereby Lifeline providers identify consumer
demand for a non-supported service such as texting and voluntarily
provide the service consumers demand apart from any regulation from the
Commission.
48. One-Per-Household Rule. Through our reforms today, we continue
to believe it is necessary to apply the one-per-household requirement
within the Lifeline program. Just as the Commission concluded in the
2012 Lifeline Reform Order, we believe a one-per-person rule or one-
per-service rule--providing an individual household an opportunity to
receive one supported service for both voice and broadband--could
increase the size of the Lifeline program by a significant percentage
above the projected Fund size. By limiting support to one Lifeline
offering and one household, we find that continued implementation of
the one-per-household rule strikes an appropriate balance between
ensuring that support is available for eligible low-income households
against disbursing universal service funds in a fiscally prudent and
sustainable way. By continuing to enforce the one-per-household rule,
we also decline to adopt some commenters' suggestions that a household
be able to receive more than one discount to support multiple services.
Instead we take an alternate path suggested by commenters, providing
consumers a choice as to which service (or set of bundled services)
their Lifeline discount is used to support.
2. Minimum Service Standards
a. Introduction
49. In the 2015 Lifeline FNPRM, we proposed establishing minimum
service standards for all Lifeline service offerings ``to ensure the
availability of robust services for low-income consumers,'' and we
proposed updating the minimum service standards. We now adopt detailed
rules in line with these proposals, and revise Section 54.408 of the
rules. In order for Lifeline customers to obtain the type of robust
service which is essential to participate in today's society, we
conclude that forward-looking minimum service standards are required,
and that those standards must be updated on a regular basis.
50. The minimum service standards we adopt are rooted in the
statutory directives to ensure that quality services are available at
``just, reasonable, and affordable rates,'' and that advanced
telecommunications services, the services which have ``been subscribed
to by a substantial majority of residential customers,'' are available
throughout the nation. We interpret these directives as requiring the
Commission to ensure that low-income consumers can both afford and
physically access services that are available throughout the Nation.
The standards adopted below ensure that Lifeline supports the type of
service the Act specifically requires, and the updating mechanisms will
give Lifeline subscribers confidence that their supported service will
remain robust as technology improves through a predictable mechanism.
51. The minimum standards we establish will also account for the
need for Lifeline service offerings to be affordable. As we noted,
``the Lifeline program is specifically targeted at affordability,'' and
it is necessary to establish minimum service levels that are both
affordable and reasonably comparable. Commenters also
[[Page 33034]]
emphasized the importance of affordability to facilitate broadband
adoption. The minimum standards that we establish strike a balance
between the demands of affordability and reasonable comparability by
providing consumers with services that allow them to experience many of
the Internet's offerings, but not mandating the purchase of
prohibitively expensive offerings.
52. We first explain which services will have minimum service
standards. We also set initial minimum service standards and provide
updating mechanisms. Finally, we describe exceptions made for providers
who do not offer services meeting our minimum standards.
b. Minimum Service Standards for Lifeline Services
53. Discussion. We now modify our rules to establish minimum
service standards for all Lifeline supported services based on services
to which a ``substantial majority'' of consumers have already
subscribed. We also set forth the data sources that will be used to set
and update minimum service standards. We establish separate standards
covering speed and data usage allowances for both fixed and mobile
services in recognition of each service's distinct characteristics, and
we establish minimum standards for mobile voice service, until
standalone mobile voice is no longer a supported service.
54. Numerous commenters support establishing minimum service
standards for broadband; they emphasize that Lifeline customers should
not need to accept ``second-tier'' service, and that functional
Internet access is essential to allow consumers to fully participate in
society. Broadband access can help households meet their ``basic needs
for education, health care, disabilities access, and public safety.''
While other commenters argue that minimum service standards are
unnecessary, or unduly burdensome, we generally believe that, at a
minimum, services that are subscribed to by a substantial majority of
the nation's consumers should receive Lifeline funding. We are
unpersuaded by the argument that minimum service standards are unduly
burdensome. As discussed in greater detail, infra, we grant exemptions
in certain situations where a fixed broadband provider does not
currently offer service meeting the minimum standards.
55. In the 2015 Lifeline FNPRM, we also sought comment on ``whether
and how service levels would vary between fixed and mobile broadband
service.'' While some commenters argued that the same standards should
apply to fixed and mobile broadband, we believe that different
standards are appropriate because of the technological differences
between fixed and mobile broadband, the two services' different
capacity patterns, and the different constraints on service. For
example, mobile broadband providers face spectrum constraints that
fixed providers do not, and the speed mobile broadband providers can
deliver to consumers is far more dependent on the consumer's location.
For similar reasons, the Commission has established different minimum
service standards for fixed and mobile broadband when setting carrier
obligations in the Connect America Fund (CAF). Based on all of these
factors, we conclude that different minimum service standards for fixed
and mobile broadband are appropriate.
56. Finally, while setting initial minimum service standards is
necessary to guarantee access to services that a ``substantial
majority'' of residential consumers have already subscribed to, it is
equally important to regularly update those standards to make sure that
Lifeline continues to support an evolving level of telecommunications
service. Because technology develops at a rapid pace, any minimum
standards we set would quickly become outdated without a timely
updating mechanism. Commenters also agree that any minimum service
level must be updated regularly. Accordingly, we conclude that minimum
standards must be updated on a regular basis to ensure that consumers
are able to continue to receive sufficiently robust service similar to
what a substantial majority of American consumers subscribe to. We also
conclude that the updating mechanism will rely on an ``objective, data-
based methodology,'' as we proposed in the 2015 Lifeline FNPRM.
Finally, we update Section 54.408 of our rules in accordance with this
conclusion.
(i) Fixed Broadband
57. We first discuss the minimum standards for fixed broadband
service. In the 2015 Lifeline FNPRM, we sought comment on
``establish[ing] an objective standard that could be updated on a
regular basis simply by examining new data about fixed broadband
service.'' Although we recognized that ``the prevailing benchmark for
fixed broadband is the speed of the service,'' we also sought comment
on data caps and whether to set a minimum data usage allowance for
fixed broadband service. While some commenters opposed minimum service
standards for fixed broadband, many other commenters suggested that
minimum standards were necessary for both speed and data usage
allowance. We believe that for consumers to fully benefit from the same
type of Internet service that has ``been subscribed to by a substantial
majority'' of Americans, those consumers must have access to services
of both sufficient speed and data usage allowance. Accordingly, we
establish minimum service standards for both speed and data usage
allowance which both must be met for providers to receive Lifeline
funds.
58. Data Sources. In response to the 2015 Lifeline FNPRM commenters
proposed various methods to set initial minimum service standards for
fixed broadband: Some commenters proposed using specific numerical
thresholds; others supported using existing Commission testing
mechanisms to determine initial minimum service standards; and a third
group of commenters supported ``functional'' minimum service standards
with a focus on making sure that consumers could ``perform a full range
of online activities.''
59. In the 2015 Lifeline FNPRM we asked if we should ``consider
setting any minimum standards based on the FCC Form 477 (Form 477)
data,'' and several commenters supported the idea. We also sought
comment on using CAF standards in the Lifeline program. While a few
commenters opposed using CAF standards because meeting the CAF
standards would be too expensive for providers, or because the CAF
standards would not provide sufficient flexibility for providers who do
not currently meet the standards, other commenters supported using CAF
standards to determine the initial minimum standards for fixed
broadband.
60. We conclude that the minimum service standards for fixed
broadband speed should be based on the service to which a ``substantial
majority'' of consumers subscribe as determined using available
subscriber data reported on the Form 477. As we discuss in greater
detail below, while we do not formally define the term ``substantial
majority'' for all supported services, we believe that 70 percent of
consumers constitutes a ``substantial majority'' in the context of
fixed broadband speeds. (While we conclude that 70 percent of consumers
constitutes a ``substantial majority'' as it relates to fixed broadband
speeds, we lack the data to precisely determine what percent of
consumers subscribe to other modes of services at particular service
levels. Despite this, we still set minimum standards for other
supported services at levels that in our judgement constitute
[[Page 33035]]
a substantial majority of consumers based on the information
available.).
61. We also conclude that focusing solely on the ``functionality''
of a consumer's Internet service would not provide a workable standard
for the Commission to use when updating annual service standards
because it would require the Commission to determine the numerical
threshold of ``functionality'' on a regular basis. By using numerical
thresholds indexed to what consumers actually subscribe to, the
Commission will allow consumer usage to determine what speeds are
``reasonably comparable.''
62. Because providers already ``report extensively on their
offerings'' on Form 477 twice a year, it is an appropriate repository
for data to set and regularly update the minimum service standard for
fixed broadband speeds. Additionally, the Commission previously
emphasized that it uses Form 477 to ``update our universal service
policies and monitor whether our statutory universal service goals are
being achieved.'' Because Form 477 provides an accurate picture of what
services American consumers actually subscribe to, and because it is
collected on a regular basis, we conclude that Form 477 provides the
best data with which to set and update the minimum service standard for
fixed broadband speeds.
63. In addition, for the fixed broadband data usage allowance
minimum service standard, we conclude that the data usage allowance
standards currently used in the Connect America Fund for rate of return
carriers electing A-CAM support are appropriate. We base the initial
data usage allowance standard on this CAF standard because we do not
currently have a source of available data that could be used to
determine what percentage of subscribers purchase offerings with
certain data usage allowance limits. We therefore set the initial data
usage allowance standard for fixed broadband at the CAF rate-of-return
standard for carriers electing A-CAM support, which is 150 GB per month
for fixed broadband. We further conclude that the minimum service
standards for data usage shall be updated based on data in the
Commission's Urban Rate Survey and other appropriate and relevant data
sources. The Urban Rate Survey was originally created as part of the
Commission's Connect America Fund initiative in part to allow the
Bureau ``to specify an appropriate minimum for data usage allowance
allowances'' in CAF, and we believe it can serve a similar purpose
here. While we set the initial data usage allowance standard for fixed
broadband based on the CAF rate-of-return standard for carriers
electing A-CAM support, we also believe the Urban Rate Survey in the
future will help guide the Bureau to determine the usage allowance most
commonly offered in the fixed broadband marketplace. (We also encourage
providers to explore options for increasing usage allowances for
Lifeline consumers who are deaf, hard of hearing, deaf-blind, or have a
speech disability and rely on video connection for Video Relay Services
and point-to-point calls and other bandwidth-intensive accessibility
functionalities.).
64. Initial Minimum Service Standards. While we conclude that Form
477 data will be used to set and update the minimum standards for
download and upload speeds, we also conclude that the Connect America
Fund rate-of-return standard is the best starting point for setting
minimum service standards for data usage allowance. Finally, we
recognize that for the purpose of updating the minimum standard for
capacity, the Urban Rate Survey and potentially other data will be
useful sources for the Bureau to consider.
65. Speed. We conclude that in order to determine what fixed
broadband speeds a ``substantial majority'' of Americans subscribe to,
we will use the 30th percentile of subscribed speeds based on Form 477
data. By using the 30th percentile, we arrive at a speed to which 70
percent of Americans already subscribe, and we conclude that 70 percent
constitutes a substantial majority. Although the Commission has not
previously defined what constitutes a ``substantial majority,'' it has
concluded that it is more than a simple majority. Based on the most
recent Form 477 data, the 30th percentile of subscribed fixed broadband
speeds is 10/1 Mbps. Put differently, this means that 70 percent of
residential broadband subscriptions already meet or exceed 10/1 Mbps
speeds. (To order the subscription data in Form 477 for the purposes of
determining percentiles, residential subscriptions were ordered
lexicographically by download speed and then upload speed.). Based on
Form 477 data on what consumers actually subscribe to, we set the
initial minimum service speed standards for fixed broadband at 10 Mbps
for download and 1 Mbps for upload. An offering must meet both download
and upload speed minimums to be considered to meet the minimum service
standards.
66. Usage Allowance. As stated supra we set the initial usage
allowance standard for fixed broadband at the CAF rate-of-return
standard, which is 150 GB per month for fixed broadband.
67. Updating Minimum Service Standards. We conclude that Form 477
will be used to update the minimum service standard for fixed broadband
speed. When updating the minimum service standards in the future, the
Bureau will use data from the most recently available and usable Form
477. Using Form 477, the 30th percentile level of residential broadband
service speeds reported nationally will be used as the speed component
of the minimum service standard. We find that this benchmark represents
a service standard that is consistent with our statutory directive in
Section 254 of the Act. Accordingly, we conclude that using the 30th
percentile of residential broadband speed is appropriate, because this
level indicates that seventy percent of Americans subscribe to it, or
something more robust.
68. For the fixed broadband minimum service standards, the Bureau
will, on delegated authority, on an annual basis, release a Public
Notice on or before July 31 notifying the public of the updated
standard levels for speed and data usage allowance to be effective on
December 1 for the next twelve months. The updated speed standard will
be calculated using the above specified values from the most recent
available Form 477. In the event the Bureau does not issue the Public
Notice by July 31, or if any of the data required by the calculation
are older than 18 months, the minimum service level for fixed broadband
speed will be set at the greater of either (1) its current level; or
(2) the fixed broadband speed standard used in the Connect America Fund
for rate-of-return carriers. Because the Connect America Fund is also
designed to provide advanced telecommunications services to America's
consumers, we conclude that its fixed broadband speed standards provide
an acceptable alternative in the event the Bureau does not complete its
update in a timely manner.
69. For the fixed broadband minimum service data allowance usage
standard, the Bureau will, on delegated authority, on an annual basis,
release a Public Notice on or before July 31 notifying the public of
the updated standard level to be effective on December 1 for the next
twelve months. The updated fixed broadband minimum service standard for
data allowance usage will be the greater of (1) an amount the Bureau
concludes a ``substantial majority'' of American consumers already
subscribe to; or (2) the Connect America Fund data usage allowance
standard set for rate-of-return carriers.
[[Page 33036]]
(ii) Mobile Broadband
70. We next discuss the minimum service levels for mobile broadband
services in the Lifeline program and revise Section 54.408 of the
rules. In the 2015 Lifeline FNPRM, we sought comment on whether minimum
standards were appropriate for mobile broadband, and what criteria
should be used to set those standards. Multiple commenters supported
minimum standards for mobile broadband, while others were opposed. We
agree with commenters who argue that some consumers only have access to
mobile broadband, and that low-income consumers are particularly likely
to only have access to mobile broadband. For these low-income
consumers, it is vital that the offered service provides sufficient
speed and capacity to allow the user to utilize all that the Internet
has to offer. Accordingly, we conclude that minimum standards for both
speed and data usage allowance are appropriate.
71. Data Sources. In the 2015 Lifeline FNPRM, we sought comment on
setting minimum service standards for mobile broadband. We specifically
sought comment on setting a minimum standard for capacity at 1.8 GB per
person per month, which is what the average American consumer used in
2014. Some commenters believed that requiring 1.8 GB would be too
expensive for providers, or would require a significant charge for
consumers, while others argued that 1.8 GB per month per subscriber
would be insufficient for consumers without access to fixed broadband.
While most commenters did not propose specific numerical thresholds,
one commenter proposed requiring 1 GB of 4G data and unlimited 3G data.
We are mindful that Lifeline is meant to support a household, as
opposed to an individual, and we must take this into consideration when
setting the proper minimum service standard for mobile broadband.
Accordingly, as we discuss in more detail below, we conclude that after
an initial schedule of minimum service standards, updated minimum
service standards for mobile broadband data usage allowance will be
based on calculation of a mobile data usage level by using data set
forth in the Commission's annual Mobile Competition Report and other
available data sources For the mobile broadband minimum service
standard for speed, we rely on Form 477 data while also incorporating
industry mobile technology generation (i.e. 3G, 4G).
72. Initial Schedule of Data Usage Allowance. We conclude that, in
order to allow the Lifeline market an appropriate period to adjust to
the introduction of mobile broadband into the program, we should adopt
a phased-in schedule of minimum service standards for mobile data usage
allowances. After the period of time addressed in the schedule, the
regular updating mechanism for mobile broadband service will apply
unless the Commission acts otherwise based on recommendations in the
State of the Lifeline Marketplace Report. Beginning on the later of
December 1, 2016 or 60 days after PRA approval, the minimum data usage
allowance standard for mobile broadband will be 500 MB per month.
Beginning December 1, 2017, the minimum data usage allowance standard
for mobile broadband will increase to 1 GB per month. Beginning
December 1, 2018, the minimum data usage allowance standard for mobile
broadband will increase to 2 GB per month. Beginning December 1, 2019,
the minimum data usage allowance standard for mobile broadband will be
determined, and updated thereafter, based on the procedures below.
73. Data Usage Allowance. We conclude that after the phase-in of
mobile data usage allowance standards, in order to update mobile
broadband standards for data usage allowance in line with the principle
of supporting services that a ``substantial majority'' of American
consumers subscribe to, and given the types of data that are publically
and regularly available, the minimum service standard for mobile
broadband data usage allowance will be 70 percent of the calculated
average mobile data usage per household. These values will be
calculated as follows:
First, the average number of mobile subscriptions per
household will be determined by dividing the total number of mobile-
cellular subscriptions in the United States, as reported in the Mobile
Competition Report or by CTIA, by the total number of American
households, as determined by the U.S. Census Bureau. This number will
be rounded to the hundredths place. (Based on the most recent data,
there are 3.03 mobile subscriptions per American household.
[355,400,000/117,259,427]).
Second, the number of mobile subscriptions per American
household will be multiplied by the percentage of mobile subscribers
who own a smart phone, as reported by the Commission in its annual
Mobile Competition Report, or other publicly available data sources if
necessary, in order to determine the number of mobile smartphone
subscriptions per American household. Because this value should not
include mobile subscriptions that are not data-capable, phones that are
not data-capable will not be used when calculating the mobile broadband
minimum service standards. Additionally, phones that are not data-
capable have no impact on the average household's mobile data capacity.
This product will be rounded to the hundredths place. (Based on the
most recent data, there are 2.33 smartphone subscriptions per
household. [3.03 * .77]).
Third, the calculated average number of mobile smartphone
subscriptions per household will be multiplied by the average data used
per mobile smartphone subscriber, as reported by the Commission in its
annual Mobile Competition Report, (Eighteenth Mobile Competition Report
30 FCC Rcd at 14609, Chart VII.B.2 (stating that the average smartphone
user uses 1.361 GB per month of data) to determine the average mobile
broadband data usage per household. This number will be rounded to the
hundredths place and then multiplied by 0.7 (Based on the most recent
data, this currently amounts to 2.22 GB per month per household [2.33 *
1.361 * 0.7]) to adjust for the fact that in these circumstances a
``substantial majority'' of subscribers will use less than the average.
Fourth, to provide more simplicity for providers, the per-
household capacity will be rounded down to the nearest 250 MB. (Based
on current data, the 2.22 GB household capacity leads to a minimum
capacity standard of 2 GB per month).
74. If applied today, the minimum service standards for mobile data
usage allowance would be set at 2 GB per month, however, as discussed
supra, we choose to adopt a more gradual phase-in of this standard.
After the phase-in, in order to update the minimum standard for mobile
broadband capacity, the Bureau will perform the same calculations
listed above with the updated data from the Mobile Competition Report
and other specified sources.
75. Speed. We now set the initial value for the minimum speed
standard for mobile broadband. As stated above, our initial mobile
broadband speed standard is based on technology generation, while the
updated standard will incorporate Form 477 data. A coalition of
Lifeline providers indicated that the Commission should require mobile
broadband providers to offer speeds of 3G or better, and we agree. We
conclude that, to claim Lifeline support for a mobile broadband
service, a provider must provide to the Lifeline subscriber a service
advertising at least
[[Page 33037]]
3G mobile technology for at least the amount of data usage allowance
specified by the minimum service standards. (Many mobile offerings will
provide a certain amount of data at a certain speed and then provide
data service beyond that amount at lower speeds. The minimum service
standard requires the usage allowance standard be met at the speed
standard). We believe this is an appropriate starting point given the
Commission's actions in the Mobility Fund, where funding was limited to
those who deployed networks at 3G or higher. The initial mobile speed
minimum service standard will be effective beginning on the later of
December 1, 2016 or 60 days after PRA approval.
76. Updating Minimum Service Standards. For the mobile broadband
minimum service standards, the Bureau will on delegated authority, on
an annual basis, release a Public Notice on or before July 31 notifying
the public of the updated standard to be effective on December 1 of the
same year for the next 12 months. After the phase-in of the data usage
allowance minimum standards, the updated data usage allowance standard
will be calculated using the above specified values from the most
recent versions available of each required data source. In the event
the Bureau does not issue the Public Notice by July 31, or if any of
the data sources required by the calculations are older than 18 months,
the minimum service level for mobile broadband capacity will
automatically increase or decrease on December 1 of the same year from
its previous level by the most recent year-over-year percentage change
in smartphone data usage per household, as reported in the two most
recent Mobile Competition Reports. The value of the previous minimum
service level adjusted by the most recent year-over-year percentage
change in smartphone data usage per subscriber will then be rounded up
to the nearest 250 MB level. As an example, in 2013, the average
smartphone user used 1.152 GB per month. In 2014, the average
smartphone user used 1.361 GB per month. This indicates an 18.1 percent
increase. If the Bureau did not issue the required Public Notice
performing the calculations detailed above, the most recent minimum
standard would be increased by 18.1 percent and rounded up to the
nearest 250 MB level.
77. We recognize that the minimum service standards for mobile
broadband speeds may not need to be updated as frequently as the mobile
data usage allowance standard given the pace at which new mobile
technology generations are deployed. We therefore direct the Bureau to
consider updating the mobile broadband speed standard at the same time
it updates the minimum service standard for mobile broadband data usage
allowance. The Bureau should consider mobile Form 477 data and other
relevant sources to determine whether the mobile speed standard should
be updated. Because we recognize that the minimum standard for mobile
broadband speeds may not need to be updated on an annual basis, it will
not be subject to an automatic increase; instead, it will only be
adjusted if the Bureau determines that it ought to be adjusted after
determining that, based on Form 477 data or other relevant sources, the
``substantial majority'' principle is best satisfied by an adjusted
speed standard. In any case, the same Public Notice updating the mobile
broadband data usage allowance standard should also establish the
mobile broadband speed standard in effect beginning December 1,
regardless of whether it is adjusted from its previous level.
(iii) Fixed Voice
78. In the 2015 Lifeline FNPRM, we sought comment on how to ensure
fixed voice service is ``reasonably comparable'' and affordable to low-
income consumers. After consideration of the record, we decline to set
minimum service standards for fixed voice service and instead maintain
the status quo in this portion of the Lifeline market. It is not
apparent that in this segment of the market Lifeline consumers are
likely to be offered a less robust service than non-Lifeline consumers.
In the fixed voice segment, providers typically apply the Lifeline
discount to the price of the generally available residential voice
service. In this way, the same services available to non-Lifeline
customers are made more affordable to Lifeline customers. Additionally,
while numerous commenters emphasize the need to retain fixed voice as a
supported service, no commenters stated that specific minimum service
standards for fixed voice service are necessary. Accordingly, we see no
need at this time to intervene in such a situation.
(iv) Mobile Voice
79. In the 2015 Lifeline FNPRM, we proposed establishing minimum
service levels for voice-only service, and we sought comment on
requiring providers to offer unlimited talk and text to consumers.
Commenters emphasized that voice-only service remained an essential
part of the program, at least until the IP-enabled transition is
complete, and many other commenters supported requiring providers to
offer unlimited talk and text. While some providers argued that minimum
standards for mobile voice are unnecessary or ``uneconomical,'' we
believe that requiring mobile voice providers to offer 1,000 minutes to
consumers is consistent with our statutory directive to ensure that
Lifeline consumers have access to the same services to which a
substantial majority of American consumers subscribe. While we conclude
that requiring providers to offer 1,000 minutes is appropriate, we are
also mindful of providers' concerns about the affordability and
feasibility of immediately requiring providers to offer 1,000 minutes
and the resulting disruption to current Lifeline subscribers.
Accordingly, we adopt a transition period beginning with an initial
minimum standard of 500 voice minutes per month increasing over time to
1,000 minutes on December 1, 2018. We also at this time decline to
include texting as a supported service, and thus we also decline to
follow some commenters' suggestion that we set a minimum service
standard for texting.
80. Based on recently available data, it is clear that a
``substantial majority'' of American consumers already subscribe to
plans that offer 1,000 or more minutes, because ``none of the
smartphone plans for the United States have limited minutes,'' and 77
percent of cell phones in the United States are smartphones.
Accordingly, we conclude that Lifeline providers that seek support for
mobile voice-only service, after the transition set out here, must
provide 1,000 voice minutes in order to satisfy the minimum service
standards until mobile voice is no longer a supported standalone
service. Because we will require mobile voice providers to offer at
least 1,000 minutes beginning on December 1, 2018, the mobile voice
minimum service standard will not be updated annually after that date.
81. We therefore adopt the following transition for mobile voice
minimum service requirements. The minimum service standards for mobile
voice are as follows. Beginning the later of December 1, 2016 or 60
days after PRA approval, providers will be required to offer at least
500 minutes per month to mobile voice consumers. Multiple providers
have indicated that they will be able to offer consumers 500 minutes a
month, (To the extent that some of these providers suggest we should
not at this time schedule any increase above 500 minutes, we disagree.
Under the schedule we have adopted, providers will have well over 18
months to prepare for a phase-in of the 750-minute
[[Page 33038]]
minimum standard and another year to prepare for the phase-in of the
1,000 minutes requirement); and we accordingly conclude that this
requirement is not unduly burdensome. Beginning December 1, 2017,
providers will be required to offer at least 750 minutes per month to
mobile voice consumers. Beginning December 1, 2018, and until voice
telephony is no longer a supported service, providers will be required
to offer at least 1000 minutes per month to mobile voice consumers. We
believe this provides a gradual transition period that will allow
Lifeline providers and consumers to adjust to the new mobile voice
minimum standards reflective of the mobile voice plans offered to the
substantial majority of American consumers.
(v) Bundled Offerings
82. In the 2012 Lifeline Reform Order, we amended our rules to
allow providers to offer bundled packages of voice and data service. In
the 2015 Lifeline FNPRM we sought comment on how bundles should affect
the Lifeline support level. We now clarify that providers remain free
to offer bundled offerings as a way to improve their service offerings
and attract consumers. However, beginning December 1, 2019, when
support for voice-only service is phased down, in order for Lifeline
providers to receive the full $9.25 reimbursement from the program for
services offered as part of a bundle, the broadband component of the
bundle must meet the applicable minimum service standards. (If the
broadband component does not meet the applicable minimum service
standard but the voice offering does meet the applicable minimum
service standard, then the provider may still receive the then-
applicable benefit provided for voice-only service). We believe this
requirement is necessary to ensure that Lifeline subscribers continue
to receive robust broadband service while affording reasonable
flexibility to the provider and choice to the consumer.
c. Application of the Minimum Service Standard
83. While numerous commenters supported minimum service standards,
many commenters worried about reduced consumer choice, or providers
being forced from the Lifeline market if they could not offer services
that meet the minimum standard. We are mindful of these issues, but we
conclude that allowing the Lifeline benefit to be used on services that
do not meet our minimum service standards would lead to the type of
``second class'' service that the minimum service standards are meant
to eliminate. One of the reasons behind adopting minimum service
standards was our belief that such standards would ``remove the
incentive for providers to offer minimal, un-innovative services.'' If
providers were able to collect support for services that did not meet
our standards, this would lead providers to continue to offer low-
quality services. For this reason, we require, for fixed broadband,
that any Lifeline supported service meet both the speed and data usage
allowance minimum standards.
84. We also decline to allow mobile broadband services to be
supported if the service does not meet the minimum service standards
for both speed and data usage allowance. We do not believe that mobile
broadband speeds of less than 3G are sufficiently advanced to warrant
Lifeline funding. Further, we believe the current wireless and Lifeline
marketplaces would allow mobile service providers to structure their
offerings in such a way that the minimum service standards would not
promote robust service. For this reason, we require that any Lifeline
mobile broadband service meet both the speed and data usage allowance
minimum service standards. For mobile voice-only service, as long as it
is supported as a standalone service and subject to the transition
detailed above, the service provided must meet the minimum service
standard.
85. In order to ensure that Lifeline service meets the minimum
service standards, we require service providers to annually certify
compliance with the applicable minimum service level rules.
Accordingly, we amend Section 54.422(b) to require carriers to certify
their compliance with these requirements on our Form 481.
d. Exceptions Where Providers Do Not Meet Minimum Service Standards
86. We next provide an exception to our minimum standard
requirements targeted towards fixed providers who have yet to deploy
broadband capable networks in specific geographic areas that meet the
minimum service standards. While we are mindful of our statutory
directive to ensure that residents of underserved areas have access to
services that are ``reasonably comparable to those services provided in
urban areas and that are available at rates that are reasonably
comparable to rates charged for similar services in urban areas,'' we
have also recognized that many people, especially those living in rural
areas, might not yet have access to broadband services that meet our
minimum service requirements. Many commenters have similarly emphasized
the different levels of infrastructure present in rural areas. In the
2016 Broadband Progress Report, the Commission noted that 25 percent of
residents of rural areas did not have access to download speeds of at
least 10 Mbps.
87. We recognize that the necessary infrastructure is not present
in all areas, and that there are providers which are not currently
capable of offering services which meet or exceed the minimum service
standards. Accordingly, we address commenters' concerns with a limited
exception to our minimum service standards. This approach maintains our
objective of providing robust service where available while also not
precluding a subscriber from obtaining a Lifeline benefit in situations
where the infrastructure does not yet support the minimum service
standard. Additionally, our conclusion is consistent with Commission
precedent, as the Commission has previously granted certain recipients
of Universal Service funding waivers from our minimum service standards
because of infrastructure constraints. As we explain in more detail
below, the exception applies in the following circumstances.
88. First, we apply the exception only to fixed broadband
providers. (47 CFR 8.2(d) (defining a fixed broadband service as a
broadband Internet access service that serves end users primarily at
fixed endpoints using stationary equipment. Fixed broadband Internet
access service includes fixed wireless services (including fixed
unlicensed wireless services, and fixed satellite services.). We find
the exception is only appropriate for fixed broadband because fixed
broadband is the mode for which there are still significant areas of
the country in which locations do not have access to the minimum fixed
broadband standards. While we acknowledge that some areas also do not
have mobile broadband coverage meeting the minimum standards, there are
far fewer of these areas. Further, we are concerned, given inherent
differences in mobile and fixed technologies and the attendant business
models of each, that an exception for mobile service could more easily
be used to undercut our objective of supporting robust service in the
Lifeline program. (More specifically, for mobile services we find that
the business economics of the marketplace mean a mobile broadband
provider could much more easily than a fixed broadband provider craft a
business model with a set of very low usage allowance offerings for the
purpose of triggering this exception to meeting the
[[Page 33039]]
minimum service standards. We find that allowing such behavior would
undercut this Order's commitment to funding meaningful levels of robust
service.).
89. Second, the exception applies only where the provider does not
offer any generally available residential fixed broadband packages
which meet the minimum service standards at a prospective subscriber's
residence. Because we do not believe Lifeline funding should support
``second-tier'' service, we find that providers who meet the minimum
service standards with a generally available residential offering to a
location should not be eligible for the exception at the location where
they meet the minimum service standards.
90. Third, the exception only applies if the provider offers a
generally available residential fixed broadband service to the
prospective subscriber with speeds meeting or exceeding 4 Mbps download
and 1 Mbps upload. We believe this requirement is necessary to ensure
that providers who offer ``second-tier'' service are not rewarded for
failing to upgrade their networks. We delegate to the Bureau the
rulemaking authority to increase, but not decrease, this speed floor as
it determines is appropriate.
91. A provider qualifying for this exception may claim Lifeline
support for a household even when providing service that does not meet
the minimum standards for fixed broadband as long as the Lifeline
discount is applied only to the purchase of its highest performing
generally available residential offering that meets or exceeds 4Mbps/
1Mbps. A provider will certify that it is providing the service in
accordance with Commission rules, including that this exception has
been appropriately applied. However, as always, the Commission will
retain its audit authority and may use it to periodically evaluate
whether a provider is complying with the rule.
92. Finally, while we do not at this time provide an exception to
the minimum service standards for mobile broadband, our longstanding
waiver rule permits the Commission to waive any rule ``in whole or in
part, for good cause shown.'' We accordingly will consider waivers on a
case-by-case basis for providers who do not meet our minimum speed
standard for mobile broadband in particular areas. Pursuant to our
general waiver rule, waiver of the mobile minimum service standards for
broadband would be appropriate only if special circumstances warrant a
deviation from those standards, and such a deviation will serve the
public interest. We could envision that such special circumstances and
public interest benefits would most likely be present in cases in which
a provider seeks a waiver to apply the Lifeline benefit to the fastest
mobile broadband product it offers, but that product does not meet the
minimum service standards for mobile broadband due to lack of a
deployed network able to achieve that standard.
3. Support Levels
93. Baseline Level of Support. In the 2015 Lifeline FNPRM, we
tentatively concluded that we should make permanent the non-Tribal
support amount of $9.25 per month. We now conclude that the non-Tribal
support amount will be up to $9.25 per month. We believe that
establishing a permanent support amount provides an additional amount
of certainty for interested parties, and it allows for continued
administrative simplicity by enabling more accurate funding need
projections. While $9.25 will be the permanent support level which will
apply to all modes of service other than voice-only service, the non-
Tribal support level for voice-only service will be adjusted as
specified below.
94. Many commenters argue that the current $9.25 support level may
be insufficient to cover the total cost of the supported service. Other
commenters support the adoption of ``tiered'' service levels, with the
amount of Lifeline support varying with the service provided, and the
provision of a greater benefit for broadband service and a smaller
benefit for voice-only service. We partially adopt such proposals,
because we conclude that a greater benefit amount should be offered for
broadband providers to facilitate the program's transition to
broadband.
95. Although we take no position on whether $9.25 will be
sufficient to support the entire cost of supported service, we
emphasize that Lifeline was created to provide affordable, rather than
free service, and past Commission decisions have emphasized this point.
Additionally, we believe that other changes made in today's Order, such
as the creation of a National Verifier and the streamlined eligibility
determination process, will lower Lifeline providers' costs, and those
savings can be passed on to consumers.
96. Support for Voice-only Service. For voice-only service, we
adopt a schedule indicating the level of Lifeline support provided for
voice-only service. As discussed above, prior to December 1, 2019,
voice-only service meeting the minimum service standards shall be
supported by $9.25 per month. From December 1, 2019 through November
30, 2020, voice-only service meeting the minimum service standards
shall be supported by $7.25 per month. From December 1, 2020 through
November 30, 2021, voice-only service meeting the minimum service
standards shall be supported by $5.25 per month. On December 1, 2021,
no support generally shall be provided for voice-only service except in
certain circumstances identified below, or unless the Commission,
having considered the recommendations of State of the Lifeline
Marketplace Report, orders otherwise. In all events, voice service may
still be provided in the context of an offering receiving Lifeline
support if bundled with BIAS meeting the applicable minimum service
standards.
97. Although we decide generally to phase-out Lifeline support for
voice-only service as of December 1, 2021, we create an exception where
particular circumstances are met. Specifically, we preserve the final
phase-down level of Lifeline support ($5.25) even after December 1,
2021, for the provision of voice-only service to eligible subscribers
by a provider that is the only Lifeline provider in a Census block. In
particular, in any such Census block, such a provider will continue to
receive $5.25 per month in federal Lifeline support for providing voice
telephony service meeting the minimum standards to eligible
subscribers, and thus will discount such voice service in the amount of
the support received in accordance with our Lifeline rules.
98. Although we conclude that Lifeline should transition to focus
more on broadband Internet access service given the increasingly
important role that service plays in the marketplace, we remain mindful
of the importance historically placed on voice service. We also
recognize that although we provide a transition during which support is
phased down, consumer migration to new technologies is not always
uniform, and certain measures to continue addressing the affordability
of voice service may be appropriate consistent with the objectives of
Sections 254(b)(1), (b)(3) and (i). At the same time, in implementing
Section 254 the Commission has a ``responsibility to be a prudent
guardian of the public's resources.'' Collectively, this persuades us
that although it remains appropriate to use some universal service
resources for Lifeline voice even after such support otherwise
generally has been phased out, we should prioritize supporting, in an
administrable way, those areas where we anticipate there to be the
greatest likely need for doing so.
[[Page 33040]]
99. Balancing those objectives, we conclude that the pre-December
1, 2021, level of Lifeline support--$5.25--will remain available even
after December 1, 2021, for a provider to provide voice-only service to
eligible subscribers in any Census block where it is the only Lifeline
provider. Although one theoretically could imagine targeting this
continued Lifeline support for voice-only service in other ways--e.g.,
to other geographies, on the basis of certain demographic criteria, or
otherwise--we are not persuaded that such other approaches would be as
readily administrable, either in terms of identifying the area(s) or
consumer(s) to be served with discounted service in implementing the
Lifeline mechanism and/or in terms of our ability to estimate and
predict Lifeline demand for purposes of budget evaluations. (As
described below, data sufficient to initiate the analysis required
under our approach will already be available to the Commission as part
of its implementation of universal service support.).
100. Further, having focused on these areas, we conclude that it
makes more sense to provide any continued Lifeline support for voice-
only service to the existing, single ETC serving the relevant Census
block, rather than necessitating the designation of an entirely new ETC
simply to serve this post-phase out role, particularly given that the
Commission is phasing out Lifeline support for voice-only service more
generally. With respect to any such Census block, Lifeline support for
voice-only service provided by the sole Lifeline provider shall remain
in place--together with the ETC's obligations as a Lifeline provider
(This assumes that the ETC has not qualified for the conditional
forbearance described in Section III.E.2.c (Forbearance Regarding the
Lifeline Voice Service Obligations) or relinquished its ETC status in
relevant part)--until the first year after the Commission (or the
Bureau, acting on delegated authority) announces that a second Lifeline
provider has begun providing service in the Census block.
101. For purposes of identifying the providers and Census blocks
initially subject to this rule, we direct the Bureau to conduct a
process to identify the Census blocks where there only is one Lifeline
provider. The results of that initial process should be announced at
least six months prior to the date on which support for standalone
voice is scheduled to phase down to $0, i.e., by June 1, 2021. The
Bureau will have substantial data available to it by the time this
process would need to occur in order to identify proposed Census
blocks, and providers, that would (or would not) be encompassed by this
continued Lifeline support for voice-only service. In particular, data
will be available from the NLAD, from states that previously opted-out
of the NLAD, and from the National Verifier, among others. This list
shall be updated on an annual basis, such that support for standalone
voice service provided by the relevant provider--and thus any
accompanying obligation to offer service discounted by passing through
the Lifeline support--shall end in a census block as of December 1 of
the year that the Bureau identifies the census block as being served by
more than one Lifeline provider.
102. Support for Bundled Service. For a bundled voice and broadband
service, the support level will depend on whether the voice and
broadband components meet the minimum service standard effective at the
time. If the broadband component meets the broadband minimum service
standards (both speed and data usage allowance) then $9.25 per month of
support shall be provided. If the broadband component does not meet the
minimum service standards but the voice component meets the minimum
service standard, then support shall be provided at the level in effect
for voice-only service as explained supra.
103. Other Issues. We also address concerns raised by several
providers claiming that they are unable to process any form of payment.
While some Lifeline providers currently operate as prepaid wireless
carriers, and therefore do not have dedicated billing departments,
these providers nevertheless collect revenue from both Lifeline and
non-Lifeline customers, such as through the purchase of reload cards,
and they appear to be able to receive funds either via online payment
or by mail. Many of these providers partner with physical retailers who
provide locations for Lifeline providers to sell such cards or even
process payments. In addition, we also highlight the flexibility
provided for providers under the rules we adopt. Since the $9.25 of
monthly support must only be applied to an eligible service provided
for a month's time, and since we do not mandate pricing or any terms of
payment for the Lifeline-supported service, a provider has a wide range
of options for collecting additional revenue from the consumer if it so
desires. For example, a provider may choose to have the consumer make a
one-time payment upon enrollment, monthly payments, or payments on a
more flexible schedule. A wide variety of approaches are possible, thus
allowing providers the ability to find approaches to their business
which work best for their customers. In sum, we are confident that a
dynamic and competitive Lifeline marketplace will adapt to the changes
we make.
104. Finally, we address the issue of whether the Lifeline program
should support the cost of handsets or customer premise equipment. In
the 2015 Lifeline FNPRM, we sought comment on whether to include the
cost of Consumer Premise Equipment (CPE) when determining a service's
affordability. While many commenters stated that the cost of CPE must
be considered, and that the Commission should provide a subsidy to
facilitate the purchase of the equipment, we do not believe that such a
subsidy is warranted at this time. Past Commission precedent makes it
clear that Lifeline, with the exception of a brief period after
Hurricane Katrina, has been used to fund services, and not equipment.
At this time we see no reason to deviate from that approach. While we
do not separately fund the purchase of equipment, we encourage the
private sector to work collaboratively with the Lifeline program and
Lifeline providers to help make devices more available. We further
encourage Lifeline providers to explore options for offering accessible
devices for consumers with disabilities.
C. National Lifeline Eligibility Verifier
105. In this Section, we establish a National Lifeline Eligibility
Verifier (National Verifier) to make eligibility determinations and
perform a variety of other functions necessary to enroll eligible
subscribers into the Lifeline Program. The National Verifier is more
than simply a piece of technology; it is a system relying on both human
resources and technological elements to increase the integrity and
improve the performance of the Lifeline program for the benefit of a
variety of Lifeline participants, including Lifeline providers,
subscribers, states, community-based organizations, USAC, and the
Commission. As described below, the National Verifier will have both
electronic and manual methods to process eligibility determinations and
will have at its center a Lifeline Eligibility Database (LED), which
will contain records of all subscribers deemed eligible by the National
Verifier. The National Verifier will also engage in a variety of other
functions, such as, but not limited to, enabling access by authorized
users, providing support payments to providers, and conducting
recertification of subscribers, to add to the efficient administration
of the Lifeline program. This Order directs
[[Page 33041]]
USAC, with the oversight and approval of the Bureau and OMD, to procure
the necessary parts to the National Verifier. As described below,
certain aspects of the implementation will be overseen mainly by the
Bureau with additional oversight by OMD, as necessary and appropriate.
We delegate to the Bureau and OMD all aspects of the development,
implementation, and performance management of the National Verifier. We
delegate to the Bureau authority to provide any rule clarifications or
guidance with respect to the National Verifier. Along with the other
important changes we make to the program today, the National Verifier
is an integral part of our vision for the future of this program. We
revise Sections 54.400 and 54.410 of the Lifeline rules to incorporate
the National Verifier.
1. Objectives for the National Verifier
106. The Commission's key objectives for the National Verifier are
to protect against and reduce waste, fraud, and abuse; to lower costs
to the Fund and Lifeline providers through administrative efficiencies;
and to better serve eligible beneficiaries by facilitating choice and
improving the enrollment experience.
107. Reducing Waste, Fraud, and Abuse. As recognized by commenters,
the National Verifier will close one of the main avenues historically
leading to fraud and abuse in the Lifeline program: Lifeline providers
determining subscriber eligibility. Before 2008 when the first non-
facilities-based wireless providers started to enter the program,
Lifeline was a traditional wireline voice service program and consumer
eligibility determinations were necessarily made by the providers.
Today, the Lifeline program is a modern, dynamic, multi-provider
program with wireline, wireless, and broadband service. Modern Lifeline
providers have varied business models and some have a greater financial
interest in the eligibility determination, as the more subscribers they
enroll, the higher the disbursement they will receive from the Fund.
Therefore, commenters have noted that the program should remove the
responsibility of determining eligibility from an entity who is
providing service to the subscriber. Commenters agree that given
today's modernization, adopting the National Verifier eligibility
process to help enforce program rules and address concerns with
eligibility determinations will greatly increase Lifeline
accountability.
108. Reducing Costs to Lifeline Providers. As noted in the
comments, by removing the responsibility of determining eligibility
from providers, the Lifeline program will also be a more attractive
business opportunity as providers recognize significant reductions in
administrative and compliance costs. Commenters argue that variation
across states has made the program more costly for multi-state
providers who have had to use and comply with multiple eligibility
systems and that the overall costs most likely exceed $600 million per
year. By providing a central point of verification, Lifeline providers
can avoid the patchwork of systems currently required to enroll
subscribers in various states. By reducing compliance costs and burdens
and attracting more Lifeline providers, the program will benefit from
greater competition and, as a result, deliver more value to
subscribers. Once implemented, the National Verifier functionality will
further reduce administrative burdens for Lifeline providers by
streamlining the flow of payments from USAC to providers. Further,
commenters note that the risk of enforcement liability caused by the
actions of third parties prevents providers from participating in the
Program. By adopting the National Verifier, the risk of enforcement
actions against providers for eligibility related issues will decline
as the National Verifier takes on the risk of determining eligibility
for subscribers. Overall, transferring the eligibility certification
process away from providers will make it easier on providers to comply
with the Lifeline rules.
109. Facilitating Consumer Choice and Improving the Enrollment
Process. The National Verifier will also facilitate subscriber choice,
and serve as a single, unified platform for administering the new
modernized Lifeline program. Commenters note that Lifeline's current
model of primarily determining eligibility through ETCs places
significant limitations on the choices of eligible subscribers. The
existing model leaves little room for participation by third-party
organizations, such as schools, community-based organizations, or
digital literacy groups, to assist eligible subscribers in
understanding the value of the Lifeline benefit as well as navigating
the process of seeking an eligibility determination. As we move to a
broadband-supporting Lifeline program, we agree with commenters that it
is critical to provide maximum subscriber choice as well as enlist the
assistance of third-party organizations to help subscribers get and
stay connected with broadband. These comments note that organizations
who do not have a financial interest in the provision of Lifeline
benefits and have social motivations to help low-income subscribers
will improve the integrity of and participation in the program. A
subscriber-focused National Verifier will facilitate third-party
participation by allowing them to help subscribers with eligibility
questions and in applying the benefit to a Lifeline-supported service.
2. Functions of the National Verifier
110. As supported by the record, we establish the National Verifier
and explain how its core functions will achieve each objective
described above. The National Verifier is a comprehensive integrator of
processes and systems. The National Verifier will, first and foremost,
determine subscriber eligibility for the Lifeline program. It will also
perform other necessary functions, such as enabling Lifeline providers
to verify eligibility of a subscriber, providing access to authorized
users, and providing support payments to providers. At the core of the
National Verifier will be the Lifeline Eligibility Database (LED),
which will contain a list of Lifeline eligible, non-duplicative
potential subscribers. (As described below, USAC may propose to the
Bureau how and whether the information in the NLAD can or should be
used to populate the LED). While we set forth the basic functions and
structure below, we direct USAC to work with the Bureau, and OMD as
appropriate, to implement the National Verifier and to make
administrative and efficiency improvements consistent with the core
elements described below.
111. Determination of Subscriber Eligibility. A primary function of
the National Verifier will be to determine eligibility for potential
Lifeline subscribers in a manner that is cost-effective and
administratively efficient. As revised by this Order, subscribers will
demonstrate eligibility for the Lifeline program by showing proof of
enrollment in specific Federal and Tribal programs. These programs,
such as the Supplemental Nutrition Assistance Program (SNAP) and
Medicaid, have extremely robust program integrity and enrollment
procedures. By using these programs as determinants of eligibility
here, the Lifeline program can draw upon their vast fraud prevention
and program integrity capabilities. As recommended by commenters, the
eligibility certification process will have both manual and electronic
components to accommodate the needs of subscribers. Manual
certification will use human review of documents and other
[[Page 33042]]
information to assess eligibility, while electronic certification will
rely on communications between the National Verifier and other systems
and databases. (We direct USAC to propose acceptable documentation for
the manual review to the Bureau. In particular, USAC shall consider how
the National Verifier can address possible misuse of eligibility
documentation (e.g. SNAP cards lacking identifying information)). We
agree with the commenters that the program databases checked should, to
the extent possible, include those owned by states, (For example, the
SNAP program uses databases that are owned by the states), those owned
by Federal entities, or those owned by other entities. (For example,
the Supplemental Security Income program uses databases that are owned
by the Social Security Administration). We expect that the National
Verifier will be able to accommodate and utilize many of the varying
state databases available. We also envision that the electronic
certification process will produce at least near real-time results.
112. Both the manual and electronic approaches will apply program
rules, including identity verification, as necessary, to determine a
subscriber's eligibility. (For example, if a state administrator
verifies identity in the same robust manner as the federal
identification verification check, USAC may propose to the Bureau to
rely on the state's check). The National Verifier will also check to
ensure that the subscriber is not a duplicate of any existing
subscriber already receiving a Lifeline benefit. By checking this, the
National Verifier will reinforce and build on the NLAD to enforce
Lifeline's one-per-household rule, and prevent duplicates. Subscribers
will be able to submit information about themselves (e.g. such as
verifying identity and documenting the basis for eligibility) to the
National Verifier through a variety of methods, such as via mail and an
online portal, and certify their eligibility. (USAC currently maintains
a list of documents that can be used to establish identity. Commenters
have suggested that improvements be made to the documents used to
establish identity. Thus, we direct USAC to review the Web site list
and propose to the Bureau changes to the list.). The National Verifier
will also have a dispute resolution process whereby subscribers found
to be ineligible may have an opportunity to dispute the finding. (We
direct USAC to propose a process for dispute resolution to the Bureau
for approval for the National Verifier).
113. The National Verifier will have both a manual and electronic
certification process. We agree with commenters that our long-term goal
should be to determine the eligibility of most subscribers through the
more efficient means of electronic certification. We recognize that
electronic certification of eligibility will generally have lower long-
run costs relative to labor-intensive manual certification. We have
streamlined the programs used to determine eligibility for Lifeline to
those that have substantial automation and electronic process in place
already. We direct USAC to seek the most cost effective and efficient
means to incorporate electronic eligibility certification into the
National Verifier wherever feasible. We expect USAC and the Bureau to
work closely with the states, other federal agencies, and Tribal
Nations to foster partnerships that will help the National Verifier
develop the most efficient pathways to determining subscriber
eligibility. For example, USAC should consider co-enrollment with
states, other federal entities, or Tribal Nations or coordination with
other entities that have enrollment responsibilities to more
efficiently determine eligibility. We believe such actions based on
electronic certification will better support our objectives to reduce
the costs to the Fund and to better serve subscribers with an improved
certification process.
114. The National Verifier will implement a complete eligibility
review prior to providing a Lifeline benefit. We believe that it is
vital to deploy the National Verifier with the expectation that it will
conduct comprehensive and timely reviews. In the 2015 Lifeline FNPRM,
we sought comment on whether we should implement a pre-approval process
to mitigate delays in the review period. Commenters argued that
completing full reviews of eligibility will reduce waste, fraud, and
abuse. We agree with the comments filed and, at this time, do not adopt
a pre-approval process that would allow Lifeline providers to claim
Lifeline support for a subscriber prior to a full review. Only after a
full review is complete may the Lifeline provider claim and receive
support for the subscriber. Lifeline supported service must begin on
the day that the Lifeline provider certifies it will begin claiming
support for serving the subscriber. (Note that a provider could
``claim'' a subscriber in the Lifeline Eligibility Database (LED) but
not claim support until a later time when service begins. The claiming
process in the National Verifier will make it clear when the provider
is certifying to providing service and therefore eligible to collect
support for a subscriber.). If the subscriber is not listed and claimed
in the Lifeline Eligibility Database (LED), the Lifeline provider has
no claim on support.
115. Population of the Lifeline Eligibility Database. The LED will
contain records of Lifeline-eligible subscribers. As such, another
important function of the National Verifier will be to allow for cost
effective and administratively efficient ways to populate the LED. (For
the purposes of defining a framework for the National Verifier,
``database'' is not intended to have any technological meaning
requiring the National Verifier to follow a specific path toward
technically implementing these requirements. ``Database'' is meant as a
general term denoting a collection of data organized for rapid search
and retrieval. The Commission directs USAC to implement the National
Verifier in accordance with this Section using the most appropriate
technological means.). The National Verifier will populate the LED with
all necessary subscriber records after determining the subscriber is
eligible. However, this need not be the only method of populating the
LED with eligible subscribers. We envision multiple other methods,
including utilizing state databases, which are already being used today
by current Lifeline providers in a number of states, and building on
existing processes used by states and/or community organizations which
interact regularly with low-income subscribers. Our objective is to
provide multiple pathways to populate the LED with records associated
with Lifeline-eligible subscribers in order to simplify the enrollment
process for subscribers and Lifeline providers. We therefore direct
USAC to work with the Bureau to develop other efficient and reliable
methods of listing eligible subscribers in the LED. Additionally, USAC
must develop processes regardless of the pathway used, to obtain
subscriber consent to the collection, retention, use, and sharing of a
subscriber's personally identifiable information, including information
about their use of Lifeline services with USAC, the National Verifier,
and other appropriate users. As described further below, the LED will
also maintain information about the supported services of the Lifeline
subscribers.
116. Access by Different Users. The National Verifier will also
function as an interface for authorized users for
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many different activities. We agree with commenters and anticipate that
eligible subscribers, Lifeline providers, states, and Tribal Nations
will require access to establish or verify eligibility. We also expect
the National Verifier to have varying interface methods to accommodate
these different groups of users. (For example, the National Verifier
may have an interface that is consumer-friendly and geared towards
subscribers. It may have another interface that is geared toward
providers that may allow application programming interfaces (machine-
to-machine interaction). We direct USAC to work with the Bureau to
develop interfaces that promote the objectives of the National Verifier
and serve the needs of users in a cost-effective and efficient manner.
117. Access by Lifeline Providers. For Lifeline providers, the
National Verifier will support many functions, such as allowing
permissible queries to the LED to verify if a subscriber is eligible,
(The National Verifier will only permit queries which facilitate the
purposes of the Lifeline program. After obtaining approval of the
Bureau, USAC may implement useful administrative queries to facilitate
the needs of the modernized the program) allowing the claiming of a
subscriber as a Lifeline customer, and allowing reimbursement based
upon subscribers served. For example, the National Verifier will allow
Lifeline providers to easily confirm a subscriber's eligibility status
in the LED by using an appropriate set of personal information provided
by the subscriber. After obtaining authorization from the subscriber,
Lifeline providers intending to initiate a supported service will use
the LED to claim that subscriber as a Lifeline customer. By claiming
the subscriber, the Lifeline provider will certify that it will be
providing a Lifeline-supported service to the subscriber in accordance
with Commission rules. Providers will be able to enter into the LED the
correct support amount (non-Tribal or Tribal) for the claimed
subscriber. We also agree with commenters who argue that the National
Verifier should also allow Lifeline providers to relinquish subscribers
in the LED, thus discontinuing support, in accordance with Commission
rules. We expect that the technology used for the National Verifier
will allow claiming and relinquishing either a single subscriber record
or batches of records. However, irrespective of the technical abilities
of the National Verifier, service providers must follow the
Commission's rules on enrollment and de-enrollment.
118. Access by Subscribers. The National Verifier will also allow
potential subscribers (we use the term potential subscribers here
generally to refer to both successful and unsuccessful applicants to
the Lifeline program), to contact it directly to initiate and complete
eligibility determinations and applications for Lifeline service, to
obtain information about Lifeline providers and services, and to
resolve any issues through dispute resolution as recommended by
commenters. The National Verifier may use standardized forms and easy-
to-use processes to assist subscribers in completing applications. It
will have internal controls and utilize document management processes
to aid the submission of complete applications, regardless of the
submission method used. (For example, applications submitted via a
secure Web site should have standardized, mandatory fields that require
input and provide error messages before advancing to the next screen.).
During the application and certification process, the National Verifier
will communicate with subscribers to notify them of application status
at relevant milestones in the process. Subscribers will be notified of
either an affirmative or negative eligibility determinations by the
National Verifier. Once a subscriber is listed in the LED, he or she
will be notified, and be given information such as, but not limited to,
the manner in which the Lifeline benefit may be used, as well as
information on services and Lifeline providers in their area.
Subscribers must consent to providing the information to the National
Verifier, should be made aware of what information is being stored and
used by the National Verifier, and should also be allowed to view and
modify their records in the National Verifier as appropriate. The
National Verifier may also communicate with subscribers for other
purposes related to the efficient administration of the program as
determined to be necessary by USAC, with the approval of the Bureau.
119. We also expect the National Verifier to use a variety of
methods to communicate with subscribers who have limited means of
connection, both in terms of the mode used (such as mail, telephone,
text messages, email, etc.) and in terms of form used (such as various
languages and access for disabled individuals). The mode of
communication from the National Verifier to the subscriber at a minimum
must be appropriate and commensurate with the mode through which the
subscriber initiated contact with the National Verifier or requested to
be contacted. We also expect the National Verifier to provide access to
subscribers with disabilities in accordance with all applicable laws
and to provide service in multiple languages as directed by the Bureau.
120. Access by States, Tribal Governments and State/Tribal
Administrators. As recommended by commenters, the National Verifier
will also support access by states, Tribal governments, and state/
Tribal administrators and will also support communications between it
and the states. Commenters note that some states have already
implemented processes for determining Lifeline eligibility for
individuals in their states, and we seek to cooperate with such state
efforts as we jointly continue to protect the integrity of the program
and the subscriber experience with the Lifeline eligibility
certification process. Recognizing that existing state efforts will
provide a way to more efficiently and cost-effectively determine
eligibility, we direct USAC, as part of its development and operation
of the National Verifier to consider opportunities to coordinate and
partner with states. USAC should ensure any partnership promotes the
objectives of the National Verifier to improve administrative
efficiency, better the subscriber experience, and prevent waste, fraud,
and abuse in the program. (One commenter suggested that connection to a
state database should only be mandatory if the provider has more than
5,000 subscribers in the state. While we do not impose such a policy
here, we direct USAC to consider the most efficient ways to partner
with the states). It is also imperative that a Tribal or state
eligibility determination is congruent with the Commission's rules.
Prior to initiating these Tribal or state partnerships, USAC must
submit a proposed partnership plan to the Bureau indicating how it is
congruent with the National Verifier and the Bureau must approve of
establishing such a partnership as proposed by USAC.
121. Support Payments Based on the National Verifier. The National
Verifier will also function as the default basis for determining
support payments to providers. (After obtaining approval from the
Bureau, we also direct USAC to implement administrative solutions to
resolving concerns with the accuracy of the number of active
subscribers in the database. For example, subscribers remain actively
enrolled during the 30 day cure period following an initial 60 days of
non-usage. Providers will be paid based upon the records of claimed
subscribers in the LED absent some
[[Page 33044]]
other basis for suspending, delaying or declining to provide such
support. (For a provider to receive Lifeline support for serving a
claimed subscriber, not only must there be a record of the claimed
subscriber in the LED, but the service provider must be acting in
compliance with relevant applicable statutory requirements and Lifeline
program rules. Moreover, Section 54.707 of the rules authorizes USAC to
suspend or delay universal service support amounts if a carrier fails
to provide adequate verification of its entitlement to such support
upon reasonable request or if USAC is directed by the Commission to
suspend or delay universal service support amounts. 47 CFR 54.707. In
the 2012 Lifeline Reform Order, the Commission provided guidance to
USAC regarding the procedures it should follow in the Lifeline context
regarding the suspension or delay of universal service support amounts
if a carrier fails to provide adequate verification of its entitlement
to such support upon reasonable request under Section 54.707 of the
rules. As also observed in the 2012 Lifeline Reform Order, the
Commission has responsibilities to maintain the integrity of the
universal service fund and will pursue recapture of funds and/or seek
to impose penalties where warranted. Thus, in addition to the role of
USAC audits under Section 54.707 of the rules and the associated
guidance in the 2012 Lifeline Reform Order, the Commission itself can
direct USAC to suspend or delay universal service support amounts under
Section 54.707 of the rules, as noted above. In this context, we
anticipate that the Commission could direct USAC to suspend or delay
universal service support amounts, either wholly or in part, when the
Commission has proof, or credible information, that leads it to
reasonably believe, based on the totality of the information available,
that all or part of a payment would be in violation of the statutes and
regulations applicable to the Lifeline program. Furthermore, in
extraordinary cases where advance notice would likely cause significant
harm to the universal service fund, for instance, by hindering the
possibility of recovering funds, the Commission reserves the right to
direct USAC to initiate the suspension or delay of Lifeline support
amounts even in advance of notice to the relevant service provider.)
This approach will serve to enforce Commission rules and significantly
reduce duplicates, ineligible subscribers, and improper payments. We
direct USAC to provide the Bureau and OMD with a transition plan for
phasing out the FCC Form 497, currently used to seek Lifeline support.
With approval of the Bureau and OMD, USAC will begin executing this
plan and moving to a system where support payments are based on the
records in the LED. We also direct USAC to propose to the Bureau and
OMD improved methods of providing payment to the Lifeline providers
that will reduce costs and burdens to the Fund and to Lifeline
providers. For example, we received comments from AT&T suggesting that
payments could be received by providers as electronic funds transfers.
USAC should consider comments such as these and provide recommendations
to the Bureau as to whether the model of payment currently in place is
the most efficient method of serving Lifeline subscribers.
122. Additionally, we direct USAC to consider how the National
Verifier might facilitate initiatives that aggregate eligible
subscribers' Lifeline benefits so as to streamline the payment of
benefits and therefore encourage provider participation. The Bureau
will work with USAC to establish procedures and guidance USAC can use
to coordinate ``aggregation projects'' in the Lifeline program
consistent with the objective of preventing waste, fraud, and abuse. At
a minimum, to create an aggregation project, the Lifeline provider must
certify that the aggregation project will provide Lifeline eligible
service directly to the eligible low-income subscribers' residences,
describe the technologies the Lifeline provider plans to utilize for
that specific project, and certify that the service provided through
the project will otherwise comply with all other Lifeline rules. We
note here that aggregated benefit programs must meet the minimum
standards set out in the Lifeline rules, as measured by the service
provided to each individual subscriber. We therefore amend Sec. 54.401
to enable payment for providers' servicing aggregation projects.
Further, we direct the Bureau to work with USAC, as part of
implementing the National Verifier, to provide Lifeline providers with
guidance and procedures for creating aggregation projects and for
enrolling subscribers in aggregation projects. (USAC's role will be to
develop processes to ease and streamline the administration of
aggregation projects by implementing special systems, technical
support, and coordination efforts. USAC will not fund consumer outreach
efforts but may provide administration and expertise to community-based
organizations, housing associations, and institutions seeking to
coordinate the aggregation of benefits). Finally, total reimbursement
distributed to the Lifeline provider will be tied directly to the
number of subscribers affiliated with an aggregation project who have
been determined eligible for a Lifeline benefit.
3. Performance Management of the National Verifier
123. In this Section, we direct USAC to develop a robust
performance management system to advance the objectives and to analyze,
on an ongoing-basis, the effectiveness of the National Verifier. We
recognize that our success with the National Verifier is integral to
the Lifeline program. We provide below a range of components to be
utilized in evaluating the performance of the National Verifier. Our
list is not exhaustive, and we expect USAC, in consultation with the
Bureau and OMD, to continue to update the performance of the National
Verifier and its performance management system.
124. Time of Review. We first discuss the time it will take for the
National Verifier to review a subscriber's eligibility. We expect that
both the manual and electronic certification processes will be
completed in a reasonable amount of time from the time of application
receipt by the National Verifier to final eligibility determination and
population of the LED. We expect that the National Verifier will
develop review processes that balance the needs of subscribers to
receive a decision quickly with our responsibility to conduct accurate
eligibility reviews. To the extent it would improve the subscriber's
experience and improve program efficiency, the National Verifier may
implement any solutions, such as queuing, to manage demand. We also
require the National Verifier to forecast and provide innovative
solutions to enrollment fluctuations that may affect review times. At a
minimum, the National Verifier should use project management processes,
maximum automation, and flexible staffing to facilitate the rapid
response time required to best serve the stakeholder community.
125. Performance of the LED. The LED will, at a minimum, maintain a
list of subscribers for whom eligibility has been confirmed for
Lifeline-supported services and a list of claimed subscribers.
Recognizing that some providers and subscribers may have concerns about
the frequency with which the LED is updated, we direct USAC to have the
National Verifier modify and make available listings, de-listings, and
other record changes in the
[[Page 33045]]
LED quickly, taking into account the need for reliable information and
cost considerations of varying levels of service.
126. Development Environment. The National Verifier must include a
development environment that can be used by interested parties to test
the components of the National Verifier prior to the live date. The
development environment should allow the National Verifier and
stakeholders to test new functionalities before the National Verifier
launches and as new functions are added.
127. Use of the NLAD. In order to build the National Verifier in an
efficient and timely manner, we permit USAC to integrate or repurpose
the NLAD in whole or in part as necessary. If the National Verifier has
integrated into it all the responsibilities and functions of the NLAD,
including but not limited to subscriber duplicate prevention and
detection and identify verification, then USAC may propose to the
Bureau to discontinue the NLAD. Further, records currently contained in
the NLAD may be incorporated into the National Verifier if such
incorporation promotes the operation of the National Verifier. We
delegate to the Bureau the ability to revise the rules regarding the
NLAD, including but not limited to Section 54.404, as necessary to
allow for the transition and implementation of the National Verifier.
128. Use of Acceptable Documents for Eligibility and Identity
Certification. The National Verifier will require subscribers to submit
documentation for determination of eligibility. Given the great
diversity in types of documentation available for establishing identity
and eligibility across the states, territories, Tribal Nations, and
eligibility portals, the National Verifier will maintain information on
acceptable documentation types and will provide guidance about the
types of documentation that are acceptable for establishing identity
and eligibility for the Lifeline program. We also delegate to the
Bureau to work with USAC to develop new forms, update or revise current
forms, and/or retire forms if the Bureau believes it appropriate and
necessary to aid program administration and to facilitate the
implementation of the National Verifier.
129. Document and Data Retention by the National Verifier. The
National Verifier will retain eligibility information collected as a
result of the eligibility determination process. Lifeline providers
will not be required to retain eligibility documentation for
subscribers who have been determined eligible by the National Verifier.
However, current Lifeline program rules regarding record retention of
eligibility documentation will remain in effect for Lifeline providers
who have determined the eligibility of a current subscriber when
enrolling that subscriber, as this is necessary for Lifeline program
evaluations and audits.
130. Comprehensive Help Desk. The National Verifier will have a
help desk equipped to handle inquiries from all stakeholders, including
subscribers, Lifeline providers, states, and aggregators. At a minimum,
the help desk will have the ability to interact with stakeholders in
multiple languages and for specified time periods.
131. Training and User Support. We direct USAC to develop and
implement a training plan and ongoing National Verifier user support
strategy. The training should include, but not be limited to, training
for USAC and National Verifier personnel, training for Lifeline
providers and states, and outreach packets for state PUCs and PSCs for
subscribers and aggregators. We direct USAC to develop on-going
training and user plans for all the stakeholders as needed.
132. Security and Privacy of the National Verifier. We direct USAC,
working with OMD and its Office of the Chief Information Officer
(OCIO), to ensure that the National Verifier will incorporate robust
privacy and data security best practices in its creation and operation
of the National Verifier. USAC must ensure that the National Verifier
complies with all applicable laws and Federal government guidance on
privacy and security and other applicable technology requirements such
as those enacted by the Federal Information Security Management Act
(FISMA), National Institute of Standards and Technology (NIST)
publications, and the Privacy Act. As USAC seeks vendors to build the
National Verifier, it should require that potential vendors demonstrate
and incorporate in their proposals principles, including but not
limited to, privacy-by-design and security-by-design principles for the
National Verifier. Potential vendors must also include statements that
allow sharing their proposals with USAC and the Commission for review
and discussion prior to beginning the work. Any vendor selected must
commit to abiding by the principles described here and must build and
operate the National Verifier using agile development methodologies. We
recognize that privacy and data security best practices change over
time, so we direct USAC to ensure that the National Verifier's privacy
and data security practices remain consistent with Federal government
guidance, legal requirements and best practices, and to hire a third-
party firm to independently audit and verify the National Verifier's
compliance with these policies annually and provide recommendations
based on any audit findings. USAC should report to the Commission
annually the results of this third-party audit and verification, as
well as its efforts to ensure compliance with regards to its privacy
and data security practices. (USAC may incorporate this annual
reporting requirement on privacy and data security practices in the
National Verifier Annual Report).
133. The National Verifier must follow the NIST guidance for
secure, encrypted methods for obtaining, transmitting, storing, and
disposal of consumer and provider information. The National Verifier
should also follow NIST guidance for firewalls, boundary protections,
protective naming conventions, and adoption of strong user
authentication requirements and usage restrictions to protect the
confidentiality of consumer and provider information. (In discussing
the privacy of consumer information, we do not limit it to active
subscribers. The Verifier must also protect information gathered from
applicants to the Lifeline program, whether unsuccessful or successful,
and past subscribers.) We further direct USAC to ensure that, per NIST
guidance, access to consumer and provider data is limited and subject
to secure authentication systems for Verifier personnel, (The personnel
for the Verifier, include but are not limited to, personnel at USAC,
personnel at an entity procured by USAC to execute the functions of the
Verifier, or personnel procured by USAC to support any of the functions
of the National Verifier) for service providers and for other users who
will have access to consumer or provider data in the possession or
control of the National Verifier. We also direct USAC, per NIST
guidance, to ensure that Verifier personnel working with consumer or
provider data held by the National Verifier receive USAC's yearly rules
of behavior, regular privacy and data security training. (We expect
that USAC annually will update its rules of behavior as needed.) USAC
must maintain records of the trainings and attendees. We further direct
USAC, per NIST guidance, to ensure that the National Verifier limit its
data collection to information it needs to perform its functions as
National Verifier, and to promptly and securely dispose of data that it
no longer needs. We direct USAC, in accordance with NIST 800-53 (The
NIST 800-53 is a security publication
[[Page 33046]]
issued by NIST) to ensure that the National Verifier program has all of
the necessary documentation and verification of authority to operate,
yearly updates, continuous monitoring, plans of actions and milestones
(POAMS) (These are required by NIST) and proper continuity and disaster
recovery plans. The National Verifier must have subscriber notification
procedures in the event of breach that are compliant with Department of
Homeland Security (DHS) and OMB guidance. All these efforts and other
guidance on privacy and security as FISMA NIST Publications, and the
Privacy Act should be independently audited and verified by a third
party, hired by USAC to assess its annual compliance with these
policies annually as well as provide recommendations based on any audit
findings. USAC must also provide the Commission with assistance and
documentation should any of the above items or aspects of the National
Verifier relate to audits or investigations of the Commission's
compliance with federal laws and regulations.
134. Reporting and Internal Controls Component. The National
Verifier will include a component responsible for coordinating with
USAC on audits of internal controls to ensure consistency with the
Lifeline program rules, for conducting surveys to ensure satisfaction
in the performance of National Verifier personnel, and for producing
reports to Lifeline providers, USAC, and the Commission. With respect
to the reports to the Commission, the National Verifier must also
produce reports necessary to ensure the Commission's compliance with
federal rules and regulations pursuant to direction from the Bureau and
OMD. The reporting capabilities will include the use of data analytics
and fraud prevention software to help detect fraud before improper
payments are made to Lifeline providers. In the event of data and
security breaches, it will inform USAC and the Commission, and carry
out the process of subscriber notification. We direct the Bureau to
work with USAC and determine the appropriate reports to be incorporated
into the National Verifier.
135. Internal Controls and Procedures Manual. We also direct USAC
to create written procedures for the National Verifier, including but
not limited to, procedures for all functions, processes, quality
control standards, and internal controls. Subject to Bureau and OMD
approval, USAC should use Government Accountability Office's (GAO)
Green Book to serve as a guide to developing internal controls for the
National Verifier.
136. Unforeseen Circumstances and Clarifications. Given the complex
nature of the National Verifier and the importance of developing it in
an efficient and timely manner, as stated above, the Commission
delegates to the Bureau the role of providing USAC with any needed
clarifications or interpretations of the Commission's orders for all
aspects of the National Verifier, including but not limited to
development, design, and maintenance of the National Verifier. Further,
the Bureau may provide guidance to USAC concerning the National
Verifier in the event of unforeseen circumstances. Any such guidance
must be in line with the intentions of the Commission's orders for the
National Verifier.
137. National Verifier Procurement and Funding. We direct USAC,
working with the Bureau and OMD, to use efficient and cost effective
means to manage the funding and procurement of the National Verifier.
USAC will be primarily responsible for the procurement of both the
human resources and the technological components of the National
Verifier with oversight from the Bureau and OMD. (USAC has already
obtained information from entities via its RFI issued in 2015). USAC
may also propose to the Bureau and OMD to manage certain activities in-
house, if most cost effective. We direct USAC to prepare a procurement
plan for the National Verifier for review by the Bureau and OMD. We
direct USAC to incorporate, as feasible, into the National Verifier
contract requirements, payment terms and conditions that reasonably
reduce the risks inherent in the ambitious task of developing the
National Verifier and that incent timely completion of tasks while also
considering cost considerations. USAC may also as part of developing
and maintaining the National Verifier, procure from other entities
(including other government entities), access to or connection with
databases and systems if USAC determines this is the most reasonable
approach, taking into consideration cost and other factors, to achieve
the objectives of the National Verifier. In the event of disagreement,
the Bureau and OMD will provide USAC with a final determination. The
USF will fund the development and ongoing maintenance of the National
Verifier, including all procurement of the various components, testing
environment, and its ongoing activities.
138. Stakeholder Engagement. We direct USAC, working with the
Bureau, to develop a plan to allow for meaningful collaboration from
potential users on the administrative aspects of implementation of the
National Verifier. We expect that potential users, such as service
providers, states, Tribal Nations, and others, who may have valuable
recommendations on a variety of implementation areas, including but not
limited to, best practices for IT requirements, efficient interface for
electronic and manual eligibility pathways, effective payment pathways,
and effective communication strategies for consumer beneficiaries. We
therefore encourage USAC to create a stakeholder committee to advise
USAC on the ``Draft National Verifier Plan'' (described below). After
such collaborative efforts conclude, USAC shall incorporate stakeholder
input and recommendations into its ``Draft National Verifier Plan'',
which it submits to the Bureau. The Bureau shall determine the
appropriate path forward after balancing factors, such as but not
limited to, cost, administrative efficiency, and ease of use. Overall,
we believe that the National Verifier system that is developed with a
high degree of collaborative input from users will best advance our
goals.
139. Implementation Timeline and Transition. Implementation of the
National Verifier is a considerable undertaking and will require
significant resources from both the Commission and USAC. We here
establish milestones to chart the implementation of the National
Verifier. If USAC determines that additional time is necessary, it will
inform the Bureau and OMD and request a reasonable extension.
140. Before December 1, 2016, USAC shall submit to the Bureau and
OMD the ``Draft National Verifier Plan'' as the first implementation
milestone. This plan will comprehensively describe the National
Verifier to be developed and implemented. The plan will also set out a
proposed strategy, estimated timeline, and estimated budget for
progressively deploying each part of the National Verifier. As part of
the strategy, this plan will explain in detail how USAC expects to
procure services for the National Verifier, to partner with states, and
to incorporate other federal databases and systems into the National
Verifier. The Bureau and OMD will work with USAC to make any necessary
revisions, and will approve the revised ``National Verifier Plan.''
(While the National Verifier Plan is the official vehicle for approving
the planned details of the National Verifier, USAC from the effective
date of this order may begin taking actions in preparation for
[[Page 33047]]
developing and implementing the National Verifier).
141. After approval of the National Verifier Plan, on or before
July 31 and January 31 of each year until the National Verifier
implementation is complete, USAC will submit to the Bureau and OMD a
National Verifier Implementation Update. This document will provide
regular information to the Bureau and OMD on progress toward the
approved National Verifier Plan.
142. Given the complexity of the National Verifier and wide variety
of databases and systems to which the National Verifier may connect, we
provide flexibility in how and when USAC chooses to incorporate such
systems. We require the NLAD opt-out states to provide existing
subscriber information to USAC by December 1, 2016, and ongoing
thereafter, including any information regarding services that Lifeline
subscribers subscribe to as described further below. (These states
include California, Texas, Oregon, and Vermont. See Section III.
E.2.c.ii. (Increasing Competition for Lifeline Consumers, ETCs that are
not Lifeline-Only)). We set as an expectation that USAC will deploy the
National Verifier in at least 5 states by December 31, 2017. We further
expect that between January 1, 2018 and December 31, 2018 the National
Verifier will be deployed in an additional 20 states. By December 31,
2019, we expect Lifeline eligibility will be determined in all states
and territories using the National Verifier. We also expect that USAC
may require testing and trials of the National Verifier prior to
deployment and we allow this with the approval of the Bureau.
143. National Verifier Deployment and Notification
Responsibilities. Because deploying the National Verifier in a state
means the Lifeline eligibility responsibilities will be transitioned
from ETCs or state administrators to the National Verifier, the
deployment must be carefully managed and progressively achieved. When
USAC is ready to deploy the National Verifier in a particular state,
USAC must inform the Bureau of its deployment and transition plans in
that state, in addition to providing sufficient advance notice to the
Lifeline providers, state administrators and all other participants.
This process will allow for a transparent, progressive and staggered
roll-out of the National Verifier across the nation while retaining the
Commission's oversight. Our rules requiring National Verifier
eligibility certification will become effective in a state when USAC
deploys the National Verifier in that state and we direct the Bureau to
issue a notification to all interested participants providing
information about effective dates and any other relevant obligations.
Such notification will make clear which Commission rules will no longer
be applicable in the state(s) where the National Verifier is deployed.
144. National Verifier Annual Report and Data. In addition to the
specific reports required of USAC as part of the development and
implementation of the National Verifier, once the National Verifier is
fully operational in the first states, USAC will submit to the Bureau
in January of each year a report on the operations of the National
Verifier. This report will, at a minimum, provide a current overview of
the National Verifier, including details and data about National
Verifier operations consistent with our objective of making
transparent, to the greatest extent possible, information about the
Lifeline program. The report should also recommend improvements to the
National Verifier and should particularly focus on ways to lower costs,
increase efficiency, and improve the consumer and Lifeline provider
experiences. In its annual reports on the National Verifier, we direct
USAC to assess whether the National Verifier is effectuating the
objectives described in this Section and whether there are ways to
improve the performance of the National Verifier for all of its users,
USAC and the Commission. Overall, we require the National Verifier to
have the capability to report comprehensive program data information to
promote transparency in the Lifeline program and allow for effective
program evaluation.
D. Streamlining Eligibility for Lifeline Support
145. We next take steps to streamline eligibility for Lifeline
support to increase efficiency and improve the program for consumers,
Lifeline providers, and other participants. Beginning on the later of
December 1, 2016 or 60 days following PRA approval, low-income
households who qualify for and receive SNAP, Medicaid, Supplemental
Security Income (``SSI''), Federal Public Housing Assistance
(``FPHA''), or the Veterans Pension benefit will be eligible for
enrollment in the Lifeline program. (Consistent with the new annual
eligibility rules, subscribers already enrolled prior to December 1,
2016 under any of the retired eligibility criteria will be eligible
until their next re-certification. We direct USAC to communicate with
carriers and consumers as necessary to provide information where a
retired eligibility program is being used.). We amend our rules to
remove Low-Income Home Energy Assistance Program (``LIHEAP''); National
School Lunch Program's free lunch program (``NSLP''); and Temporary
Assistance for Needy Families (``TANF'') from the default federal
assistance eligibility for Lifeline. Finally, we do not modify the
income-based eligibility nor the Tribal eligibility criteria.
1. Criteria for Streamlining Lifeline Eligibility
146. We make these reforms as part of our modernization of the
Lifeline program to increase efficiency and reduce burdens on
participants. In the 2015 Lifeline FNPRM, we asked about various
changes to the way consumers qualify for Lifeline in order to improve
the eligibility determination process. In considering improvements, we
first look to the federal assistance programs most used by low-income
consumers who enroll in the Lifeline program. In choosing to focus on
the programs most utilized by Lifeline subscribers, we will ensure
continued access to Lifeline through well-established and often-used
avenues. Moreover, in choosing programs that currently represent the
highest enrollment rates in Lifeline, Lifeline will be more
administratively efficient.
147. In evaluating the eligibility criteria, we next focus on the
ability to develop long-term technological efficiencies by easily
accessing systems and databases from other assistance programs. An
efficient eligibility database to be used in the administration of
Lifeline will streamline the program for consumers and providers alike.
The ability to access eligibility databases for federal assistance
programs is key to the success of the National Verifier. (For example,
the Commission and SNAP have an existing data sharing agreement that
allows current ETCs to verify if a low-income consumer is receiving
SNAP benefits after coordinating with the state snap administrator.).
In streamlining eligibility programs, we selected programs where a
database or data sharing agreement could likely be achieved.
148. Finally, we remain committed to preventing waste, fraud and
abuse within the Lifeline program. By relying on highly accountable
programs that demonstrate limited eligibility fraud, Lifeline will
greatly reduce the potential of waste, fraud, and abuse occurring due
to eligibility errors. Federal assistance programs that have
demonstrated limited eligibility errors offer the ability to leverage
prevention efforts within Lifeline. We recognize that fraud is a
[[Page 33048]]
continuing concern within many federal programs and tying eligibility
to other assistance programs that have limited eligibility error rates
reduces the potential for problems within Lifeline.
a. Establishing Eligibility for Low-Income Veterans and Survivors
149. Today, we modify our rules to grant eligibility for Lifeline
to low-income consumers receiving Veterans Pension benefit or Survivors
Pension benefit. (Any reference to the Veterans Pension benefit as a
default federal assistance program is meant to include the Survivors
Pension benefit as well). The Veterans Pension benefit program is a
means-based program that supports veterans and their spouses by
providing up to $13,855 annually minus any countable family income.
150. Discussion. We add Veterans Pension benefit or Survivors
Pension benefit to Lifeline's eligibility program. Providing assistance
to America's veterans furthers the Commission's mission by specifically
targeting a low-income group lacking broadband and voice access. To
qualify for the Veterans Pension benefit program, veterans must have at
least 90 days of active duty, including one day during a wartime
period, and meet other means-tested criteria such as low-income limits
and net worth limitations established by Congress. (The other means-
tested criteria to qualify for pension benefits include that a veteran
must be: (1) Age 65 or older with limited or no income, or; (2) totally
and permanently disabled, or; (3) a patient in a nursing home receiving
skilled nursing care, or; (4) receiving Social Security Disability
Insurance, or (5) receiving Supplemental Security Income).
Additionally, any surviving spouse or dependent of a deceased eligible
veteran can qualify for the Survivors Pensions benefit. The program
includes income and net wealth limitations to ensure the funding is
sufficiently targeted to individuals in need. Further, many commenters
support this change and have demonstrated an established need for armed
forces veterans to access affordable phone service.
151. The Veterans Pension benefit also allows the Commission to
foster a long-term technological solution to verifying eligibility. By
collaborating with Veterans Affairs, the Commission will be able to
foster a similar database access agreement as we have with the USDA
FNS. (Note also that the Veterans Pension benefit can be used as an
eligibility pathway even prior to incorporation of the VA's database as
benefit recipients will already have or are able to obtain
documentation from the VA). The National Personnel Records Center has
digitized armed service personnel records, which will provide an
efficient, streamlined solution to verifying eligibility. The Veterans
Pension benefit also provides a highly accountable program to further
help combat waste, fraud, and abuse within the Lifeline program. (The
VA states that approximately 2.17 percent of pension outlays are
improper. It is important to note that the improper payment percentage
includes both under and overpayments. It is likely that the true
eligibility error rate is marginally higher or lower than improper
payment rate attributable to eligibility errors since payments may not
be proportionally related to participation.). Further, Veterans Affairs
is currently implementing the Veterans Benefits Management System
(``VBMS'') with the goal of improving processing accuracy of all
benefit claims to 98 percent. VBMS, once fully implemented, will
provide a completely electronic solution to incrementally validate
application requirements, processes, and administrative functions. We
find Lifeline will reduce waste, fraud, and abuse by leveraging the
Veterans Pension benefits' accountability rather than duplicating
eligibility determinations.
b. Relying on High-Participation Federal Assistance Programs
152. In our evaluation of the existing ways households may qualify
for the Lifeline program, we first consider whether Lifeline
eligibility programs are being utilized by subscribers for
qualification and how many current subscribers enroll in Lifeline using
the eligibility programs. The overwhelming majority of current Lifeline
consumers enroll based on participation in SNAP, Medicaid, and SSI, and
we maintain these programs in the Lifeline eligibility criteria. As of
November 2015, nearly 80 percent of all consumers participating in
Lifeline demonstrate eligibility by participation in SNAP, Medicaid, or
SSI. Additionally, these programs capture 80 percent of the eligible
low-income population under the existing Lifeline eligibility rules. In
streamlining Lifeline to rely on the federal assistance programs that
are most frequently used to provide access to Lifeline, we will
leverage eligibility efficiencies provided by these programs. In sum,
we conclude that continuing to use SNAP, Medicaid, and SSI as
qualifying programs recognizes the attractiveness of Lifeline to SNAP,
Medicaid, and SSI participants, as well as the administrative
efficiencies. (While a small percentage of subscribers currently enroll
in Lifeline by demonstrating participation in FPHA, Lifeline's goal is
to provide meaningful access to needed telecommunication technology for
low-income individuals The balance of factors discussed below
demonstrate that FPHA provides highly accountable and broad assistance
to low-income individuals with an advanced, centralized database to
enable a long-term technological solution to Lifeline eligibility
verification and recertification.).
153. We are persuaded that SNAP, Medicaid, SSI, and FPHA will
maintain access to Lifeline support for those most in need of the
Lifeline service. Specifically, SNAP assists 46 million low-income
Americans with the majority of the households including children,
senior citizens, individuals with disabilities, and working adults.
Two-thirds of SNAP benefits go to households with children and three-
quarters of recipient households have a child, an elderly member, or a
disabled individual. Medicaid provides assistance to 40 million low-
income seniors and other adults. Of these individuals, 11 million are
non-elderly adults with incomes below 133% of the federal poverty
guideline, and 8.8 million are individuals with disabilities. SSI
provides assistance to 8.2 million low-income aged, blind, or disabled
individuals. 7.2 million are disabled individuals under age 65, and 1.6
million individuals are either elderly-disabled or over 65 with an
income less than $733 per month. FPHA provides assistance to 4.8
million low-income households comprising 9.8 million individuals. Of
the 4.8 million assisted households, one-half are headed by elderly or
disabled individuals. These programs target a broad audience of low-
income households in need of improved access to voice and broadband
services.
c. Fostering a Long-Term Technological Solution for Lifeline
Eligibility
154. It is also vitally important that any qualifying federal
assistance program enables Lifeline to access systems and databases in
order to develop a National Verifier. Through the use of data sharing
agreements and database access, the National Verifier must be able to
effectively verify eligibility of potential low-income consumers
without relying solely on self-certification or documentation. The
existing databases for SNAP, Medicaid, SSI, FPHA, and the Veterans
Pension benefit enable a long-term technological solution to
eligibility determination.
155. Moving to a technological solution for Lifeline eligibility
[[Page 33049]]
verification will reduce the burden for low-income consumers in having
to provide additional documentation and will reduce the potential risk
to consumers' personal identifying information. The incorporation of
existing database solutions will also reduce waste, fraud, and abuse of
the program. While the transition to a National Verifier will not be
immediate, our selection of qualifying assistance programs that permit
easy technological solutions lays the groundwork for a successful
National Verifier.
156. SNAP, Medicaid, SSI, FPHA, and the Veterans Pension benefit
program all provide the potential for streamlined interactions between
those programs' systems and the National Verifier. The current data
sharing agreement with SNAP, for example, demonstrates an effective
technological solution to Lifeline eligibility determinations. SNAP is
administrated on the state level with Federal monitoring and oversight
by the United States Department of Agriculture, Food and Nutrition
Service (``USDA FNS''). The data sharing agreement allows current ETCs
to verify if a low-income consumer is receiving SNAP benefits after
coordinating with the state SNAP administrator and has enabled a
technological solution for the verification of SNAP participation, for
Lifeline enrollment purposes, in many states.
157. Medicaid, SSI, FPHA, and the Veterans Pension benefit program
also have accessible systems and databases the National Verifier will
be able to use. SNAP and Medicaid are often administered by the same
state agencies, allowing for more efficient database access solutions.
By reaching agreements with the state administrators, the National
Verifier will be able to develop an electronic verification system that
will reduce the administrative burden of the Lifeline program. SSI is
federally administered by the Social Security Administration and the
Veterans Pension benefit is administered by the Department of Veterans
Affairs. Both have sophisticated computer matching and communication
capabilities that can be utilized by the National Verifier to benefit
the Lifeline program. FPHA is administered by the United States
Department of Housing and Urban Development (``HUD''). HUD maintains a
federal database containing participation information for all
individuals receiving FPHA that can also be utilized by the National
Verifier for eligibility verification and recertification.
d. Protecting Against Waste, Fraud, and Abuse by Utilizing Highly
Accountable Programs
158. By relying on highly accountable programs that demonstrate
limited eligibility fraud, Lifeline will greatly reduce the potential
of waste, fraud, and abuse occurring due to eligibility errors. The
Commission and stakeholders have made substantial strides to create a
more efficient and effective Lifeline program and that has transformed
Lifeline into a more accountable program that provides vital
telecommunications services to low-income consumers. Lifeline's
streamlined eligibility programs will continue to guard against waste,
fraud, and abuse by allowing Lifeline to leverage efficiencies from
federal programs with limited eligibility and enrollment error rates.
159. Discussion. SNAP is a meaningful assistance program for
Lifeline because it maintains one of the lowest eligibility error rates
of any federal assistance program. SNAP has a 99 percent accuracy rate
in its eligibility determinations. (We distinguish between eligibility
problems, which involve ineligible individuals enrolling in SNAP and
are minimal, and SNAP trafficking problems, which occur when
individuals sell or purchase SNAP benefits in exchange for cash or
equivalents and, while prevalent in the last 15 years, have been
greatly reduced in large part due to aggressive enforcement and
prevention measures. Trafficking fraud, however, is not directly
relevant to Lifeline's use of SNAP as an eligibility program because
Lifeline only relies on the eligibility determination made by SNAP to
determine eligibility in Lifeline). SNAP eligibility problems occur
when an individual receives benefits, but does not meet the eligibility
criteria for the program. To combat this concern, SNAP employs one of
the most sophisticated quality control systems of any federal
assistance program, ensuring that 99 percent of all recipients are
eligible for the program. We find that SNAP's low eligibility error
rate provides a high level of accountability that the Commission should
leverage.
160. Medicaid provides similar efficiencies in eligibility
determinations for the Lifeline program. Like SNAP, Medicaid has a low
incidence of eligibility fraud (Medicaid's payment error rate due to
eligibility errors is only 2.3 percent), and the United States
Department of Health and Human Services, Office of Inspector General
(``HHS OIG'') has instituted new tools to combat waste, fraud, and
abuse within Medicaid. By using data analysis, predictive analytics,
trend evaluation, and modeling approaches to analyze and target
fraudulent behavior, HHS OIG has substantially affected payment errors
based on eligibility. Accordingly, we find that conferring eligibility
based on Medicaid participation will support the prevention of waste,
fraud, and abuse in Lifeline.
161. SSI demonstrates similar accountability. The Social Security
Administration conducts routine audits between its own systems and
those of other federal and state agencies to verify eligibility and
determine if an SSI recipient's information is accurate. SSI has a
limited overpayment rate resulting from eligibility errors. (This
figure represents an estimate based on publically available data as SSA
only reports overpayment (7.2%) and underpayment rates (1.9%). SSA
additionally reports the major causes of payment errors of which 89%
are attributable to eligibility errors. Therefore, the effective
overpayment rate due to eligibility errors is approximately 6.3%. It
should be noted that these error rates are based on payment and not
participation; therefore, it is possible the eligibility error rate is
marginally higher or lower as payments may not be directly proportional
to participation). SSI has demonstrated continued accountability and
commitment to combating waste, fraud, and abuse. For the same reasons
SNAP and Medicaid provide eligibility and verification efficiencies,
the utilization of the SSI program's robust eligibility verification
process will benefit the Lifeline program.
162. Finally, HUD has undertaken many steps to ensure that FPHA is
highly accountable. HUD actively employs an Enterprise Income
Verification (EIV) system that matches data from the Social Security
Administration and the National Directory of New Hires to provide
income data. The EIV system is used to verify annual income and benefit
information for FPHA participants, and further enables measures to
prevent waste, fraud, and abuse within the program by providing
auditable information to collect improper payments. FPHA has limited
improper payments. (HUD reports an improper payment percentage of 4.01%
due to eligibility errors.). HUD has demonstrated continued
accountability and commitment to combating waste, fraud, and abuse.
FPHA's accountable eligibility determinations will benefit Lifeline's
efforts to combat waste, fraud, and abuse.
[[Page 33050]]
2. Removing Eligibility Based on Certain Federal Assistance Programs
163. We amend our rules to remove LIHEAP, NSLP, and TANF from the
default federal assistance eligibility for Lifeline. In streamlining
the eligibility criteria, we choose to remove these programs in part
due to low enrollment in Lifeline. Further weighing our criteria for
selecting eligibility programs, these programs do not offer the same
advantages in developing a federal eligibility database, preventing
waste, fraud, and abuse, nor better targeting of the neediest low-
income households as SNAP, Medicaid, SSI, FPHA, and the Veterans
Pension benefit.
164. Discussion. We amend our rules to remove LIHEAP, NSLP, and
TANF from the default federal assistance eligibility for Lifeline. In
doing so, we retain the programs used by the overwhelming majority of
current Lifeline subscribers while retaining eligibility for millions
of low-income consumers. (States will still be able to condition
eligibility for state-specific lifeline payments, but will no longer be
able to broaden federal Lifeline eligibility. This will allow states,
like California, to continue to provide additional payments beyond
current Lifeline benefits and develop the necessary state-specific
eligibility criteria). By streamlining eligibility criteria, we will
improve the administrative efficiency of the program and reduce the
burden on consumers, providers, and the Fund. Only 2.74 percent of
current Lifeline consumers enroll through LIHEAP, TANF, and NSLP
combined.
165. Commenters argue that the elimination of these federal
eligibility programs will create ``eligibility gaps'' where a low-
income consumer would be eligible based on income, but other
restrictions prevent access. Many commenters argue that limiting
Lifeline eligibility will prevent access to the program by low-income
consumers in need of support and that Lifeline's low participation rate
suggests that we need to increase the number of eligibility programs to
capture more consumers. However, we find that focusing on federal
assistance programs that serve a broader range of the low-income
households will leverage the reach of those programs. SNAP, Medicaid,
SSI, and FPHA have high adoption rates among eligible households and
currently account for 80 percent of program participation.
Additionally, the programs target a wide variety of low-income
consumers in different age and life situations, thereby alleviating
commenters' concerns of ``eligibility gaps'' resulting from limiting
Lifeline eligibility.
166. We disagree with those commenters who caution against removing
NSLP and who argue that providing community-based eligibility or
retaining federal assistance programs that allow for such eligibility,
such as NSLP, increases administrative efficiency or appropriately
protects the use of funds. First, eliminating NSLP as a qualifying
program will affect very few participants since NSLP only accounts for
0.31 percent of the total participation in the Lifeline program. In
addition, because there is substantial overlap between SNAP
participation and NSLP participation, with 87 percent of NSLP students
qualifying directly through SNAP participation of the household, we are
confident there will be minimal disruption to qualifying households.
167. Also, NSLP cannot be effectively verified by a federal
eligibility database. The federal administration of NSLP cannot
authorize any access to the databases that maintain participation
information. This would require duplicative efforts of the Commission
to coordinate with state administrators to verify eligibility, as it
currently must with SNAP and Medicaid. However, this access is
complicated by federal regulations that would require written consent
from all students' parents or guardians in order to disclose any
information. The experience of state commissions demonstrates that this
process is untenable and works against streamlining the administration
of Lifeline.
168. Further, NSLP is currently undergoing program overhauls and
transitioning to a community-based approach that will complicate the
ability to determine individual household eligibility. The Community
Eligibility Provision (``CEP'') allows for participation in free or
reduced meals for an entire school district, group of schools, or
individual school if 40 percent of its students are ``identified
students.'' (``Identified students'' are students that qualify without
application due to participation in low-income assistance programs like
SNAP, or students that are considered at risk of hunger due to a
codified list of factors that includes being homeless, or in foster
care). USDA adopted this change to eliminate the burden of collecting
household applications to determine eligibility for school meals,
relying instead on information from other means-tested programs such as
the SNAP. This undoubtedly includes households that are not low-income,
but still qualify for NSLP. Allowing Lifeline eligibility based on
NSLP's CEP method could result in large numbers of non-low-income
households qualifying for the Lifeline program and would greatly
undermine the targeting of support to the low-income households. Given
the extremely low number of Lifeline participants that use NSLP to
establish Lifeline eligibility, coupled with the high overlap between
NSLP and SNAP, the balance of factors supports removing NSLP as a
qualifying Lifeline program.
169. We also have administrative concerns with using LIHEAP and
TANF in the Lifeline program. Providers and state commissions have
experienced difficulty in developing long-term, technology-based
solutions for these federal eligibility programs. The majority of
providers and state commissions choose only to provide database
eligibility verification for a select group of programs, often SNAP,
Medicaid, and SSI, due to the lack of centralized administration of
many federal assistance programs, the wide varieties of documentation,
differing technologies, and complications presented by controlling
regulations. We intend to foster a centralized, technology-driven
solution to eligibility determination, certification, and verification
and the federal eligibility programs need to enable a database
eligibility solution.
170. By using SNAP, Medicaid, SSI, FPHA, and the VA Pension benefit
as eligibility avenues for Lifeline, the Commission will modernize the
program while remaining committed to providing support to low-income
consumers. Millions of low-income households remain eligible under the
streamlined eligibility criteria while allowing the Commission to
reduce the administrative burden to consumers, providers, and itself.
Currently, LIHEAP eligibility accounts for only 1.23 percent of
Lifeline participants. TANF accounts for only 1.20 percent. The
retained programs account for 80 percent of all participants and enable
80 percent of all eligible low-income consumers to qualify with SNAP,
Medicaid, SSI, or FPHA. The retained programs will allow the Commission
to develop a long-term technological solution to determining and
verifying Lifeline eligibility.
3. Independent Income-Based Eligibility
171. We next maintain our rules regarding income-based eligibility
as an avenue to access Lifeline support. In doing so, we acknowledge
that maintaining independent income verification allows low-income
households to qualify for the program without being required to receive
assistance from another program. However, we amend the Lifeline
[[Page 33051]]
definition of income to align with the Internal Revenue Service's
(``IRS'') definition of gross income to provide a clearer standard for
eligibility determinations. By focusing independent income verification
efforts by carriers and the National Verifier on checking readily
available income verification sources and requiring consumer
certification, we will reduce the potential for waste, fraud, and abuse
of the program resulting from underreporting income.
172. In the 2015 Lifeline FNPRM, the Commission sought comment on
whether low-income consumers should be able to continue to qualify for
Lifeline support based on household income. We recognized that, under
the current program, less than four percent of Lifeline subscribers
demonstrate eligibility based on income level and we questioned whether
we could better target the neediest consumers given the relatively low
number of consumers using income as their qualifying method.
173. Discussion. While a limited number of participants demonstrate
eligibility through verifying their income, the eligibility avenue
remains an important and independent access route into the program.
Currently, three percent of Lifeline subscribers qualify by
demonstrating household income. However, independent income-eligibility
remains the only stand-alone avenue for access into the program. By
ensuring low-income consumers can independently qualify for the
Lifeline program, qualifying subscribers will not be denied access into
the Lifeline program simply for not seeking other forms of assistance.
174. Maintaining income-eligibility requires a focused approach to
verifying the low-income consumer's complete household income. Income
verification has typically been more onerous for both the consumer and
Lifeline provider than establishing eligibility through another
program. Under the current definition of income, verifying income
requires a provider to review documentation that demonstrates the
household's income. Income includes all forms derived by all members of
a household, including payments normally deductible from taxable
income, like child support. While verifying income with the IRS can
give a baseline, (for example, the IRS provides a system normally used
by mortgage lenders to verify income of individuals with the
individual's signed consent), the Lifeline provider must look to all
sources of income within the household and sources that would be
excluded from taxable income to ensure compliance with Commission
rules. Thus, income verification is highly susceptible to intentional
or unintentional underreporting of income. Commenters agree with this
concern, noting the difficulty in ensuring that a produced tax return
accurately represents income and that ``virtually no Lifeline
applicants present their tax returns to demonstrate eligibility''
especially given the ease of demonstrating program eligibility. The
consumer must present the household's income including ``salary before
deductions for taxes, public assistance benefits, social security
payments, pensions, unemployment compensation, veteran's benefits,
inheritances, alimony, child support payments, worker's compensation
benefits, gifts, lottery winnings, and the like.'' The only exceptions
are for student financial aid, military housing and cost-of-living
allowances, and irregular income from occasional small jobs.
Additionally, the consumer must certify they have presented all income
for themselves and their household.
175. We also amend the definition of income in Section 54.400(f) of
our Lifeline rules to align with the Internal Revenue Service's (IRS)
definition of gross income. This revised definition of income
simplifies what a subscriber must demonstrate for income-based
eligibility. Gross income, as defined by the tax code, includes all
income for whatever source derived unless specifically excluded. By
relying on a definition of income that subscribers use every year, we
will greatly reduce instances of intentional or unintentional
underreporting of income and will reduce the burden on the qualifying
low-income consumer by eliminating the need for them to make additional
income calculations. Further, tax information and employment
information can readily be determined electronically through the IRS or
third-party services. Aligning the Lifeline definition of income to
mirror the tax definition of gross income, enables electronic
verification by utilizing already reported information to a single
source where previously this was not possible due to the expansive
definition of income. (The Commission stresses the importance of
verifying a complete household income picture when income eligibility
is used. The Commission's rules have and continue to require that a
consumer establish income for both themselves and for the rest of the
household. This may require a low-income consumer to provide additional
documentation or information for other individuals in the consumer's
household to verify household income. These documents often contain
additional sensitive and personally identifying information, and
carriers must continue to protect this information in compliance with
current Lifeline document retention and protection policies).
176. Continuing to allow income-based eligibility is also essential
for Lifeline households in United States Territories. Due to the unique
combination of high poverty rates (For the United States Territories
currently receiving Lifeline support, the average poverty rate of the
population is: Puerto Rico--45.4%; U.S. Virgin Islands--23.3%; American
Samoa--57.8%; Guam--22.9%; Northern Mariana Islands--31.4%), and non-
uniform federal assistance programs in the United States Territories,
the United States Territories rely on income-based eligibility.
Lifeline serves low-income consumers in all states as well as the
Territories (United States Territories include all areas currently
controlled by the United States and specifically the territories of the
Commonwealth of Puerto Rico, American Samoa, the Commonwealth of
Northern Mariana Islands, the United States Virgin Islands, and Guam),
of the United States. However, the Territories do not have full access
to the default federal eligibility programs for several reasons. For
the United States Territories, the USDA offers Nutrition Assistance
Block Grants (NABG) in lieu of operating SNAP in these areas. The same
is true for Medicaid, which is operated similarly to block grants with
an annual funding cap. Moreover, besides the Northern Mariana Islands,
SSI is not available for individuals in the United States Territories.
177. Puerto Rico's Telecommunications Regulatory Board (``TRBPR'')
cautions against limiting program eligibility to only federal
assistance programs. The differing administration and eligibility
criteria for SNAP, Medicaid, and SSI requires income-verification
remain in Puerto Rico and other United States Territories. For example,
the income levels for the Nutrition Assistance Program for Puerto Rico
(``PAN'') range between 23.9 percent and 35.3 percent of FPG, which is
substantially lower than SNAP. As a result, participation in PAN is 30
percent lower than if the default federal eligibility existed. Given
the unequal treatment of Puerto Rico in federal assistance programs,
TRBPR recommends retaining income verification. Retaining income-based
eligibility prevents ``qualification gaps'' between low-income
consumers in
[[Page 33052]]
states and those in the Territories. We continue to allow income-based
eligibility for households with annual incomes of less than 135 percent
of the FPG.
4. Tribal-Specific Eligibility Criteria
178. After careful consideration, we maintain the current set of
Tribal-specific eligibility programs. The Commission embraced these
Tribal assistance programs to encourage adoption among low-income
residents on Tribal lands. We agree with commenters and find that the
disproportionately low adoption of telecommunication services on Tribal
lands, especially those in remote and underserved areas, makes clear
that there is much more progress to be made in increasing penetration
and adoption of Lifeline services.
179. In the Lifeline Reform Order, the Commission took specific
steps to make Lifeline more inclusive for consumers living on Tribal
lands. The Commission noted that consumers on Tribal lands did not
qualify for Lifeline support because many Tribal members chose to
participate in the Food Distribution Program on Indian Reservations
(``FDPIR'') rather than SNAP. The Commission added FDPIR as a
qualifying program because both SNAP and FDPIR have similar income-
based eligibility criteria and that members of more than 200 Tribes,
especially Tribal elders, currently receive benefits under FDPIR.
180. In the 2015 Lifeline FNPRM, in the context of exploring the
idea of streamlining eligibility for the program, we also sought
comment on whether to remove eligibility based on federal Tribal
assistance programs and the effect removing those programs would have
on low-income subscribers and the Lifeline program. Specifically, we
asked about continuing to use FDPIR and, more broadly, about overlap
between Tribal-specific assistance programs and the other federal
assistance programs used in the Lifeline program.
181. Discussion. Low-income consumers living on Tribal lands and
receiving Bureau of Indian Affairs general assistance (``BIA general
assistance''), Tribally administered Temporary Assistance for Needy
Families (``TTANF''), Head Start (only those households meeting its
income qualifying standard), or FDPIR remain eligible for Lifeline. BIA
general assistance, TTANF, and Head Start were added in 2000 to
encourage enrollment of low-income Tribal households because the
programs were specifically targeted to Tribal members, and the addition
of these programs helped remedy the barrier to Tribal participation in
Lifeline caused by the other federal assistance program criteria.
Additionally, the programs are means-tested and target household
incomes similar to the other federal assistance programs.
182. The retention of these Tribal programs as Lifeline qualifying
programs allows continued access to a specifically underserved group of
potential subscribers. The Commission has noted previously that
consumers living on Tribal lands have limited access to advanced
telecommunications technologies. We recognize that retaining the
programs may add additional complications to developing a uniform set
of eligibility criteria to enable a long-term technological solution to
eligibility determinations. However, we find that continuing to support
low-income consumers living on Tribal lands through these Tribal-
specific eligibility programs outweighs the limited administrative
difficulties.
183. We make clear that our determination here to retain Tribal-
specific eligibility programs does not prejudge a decision on any of
the other Tribal-related or other outstanding issues for which the
Commission sought comment in the 2015 Lifeline FNPRM and prior
Commission-level notices in these proceedings. For example, we are not
at this time modifying the enhanced support amount or deciding whether
to restrict Lifeline and/or Link Up support to certain carriers
operating on Tribal lands or carriers serving certain portions of
Tribal lands. These and other issues for which the Commission has
sought comment and which are not addressed in this order, remain open
for consideration in a future proceeding more comprehensively focused
on advancing broadband deployment Tribal lands. (We note that the
Commission recently sought comment on adopting rules to increase
support to rate-of-return carriers in areas that include Tribal lands.
The Commission will address related issues in both proceedings to the
extent that it deems appropriate).
5. State-Specific Eligibility Criteria
184. We amend our rules to remove state-specified eligibility
criteria for Lifeline support. While the Commission has traditionally
allowed states to establish eligibility for the federal program, we
ultimately conclude that Lifeline eligibility needs to be updated to
allow for more efficient administration that enables comprehensive
eligibility verification to continue to prevent waste, fraud, and
abuse.
185. Discussion. We find that the benefits to the federal Lifeline
program of removing state-specific eligibility criteria outweigh
concerns presented by the states that object to this action. It is
important to note that the changes to eligibility only apply to the
federal Lifeline program. Thus, a state maintaining its own Lifeline
fund will still be free to adopt any eligibility requirements it deems
necessary. We make this change to simplify the administration of the
Lifeline program. Lifeline currently allows for unique eligibility
criteria depending on the state in which the consumer resides. (The
Commission received comments from multiple State Commissions detailing
that state's Lifeline program and the administration differences from
the default federal program). This approach complicates administration
at a federal level. Allowing the states to continue to develop tailored
rules for federal Lifeline assistance would eliminate many of the
efficiencies the Commission gains by modernizing the eligibility
criteria. Streamlining the default federal eligibility criteria allows
the Commission to transition the program to modern approaches for
eligibility determinations, verification, and annual recertification.
The selected list of federal assistance programs allows for a
technology-based system by leveraging existing databases. Further, the
programs are tailored to allow the Commission to reach needed data
sharing agreements with the stakeholders in an efficient manner and
state-specific eligibility criteria would minimize or eliminate the
efficiencies the Commission is working to achieve.
186. The size, scope, and technology of the Lifeline program has
changed drastically from 1997 when the Commission allowed state
Lifeline eligibility to grant eligibility in federal Lifeline. The
program has grown from 5.1 million households in 1997 to 13.1 million
currently. Disbursements have grown from $422 million in 1997 to $1.5
billion in 2015. In this Order, we have instituted sweeping changes to
the Lifeline program regarding verification of federal Lifeline
eligibility on a national level. These require us to revisit the
initial decision in 1997 to allow states to determine if eligibility
verification was needed. Instituting a National Verifier requires
specifically targeted federal assistance programs that have
demonstrated use by current low-income consumers within the federal
Lifeline program. State eligibility often relies on federal Lifeline
eligibility programs, proving the criteria redundant in the majority of
cases. In
[[Page 33053]]
fact, the state-specific assistance programs only account for 2.52% of
total Lifeline participation. The administrative burden to verify each
individual program for a National Verifier is not supported by the
limited adoption of state-specific eligibility programs.
E. Increasing Competition for Lifeline Consumers
187. We recognize that in order to truly modernize the Lifeline
marketplace, it is incumbent on the Commission to examine and reform
three key aspects of providers' participation in the Lifeline program.
Specifically, we must update providers' processes for entering the
Lifeline program, providers' obligations as Lifeline providers, and
providers' responsibilities when they may seek to exit the program.
These three aspects of being a Lifeline provider--entry, service
obligations, and exit--are crucial to providers' decisions about
whether to participate in the program at all, and they are accordingly
fundamental pieces of a revitalized Lifeline program. We expect that
our actions today will encourage market entry and increase competition
among Lifeline providers, which will result in better services for
eligible consumers to choose from and more efficient usage of universal
service funds.
188. In this Section, we continue to require Lifeline providers to
be designated as ETCs, but we take several steps to modernize the
processes and obligations necessary to obtain and maintain ETC status.
We first establish our authority to designate Lifeline Broadband
Provider (LBP) ETCs and create a designation process for such Lifeline
Broadband Providers. This action preserves states' authority to
designate ETCs to receive Lifeline reimbursement for qualifying voice
and/or broadband services, while adding to that structure the option
for carriers to seek designation as Lifeline Broadband Providers
through the FCC.
189. We next establish reformed service and relinquishment
obligations for different categories of ETCs. For Lifeline Broadband
Providers, we establish a streamlined relinquishment process that gives
providers greater certainty while retaining the Commission's ability to
protect consumers. For Lifeline-only ETCs, those carriers that have
received limited designations to participate only in the Lifeline
program, we establish that such ETCs are eligible to receive support
for broadband service but may choose to only offer supported voice
service instead. For ETCs that are designated to receive high-cost
support (High-Cost/Lifeline ETCs), we establish that such ETCs are also
eligible to receive support for broadband service and forbear from
requiring such High-Cost/Lifeline ETCs to offer Lifeline-supported
broadband service, except in areas where the ETC commercially offers
broadband pursuant to its high-cost obligations. We also establish
conditional forbearance from existing ETCs' Lifeline voice obligations
where certain objective competitive criteria are met.
190. These reforms balance low-income consumers' reliance on
existing service providers while encouraging new market entry in the
Lifeline program and creating a level playing field for existing and
new providers. We expect that these reforms will unleash increased
competition in the Lifeline marketplace, providing more choice and
better service for the consumers benefitting from the program.
1. Creating a Lifeline Broadband Provider Designation
191. As part of our comprehensive modernization and reform of the
Lifeline program, we must address the barriers potential Lifeline
providers face when attempting to enter the program and the burdens
existing providers shoulder while participating in the program. Through
a number of actions, in this Section we modernize carriers' process for
entering the Lifeline program to become LBPs, their obligations within
the program, and the process for relinquishing their participation in
the program. We also take certain steps to streamline the LBP
designation process to encourage broader provider participation in the
Lifeline program with the expectation that increased participation will
create competition in the Lifeline market that will ultimately redound
to the benefit of Lifeline-eligible consumers.
192. First, we decide that the Lifeline program will continue to be
limited to providers that are ETCs. However, to ease the burden of
becoming an LBP providing BIAS to eligible consumers, we improve the
designation process, clarify LBP obligations, and modernize the
relinquishment process to better reflect the modern competitive
Lifeline market. We establish our authority to designate such ETCs
pursuant to our responsibility under Section 214(e)(6) and take steps
to streamline the LBP designation process to encourage greater
nationwide participation in the program.
a. Lifeline Participation Limited to ETCs
193. We first maintain the existing, statutorily compelled paradigm
for providing Lifeline service and continue to require Lifeline
providers be designated as ETCs. At this time, we decline to extend
Lifeline participation to non-ETCs. We find that continuing to require
providers to be ETCs to receive reimbursement through the Lifeline
program will protect consumers and facilitate continuing efforts to
prevent waste, fraud, and abuse. As discussed below, however, we also
take steps later in this Section to streamline the ETC designation
process and ETC service obligations to increase provider participation
in the Lifeline program.
194. In the 2015 Lifeline FNPRM, the Commission sought comment on
various means to increase competition among carriers serving Lifeline-
eligible households. Among other potential ways to increase
competition, the Commission asked for comment on a process for
providers to participate in Lifeline that is separate from the ETC
designation process required to receive high cost universal service
support to encourage broader participation. The Commission also sought
comment on re-visiting the Commission's 1997 decision not to provide
Lifeline support to non-ETCs to encourage broader participation in the
market, and its authority to provide Lifeline support to non-ETCs.
195. In response to the 2015 Lifeline FNPRM, several commenters
urged the Commission to eliminate the requirement that recipients of
Lifeline support be ETCs through statutory interpretation or
forbearance under Section 10 of the Act, arguing that such a change
would increase provider participation in the Lifeline program. Some
commenters reasoned that eliminating the ETC requirement would enable
more community-based organizations to participate in the Lifeline
program. Other commenters urged the Commission to retain the ETC
requirement, arguing that the ETC requirement is necessary to prevent
waste, fraud, and abuse in the program. Commenters opposing the
elimination of the ETC requirement also argued that the Communications
Act requires providers participating in the Lifeline program to be
ETCs.
196. Regarding the Commission's authority to permit non-ETC
providers to receive Lifeline funds, AT&T argues that Section 254(j)
and Section 254(e) of the Act permit the Commission to expand Lifeline
participation to non-ETCs. Public Knowledge argues that the
Commission's decisions in the 2004 Report and Order and TracFone
Forbearance Order are inconsistent with the Universal Service First
Report and Order on the issue of the Commission's authority to permit
non-ETCs to
[[Page 33054]]
participate in the Lifeline program. Public Knowledge also argues that
the Commission's prior orders failed to state that the Commission was
departing from its prior interpretation of Section 254, so the
Commission's controlling interpretation of Section 254 continues to be
that expressed in the Universal Service First Report and Order. Some
commenters also argue that the Commission may permit non-ETCs to
participate in the Lifeline program by amending its rules or by
forbearing from rules that currently prevent non-ETCs from
participating in the Lifeline program.
197. We agree with the commenters who assert that the Commission
should continue to limit reimbursement through the Lifeline program to
ETCs, but we take significant action to address the concerns that
animate suggestions that we provide support to non-ETCs. Requiring
participating Lifeline providers to be ETCs facilitates Commission and
state-level efforts to prevent waste, fraud, and abuse in the program,
and serves the public interest by helping the Commission and state
commissions ensure that consumers are protected as providers enter and
leave the program. For federally-designated ETCs, in implementing
Section 214(e)(6) of the Act, the Commission's rules state that common
carriers must meet certain requirements to obtain an ETC designation,
including certification to the relevant service requirements for its
support, demonstrating the ability to function in emergency situations,
satisfying consumer protection and service quality standards, and
demonstrating financial and technical capability to provide Lifeline
service (for Lifeline-only ETCs). For state designations, states that
retain the relevant designating authority also ensure that carriers
have the financial and technical means to offer service, including 911
and E911, and have committed to consumer protection and service quality
standards. These structures that protect consumers and ensure carriers
meet service quality standards ensure that the services supported by
the Lifeline program serve the Commission's goals of achieving
``[q]uality services'' offered at ``just, reasonable, and affordable
rates.'' Considering the protections and standards already built into
the ETC designation framework, we find that working within an updated
ETC framework is a more sound approach to modernizing how carriers
enter and exit the Lifeline program than creating entirely new
registration processes and requirements for Lifeline providers.
198. We share commenters' concerns that requiring providers to
obtain ETC designation could limit provider participation in the
Lifeline program, but we address this concern by the targeted steps we
take in this Order to streamline the ETC designation process, reduce
compliance burdens, and implement a National Verifier. (For example, if
a non-traditional provider like a school, library, or other anchor
institution wishes to provide Lifeline-supported BIAS and can meet the
streamlined requirements to enter the program and offer service as a
Lifeline Broadband Provider, such a provider could seek designation to
participate in Lifeline just as any other qualifying provider may). We
are confident that these changes will encourage provider participation
through reduced administrative burdens. Finally, because we decide not
to permit non-ETCs to receive reimbursement through the Lifeline
program at this time, we need not decide the Commission's authority to
do otherwise. We next revisit the Commission's authority to designate
ETCs offering BIAS in the Lifeline program under Section 214(e).
b. Jurisdiction To Designate Under Section 214(e)(6)
199. Having established that providers must become ETCs to receive
reimbursement through the Lifeline program, we now turn to the issue of
when the Commission retains authority to designate ETCs for the purpose
of offering BIAS in the Lifeline program. In addition to including BIAS
as a supported service in the Lifeline program, we must also determine
who may provide that service. We establish the Commission's
jurisdiction to designate broadband Internet access service providers
as ETCs solely for the purpose of receiving reimbursement through the
Lifeline program for providing BIAS to eligible low-income subscribers.
We interpret Section 214(e) to permit carriers to obtain ETC
designations specific to particular mechanisms of the overall universal
service fund. We also find that state designations for this new LBP ETC
designation would thwart federal universal service goals and broadband
competition, and accordingly preempt such designations.
200. To provide guidance regarding our authority to designate LBPs
under Section 214(e)(6), we clarify that a carrier need only provide
some service or services--not necessarily the supported service--that
constitute ``telephone exchange service and exchange access'' to
qualify for designation by the Commission. Even though we anticipate
that many providers will be able to meet the requirement of ``providing
telephone exchange service and exchange access,'' we also grant
forbearance from the provisions of Section 214(e)(6) that require
carriers to provide telephone exchange service and exchange access in
order to seek designation as an ETC by the Commission under that
Section.
201. Accordingly, LBPs will be designated by the Commission under
the authority granted to it in Section 214(e)(6) of the Act. (We note
that, in certain circumstances, we also have authority under Section
214(e)(3)). We find that these measures enable the Commission to
efficiently designate LBPs and unlock the Lifeline program to new
innovative service providers and robust broadband offerings for the
benefit of our Nation's low-income consumers.
(i) Carriers Not Subject to the Jurisdiction of a State Commission
202. To facilitate the Lifeline program's goal of promoting
competition and facilitating new services for eligible low-income
consumers, we preempt states from exercising authority to designate
Lifeline-only broadband ETCs for the purpose of receiving Lifeline
reimbursement for providing BIAS to low-income consumers. (Some
commenters assert that although the Commission has concluded that
broadband Internet access service is interstate for regulatory
purposes, at least some states still could have sufficient jurisdiction
to perform an ETC designation. This question is moot insofar as we
preempt any state jurisdiction to perform ETC designations specifically
for Lifeline broadband purposes, and thus we need not, and do not,
address the scope or contours of any state authority regarding
broadband Internet access service.). Accordingly, Section 214(e)(6)
grants to the Commission the responsibility to resolve carriers'
requests for designation as an ETC for the purposes of receiving such
Lifeline broadband support. (Further, we need not establish the
Commission's jurisdiction to designate Tribally-owned and operated ETCs
seeking to serve within the external boundaries of their Reservation,
as that jurisdiction has already been established).
203. Discussion. Taking into consideration the comments we have
received in the record on this issue, we now create a unified,
streamlined FCC ETC designation process for providers seeking to
receive reimbursement for providing BIAS. First, we find that it is
[[Page 33055]]
reasonable to interpret Section 214(e) as permitting the Commission to
tailor the ETC designation process and ETC obligations to the
particular element of the USF from which the provider is receiving
funds. Next, we find that the Commission has authority to preempt
states from designating LBPs and, in this limited circumstance, we
preempt states from exercising any authority to designate providers as
LBPs.
204. Commission authority to designate where states lack
jurisdiction. Section 214(e)(6) establishes the Commission's authority
to designate a common carrier ``that is not subject to the jurisdiction
of a State commission'' as an ETC. The circumstances in which a carrier
is ``not subject to the jurisdiction of a State commission'' under
Section 214(e)(6) is ambiguous regarding whether the carrier must be
entirely outside the state commission's jurisdiction or only outside
the state commission's jurisdiction with respect to a particular
service supported by universal service mechanisms, even if subject to
state commission jurisdiction in other respects. As previously
interpreted by the FCC, the jurisdictional inquiry under Section
214(e)(6) ``should include, but not be limited to, whether a state
commission lacks jurisdiction over the particular service or geographic
area.''
205. We interpret the inquiry as to whether a carrier is ``subject
to the jurisdiction of a State commission'' under Section 214(e)(6) in
light of the merits analysis required for designating a carrier as an
ETC under either Section 214(e)(2) or (e)(6). In particular, the state
(under Section 214(e)(2)) or the Commission (under Section 214(e)(6))
must find that the carrier seeking designation as an ETC will comply
with the service obligations in Section 214(e)(1). In relevant part,
Section 214(e)(1) requires ETCs to ``offer the services that are
supported by Federal universal service support mechanisms under Section
254(c)'' at least in part using their own facilities ``throughout the
service area for which the designation is received.''
206. To the extent that the Commission previously interpreted
Section 214(e)(6) to only apply if the relevant state commission had no
authority over any of the services offered by the carrier--or any of
the services supported by the federal universal service support
mechanisms (As originally implemented, ETC designations were not
specific to a particular supported service or a particular universal
service support mechanism, and thus, as interpreted and implemented by
the Commission, ETCs' service obligations under Section 214(e)(1)
encompassed the duty to offer all the supported services designated
under Section 254(c)(1). Congress initially provided only for state ETC
designations under Section 214(e) while simultaneously recognizing in
Section 214(e)(3) that universal services could include interstate
services.)--we now revise that interpretation to more closely match the
services supported by federal universal service support mechanisms. In
a 2014 Order, the Commission adopted an interpretation of Section
254(c)(1) that enables it to define universal service(s) under Section
254(c)(1) that differs among different rules (e.g., among different
universal service mechanisms). The Commission also has granted carriers
forbearance from the `own facilities' requirement in Section 214(e)(1)
to enable pure resellers to be designated as ETCs, conditioned on them
only obtaining Lifeline universal service support. Building on this, we
conclude that regardless of the scope of ETC designations granted
historically, Section 214(e) permits carriers to seek, and obtain, ETC
designations specific to particular elements of the overall universal
service fund. When they do so, we further conclude that the ETC's
service obligations under Section 214(e)(1) mirror the scope of
universal service(s) defined under Section 254(c)(1) for specific
purposes of that element of the overall universal service fund (if
there is a definition specific to that element). In other words, the
Commission interprets ``the services that are supported by Federal
universal service support mechanisms under Section 254(c)'' to mean
only those services within the definition of universal service--as
stated in the Commission's rules and orders implementing Section
254(c)--for purposes of the specific mechanism or mechanisms for which
the relevant carrier is designated an ETC.
207. Further, interpreting the relevant scope of state jurisdiction
under Section 214(e)(6) against the backdrop of the above
interpretation and implementation of Sections 254(c)(1) and 214(e)(1),
the relevant state jurisdiction would be jurisdiction specific to that
scope of services defined as universal service for purposes of the
specific mechanism or mechanisms for which the carrier is seeking
designation as an ETC. Insofar as there is a specific mechanism or
program within the overall universal service fund that, for instance,
only has broadband Internet access as the supported service, a carrier
that has obtained designation as an ETC just in that narrow context
would bear service obligations that mirror that program's supported
services, absent any other forbearance, waiver, or clarification by the
Commission. Alternatively, carriers would remain free to seek broader
ETC designations that would involve designation by the state
commission.
208. We interpret Section 214(e)(1)'s service obligation, which
applies to ``the services that are supported by Federal universal
service support mechanisms under Section 254(c),'' to be limited to the
services that are supported by the relevant Federal universal service
support mechanisms under Section 254(c). Such an interpretation makes
sense against the backdrop of the Commission's 2014 interpretation of
Section 254(c)(1) in the E-rate Modernization Order. Insofar as the
defined universal service(s) can differ among different elements of the
overall universal service program, it makes logical sense for ETC
designations and the associated service obligations to be able to be
tailored to match--i.e., to be able to designate carriers as ETCs for
purposes of specific elements of the overall universal service fund and
for their service obligations to match the supported services as
defined for that purpose.
209. Section 214(e)(1)(A)'s reference to ``mechanisms,'' rather
than a ``mechanism,'' does not prevent this interpretation because we
interpret Section 214(e)(1)(A) to be drafted broadly enough to
encompass the obligations of an ETC participating in multiple universal
service mechanisms without demanding that the ETC provide services that
are supported by universal service mechanisms in which that ETC does
not participate. To interpret Section 214(e)(1)(A) otherwise would
point to the conclusion that whenever the Commission exercised its
authority to designate additional services for support in programs for
schools, libraries, and health care providers, Section 214(e)(1)(A)
would require ETCs participating in the Lifeline or High-Cost programs
to also offer those additional services as services ``supported by
Federal universal service support mechanisms under 254(c).'' Section
254(c)(3)'s specific reference to particular mechanisms within the
overall universal service fund counsel against such a conclusion, and
so we interpret Section 214(e)(1)(A) inclusion of ``mechanisms'' to
simply mean that, to the extent that an ETC participates in multiple
universal service mechanisms, its service obligations include the
[[Page 33056]]
services supported by all of the relevant mechanisms.
210. Section 254(e) bolsters this interpretation by both requiring
that, in general, recipients of federal universal service support must
be ETCs designated under Section 214(e) and simultaneously limiting
ETCs to using the support they receive ``only for the provision,
maintenance, and upgrading of facilities and services for which the
support is intended.'' At a high level, then, Section 254(e) supports
the view that ETC designations (which generally are required for
support)--and the associated service obligations under Section
214(e)(1)--should be tailored to the particular services ``for which
the support is intended.''
211. We find further support for this interpretation in Section
214(e)(3). That provision expressly recognizes the possibility of
carriers being designated ETCs with respect to either interstate or
intrastate services, rather than more generally. In addition to
supporting the general concept that ETC designations need not encompass
all possible supported services, it also lends support to the view that
Section 214(e)(1) service obligations can be specific to particular
services. Section 214(e)(1) applies, by its terms, to ETCs designated
under Section 214(e)(3), as well as those designated under (e)(2) or
(e)(6). Interpreting Section 214(e)(1) only to impose service
obligations associated with the particular mechanism or mechanisms for
which a carrier is designated an ETC seems most consistent with the
dual FCC and state roles established under Section 214(e)(3). Where
both interstate and intrastate services are supported services, the FCC
identifies the carrier best positioned to provide the interstate
services and the relevant state commission identifies the carrier best
positioned to provide the intrastate services. It is consistent with
this framework for the carrier designated for interstate services by
the FCC only to be obligated to provide those services under Section
214(e)(1). By the same token, it is consistent with this framework for
the carrier designated for intrastate services by the state commission
only to be obligated to provide those services under Section 214(e)(1).
A contrary reading of Section 214(e)(1) would mean that the carrier
designated an ETC by the FCC for interstate services also would have to
provide the intrastate services even where the state commission
identified a different carrier as best positioned to provide those
services (and vice versa). Section 214(e)(3) appears designed to ensure
that there is one ETC providing each supported service in areas that
otherwise would have none, however. But if any single ETC designated
under Section 214(e)(3) would have to provide all the supported
services--both interstate and intrastate--the requirement for separate
designations by the FCC (for interstate services) and the state
commission (for intrastate services) would make little sense, since
either one of those carriers individually would have to provide all the
supported services.
212. Finally, as an implementation matter, we find that this
interpretation counsels in favor of creating a separate element of the
overall universal service fund to support BIAS for eligible low-income
households in the Lifeline program. As a separate subset of the
Lifeline mechanism in the overall universal service fund, supporting
BIAS for low-income consumers, this separate element of the Lifeline
program will help the Commission designate carriers seeking to become
ETCs only in the specific context of Lifeline-supported BIAS. (This
could be seen as roughly analogous to the current Rural Health Care
mechanism, which includes a separate Telecommunications Program and
Healthcare Connect Fund program).
213. Preempting state designations for Lifeline Broadband Provider
ETCs. We next find that state designations for LBPs thwart federal
universal service goals and broadband competition, and accordingly we
preempt such designations.(In accordance with this preemption, we also
amend Section 54.201 of the Commission's rules to clarify that a state
commission shall not designate a common carrier as a Lifeline Broadband
Provider. See 47 CFR 54.201(j)). In the absence of state jurisdiction
to designate providers as LBPs providing BIAS through the Lifeline
program, the Commission has authority to designate such ETCs under
Section 214(e)(6).
214. A robust and successful Lifeline broadband program will serve
the purposes of Section 254(b) by enabling the Commission to utilize
universal service funds to give eligible low-income households
affordable access to advanced telecommunications services. The success
of that modernized program, however, depends on participation from
providers to give eligible low-income households a choice between
quality services. Many providers that may be interested in competing
for Lifeline broadband funds are not currently designated as ETCs, and
in particular larger providers with infrastructure and market offerings
that span multiple states must be afforded a reasonable, clear pathway
into the Lifeline broadband program.
215. Preempting the states from designating Lifeline Broadband
Providers and permitting carriers to seek designation from the
Commission for multiple states at once would serve the universal
service principles of Section 254(b) by increasing low-income
consumers' access to advanced telecommunications and information
services at affordable rates. (In TOPUC v. FCC, the Fifth Circuit found
that Section 254 was not such an unambiguous grant of FCC authority
over intrastate matters to overcome the restriction on Commission
authority in Section 2(b) of the Act. See also 47 U.S.C. 152(b) (expect
as provided in specified provisions, ``nothing in this chapter shall be
construed to apply or to give the Commission jurisdiction with respect
to (1) charges, classifications, practices, services, facilities, or
regulations for or in connection with intrastate communication service
by wire or radio of any carrier, . . .''). However, since here the
preempted state actions have detrimental effects on the FCC's
implementation of Section 254 as it relates to interstate services, we
find this situation is distinguishable from the facts the court faced
in TOPUC. Similarly, although Section 601(c)(1) of the 1996 Act
provides that ``[t]his Act and the amendments made by this Act shall
not be construed to modify, impair, or supersede Federal, State, or
local law unless expressly so provided in such Act or amendments,''
Pub. L. 104-104, 601(c)(1), 110 Stat. 56 (1996), that does not alter
the normal application of conflict preemption.). With respect to
carriers seeking ETC designation in order to participate in a reformed
Lifeline program as LBPs, we find that participation by such ETCs will
advance the objectives of Section 254, but potential Lifeline providers
would be deterred by a requirement to undergo ETC designation
proceedings before dozens of state commissions and the Commission in
order to launch a nationwide Lifeline broadband offering. As commenters
have explained, a provider currently seeking ETC designation from
multiple state commissions will likely face designation procedures and
time frames that vary widely, lasting anywhere from a few months to
several years. The state designation process may involve simply
responding to staff's information requests or may include formal
evidentiary hearings. Additionally, even if the state and federal ETC
designation processes were entirely uniform, we are
[[Page 33057]]
persuaded that even just the burden of seeking designation from
multiple states and the Commission is sufficient to discourage
broadband service providers from entering the Lifeline program to
introduce nationwide or similarly large-scale broadband offerings,
because such a requirement means that a provider that has calculated
that it needs to achieve a nationwide scale to justify introducing a
Lifeline offering will be faced with potentially years of uncertainty
while it pursues the necessary designations. We therefore find that
state designation of LBPs conflicts with our implementation of the
universal service goals of Section 254(b) in the Lifeline broadband
rules adopted in this Order. (Under the Supremacy Clause, U.S. Const.
art. VI, cl. 2, federal law preempts any conflicting state laws or
regulatory actions that would prohibit a private party from complying
with federal law or that ``stand[] as an obstacle to the accomplishment
and execution'' of federal objectives. Freightliner Corp. v. Myrick,
514 U.S. 280, 287 (1995) (internal quotation marks omitted);
Hillsborough County, Fla. v. Automated Med. Labs., Inc., 471 U.S. 707,
713 (1985) (noting that ``state laws can be pre-empted by federal
regulations''). Because state ETC designations specifically for LBPs
would conflict with our rules implementing Section 254, such authority
also is not preserved by Section 254(f). See 47 U.S.C. 254(f)).
216. We find that the Commission should not similarly preempt state
ETC designations for providers seeking Lifeline-only ETC designations
to provide voice service, nor for providers seeking broader ETC
designations that are not Lifeline-only and include high-cost funding.
Today, multiple providers already serve the Lifeline voice market, and
the states' traditional role in designating voice ETCs argues in favor
of preserving the existing de-centralized structure for designating
ETCs other than LBPs. We also note that Section 706 of the
Telecommunications Act directs us to focus our efforts on removing
barriers to investment in ``advanced telecommunications services.'' We
therefore focus our streamlining efforts on broadband services within
the Lifeline program.
217. Additionally, the Commission has previously found that Section
706 of the 1996 Act authorizes preemption, and that conclusion is
applicable to our current efforts to modernize the Lifeline program to
support BIAS. ``In light of Congress's delegation of authority to the
Commission to `encourage' and `accelerate' the deployment of broadband
to all Americans, we interpret Sections 706(a) and (b) to give us
authority to preempt state laws that stand as barriers to broadband
infrastructure investment or as barriers to competition.'' Section
706(a) grants the Commission authority to ``encourage the deployment on
a reasonable and timely basis of advanced telecommunications capability
to all Americans.'' Indeed, Section 706(a) specifically states that the
Commission ``shall'' encourage such deployment, using a variety of
tools including ``measures that promote competition in the local
telecommunications market'' and ``other regulating methods that remove
barriers to infrastructure investment.'' We find that our preemption
authority falls within these categories listed by Section 706(a), and
the Commission therefore has authority to preempt state laws that
conflict with Section 706(a) by preventing market entry and competition
in the Lifeline program.
218. Additionally, the Commission's 2016 Broadband Progress Report
found that ``advanced telecommunications capability is not being
deployed to all Americans in a reasonable and timely fashion.''
Accordingly, under Section 706(b), we are mandated by Congress to
``take immediate action to accelerate deployment of such capability by
removing barriers to infrastructure investment and by promoting
competition in the telecommunications market.'' Here, we find that
requiring prospective Lifeline Broadband Providers to seek separate
designations before many states and the Commission constitutes a
barrier to investment and competition in the Lifeline market. The
greater carrier participation in Lifeline that would be fostered by
preemption of state conditions unrelated to compliance with the
Lifeline rules on relevant ETC designations would encourage the
deployment of advanced telecommunications capability, such as BIAS. We
also find that preempting these state conditions on ETC designations
would ``promot[e] competition in the telecommunications market''
insofar as such state conditions otherwise would deter participation in
the marketplace for Lifeline-supported broadband Internet access
service.
219. More broadly, as the Commission has previously found,
broadband Internet access service is jurisdictionally interstate for
regulatory purposes. Although Section 214(e)(2) authorizes states to
perform ETC designations and, under the TOPUC decision, does not itself
preclude state conditions on such designations, there are indications
in the Fifth Circuit's decision that it anticipated that those
conditions would involve intrastate services subject to states'
historical state law authority. Further, although the Commission has
recognized state jurisdiction to collect data regarding BIAS, that is
materially different from the imposition of substantive obligations on
broadband Internet access service.
220. In addition to declaring that states are preempted from
exercising authority to designate Lifeline Broadband Providers, we
adopt a legislative rule consistent with that outcome. As described
above, the ETC designation process is an important tool to protect
consumers and prevent waste, fraud, and abuse in the Lifeline program,
but should not become a barrier that discourages legitimate carrier
participation and inhibits universal access to advanced communications
services. Accordingly, for the reasons discussed above, the Commission
revises Section 54.201 of its rules to prohibit state commissions from
designating Lifeline Broadband Providers.
221. Some commenters have argued that the Commission should not
preempt or limit states' roles in ETC designations. To that end, we
note that in this Order we do not preempt states' authority to
designate ETCs for Lifeline voice service, nor to grant broader ETC
designations that are not Lifeline-only and include support from the
USF High-Cost Program. (We also note that, to the extent that state
commissions have declined to designate carriers as ETCs over concerns
about those carriers' 911 services, this Order does not prevent states
from inquiring into such issues for carriers offering voice service
seeking a non-Lifeline Broadband Provider ETC designation). For those
areas in which states have traditionally held a role and which more
often involve jurisdictionally intrastate services, our preemption here
does not change states' responsibility to designate ETCs. (States will
therefore continue to be in a position to evaluate issues like a non-
LBP ETC's ability to meet ETC service and facilities requirements. We
find that the Commission is capable of determining whether common
carriers seeking designation as an LBP will be able to fulfill those
requirements, as detailed below. We recognize that Section 254(i)
contemplates that ``the Commission and the States should ensure that
universal service is available at rates that are just, reasonable, and
affordable.'' 47 U.S.C. 254(i). We do not here preempt any otherwise
permissible efforts, consistent with state law, to provide state
support). Additionally, although some commenters argue that Section
214(e)
[[Page 33058]]
implicitly preserves any state authority relevant to ETC designations,
the interrelationship between Section 214(e) and Section 254--i.e., the
purpose of a Section 214(e) ETC designation is to implement universal
service support mechanisms under Section 254--supports our present
preemption of state designations of LBPs as conflicting with the goals
of Section 254.
222. Some commenters suggest the FCC is ill-equipped to assume the
responsibility of designating broadband providers for the Lifeline
program. In response, we expect our reforms to the federal ETC
designation process for Lifeline Broadband Providers to prevent
petitions from pending longer than is necessary to ensure the continued
integrity of the program and protection of consumers. Other commenters
argued that the current ETC designation process is not generally
lengthy or onerous, and is an important tool in combatting waste,
fraud, and abuse in the Lifeline program. We find, however, that a
centralized LBP designation process can further streamline the burdens
of seeking designation while continuing to prevent waste, fraud, and
abuse in the program. Similar to the state measures to prevent fraud
that NARUC discusses, Commission rules require annual reporting, annual
certifications, and audits for Lifeline providers, the Commission may
deny an ETC designation petition if the provider does not meet the
relevant requirements, and the Commission's Enforcement Bureau is
equipped to investigate and take action against providers that violate
the Lifeline program's rules. Some commenters cautioned the Commission
to limit the extent to which it streamlines or centralizes the
designation process, because of the unique characteristics of the
Lifeline market. We note that our preemption and forbearance actions in
this Order are tailored to ensure a more competitive, effective program
without sacrificing the integrity of the program or the Commission's
authority to act in cases of waste, fraud, or abuse.
(ii) Carriers Providing Telephone Exchange Service and Exchange Access
223. Having established our authority to designate where state
commissions lack jurisdiction under Section 214(e)(6), we next turn to
the question of what types of carriers are eligible for designation by
the Commission under 214(e)(6).
224. Guidance regarding Section 214(e)(6). Under Section 214(e)(6)
of the Act, in order to seek designation as an ETC by the Commission, a
provider must be ``a common carrier providing telephone exchange
service and exchange access that is not subject to the jurisdiction of
a State commission.'' We explain above why carriers seeking ETC
designation specifically as LBPs are ``not subject to the jurisdiction
of a State commission'' within the meaning of that Section. We further
clarify that a carrier need only provide some service or services--not
necessarily the supported service--that qualify as telephone exchange
service and exchange access in order to seek a designation from the
Commission under Section 214(e)(6). (We note that the Commission
recently declined to address whether broadband Internet access service
could constitute telephone exchange service and/or exchange access, nor
do we address that issue here).
225. The text of Section 214(e)(6) does not require that the
relevant supported service or services for which the carrier is being
designated an ETC must constitute telephone exchange service and
exchange access. Nor is there any requirement in Section 254(c)(1) that
services must be telephone exchange service or exchange access--let
alone both--in order to be included in the definition of universal
service. Insofar as supported services need not be telephone exchange
service and/or exchange access, we decline to interpret Section
214(e)(6) to impose such a requirement on carriers seeking Commission
designation under that Section where the text does not itself require
it. (Interpreting Section 214(e)(6) to mean that the telephone exchange
service and exchange access requirement be met by the supported service
would lead to anomalous results. As an illustrative example, if the
Commission were to establish a universal service program with telephone
toll service as the supported service under Section 254(c), it would be
impossible for a provider seeking designation as an ETC to provide
telephone exchange service and exchange access as the supported service
if that were needed to meet the criteria of Section 214(e)(6). See 47
U.S.C. 153(20) (defining ``exchange access'' and making clear that
``telephone exchange service,'' ``exchange access,'' and ``telephone
toll service'' are distinct categories). If such a carrier also were
not subject to the designation authority of a state commission, it
would be left with no entity--state commission or this Commission--that
could designate it as an ETC, which is at odds with the intent of
Section 214(e)(6)). Thus, a carrier providing any service or services
that constitute telephone exchange service and exchange access in the
area for which it is seeking designation as an ETC may seek designation
from the Commission where, as here, such carriers are not subject to
state ETC designation jurisdiction within the meaning of Section
214(e)(6).
226. We make clear that in considering whether a carrier is
providing telephone exchange service and exchange access for purposes
of Section 214(e)(6), we look beyond the corporate entity that itself
is seeking designation as a Lifeline Broadband ETC, and also consider
affiliates of that entity. This approach is consistent with the
Commission's interpretation of Section 214(e)(1), under which the
``requirement that an ETC offer the supported services through `its own
facilities or a combination of its own facilities and resale of another
carrier's service' would be satisfied when service is provided by any
affiliate within the holding company structure.'' If the duties of an
ETC can be satisfied through an affiliate, we find no reason why the
Commission, to find Section 214(e)(6) triggered, should have to adopt a
stricter interpretation of what entity must provide telephone exchange
service and exchange access. This is particularly true because, as
explained below, the telephone exchange service and exchange access
criteria in Section 214(e)(6) does not bear directly on the carrier's
qualifications or responsibilities as an ETC in providing supported
services. Further, Section 214(e) was codified as part of Section 214,
and prior to the 1996 Act, certain references to ``carriers'' in
Section 214 were interpreted to extend beyond just the relevant
corporate entity itself. (Thus, although the 1996 Act codified a
definition of ``affiliate'' in Section 3 of the Act distinct from the
definition of ``common carrier'' there, that does not, by implication,
undercut our interpretation of Section 214 because the 1996 ``Act and
the amendments made by [the 1996] Act shall not be construed to modify,
impair, or supersede Federal . . . law unless expressly so provided in
such Act or amendments.'' 1996 Act, 601(c). Indeed, Commission rules
implementing Section 214(a) make clear that their use of the term
``carrier'' includes affiliates within the meaning of Section 3(1) of
the Act.). This further bolsters our interpretation of Section
214(e)(6). Thus, we expect that many carriers likely already provide
some telephone exchange and exchange access services, whether through
the entity providing broadband Internet access service or an affiliate.
For example, such services
[[Page 33059]]
have included traditional telephone service and commercial mobile radio
services (CMRS), which many carriers already provide today. (We
recognize that we have not generally classified VoIP as a
telecommunications service or information service, but we nonetheless
have recognized that providers might elect to offer interconnected VoIP
as a telecommunications service. Insofar as a carrier elected to offer
VoIP on a common carrier basis, we do not see a reason based on the
record here why such service would not also be classified as telephone
exchange service and exchange access to the same extent as traditional
voice telephone service. We further note that in highlighting the
seemingly more straightforward case where VoIP is offered as a
telecommunications service, we are not prejudging the question of
whether, even if not a telecommunications service, particular VoIP
services could constitute telephone exchange service and exchange
access, which remains open regarding those scenarios, as well.
227. Furthermore, we interpret the requirement that a carrier
seeking designation under Section 214(e)(6) be ``providing'' telephone
exchange service and exchange access in a broad and flexible manner.
The Commission in other contexts has interpreted the term ``providing''
as more inclusive than the offering of the relevant service. Thus, we
conclude that it is sufficient for purposes of Section 214(e)(6) that a
carrier is making available telephone exchange service and exchange
access, whether or not it actually has customers for those services at
the time of the ETC designation.
228. In addition, in contrast to Section 214(e)(1)(A), which
requires ETCs to provide supported services at least in part over their
own facilities, there is no analogous ``facilities'' requirement in
Section 214(e)(6) as to any non-supported services relied on by the
carrier for its provision of telephone exchange service and exchange
access to trigger that Section. Thus, we interpret Section 214(e)(6) as
enabling a carrier to satisfy the ``telephone exchange service and
exchange access'' criteria through pure resale of services that satisfy
those definitions.
229. The text of Section 214(e)(6) also does not require the
carrier to be providing telephone exchange service and exchange access
for any particular period of time before or after the Commission
invokes its Section 214(e)(6) designation authority. So we further
conclude that the relevant requirement of Section 214(e)(6) can be met
by a service or services introduced by the carrier in order to meet the
Section 214(e)(6) criteria. We note as well that carriers subject to
dominant carrier regulation likely otherwise already are providing
services that constitute telephone exchange service and exchange access
(and, indeed, likely already are designated as ETCs in relevant
respects), so any carriers needing to introduce a new service to
satisfy the telephone exchange service and exchange access criteria of
Section 214(e)(6) are likely to be nondominant. Thus, they generally
are subject to comparatively fewer, if any, ex ante constraints on the
rates and terms of their offerings.
230. `Telephone exchange service and exchange access' forbearance.
Even though we anticipate that many providers readily will be able to
meet the requirement of ``providing telephone exchange service and
exchange access'' and can seek Commission ETC designation as LBPs under
Section 214(e)(6), some providers could be deterred from seeking such
designation--and thereby participating in the Lifeline broadband
program--because of uncertainty whether they satisfy that criteria.
Although we also have authority to designate ETCs under Section
214(e)(3)--which does not require providers to be providing telephone
exchange service and exchange access--that authority does not enable us
to designate additional LBPs in an area where a carrier already present
will provide the supported Lifeline broadband Internet access service.
Thus, while an important backstop, that Section 214(e)(3) designation
authority does not necessarily enable us to have the type of
competitive environment for Lifeline broadband Internet access service
that we conclude will most effectively advance our statutory
objectives.
231. As a result, pursuant to our authority under Section 10 of the
Act, we grant certain forbearance from applying the provision of
Section 214(e)(6) requiring carriers to be providing telephone exchange
service and exchange access. In particular, we forbear from applying
that provision to carriers seeking designation from the Commission as
an LBP that do not otherwise provide a service or services already
classified by the Commission as telephone exchange service and exchange
access. We conclude that doing so will help maximize the potential for
the widest possible participation by broadband Internet access service
providers in a manner targeted to our policy objectives in this
proceeding.
232. In pertinent part, Section 10 directs the Commission to
``forbear from applying . . . any provision of [the Act] to a
telecommunications carrier or . . . class of telecommunications
carriers . . ., in any or some of its or their geographic markets, if
the Commission determines that'' three criteria are met. Namely, such
forbearance is authorized if ``the Commission determines that--(1)
enforcement of such regulation or provision is not necessary to ensure
that the charges, practices, classifications, or regulations by, for,
or in connection with that telecommunications carrier or
telecommunications service are just and reasonable and are not unjustly
or unreasonably discriminatory; (2) enforcement of such regulation or
provision is not necessary for the protection of consumers; and (3)
forbearance from applying such provision or regulation is consistent
with the public interest.'' The basic forbearance framework is
discussed in greater detail below.
233. We find that our forbearance from applying the requirement
that carriers be ``providing telephone exchange service and exchange
access'' in the Section 214(e)(6) designation process is a reasonable
exercise of our Section 10 authority for several reasons. First,
although not unambiguous, the practical impact of that provision in
Section 214(e)(6) persuades us that it imposes an obligation on
carriers--namely, carriers must provide telephone exchange service and
exchange access in order to obtain an ETC designation from the
Commission under that Section. The Commission in the past has
recognized that Congress intended Section 10 to sweep broadly, (Cf.
Petition For Declaratory Ruling To Clarify 47 U.S.C. 572 In The Context
of Transactions Between Competitive Local Exchange Carriers and Cable
Operators; Conditional Petition For Forbearance From Section 652 of the
Communications Act For Transactions Between Competitive Local Exchange
Carriers and Cable Operators, Memorandum Opinion and Order, 27 FCC Rcd
11532, 11543, para. 22 (2012) (Section 652 Forbearance Order)
(interpreting the use of ``any'' in referring to regulations and
provisions of the Act that the Commission can forbear from applying to
telecommunications carriers or telecommunications services as revealing
Congress' broad intent that the forbearance authority). Although the
focus in that proceeding was on whether a provision in Title VI could
be subject to forbearance under Section 10, the reasoning likewise
persuades us more generally to adopt a broad--though not unlimited--
view of the Commission's
[[Page 33060]]
forbearance under Section 10), and has looked to the real-world
consequences of a provision to inform its interpretation and
application of Section 10 to that provision. We do the same here, and
conclude under Section 10 that the Commission has authority to forbear
from applying that provision to carriers that want an LBP designation
from the Commission but do not provide a service or services that
clearly meet the ``telephone exchange service and exchange access''
requirement and thus can designate those carriers as LBPs if the
remaining Section 214(e)(6) criteria are met. (We explained above why a
carrier seeking designation specifically as an LBP is not subject to
the jurisdiction of a state commission for purposes of Section
214(e)(6), and beyond the requirement of providing ``telephone exchange
service and exchange access'' from which we forbear here, the carrier
still must ``meet[] the requirements of'' Section 214(e)(1) and be
designated as an ETC ``for a service area designated by the Commission
consistent with applicable Federal and State law,'' so long as the
designation is in the public interest).
234. Second, we conclude that this grant of forbearance readily
satisfies the Section 10(a)(1)-(3) criteria. In particular, we find
that applying that provision is not necessary to ensure just,
reasonable, and not unjustly or unreasonably discriminatory rates and
practices under Section 10(a)(1) nor to protect consumers under Section
10(a)(2). The text of Section 214(e)(6) does not illuminate the purpose
served by the requirement that carriers seeking ETC designations from
the Commission under Section 214(e)(6) be providing telephone exchange
service and exchange access. As explained above, because supported
services need not be telephone exchange service or exchange access
service (let alone both), there is no inherent nexus between a
carrier's provision of telephone exchange service and exchange access
and its ability to satisfy the requirements for ETC designation under
Section 214(e)(1). Nor is there any inherent nexus between a carrier's
provision of those services and the public interest analysis under
Section 214(e)(6). Thus, nothing in the text of Section 214(e)(6)
demonstrates that the ``providing telephone exchange service and
exchange access'' provision is intended to, or is likely to, have any
practical effect on carriers' rates and practices for purposes of
Section 10(a)(1) or on the protection of consumers under Section
10(a)(2).
235. Nor do we find in the context specifically at issue here that
our application of the ``providing telephone exchange service and
exchange access'' provision is necessary under the Section 10(a)(1) and
(a)(2) criteria. To the contrary, we conclude that forbearance from
applying that provision better advances the objective of just and
reasonable rates and practices and protection of consumers, by
promoting competition among Lifeline broadband Internet access service
providers. If we continued to apply that provision in full, given the
concerns expressed about the deterrent effect of the historical ETC
designation process in other respects, we expect that carriers
otherwise willing to participate in the Lifeline broadband program will
be deterred at least incrementally from seeking an LBP designation from
the Commission under Section 214(e)(6) if they do not otherwise provide
a service or services already clearly classified by the Commission as
telephone exchange service and exchange access. (Section 10 permits the
Commission to evaluate forbearance assuming arguendo that it applies).
Providers might be less willing to undertake the effort of seeking an
LBP designation in the face of uncertainty regarding whether they meet
the threshold obligation of providing telephone exchange service and
exchange access.
236. Granting forbearance from the specified provision of Section
214(e)(6) for carriers seeking designation as an LBP that do not
otherwise provide a service or services already classified by the
Commission as telephone exchange service and exchange access eliminates
uncertainty that otherwise risk deterring those providers'
participation. This is likely to promote competition for Lifeline
broadband Internet access services, and the Commission previously has
found that competition helps ensure just and reasonable rates.
Moreover, we anticipate that the availability of competing LBPs will
better protect consumers receiving the benefits of that increased
competition. We further observe that our evaluation of what is
necessary to ensure just and reasonable and not unjustly or
unreasonably discriminatory rates under Section 10(a)(1) and what is
necessary to protect consumers under Section 10(a)(2) is guided by the
Commission's responsibilities under Section 254 of the Act and Section
706 of the 1996 Act. As we explain elsewhere, we are modernizing our
Lifeline efforts to support broadband Internet access service given its
importance to consumers, and ensuring the widest possible participation
in the Lifeline broadband program is an important element of those
reforms.
237. These same considerations likewise persuade us that
forbearance is in the public interest under Section 10(a)(3). Indeed,
Section 10(b) directs the Commission, as part of the Section 10(a)(3)
analysis, to consider whether forbearance will promote competitive
market conditions and, if ``forbearance will promote competition among
providers of telecommunications services, that determination may be the
basis for a Commission finding that forbearance is in the public
interest.'' As explained above, we anticipate that the specified
forbearance from applying the ``providing telephone exchange service
and exchange access'' provision in Section 214(e)(6) will promote
competition among providers of Lifeline broadband Internet access
services. Based on that, coupled with the forgoing analysis, we
conclude that forbearance is in the public interest under Section
10(a)(3).
c. Lifeline Broadband Provider ETC Designation Process
238. We next turn from the Commission's authority to designate
Lifeline Broadband Provider ETCs and take steps to modernize the
process by which carriers can obtain such designation. We take
additional steps to decrease the burdens of obtaining and maintaining
Lifeline Broadband Provider ETC status, while still protecting
consumers. We therefore take action to streamline the process by which
we will designate Lifeline Broadband Providers to encourage broader
participation in the program.
(i) Streamlined Lifeline Broadband Provider Designation Process
239. In this Section, we create a streamlined ETC designation
process for carriers seeking designation as Lifeline Broadband
Providers, solely for the purpose of receiving Lifeline support for
broadband service. We expect that this streamlined process will
facilitate market entry and allow new competition to enter the Lifeline
market while continuing to protect consumers and the Fund. (Contrary to
some commenters' claims, we expect that increasing provider
participation will increase competition among providers in the Lifeline
program and incentivize providers to offer better quality services).
240. A broadband provider's petition for ETC designation as a
Lifeline Broadband Provider for the limited purpose of receiving
Lifeline support for BIAS will be subject to expedited review and will
be deemed granted within 60 days of the submission of a completed
filing provided that the
[[Page 33061]]
provider meets certain criteria demonstrating that it is financially
stable and experienced in providing broadband services, unless the
Commission notifies the applicant that the grant will not be
automatically effective. First, as of the date of the filing, the
carrier must serve at least 1,000 non-Lifeline customers with voice
telephone and/or BIAS service. Second, the carrier must have offered
broadband services to the public for at least the 2 years preceding the
filing, without interruption. For purposes of this rule, emergency
service outages do not constitute an ``interruption'' because the
purpose of this rule is to gauge whether a provider has maintained a
substantial presence in the broadband services market. Service quality
concerns, if any, will be duly considered by the Commission in
evaluating the provider's petition but do not determine whether the
provider qualifies the above-described streamlined treatment. We
delegate to the Bureau the responsibility for implementing this process
and the authority to clarify how carriers may establish that they meet
the criteria set out in this framework.
241. Additionally, as part of our efforts to encourage broadband
service on Tribal lands, we will apply the above-described expedited
review process to petitions for designation as a Lifeline Broadband
Provider submitted by Tribally-owned and -controlled facilities-based
providers that provide service on Tribal lands, regardless of whether
they meet the above-discussed prior service or existing customer
criteria. To qualify as a Tribally-owned and -controlled, facilities-
based provider, the provider must be greater than 50 percent owned and
actually controlled by one or more federally-recognized Tribal
Nation(s) or Tribal consortia.
242. Once a provider has obtained designation as an LBP, that
provider may expand their LBP service area designation by submitting a
letter to the Commission identifying the service areas in which the LBP
plans to offer Lifeline-supported service and a certification that
there has been no material change to the information submitted in the
petition for which the LBP received designation as an LBP. Such a
request shall be deemed granted five business days after it is
submitted to the Commission, unless the Bureau notifies the applicant
that the grant will not be automatically effective. We therefore amend
Section 54.202 of the Commission's rules to reflect these changes. We
expect that this process will empower LBPs to rapidly expand Lifeline-
supported broadband service offerings to new areas, while retaining the
Commission's ability to protect consumers and the Fund.
243. We want to facilitate a robust competitive marketplace for
Lifeline customers and therefore encourage providers, including
nontraditional providers, that do not meet the streamlined criteria to
submit a request to be an LBP. All such petitions will be reviewed
thoroughly and not automatically deemed granted after a set time, but
the Bureau shall act on such petitions within six months of the
submission of a completed filing. Accordingly, we update Section 54.202
of the Commission's rules to reflect these targeted changes to the
Commission's designation process for the purpose of designating
Lifeline Broadband Provider ETCs. (Providers seeking designation as an
LBP that are not facilities-based are not required to obtain Commission
approval of a compliance plan prior to receiving designation as an LBP.
We find that the designation process for LBPs is distinct from the
process set out for Lifeline-only ETCs in the 2012 Lifeline Reform
Order, and LBP designation criteria are sufficient to prevent waste,
fraud, and abuse in the program, so a separate obligation to obtain
approval for a compliance plan is not necessary). Our revisions to
Section 54.202 of the Commission's rules, as discussed in this Section,
will become effective upon announcement of OMB approval under the PRA,
at which point providers may begin submitting petitions for ETC
designation as a Lifeline Broadband Provider.
244. A provider seeking designation as an LBP should submit the
following information in its filing. First, the provider must certify
that it will comply with the service requirements applicable to the
support that it receives, including any applicable minimum service
standards. Second, the provider must demonstrate its ability to remain
functional in emergency situations, including a demonstration that it
has a reasonable amount of back-up power to ensure functionality
without an external power source, is able to reroute traffic around
damaged facilities, and is capable of managing traffic spikes resulting
from emergency situations. Third, the provider must demonstrate that it
will satisfy applicable consumer protection and service quality
standards. (A commitment by wireless applicants to comply with the
Cellular Telecommunications and Internet Association's Consumer Code
for Wireless Service will satisfy this requirement). Fourth, the
carrier must demonstrate that it is financially and technically capable
of providing the Lifeline service, which could be satisfied in a number
of ways, including showing compliance with subpart E of part 54 of the
Commission's rules.
245. Section 54.202(a) of the Commission's rules currently requires
common carriers seeking designation as an ETC solely for the purpose of
receiving Lifeline support to ``submit information describing the terms
and conditions of any voice telephony service plans offered to Lifeline
subscribers.'' We now revise this rule to also require such ETCs,
including LBPs, to submit information describing the terms and
conditions of any broadband Internet access service plans offered to
Lifeline subscribers at the time of designation. Such information
should include details regarding the speeds offered, data usage
allotments, additional charges for particular uses, if any, and rates
for each such plan. While this information should be filed at the time
of LBP designation, providers need not refile or notify the Commission
of changes to their plans so long as they certify compliance with the
applicable minimum standards. Providing this snapshot of Lifeline
offerings will allow the Commission to better understand and evaluate
whether prospective ETCs, including prospective LBPs, are seeking to
launch service offerings that comply with the Lifeline program's rules.
246. We find that this process for prospective LBPs protects the
integrity of the Lifeline program and guards against waste, fraud, and
abuse, while facilitating market entry and encouraging competition. All
LBPs, regardless of whether they qualify for streamlined treatment,
must meet the requirements for designation as a Lifeline-only ETC
established in Section 214(e) of the Act and Sec. Sec. 54.201 and
54.202 of the Commission's rules. (We note that the requirement to
submit a five-year plan describing proposed improvements or upgrades to
the provider's network does not apply to providers seeking designation
solely for the purpose of receiving support through the Lifeline
program, including LBPs). The Commission will examine all petitions for
designation as an LBP to ensure that petitioning carriers meet the
requirements in the Act and the Commission's implementing rules. The
Commission will use its authority to deny petitions, remove petitions
from streamlined treatment, or both, if the circumstances so require.
Additionally, LBPs must comply with the Lifeline program rules and will
be subject to auditing and enforcement in accordance with the
Commission's rules.
[[Page 33062]]
247. We are also mindful of the many existing Lifeline providers
designated by states and the FCC that intend to offer standalone
broadband to Lifeline consumers. We note that, as set out below,
Lifeline-only ETCs may receive Lifeline support for BIAS provided to
eligible low-income consumers but existing ETCs also retain the option
to avail themselves of forbearance from the obligation to offer
broadband. Lifeline-only ETCs will thus be able to receive support for
BIAS through Lifeline without re-submitting a petition for ETC
designation as a Lifeline Broadband Provider.
d. Preserving a State Role in Lifeline
248. Nothing in this Order preempts states' ability to develop and
manage their own state Lifeline programs. Nor does the creation of the
LBP designation disturb states' current processes for designating non-
LBP ETCs, where they retain jurisdiction. In these ways, states will
continue to play an important role in the administration of state
Lifeline programs and traditional non-LBP ETC designations, where state
law grants them authority to do so.
249. We recognize that a number of states have put in place state
Lifeline programs that provide state-funded subsidies to low-income
consumers for communications services. We applaud these state programs
for devoting resources designed to help close the affordability gap for
communications services. Nothing in this Order preempts states' ability
to create or administer such state-based Lifeline programs that include
state funding for Lifeline support to support voice service, BIAS, or
both. States that do maintain state Lifeline programs may therefore
enact their own rules for the administration of those programs. For
example, a state may deem consumers eligible to participate in that
state's Lifeline program based on the consumer's participation in
another state-based program, even if that eligibility program does not
make the consumer eligible for federal Lifeline support.
250. Additionally, we make clear that states retain the ability to
designate Lifeline-only ETCs and ETCs that are not Lifeline-only, to
the extent that state law grants them authority to do so. For the
reasons discussed above, our preemption in this Order with regard to
LBPs does not impact states' authority to designate other categories of
ETCs, even if those ETCs receive designations from states that are
broad enough to encompass Lifeline support for BIAS. As a result, to
the extent a provider wants to receive state Lifeline funds in addition
to federal Lifeline support, the provider must seek approval and (to
the extent required by a state for receipt of state funding) ETC
designation from the relevant state commission and comply with any
applicable state laws. To the extent a provider only seeks the federal
LBP, however, providers are not required to seek approval or
designation from the states.
251. We anticipate that preserving the roles that states have
traditionally played in Lifeline will benefit low-income consumers by
enabling states to offer their own support for services provided to
low-income households and encouraging competition from non-LBP ETCs
that have traditionally been designated by states.
2. Lifeline Obligations for Eligible Telecommunications Carriers
252. In this Section, we turn to the issue of what ETC service
obligations are appropriate and best suited for a successful modernized
Lifeline program. We consider the substantive obligations placed on
ETCs through the Act and the Commission's rules, and streamline certain
of those obligations through targeted forbearance and other regulatory
tools to encourage broader participation and more robust competition
among providers in the Lifeline market. We find that such actions will
further modernize the Lifeline program to encourage market entry by
providers offering BIAS while still protecting consumers and ensuring
the services Lifeline subscribers receive are of high quality.
253. In the 2015 Lifeline FNPRM, we sought comment on ways to
increase competition and encourage market entry in the Lifeline
program. Within that inquiry, we sought comment on whether certain
requirements related to ETC designation were ``overly burdensome'' and
could be simplified or eliminated while protecting consumers and the
Fund. We also inquired about permitting ETCs to opt-out of providing
Lifeline supported service in certain circumstances, and we sought
comment on the many other requirements new Lifeline providers must meet
to participate in the program. We asked whether there are specific
state or federal regulatory barriers that make it difficult for
carriers to enter or remain in the Lifeline program, and how the
Commission can address them.
a. Forbearance Standard
254. Section 10 of the Act provides that the Commission ``shall''
forbear from applying any regulation or provision of the Communications
Act to telecommunications carriers or telecommunications services if
the Commission determines that: (1) Enforcement of such regulation or
provision is not necessary to ensure that the charges, practices,
classifications, or regulations by, for, or in connection with that
telecommunications carrier or telecommunications service are just and
reasonable and are not unjustly or unreasonably discriminatory; (2)
enforcement of such regulation or provision is not necessary for the
protection of consumers; and (3) forbearance from applying such
provision or regulation is consistent with the public interest.
255. In evaluating whether a rule is ``necessary'' under the first
two prongs of the three-part Section 10 forbearance test, the
Commission considers whether a current need exists for a rule. In
particular, the current need analysis assists in interpreting the word
``necessary'' in Sections 10(a)(1) and 10(a)(2). For those portions of
our forbearance analysis that require us to assess whether a rule is
necessary, the D.C. Circuit concluded that ``it is reasonable to
construe `necessary' as referring to the existence of a strong
connection between what the agency has done by way of regulation and
what the agency permissibly sought to achieve with the disputed
regulation.'' Section 10(a)(3) requires the Commission to consider
whether forbearance is consistent with the public interest, an inquiry
that also may include other considerations. Forbearance is warranted
under Section 10(a) only if all three of the forbearance criteria are
satisfied. The Commission has found that nothing in the language of
Section 10 precludes the Commission from proceeding on a basis other
than the competitiveness of a market where warranted.
256. Also relevant to our analysis, Section 706 of the 1996 Act
``explicitly directs the FCC to `utiliz[e]' forbearance to `encourage
the deployment on a reasonable and timely basis of advanced
telecommunications capability to all Americans.' '' In its most recent
Broadband Progress Report, the Commission found ``that advanced
telecommunications capability is not being deployed to all Americans in
a reasonable and timely fashion.'' This finding, in turn, triggers a
duty under Section 706 for the Commission to ``take immediate action to
accelerate deployment of such capability by removing barriers to
infrastructure investment and by promoting competition in the
telecommunications market.'' Within the statutory framework that
Congress established, the Commission ``possesses significant, albeit
not unfettered, authority and
[[Page 33063]]
discretion to settle on the best regulatory or deregulatory approach to
broadband.''
257. Section 10(b) directs the Commission to consider whether
forbearance will promote competitive market conditions as part of its
public interest analysis under Section 10(a)(3). However, we recognize
that Section 10 does not compel us to treat a competitive analysis as
determinative when we reasonably find, based on the record, that other
considerations are more relevant to our statutory analysis. We make our
decision as to each category of ETC requirements as they relate to the
provision of Lifeline-supported services based on the information we
deem most relevant to the analysis prescribed from Section 10(a).
b. Forbearance Regarding the Lifeline Broadband Service Obligation
258. In streamlining Lifeline ETC obligations for participating
carriers, we first turn to the broadband service obligations of various
categories of ETCs. In this Section we use targeted forbearance from
certain ETC obligations to encourage market entry and competition while
continuing to protect consumers and the Fund.
259. For Lifeline-only ETCs, we establish that such ETCs are
eligible to receive Lifeline support for broadband service but may
choose to only offer a supported voice service instead. For other ETCs
that are not Lifeline-only, we establish that such ETCs are also
eligible to receive Lifeline support for broadband service and forbear
from requiring such ETCs to offer Lifeline-supported broadband service,
except in areas where the ETC commercially offers broadband pursuant to
its high-cost obligations. For Lifeline Broadband Providers, we
establish a streamlined relinquishment process that gives providers
greater certainty while retaining the Commission's ability to protect
consumers.
(i) Lifeline-Only ETCs
260. For Lifeline-only ETCs, we interpret such carriers' ETC
designations as broad enough to make them eligible for Lifeline
broadband support. Lifeline-only ETCs may therefore receive support for
Lifeline-discounted BIAS provided to eligible low-income subscribers
within their designated service areas without receiving federal
designation as Lifeline Broadband Providers. However, we forbear from
Lifeline-only ETCs' obligations to offer BIAS to permit such ETCs to
solely offer voice if they so choose. (We note that when the Lifeline
discount no longer applies to voice-only offerings, a Lifeline-only ETC
that does not choose to offer Lifeline-discounted fixed voice service
will have the option of seeking relinquishment of its statutory
obligation to offer supported voice telephony service under Section
214(e)(4) of the Act and continuing to receive Lifeline support for its
BIAS offerings. Alternatively, a Lifeline-only ETC may obtain an ETC
designation as a Lifeline Broadband Provider, seek relinquishment of
its existing Lifeline-only ETC designation, and operate solely as a
federally-designated LBP). To the extent that Lifeline-only ETCs elect
to also offer BIAS to eligible subscribers, they may receive
reimbursement for such service through the Lifeline program.
261. Eligibility to receive Lifeline broadband support. We find
that Lifeline-only ETC designations, such as exist today, are broad
enough to make Lifeline-only ETCs eligible to receive reimbursement
through the Lifeline program for offering discounted BIAS to eligible
low-income subscribers. This is consistent with past Commission
precedent. For example, when the Commission simplified the core
functionalities of the supported services for universal service support
mechanisms in the overarching concept of ``voice telephony service,''
it clarified that such a change was intended to promote technological
neutrality and that many of the previously-enumerated supported
services would still be offered as a function of voice telephony.
Accordingly, providers that obtained ETC designation for the limited
purpose of receiving Lifeline support, even after the USF/ICC
Transformation Order, received designation for a number of different
functionalities encompassed within ``voice telephony.'' Now, as we add
BIAS as a supported service in this Order, we find that Lifeline-only
ETCs' designations, which were broad enough to encompass the nine
supported services before the USF/ICC Transformation Order and broad
enough to encompass multiple functionalities within the concept of
``voice telephony,'' are similarly broad enough to include the addition
of a supported service for purposes of offering Lifeline-supported
BIAS.
262. Obligation to offer all supported services. Based on our
consideration of the relevant statutory framework and the record before
us, we now conclude that it is in the public interest to forbear,
pursuant to Section 10 of the Act, from requiring existing Lifeline-
only ETCs to offer Lifeline-supported broadband Internet access
service. As a result of this forbearance, existing Lifeline-only ETCs
will be able to continue to offer voice service, consistent with the
Lifeline program's rules. At the same time, Lifeline-only ETCs remain
eligible for Lifeline broadband support to the extent that they elect
to provide that service. ETCs that seek to avail themselves of this
forbearance and therefore offer only voice service must file a
notification with the Commission that they are availing themselves of
this relief.
263. To facilitate program administration, we require any ETC that
plans to not offer a Lifeline-discounted BIAS offering under the
reforms in this Order to notify the Commission that it is availing
itself of the forbearance relief granted in this Section. Such
notification must be filed by the later of 60 days after announcement
of OMB approval of this Order under the PRA or 30 days after receiving
designation as a Lifeline-only ETC. This notification requirement, as a
condition to our grant of forbearance, is a critical element of our
actions today. To ensure that the Commission is well informed about the
state of the marketplace of Lifeline providers offering voice-only
versus Lifeline BIAS, we must impose this notification requirement
prior to ETCs availing themselves of this forbearance.
264. We find that enforcement of this requirement is not necessary
to ensure that the charges, practices, classifications, or regulations
by, for, or in connection with this class of telecommunications carrier
and telecommunications service are just and reasonable and are not
unjustly or unreasonably discriminatory. We also find that enforcement
of this requirement is not necessary for the protection of consumers
and that the above-described forbearance is consistent with the public
interest.
265. We find that it is not necessary to impose an obligation to
offer Lifeline-supported BIAS within the Lifeline marketplace for
Lifeline-only ETCs and that they should be permitted, but not required,
to offer Lifeline-discounted BIAS when such ETCs give notice to the
Commission of their intent to limit offerings to voice service. This
forbearance will not alter the Commission's authority over Lifeline-
only ETCs' charges, practices, and classifications in providing
Lifeline-supported voice service, nor will it allow such ETCs to
unjustly or unreasonably discriminate in their voice offerings.
Lifeline-only ETCs will continue to comply with all existing
regulations to protect consumers and will, in many instances, face more
competition within the marketplace from other Lifeline providers
offering
[[Page 33064]]
either or both voice and Lifeline-supported BIAS service offerings.
Existing regulations and competition will also help keep Lifeline-only
ETCs' rates and other terms and conditions of service just and
reasonable and not unjustly or unreasonably discriminatory. As a
result, the obligation to offer BIAS for Lifeline-only ETCs is not
necessary to protect consumers. The Commission has recognized that
granting forbearance relief in light of other still-applicable
regulatory requirements is reasonable and appropriate while both
retaining necessary safeguards and reducing costs.
266. Preserving this option for Lifeline-only ETCs is also
consistent with concerns raised by commenters. In response to the
Commission's inquiries about including broadband as a supported service
in the Lifeline program and setting minimum service levels for voice
and broadband services, several providers responded that the Commission
should preserve providers' ability to offer a voice-only service
option. For example, Sprint argued that ``the provision of Lifeline
broadband service should be voluntary, not mandatory,'' noting that
some existing Lifeline carriers may not be able to offer broadband
service because of the nature of their existing resale agreements with
their underlying providers.
267. We also agree with commenters that permitting Lifeline-only
ETCs offering voice service to participate in Lifeline even if they do
not offer BIAS will give eligible low-income customers more Lifeline-
discounted options in the market. (This decision is consistent with the
Commission's decision to transition Lifeline funding away from voice
service as a standalone option. While Lifeline-only ETCs are able to
receive reimbursement for voice service they may choose to focus on
that service, but when voice service as a standalone option is no
longer eligible for reimbursement through the Lifeline program those
ETCs must choose another supported service to offer or seek to
relinquish their ETC status under Section 214(e)(4)). We expect that
permitting Lifeline-only ETCs offering voice service to participate in
Lifeline even if they do not offer BIAS will give eligible low-income
customers more Lifeline-discounted options in the market. Accordingly,
this forbearance, while not preventing existing or future Lifeline-only
ETCs from offering discounted BIAS, will permit those ETCs to continue
to offer a discounted standalone voice option if they so choose, which
will preserve additional options for consumers in addition to new BIAS
options that we expect will enter the Lifeline market. This increase in
competition will, in turn, lead to higher quality service offerings at
lower prices for eligible low-income subscribers.
268. We find this forbearance is not necessary for the protection
of consumers so long as Lifeline-only ETCs are required to notify the
Commission of their intent to avail themselves of this forbearance. To
ensure that the Commission stays informed of the Lifeline marketplace
and knows the number of providers offering voice versus Lifeline-
supported BIAS, it is critical that the Commission is able to stay
informed of the Lifeline market and consumer options. This notification
requirement will give the Commission critical information in
understanding and evaluating the Lifeline market to determine how well
its regulatory structure provides incentives for participation in the
Lifeline program.
269. Forbearance from this requirement is consistent with the
public interest. Forbearance from the requirement that a Lifeline-only
ETC offer Lifeline-supported BIAS allows service providers to continue
serving the existing voice market while permitting those ETCs (to the
extent they have not elected to avail themselves of forbearance) to
also easily introduce new Lifeline-discounted BIAS offerings. (As
discussed above, this forbearance also provides ETCs with greater
options to continue serving eligible low-income consumers during the
transition to the point where voice will no longer be supported by the
Lifeline program). These additional options will promote competitive
market conditions by providing low-income consumers with more Lifeline-
discounted offerings and a diversity of providers to serve them. With
more providers in the Lifeline marketplace, this will open the Lifeline
program to innovative new service offerings that will better meet the
needs of eligible subscribers and further modernize the program by
encouraging BIAS offerings for Lifeline subscribers.
270. As an additional benefit, this forbearance will serve the
Lifeline program's purpose of ensuring affordable access to high-
quality telecommunications services to eligible low-income households.
As detailed above, we recognize that many consumers rely on voice
service as their primary form of communication. This forbearance will
allow service providers that do not intend to offer BIAS, to continue
to serving consumers this supported service. As noted by commenters,
certain providers might be required to exit the market given their
limitations in offering BIAS. Those providers that avail themselves of
this forbearance will have the option of continuing to offer voice
service.
(ii) ETCs That Are Not Lifeline-Only
271. For ETCs offering voice service that are not Lifeline-only, we
interpret such carriers' ETC designations as broad enough to make them
eligible for Lifeline broadband support. Such ETCs may therefore
receive support for Lifeline-discounted BIAS provided to eligible low-
income subscribers within their designated service areas. However, we
forbear from these ETCs' obligation to offer Lifeline BIAS to permit
such ETCs to solely offer voice in the Lifeline program, provided such
ETCs file a notification with the Commission that they are availing
themselves of this relief. This forbearance, however, does not apply to
areas where ETCs commercially offer broadband that meets the Lifeline
minimum service standards pursuant to their high-cost USF obligations,
in which case they remain subject to the Lifeline broadband service
obligation. (As detailed above, we also require carriers receiving
high-cost support to provide Lifeline-supported broadband services in
areas where they receive high-cost support and are already offering
broadband services at the minimum service levels). To the extent that
these ETCs elect to also offer BIAS to eligible subscribers even when
not required, they may receive reimbursement for such service through
the Lifeline program.
272. Eligibility to receive Lifeline broadband support. We find
that the ETC designations of ETCs that are not Lifeline-only are broad
enough to make those ETCs eligible to receive reimbursement through the
Lifeline program for offering discounted BIAS to eligible low-income
subscribers. As discussed above, this is consistent with past
Commission precedent of including multiple functionalities even as it
updated the definition of services supported by universal service
support mechanisms.
273. Obligation to offer all supported services. Based on our
consideration of the relevant statutory framework and the record before
us, we now conclude that it is in the public interest to forbear,
pursuant to Section 10 of the Act, from requiring existing ETCs that
are not Lifeline-only to offer Lifeline-supported BIAS in areas where
they do not commercially offer such service or do not receive high-cost
support. Accordingly, ETCs that are not Lifeline-only will be able to
continue to offer voice-only service, consistent with the
[[Page 33065]]
Lifeline program's rules. At the same time, such ETCs remain eligible
for Lifeline broadband support to the extent that they elect to provide
that service. This forbearance does not extend to areas where existing
ETCs commercially offer BIAS pursuant to their high-cost USF
obligations and such service meets the Lifeline program's minimum
service requirements, in which case ETCs remain subject to the Lifeline
broadband service obligation. Those ETCs receiving frozen high-cost
support--whether incumbent providers or competitive ETCs--are not
required to offer Lifeline-supported broadband services in their
designated service areas. Given that the frozen support program is an
interim program that is due to be eliminated, we agree with commenters
that frozen support recipients should not be required to implement new
processes to offer BIAS as a supported service.
274. In the areas subject to forbearance, existing ETCs remain
eligible for Lifeline broadband support to the extent that they elect
to provide that service. As a result of this forbearance, ETCs that are
not Lifeline-only will only be required to offer Lifeline BIAS in those
areas where the ETC commercially offers qualifying BIAS pursuant to the
ETC's obligations under the high-cost rules. ETCs that seek to avail
themselves of this forbearance must file a notification with the FCC
that they are availing themselves of this relief and to identify those
areas by Census block where they intend to avail themselves of this
forbearance relief.
275. To facilitate program administration, we require any ETC that
plans to not offer a Lifeline-discounted BIAS offering under the
reforms in this Order to notify the Commission that it is availing
itself of the forbearance relief granted in this Section and to
identify those areas by Census block where they intend to avail
themselves of this forbearance relief. Such notification must be filed
by the later of 60 days after announcement of OMB approval of this
Order under the PRA or 30 days after receiving designation as an ETC.
This notification requirement, as a condition to our grant of
forbearance, is a critical element of this grant of forbearance. To
ensure that the Commission is well informed about the state of the
marketplace of Lifeline providers offering voice-only service versus
Lifeline BIAS, we must impose this notification requirement prior to
ETCs availing themselves of this forbearance.
276. We find that enforcement of this requirement is not necessary
to ensure that the charges, practices, classifications, or regulations
by, for, or in connection with this class of telecommunications carrier
and telecommunications service are just and reasonable and are not
unjustly or unreasonably discriminatory. We also find that enforcement
of this requirement is not necessary for the protection of consumers
and that the above-described forbearance is consistent with the public
interest.
277. With the exception discussed below, we find that this
forbearance meets the criteria set out in Section 10(a) of the Act for
much the same reasons that led us to grant forbearance to Lifeline-only
ETCs in the prior Section. This forbearance will not alter the
Commission's authority over the charges and practices of ETCs, nor will
it allow ETCs to unjustly or unreasonably discriminate in offering
their Lifeline-supported services. The Commission has recognized that
granting forbearance relief in light of other still-applicable
regulatory requirements is reasonable and appropriate while both
retaining necessary safeguards and reducing costs.
278. Forbearance from this requirement is consistent with the
public interest. We find that such forbearance will create a level
playing field as between Lifeline-only ETCs and ETCs that are not
Lifeline-only where the latter are not commercially offering qualifying
broadband service pursuant to their high-cost obligations. Similar to
our analysis with Lifeline-only ETCs, this forbearance serves the
public interest because it permits ETCs to focus their Lifeline
offerings on the voice market where they are not able to offer
qualifying Lifeline-discounted BIAS, while still permitting such ETCs
to easily introduce Lifeline-discounted BIAS offerings if they so
choose. We find that this forbearance will give eligible low-income
consumers more Lifeline-discounted choices in the market, and will lead
to higher quality service offerings at lower prices.
279. Areas where ETCs commercially offers BIAS pursuant to high-
cost obligations. As discussed above, after the enactment of the 1996
Act, incumbent LECs' designated service areas as ETCs were defined as
wherever they offered voice telephony service in a state, including
Census blocks where the incumbent LECs do not currently receive high-
cost support or are not obligated to offer broadband at 10/1 Mbps or
greater speeds pursuant to Commission rules. Some ETCs are concerned
that program changes would require them to provide Lifeline-supported
broadband in Census blocks where the provider is not obligated to offer
broadband services or does not receive high-cost support. To address
these concerns, we first clarify, here and in Section III.A,
Modernizing Lifeline to Support Broadband, that ETCs receiving high-
cost support are not required to offer Lifeline-supported BIAS in
Census blocks where the ETC does not commercially offer a broadband
service that meets the minimum service standards of the Lifeline
program pursuant to its high-cost obligations. Accordingly, we retain
the obligation to offer the Lifeline discount on all qualifying
services in areas where an ETC receives high-cost support, has deployed
a network capable of delivering service that meets the Lifeline
program's minimum service standards, and commercially offers such
service pursuant to its high-cost obligations. (This obligation does
not apply to ETCs receiving frozen high-cost support).
280. In areas where the provider receives high-cost support but has
not yet deployed a broadband network consistent with the provider's
high-cost service obligations, the obligation to provide Lifeline-
supported BIAS begins only when the provider has deployed a high-cost
supported broadband network to that area and makes its BIAS
commercially available. (For example, we recognize that many high-cost
recipients receiving CAF Phase II support have not deployed broadband
capable networks in all of the Census blocks where they receive high-
cost support, but are required to do so pursuant to deadlines set forth
in the Commission's high-cost rules). For example, a rate-of-return
carrier must provide Lifeline-supported BIAS if it deploys a network
providing a minimum of 10/1 Mbps upon reasonable request from a
qualified low-income consumer in satisfaction of its high-cost
obligations. (In the event speeds of 10/1 Mbps are not available, such
providers are required to offer Lifeline-supported BIAS if speeds at 4
Mbps/1 or above are commercially available). Or, as another example, a
price cap carrier that accepted Connect America Phase II model-based
support, must provide Lifeline-supported BIAS in an area where that
price cap carrier has already deployed broadband facilities capable of
providing the minimum service levels set forth above and is
commercially offering service. However, an authorized rural broadband
experiment bidder is not required to provide Lifeline-supported BIAS
until it has deployed broadband-capable facilities to the location of a
qualified
[[Page 33066]]
low-income consumer in satisfaction of its high-cost deployment
obligations. We adopt these requirements to ensure that all consumers
living in high-cost areas, including low-income consumers, have the
meaningful option of subscribing to BIAS once it is commercially
available.
(iii) New Lifeline Broadband Providers
281. For providers that receive ETC designation as Lifeline
Broadband Providers, such a designation makes them eligible for
Lifeline broadband support, with the accompanying obligation to offer
Lifeline broadband service. In this Section, we establish a streamlined
LBP relinquishment process to further reduce the perceived risk of
entering the Lifeline broadband market.
282. In implementing the ETC relinquishment process for LBPs, we
establish the streamlined relinquishment procedures described below,
except for relinquishments by LBPs also receiving high-cost universal
service support. (We note that this relinquishment process will only
apply to LBPs designated under Section 214(e)(6) of the Act). We find
that a streamlined relinquishment process will encourage new providers
to enter the Lifeline market by giving them clarity as to how they may
responsibly exit that market, while fulfilling the Commission's
responsibility to protect consumers, ensure that subscribers will
continue to be served, and ensure that subscribers are given sufficient
notice. We therefore revise Section 54.205 of the Commission's rules to
create a streamlined relinquishment process for LBPs. Under this
process, an LBP's advance notice of its intent to relinquish its
designation pursuant to Section 214(e)(4) shall be deemed granted by
the Commission 60 days after the notice is filed, unless the Bureau
notifies the LBP that the relinquishment will not be automatically
effective. Consistent with Congressional directives, the Commission
will issue such a notification that the relinquishment will not be
automatically effective if an automatic grant would violate any of the
criteria listed in Section 214(e)(4).
283. We expect that a streamlined ETC relinquishment process for
LBPs will reduce the perceived risk for broadband providers to enter
the Lifeline market. This will encourage providers to offer Lifeline-
supported broadband services and increase competition, which will, in
turn, lead to greater choices among affordable, higher quality service
offerings for eligible low-income subscribers. Pursuant to the new LBP
relinquishment procedures, the Commission will notify the relevant LBP
if its relinquishment will not be automatically effective in cases
where, for example, customers may need more time to transition to a new
carrier. As a result, the Commission will still have the authority and
responsibility to at least temporarily prevent a relinquishment that
would harm consumers until an appropriate solution can be found.
284. We find that a streamlined relinquishment process for LBPs
will serve the Lifeline program's purpose of ensuring affordable access
to high-quality advanced telecommunications services to eligible low-
income households. By giving providers greater flexibility and
encouraging investment in the Lifeline market, this streamlined process
will open the Lifeline program to innovative new service offerings that
will better meet the needs of eligible subscribers and further
modernize the program by encouraging BIAS offerings for Lifeline
subscribers.
c. Forbearance Regarding the Lifeline Voice Service Obligation
285. Having described the tailored broadband service obligations of
various categories of ETCs in the previous Section, we next turn to the
Lifeline voice service obligations. As to Lifeline-only ETCs, which
historically participated specifically in order to provide Lifeline
voice service, we do not alter the preexisting voice service
obligation. Regarding existing ETCs that are not Lifeline-only, we deny
the broadest requests for unconditional forbearance from the Lifeline
voice obligation, but find it justified to grant certain conditional
forbearance designed to promote broadband policy goals while protecting
Lifeline consumers. We further make clear that entities newly
designated as ETCs specifically for Lifeline broadband purposes do not
have any Lifeline voice obligation under our interpretation of Section
214(e).
(i) Lifeline-Only ETCs
286. We decline to forbear from existing Lifeline-only ETCs'
obligations to offer Lifeline-discounted voice service. Lifeline-only
ETCs were designated as ETCs for the specific purpose of providing
Lifeline voice service. (At the time existing Lifeline-only ETCs were
designated, the only service for which they could receive support was
voice service supported by the Lifeline mechanism, including the
multiple functionalities that are encompassed within voice telephony
service). The proposals for forbearance or other relief from Lifeline
voice service obligations also have focused on ETCs that are not
Lifeline-only, as we discuss below. We thus find no basis in the record
here to conclude that existing Lifeline-only ETCs are similarly
situated to the ETCs for which we grant some relief from otherwise-
applicable Lifeline voice service obligations in the Section below. As
a result, existing Lifeline-only ETCs remain subject to Lifeline voice
service obligations unless or until they relinquish their designations
or otherwise seek--and justify--relief. Of course, consistent with the
Lifeline reforms adopted in this Order, Lifeline-only ETCs not only can
receive support for providing voice telephony to qualifying low-income
subscribers, but alternatively when they provide Lifeline broadband
Internet access service (with or without voice). Given our phase-out of
Lifeline support for voice-only service for many providers, we
recognize that such ETCs might well take steps in response, such as
relinquishing their Lifeline voice ETC designations, thereby
eliminating any obligation under Section 214(e)(1) and our implementing
rules to provide the supported Lifeline voice telephony service.
Consistent with our interpretation and implementation of Sections
214(e) and 254, however, we emphasize that ETCs have the option to seek
relinquishment of only their Lifeline voice ETC designation, leaving
them still eligible to receive Lifeline broadband support.
(ii) ETCs That Are Not Lifeline-Only
287. Conditional forbearance for existing ETCs' Lifeline voice
obligation. On several occasions, including in the 2015 Lifeline FNPRM,
the Commission has sought comment on the question of whether, or under
what circumstances, carriers that currently are designated as ETCs for
purposes of receiving both high-cost and Lifeline voice support should
get relief from Lifeline voice service obligations (referred to here
for convenience as High-Cost/Lifeline ETCs). Primarily, such requests
for relief have come from, or focused most extensively on, incumbent
LECs that obtained ETC designations following the 1996 Act. (Existing
High-Cost/Lifeline ETCs can include carriers other than price cap
carriers or incumbent LECs, and we do not find evidence or arguments in
the record here warranting a materially different analysis in the
context of competitive ETCs that are not Lifeline-only ETCs.
Consequently, our analysis below does not differentiate among such
High-Cost/Lifeline ETCs). In the 2015 USTelecom Forbearance Order, the
Commission declined to grant forbearance from such obligations on the
record there, observing among
[[Page 33067]]
other things that the record in this Lifeline rulemaking proceeding
might persuade the Commission to reach a different result. We likewise
decline to grant the broadest forbearance from Lifeline voice
obligations under the record here. In connection with the reforms
otherwise being adopted, however, we are persuaded to grant forbearance
from Lifeline voice service obligations targeted to areas where certain
conditions are met.
288. Although the Commission stated in the 2015 USTelecom
Forbearance Order that the record in this Lifeline rulemaking
proceeding might persuade the Commission to reach a different result
regarding forbearance from Lifeline voice service obligations, the
record here does not convince us to grant the broadest requests for
forbearance. In particular, we find persuasive here the Commission's
reasoning in the 2015 USTelecom Forbearance Order regarding the
possibility of broadly forbearing from Lifeline voice service
obligations for High-Cost/Lifeline ETCs. (The 2015 USTelecom
Forbearance Order also involved requests for other forbearance from ETC
designations and obligations beyond the scope of this Lifeline
rulemaking proceeding. We thus focus here on the analysis in the 2015
USTelecom Forbearance Order insofar as it was relevant to the
evaluation of possible forbearance from ETCs' Lifeline service
obligations).
289. With respect to the Section 10(a)(2) consumer protection
inquiry, the Commission, informed by the consumer protection goals in
Section 214(e)(4), found insufficient evidence to persuade it that the
Lifeline voice service obligation for High-Cost/Lifeline ETCs was
unnecessary to protect consumers. As a threshold matter, the Commission
was not persuaded that the geographic areas subject to potential
forbearance were subject to the sort of marketplace conditions that
would give it comfort with a less detailed analysis of the sort
previously used when granting certain relief from high-cost service
obligations in the Dec. 2014 CAF Order. Nor was the Commission
persuaded that other consumer protection interests, such as broadband
policy interests, ``would be controlling or even instructive in the
Commission's analysis.'' As a result, the Commission concluded that it
needed to consider detailed evidence of the ability of consumers to be
served in the absence of the relevant ETC service obligation--evidence
that it found lacking on the record there.
290. In this proceeding, we likewise find it necessary to evaluate
forbearance based on detailed marketplace evidence as to forbearance
from Lifeline voice service obligations other than the conditional
forbearance we grant below. For one, we cannot take sufficient comfort
in the marketplace conditions to justify evaluating unconditional
forbearance from Lifeline voice service obligations via the less
detailed analysis used in the Dec. 2014 CAF Order. As to the geographic
areas not within the scope of the high-cost voice forbearance in the
Dec. 2014 CAF Order, we reach that conclusion, like we did in the 2015
USTelecom Forbearance Order, because these areas are not low-cost or
served by an unsubsidized provider. As to the geographic areas that
were subject to high-cost voice forbearance in the Dec. 2014 CAF Order,
we conclude that a different approach is warranted for low-income
consumers. As the Commission explained in the 2015 USTelecom
Forbearance Order, ``[l]ow-income consumers may lack the resources to
take advantage of alternative service options from non-Lifeline
providers,'' and thus ``we find it appropriate to evaluate marketplace
conditions for low-income customers in a more focused manner, even in
areas where we might naturally expect at least some level of
competitive provision of service generally.''
291. Likewise, outside the context of the conditional forbearance
we grant below, we do not find other consumer protection interests
sufficient to counsel in favor of a less detailed marketplace analysis
in granting forbearance. Absent a condition like that imposed on the
forbearance we adopt below, we do not find a basis to expect that
forbearance from Lifeline voice service obligations necessarily will
advance our broadband policy goals. We thus reject speculative
assertions that unconditioned forbearance will promote broadband policy
sufficient to warrant forbearance in-and-of themselves or justify a
less detailed marketplace analysis to evaluate forbearance.
292. Having concluded that a detailed evaluation of the sort
described in the 2015 USTelecom Forbearance Order is needed to evaluate
unconditional forbearance from the Lifeline voice obligation for High-
Cost/Lifeline ETCs, we likewise find the record insufficient to justify
forbearance on that basis. (Given our identified need for detailed
marketplace information to evaluate possible broad, unconditional
forbearance from the Lifeline voice service obligation, we likewise
reject high-level claims that Lifeline reforms are likely to increase
competition and obviate the need for Lifeline voice service
obligations. Although we design our reforms in a manner intended to
advance that objective, particularly in the case of the Lifeline
broadband program, that does not constitute the sort of detailed market
place evidence we have concluded is needed). In particular, the
Commission found the evidence insufficient to grant forbearance from
Lifeline voice obligations (among other ETC obligations) in the 2015
USTelecom Forbearance Order. Although the Commission observed that
additional evidence adduced in the record here might warrant a
different conclusion, the record does not reveal any additional
marketplace evidence that would warrant a grant of forbearance under
such a detailed marketplace analysis. Nor does the record include
evidence regarding particular bright-line triggers or thresholds
regarding numbers or types of providers that the Commission might rely
on to grant forbearance where that number and type of provider is
present.
293. Our conclusions regarding unconditional forbearance from
Lifeline voice obligations in this proceeding under Section 10(a)(1)
likewise are in accord with the Commission's Section 10(a)(1) analysis
in the 2015 USTelecom Forbearance Order. Particularly against the
backdrop of our conclusions above that a detailed marketplace
evaluation is needed to assess the effects of unconditional forbearance
from Lifeline voice obligations, we agree that neither the limited
evidence regarding the marketplace conditions nor the regulatory
protections cited in granting certain high-cost voice forbearance in
the Dec. 2014 CAF Order would be sufficient to justify forbearance
under Section 10(a)(1) here. Indeed, as the Commission emphasized in
the 2015 USTelecom Forbearance Order, ``in all census blocks, low-
income consumers could be at particular risk if there are gaps in
coverage within the area where the price cap carrier previously offered
Lifeline service.'' We thus likewise find that unconditional
forbearance from Lifeline voice service obligations is not warranted
for High-Cost/Lifeline ETCs under Section 10(a)(1).
294. We likewise find on the record here that unconditional
forbearance from the Lifeline voice obligation for High-Cost/Lifeline
ETCs would not be in the public interest under Section 10(a)(3). In
large part, this conclusion flows from the same considerations
underlying our findings above that Sections 10(a)(2) and 10(a)(1) are
not satisfied as to such forbearance. Further, insofar as commenters
premise arguments for forbearance on the costs of complying with
Lifeline rules, we
[[Page 33068]]
note that we streamline those requirements in various ways here (in
addition to certain conditional forbearance from Lifeline voice service
obligations that we do grant below). We also find applicable here the
Commission's analysis rejecting forbearance from, among other things,
Lifeline voice service obligations under Section 10(a)(3) in the 2015
USTelecom Forbearance Order. We note in particular, as explained above,
that we are unpersuaded by speculative arguments that unconditional
forbearance will promote broadband policy goals. We thus conclude that
unconditional forbearance from the Lifeline voice service obligation
for High-Cost/Lifeline ETCs is not in the public interest under Section
10(a)(3).
295. Some commenters argue that for competitive neutrality or other
reasons, existing ETCs with broad designations should be allowed to
choose whether or not to provide Lifeline voice service, or that
participation in Lifeline should be de-linked from participation in
high-cost. We are not persuaded that such arguments are sufficient to
justify forbearance from Lifeline voice service obligations. In
particular, we are not persuaded that such concerns are sufficient to
overcome our identified need for detailed marketplace information to
evaluate unconditional forbearance from the Lifeline voice service
obligation. Further, as the Commission observed in the 2015 USTelecom
Forbearance Order, the Section 214(e)(4) relinquishment process remains
available to ETCs. Indeed, as we explain above, we interpret Section
214(e) to accommodate ETC designations specific to particular universal
service mechanisms or programs. Insofar as ETC designations can be
obtained on a mechanism- or program-specific basis, we likewise find it
reasonable to interpret Section 214(e)(4) as allowing ETC designations
to be relinquished on a mechanism- or program-specific basis. (Given
the Commission's authority to interpret the Act, our interpretation of
Section 214(e) governs all application of that provision, whether by
the Commission or by a state). Thus, a High-Cost/Lifeline ETC would,
for instance, be free to seek to relinquish just its ETC designation
for Lifeline purposes without relinquishing its designation for high-
cost purposes. We thus find no basis to depart from our conclusion
above that unconditional forbearance is not warranted on the record
here.
296. Conditional forbearance. Although we reject arguments for
broader or different forbearance from Lifeline voice service
obligations under the theories described above, we do find the Section
10(a) criteria met to grant conditional forbearance from the Lifeline
voice obligation under a different theory for existing ETCs with
designations enabling receipt of both high-cost support and Lifeline
voice support. (By its terms, Section 214(e)(1), in pertinent part,
imposes service obligations on telecommunications carriers--namely,
ETCs. See generally 47 U.S.C. 214(e)(1). Failure to meet any applicable
service obligations subjects carriers to potential enforcement by the
Commission. See, e.g., 47 U.S.C. 208, 503. Thus, we conclude that the
Section 214(e)(1) service obligations represent provisions of the Act
that the FCC can forbear from applying to a telecommunications carrier
or class of telecommunications carriers where it finds the Section
10(a) criteria met, as we do in various respects in this Order, and as
we have done in the past. We thus reject arguments suggesting that the
Commission cannot grant ETCs relief from those obligations. We also
note that an additional consequence of such forbearance is that states
are precluded from applying the forborne-from provisions. 47 U.S.C.
160(e)). In particular, for such ETCs we grant forbearance from the
obligation to offer and advertise Lifeline voice service where the
following conditions are met: (a) 51% of Lifeline subscribers in a
county are obtaining BIAS; (b) there are at least 3 other providers of
Lifeline BIAS that each serve at least 5% of the Lifeline broadband
subscribers in that county; and (c) the ETC does not actually receive
federal high-cost universal service support. Notably, this condition
allows us to reach a different conclusion than we do above regarding
the impact of forbearance on our broadband policy goals. Because we
conclude that this condition is likely to result in forbearance that
promotes our broadband policy goals, our decision is resolved based on
higher-level weighing and balancing of facts and policy considerations,
rather than following a detailed marketplace evaluation as described in
the 2015 USTelecom Forbearance Order and in our analysis of
unconditional forbearance above. This forbearance from the obligation
to offer Lifeline voice service under Section 214(e)(1)(A) and our
implementing rules also does not encompass the High-Cost/Lifeline ETC's
existing Lifeline voice service subscribers served at the time the
condition is met, further ensuring that consumers are adequately
protected.
297. We conclude that such conditional forbearance is, on net, in
the public interest under Section 10(a)(3) because it strikes the right
balance between creating additional incentives for providers to promote
the deployment and availability of broadband networks and services
while adequately protecting the interests of low-income voice service
users. In particular, it is clear from the record that a number of
carriers that historically have provided Lifeline voice telephony
service--particularly incumbent LECs--no longer wish to do so, at least
not to the full extent they did so in the past. When existing High-
Cost/Lifeline ETCs were designated, the designations broadly
encompassed both high-cost and Lifeline voice mechanisms by default,
consistent with the Commission's policy intent at the time--which we
now depart from in certain respects, as described in this Order--and
without the type of more nuanced designations that are feasible under
our current interpretation and implementation of Sections 214(e) and
254. These ETCs also commonly provide both voice telephony service and
BIAS (among other services), (Indeed, the provision of broadband
Internet access service now is a public interest obligation associated
with the receipt of high-cost universal service support), and it is our
predictive judgment that providing relief from Lifeline voice service
requirements based on an area reaching a defined level of Lifeline
broadband subscribership and competition will give these providers
strengthened incentives to take steps to promote subscribership,
whether for their own broadband Internet access service offerings in
particular or for broadband Internet access service offerings more
generally.
298. Creating additional incentives for providers to promote
broadband subscribership advances Section 254's goals of access to, and
affordability of, advanced telecommunications services. The increased
demand for, and usage of, broadband Internet access service that will
be fostered by the broadband providers' efforts also will further
Section 706 of the 1996 Act. (The Commission, for example, conducts its
Section 706(b) inquiry regarding deployment and availability of
advanced telecommunications capability under Section 706 by considering
factors such as such as price, quality, and adoption by consumers, as
well as physical network). We also are persuaded that forbearance from
Lifeline voice service obligations also at least incrementally is
likely to free up service provider funds
[[Page 33069]]
for broadband investment, while conditioning such forbearance on an
area reaching a defined level of broadband penetration helps better
ensure--in a way that unconditional forbearance does not--that such
service provider funds are, in fact, used to promote broadband
deployment and subscribership.
299. We recognize that the Commission has in the past identified
the public interest benefits of promoting affordable voice service for
low-income consumers, but we expect that any effect on such consumers
from the conditional forbearance is likely to be limited, and
outweighed by the anticipated broadband policy benefits. For one, we
conclude elsewhere in this item that the need for such Lifeline-
subsidized voice service is substantially reduced, leading us to phase
out support for standalone voice service more generally. (Although we
provide a multi-year phase-out for Lifeline support for stand-alone
mobile voice generally, the potential for this Lifeline voice
forbearance to grant relief from Lifeline voice service obligations on
a more rapid timeframe is offset as to these consumers by the benefits
in promoting our broadband policy goals). Moreover, as we explain
there, we fully expect increasingly lower-priced voice service to
continue to be available even absent a Lifeline benefit for standalone
voice service, for example as part of packages or bundles of services
including broadband Internet access service, which will remain subject
to Lifeline support, and which this Lifeline voice forbearance does not
affect. We thus conclude that the conditional forbearance we grant is
unlikely to harm that set of consumers, nor, as to that group of
consumers, is conditional forbearance likely to be in any tension with
the principle in Section 254(b) to preserve and promote affordable
service.
300. At the same time, we also recognize that our policy judgment
about how best to transition the Lifeline program to become more
broadband-focused envisions a continuing role for some Lifeline voice
support, more so in the near term, but potentially even to some degree
over the longer term. Based on the record, we cannot readily quantify
the anticipated broadband policy benefits from this conditional
forbearance, nor can we readily quantify any countervailing effects of
forbearance on any low-income consumers who would prefer the Lifeline
voice service offerings that otherwise would be available under our
Lifeline rules if the Lifeline voice service obligation remained. (In
particular, although we cannot precisely quantify the anticipated
benefits of conditional forbearance in terms of broadband deployment
and availability, the record also does not enable a price
quantification of any costs of conditional forbearance. We thus weigh
these considerations in the best manner feasible given the record and
our associated policy judgment as described in the text. We note that
the context of our forbearance decision here is different from that of
a Section 10(c) petition, where the petitioner bears the burden of
proof. Rather, our forbearance decision is conducted under the general
reasoned decision making requirements of the APA. Nonetheless, we are
persuaded that the public interest, on net, counsels in favor of
forbearance for several reasons.
301. First, our conditional forbearance does not grant relief from
the Lifeline voice service obligation as to those Lifeline subscribers
that the High-Cost/Lifeline ETC serves at the time the forbearance
condition is met. Those subscribers effectively are grandfathered to
avoid possible disruption that otherwise might occur when forbearance
newly applies in the area they live. We anticipate that this, in and of
itself, is likely to protect the interests of many, if not most,
Lifeline subscribers who prefer the legacy Lifeline voice service
offerings, and whose interests we recognize in our broader Lifeline
policy decisions. At the same time, the High-Cost/Lifeline ETCs have a
discrete, well-defined remaining Lifeline voice service obligation, and
can provide such subscribers incentives to transition to new service
offerings to enable the ETCs to take full advantage of the Lifeline
voice service forbearance.
302. Second, if the Commission were to deny conditional forbearance
from Lifeline voice service obligations as to the remaining consumers--
those who are not subject to the grandfathering described above--we
expect that providers would need to retain much, if not all, of their
infrastructure used to serve Lifeline voice subscribers just to
potentially serve that narrower segment of overall Lifeline
subscribers, not knowing if or when such subscribers might seek
service. The High-Cost/Lifeline ETCs thus would continue incurring
costs that they otherwise could direct to broadband investment. (By
this we mean not only physical network infrastructure, but also other
infrastructure like that required for billing and other administrative
functions associated with providing Lifeline voice service). Insofar as
the benefit of forbearance to providers thus would be substantially
reduced, we conclude that this likewise would materially dampen--and in
some cases, entirely eliminate--what otherwise would be increased
incentives by those providers to spur greater broadband penetration.
303. Third, conditional forbearance from the Lifeline voice service
obligation for High-Cost/Lifeline ETCs does not preclude carriers from
electing to provide the supported Lifeline voice service and from
receiving universal service support for doing so. Rather, it simply
eliminates that mandatory obligation for them to do so under Section
214(e)(1) and our implementing rules. Further, as the Commission
observed in the Dec. 2014 CAF Order, additional protections come from
the service discontinuance process under Section 214(a) and the
authority under Section 214(e)(3) to require a carrier to provide the
supported service in a community or portion thereof requesting that
service if no carrier will do so. (At the same time, we do not expect
these regulatory backstops to materially diminish the incentives for
existing High-Cost/Lifeline ETCs to promote deployment and availability
of broadband Internet access in order to obtain the conditional
forbearance. The Commission has considerable discretion in how it makes
a Section 214(a) public interest finding, and as that process enables
us to guard against unreasonable levels of customer hardship, we also
recognize our interest in creating incentives for promoting broadband
policy goals. In particular, the Commission traditionally considers a
number of factors in assessing Section 214(a) discontinuance
applications, including (1) the financial impact on the common carrier
of continuing to provide the service; (2) the need for the service in
general; (3) the need for the particular facilities in question; (4)
the existence, availability, and adequacy of alternatives; and (5)
increased charges for alternative services, although this factor may be
outweighed by other considerations. As observed in the prior paragraph,
for instance, we recognize that a financial impact on the carrier of
continuing to provide service could arise from the need to retain much,
if not all, of their infrastructure used to serve Lifeline voice
subscribers to serve what might be a relatively small segment of
potential subscribers. Likewise, under Section 214(e)(3) the relevant
regulatory authorities identify the carrier or carriers are best able
to provide service to the relevant community or portion thereof, which
need not be the carrier or carriers that availed themselves of this
conditional forbearance. Insofar as our analysis is informed in part by
the Section
[[Page 33070]]
214(e)(4) relinquishment mechanism (while not formally bound by it),
these protections also give us comfort that we can guard against the
unlikely scenario where no voice service at all ultimately would be
available in a manner sufficient for purposes of the overall weighing
of policy considerations and conclusions that conditional forbearance
is not contrary to the interests of consumers and that conditional
forbearance is in the public interest in this context). Moreover, this
forbearance from the Lifeline voice service obligation does not alter
the regulatory framework established in this order for Lifeline
broadband service. ETCs providing Lifeline broadband service are likely
to have incentives to seek to attract customers to their Lifeline
broadband offerings and to maximize the utilization of their networks.
Providing attractive voice service offerings to subscribers of their
Lifeline broadband service is one way to help achieve that. Such
offerings will provide further alternatives for low-income consumers.
(Thus, although some commenters express concern about whether such
alternatives will be sufficiently affordable, we find reason to believe
that providers are likely to have incentives to make available
affordable offerings. Moreover, our forbearance decision does not rest
solely on this ground, but relies on it as part of a wider range of
considerations, including our tailoring of the scope of forbearance to
effectively grandfather an ETC's existing voice Lifeline subscribers,
as described above, which will protect many of the relevant
subscribers).
304. Fourth, we expect that the actions broadband providers take to
promote broadband penetration in an effort to gain relief from Lifeline
voice service obligations are likely to benefit low-income consumers,
as well as the public more generally. In particular, we expect that
providers seeking to trigger the conditional forbearance we grant are
likely to undertake a variety of efforts, ranging from reducing the
price and/or increasing the capabilities of a service at a given price
point for retail broadband Internet access service offerings, making
available attractive wholesale broadband Internet access service
offerings, or undertaking other efforts such as digital literacy
training or other measures to overcome barriers to broadband adoption.
As broadband Internet access service becomes ever more important for
all consumers, such efforts are likely to benefit many of the same
consumers who currently might desire the otherwise-available Lifeline
voice service offerings. In this scenario, then, the effects of
conditional forbearance on such consumers inherently are themselves
mixed, with benefits to those consumers coupled with, at most, some
potential risks for those consumers.
305. Finally, we also expect that the efforts providers undertake
to trigger the conditions necessary for Lifeline voice forbearance are
likely to promote competitive market conditions for broadband Internet
access service. As indicated above, we anticipate that by making
available this conditional forbearance, providers will have incentives
to take steps such as reducing the price and/or increasing the
capabilities of their broadband Internet access service at a given
price point to spur adoption of their own broadband Internet access
service. Facilities-based providers with a voice obligation may also
seek to offer attractive wholesale data prices, for example, so other
Lifeline providers can also increase broadband penetration. Where there
are alternative broadband Internet access service providers to the
existing ETCs, such actions are likely to promote competition. Under
Section 10(b), the Commission is directed, in making the Section
10(a)(3) public interest evaluation, to ``consider whether forbearance
from enforcing the provision or regulation will promote competitive
market conditions.'' ``If the Commission determines that such
forbearance will promote competition among providers of
telecommunications services, that determination may be the basis for a
Commission finding that forbearance is in the public interest.'' Our
finding that forbearance is likely to promote competitive market
conditions reinforces the remainder of our analysis above, which
persuades us that the conditional forbearance we adopt is in the public
interest.
306. We are unpersuaded by claims that forbearance would be
contrary to the public interest insofar as it might reduce the number
of Lifeline voice service providers and/or competition for Lifeline
voice service customers. Although competition for Lifeline service can
have benefits, that must be evaluated in the context of other policy
considerations. As we explain above, we are modernizing our Lifeline
efforts to support broadband Internet access service given its
importance to consumers and consistent with the Commission's
responsibilities under Section 254 of the Act and Section 706 of the
1996 Act. At the same time, we find an at least somewhat diminished
need for Lifeline-supported voice service where the relevant conditions
are met. Moreover, we grandfather existing Lifeline voice service
customers obtaining service at the time forbearance newly applies in a
given county, providing protection for the customers at greatest
potential risk of disruption. In this context, and for the reasons
described above, we conclude that the conditional forbearance we grant
properly weighs our various universal service objectives and our
broader broadband policy goals, and that such forbearance is in the
public interest.
307. We also reject arguments suggesting that the Act requires the
Commission to prioritize competition in the provision of Lifeline-
subsidized service over all other considerations. Although Section
214(e)(2) anticipates multiple ETCs, at least in some areas, ETC
designation deals only with the eligibility for support, and does not
actually guarantee the receipt of support--and, consequently, does not
guarantee that all ETCs will provide services discounted through the
receipt of universal service funding. We therefore conclude that in
evaluating forbearance from the Lifeline voice service obligation,
Section 214(e) does not require us to prioritize having a greater
number of providers over the other policy considerations relevant in
this context under Section 254 of the Act and Section 706 of the 1996
Act.
308. We also disagree that any diminution in competition or loss of
options for voice service from conditional forbearance from the
Lifeline voice obligation for High-Cost/Lifeline ETCs necessarily will
leave only inferior or less desirable service offerings so as to render
conditional forbearance contrary to the public interest. As we explain
above, the extent to which the loss of competition or of particular
service offerings is, in fact, likely to occur is itself speculative,
particularly against the backdrop of other Lifeline reforms adopted in
this Order. Moreover, any comparison of different service offerings
involves some trade-offs, and we are not persuaded that the examples in
the record demonstrate that a particular offering is inherently
superior for all customers. (We also find it speculative whether, or to
what extent, historical differences cited in the record are material to
our analysis here and are likely to persist in the future, given our
Lifeline reforms). We thus find no basis to depart from our Section
10(a)(3) determination above that conditional forbearance is in the
public interest.
309. Nor does our conditional forbearance from the Lifeline voice
service obligation in Section 214(e)(1) and our implementing rules
interfere with state interests in a manner that cuts
[[Page 33071]]
against forbearance. Forbearance from these requirements under federal
law does not alter regulatory obligations imposed under state law
authority, and we thus reject arguments against forbearance on those
grounds. Further, some commenters express concern that the providers
required to offer voice service subsidized by state low-income support
programs might no longer be providing federal Lifeline-supported voice
service as a result of forbearance. Rather than trying to craft federal
universal service policy to mirror the variations and nuances of state-
adopted universal service programs, however, we conclude instead that
it best serves the public interest and our statutory responsibilities
to adopt the same conditional forbearance that is available in all
areas of the nation where the conditions are met. States remain free,
consistent with Section 254(f), to adopt their own universal service
policies not inconsistent with those of the Commission, including, to
the extent that they deem it warranted, modifying their own state low-
income support programs to make funding available to a wider range of
providers or to increase state support levels.
310. The forgoing analysis also persuades us that retaining the
Lifeline voice service obligation in areas where the Lifeline broadband
subscribership and competition condition is met is not necessary for
the protection of consumers under Section 10(a)(2). For the reasons
described in the paragraphs above, we conclude that consumers as a
whole are likely to benefit more from our conditional forbearance than
from retaining the Lifeline voice service obligation. Even as to low-
income consumers who desire the Lifeline voice service offerings that
otherwise would remain available under our rules, the result of
forbearance appears to be at most mixed, and under these circumstances,
particularly as guided by policies of Section 706 of the 1996 Act, we
conclude that the Lifeline voice requirement is not necessary to
protect consumers under Section 10(a)(2) where the Lifeline broadband
subscribership and competition condition is met.
311. We also conclude that the Lifeline voice service obligation is
not necessary to ensure just, reasonable, and not unjustly or
unreasonably discriminatory rates and practices under Section 10(a)(1).
As relevant to Section 10(a)(1), commenters' arguments appear to center
on the effect of forbearance from the Lifeline voice service obligation
on rates. Thus, we focus our Section 10(a)(1) analysis here by
considering whether the conditional forbearance we grant from the
Lifeline voice service obligation for High-Cost/Lifeline ETCs would
have a negative effect on the justness and reasonableness of rates.
Because we are dealing with obligations relating to supported services
under Section 254, our interpretation of what is ``just'' and
``reasonable'' for purposes of Section 10(a)(1) is informed by Section
254. Notably, under Section 254(b)(1) and 254(i), the question of
whether rates are ``just'' and ``reasonable'' is distinct from whether
they are ``affordable.'' Given the relevant overlay of Section 254
here, in this context we therefore consider under Section 10(a)(1) only
whether the Lifeline voice service obligation is necessary to ensure
just and reasonable and not unjustly or unreasonably discriminatory
rates distinct from the question of affordability (which we fully
consider in our analysis under other prongs above). (In particular, we
consider possible effects on affordability of the services within the
definition of universal service for Lifeline purposes under our public
interest and consumer protection analyses above. We note that in the
2015 Lifeline FNPRM the Commission granted forbearance from the ILECs'
Section 251(c) resale obligation as it relates to Lifeline service,
citing in its Section 10(a)(1) analysis the fact that ``low-income
consumers will still be able to receive Lifeline-supported services
from both wireless and wireline providers.'' The fact that such a
finding could be sufficient to demonstrate that Section 10(a)(1) is
satisfied does not imply such a finding is necessary to demonstrate
that Section 10(a)(1) is satisfied in the Lifeline context,
particularly given the overlay of Section 254(b)(1) and (i) as
discussed above. Moreover, we also reject arguments that granting such
forbearance undercuts the Section 251(c) Lifeline resale forbearance
previously granted, given our analysis here that conditional
forbearance from the Lifeline voice service obligation is warranted
under the Section 10(a) criteria without any presumption of a
particular level of marketplace participation of Lifeline ETCs. For
these reasons, as well as those stated in the text, in the context of
our Section 10(a)(1) analysis here we reject arguments suggesting that
affordability is an element of the justness and reasonableness of
rates).
312. On the record here, we are not persuaded that the Lifeline
voice service obligation is necessary to ensure just and reasonable
rates or rates that are not unjustly or unreasonably discriminatory
where the conditions on forbearance are met. Some of these areas will
remain served by ETCs with high-cost voice service obligations,
requiring them to offer and advertise voice telephony service
throughout their designated service area. We find no basis in the
record here to conclude that the rates charged for voice telephony
services in these areas are likely to be unjust, unreasonable, or
unjustly or unreasonably discriminatory as relevant to our Section
10(a)(1) inquiry here if we forbear from the Lifeline voice service
obligation where the relevant conditions are met.
313. As to the remaining areas, the Commission granted forbearance
from high-cost voice service obligations only after concluding that
competition and other regulatory protections were adequate to, among
other things, ensure just and reasonable and not unjustly or
unreasonably discriminatory rates. We find no basis on the record here
to reach a different conclusion regarding forbearance from the Lifeline
voice service obligation in these areas under Section 10(a)(1), insofar
as the relevant conditions on forbearance are satisfied.
314. As an overlay to the forgoing analysis regarding voice
telephony service rates, we note that in evaluating forbearance from
applying Lifeline voice service obligations to a class of
telecommunications carriers (carriers that are ETCs for both high-cost
and legacy Lifeline voice purposes), Section 10(a)(1) speaks to the
justness and reasonableness of rates (and practices) by those
telecommunications carriers generally. Although we consider whether
forbearance from the Lifeline voice service obligation will affect the
justness and reasonableness of rates for voice telephony service, we
also consider the effect of forbearance on these ETCs' broadband
Internet access service. As described above, we anticipate that the
potential to achieve conditional forbearance will spur ETCs to take
actions that spur competition in the marketplace for broadband Internet
access service. The Commission previously has recognized that
competition helps ensure just and reasonable rates. As part of our
Section 10(a)(1) analysis, we thus include the predictive judgment
that, in the context of broadband Internet access service, forbearance
is likely to have some effect in promoting or enhancing just and
reasonable rates. Under the totality of the analysis above, we
therefore find that the Lifeline voice service obligation is not
necessary to ensure just, reasonable, and not unjustly and unreasonably
discriminatory rates and practices under Section 10(a)(1).
315. Details of the forbearance condition. We adopt a condition on
[[Page 33072]]
forbearance from the Lifeline voice service obligation for High-Cost/
Lifeline ETCs that we conclude is intended to create incentives for
those carriers to promote broadband Internet access service
subscribership and competition, targeted in this context to low-income
consumers. To this end, forbearance from the Lifeline voice service
obligation is granted where the following conditions are met: (a) 51%
of Lifeline subscribers in a county are obtaining Lifeline broadband
Internet access service; (b) there are at least 3 other providers of
Lifeline BIAS that each serve at least 5% of the Lifeline broadband
subscribers in that county; and (c) the ETC does not actually receive
federal high-cost universal service support. (Because we find
forbearance warranted where these readily-identifiable triggers are
met, we reject concerns that forbearance from the Lifeline voice
obligation would raise administrability concerns that counsel against
such relief). As explained earlier in this Section, a number of High-
Cost/Lifeline ETCs have argued that application of the Lifeline voice
obligation to them is unnecessary given other alternative voice
options, and that such regulatory relief would free up resources to
enable the advancement of broadband policy goals. The condition on
forbearance that we adopt today enables us to ensure--in a way that
those providers' proposals themselves did not--that regulatory relief
from such ETCs' Lifeline voice service obligations genuinely will
advance our broadband policy goals. We further expect that the
resulting broadband marketplace not only will advance our broadband
policies but will itself foster additional affordable options for voice
service, as well.
316. We adopt the first two elements of our forbearance condition
to advance our policy goals of creating incentives to promote broadband
Internet access service subscribership and competition, particularly
for low-income consumers, but recognize that we are engaged in a line-
drawing exercise that cannot be resolved by available data. Regarding
our subscribership criteria, we find that a requirement that a county
have at least 51 percent of Lifeline subscribers that are subscribing
to Lifeline broadband Internet access service establishes a threshold
demonstrating that a meaningful portion of Lifeline subscribers are
taking advantage of our new Lifeline broadband program. (As we explain
elsewhere, given the increasing importance of broadband Internet access
service today we are modernizing our universal service policies for
low-income subscribers to reflect that increased importance, and taking
this step to further promote broadband Internet access service
subscribership by low-income consumers helps advance those overall
goals). At the same time, we recognize that, because the Lifeline
broadband program is newly-established, setting the threshold too high
could result in diminished or delayed incentives by High-Cost/Lifeline
ETCs to encourage such subscribership and competition if the threshold
was viewed as unattainable in any reasonable timeframe. We believe the
threshold we adopt appropriately balances these considerations.
317. Our competition criteria likewise seeks to balance our goal of
promoting a meaningful level of competition for Lifeline broadband
Internet access service subscribers, with the realities that this is a
new program. (As explained earlier in this Section, we conclude that it
advances our universal service policy implementation of Section 254 of
the Act to promote competition for Lifeline broadband services). A
requirement that a county have at least 3 other providers of Lifeline
BIAS besides the High-Cost/Lifeline ETC that would avail itself of our
forbearance, with each of those other Lifeline broadband providers
serving at least 5 percent of the Lifeline broadband subscribers in the
county demonstrates some level of competition. (The Commission has
previously acknowledged that competition between even two providers
theoretically can result in meaningful competition in some
circumstances, but by adopting a materially higher threshold for the
number of competitors we avoid such questions. By requiring that each
of the other providers need only serve 5% of the Lifeline broadband
Internet access service subscribers we are persuaded that that this
threshold remains realistically attainable, while guarding against the
possibility of counting purely de minimis providers in identifying the
counties where forbearance applies. We emphasize that in this context
we seek to identify readily-administrable bright-line thresholds that
establish meaningful thresholds while balancing the need to set them at
feasibly attainable levels to ensure appropriate incentives for High-
Cost Lifeline/ETCs to pursue steps that result in regulatory relief. We
therefore caution that the particular thresholds we adopt here do not
necessarily reflect how the Commission will evaluate competition in any
other context). It also is our predictive judgment that, even though
the Lifeline broadband program is new, and some providers thus will
need to seek Lifeline broadband ETC designations before competing for
those subscribers, this threshold is likely to be realistically
attainable in many circumstances. (We note in this regard that we take
other steps in this Order to facilitate competition for Lifeline
broadband services).
318. The subscribership and competition thresholds we adopt also
have the advantage of being calculations we can make based on NLAD,
state administrator, or National Verifier data. Those data will be
readily available to the Commission, making these calculations readily
administrable. In the interim period of time before the National
Verifier is in place, we direct USAC to obtain and have systems for
regularly updating the relevant data from the NLAD or from the states
that have opted-out of the NLAD by December 1, 2016. (One of the
requirements for any state that opted-out of the NLAD was that it
ensure that the Commission and USAC would have access to records as
needed for oversight purposes). In addition, because the NLAD or
National Verifier data (as well as the state data) are, in the first
instance, used to guard against improper universal service support
disbursements, there already is a strong incentive to ensure that they
are as accurate and up-to-date as possible. We also direct USAC, in
coordination with the Bureau, to collect as part of its administrative
function the information necessary to determine whether Lifeline
consumers are receiving Lifeline-supported BIAS either on a standalone
basis or as part of a bundle so that the necessary determinations
called for can be made.
319. We further conclude that evaluating whether the condition is
met at the county level strikes a reasonable balance in this context.
Smaller geographic areas could have more widely variable numbers of
Lifeline subscribers, leading to anomalous results under our
subscribership and competition thresholds that do not accurately
capture the policies we are seeking to advance. (For example, as of the
end of 2015 USAC estimates that there were approximately 13.1 million
subscribers participating in Lifeline. Thus, on average, there are
approximately 172 Lifeline subscribers per census tract. In practice,
however, we anticipate that there is likely to be sufficient
variability census tract-to-census tract that some tracts could have
only an extremely small number of Lifeline subscribers. Use of census
tracts
[[Page 33073]]
as the geography could, in those cases, mean that the subscribership
threshold is met based on only an extremely small number of Lifeline
broadband Internet access subscribers and/or that it might be very
difficult for three additional providers to offer Lifeline service in
that tract and each have at least 5% share of Lifeline broadband
subscribers. These problems would be exacerbated by using even smaller
geographic areas for purposes of the condition). On the other hand,
larger geographies could encompass sufficiently significant areas
outside a given High-Cost/Lifeline ETC's service territory as to render
it much more difficult for that ETC to promote Lifeline broadband
subscribership and competition to a sufficient degree to qualify for
the forbearance from the Lifeline voice service obligation. (Many ILEC
study areas are far smaller than a state, for example). The less
realistically attainable the condition appears, the less the provider
will have incentives to take the broadband-promoting actions we seek to
advance in an effort to realize forbearance. Other geographies, such as
study areas or service areas, can vary considerably provider-to-
provider and we are not persuaded that using such geographic areas for
applying our condition would result in similarly-situated providers
being treated similarly. Although we have not identified any single,
ideal geographic area to rely on for purposes of our condition, we
conclude that calculations at the county level provides a reasonable
middle ground relative to larger, smaller, or even more variable
alternatives. (Counties fall within the range of geographies that the
Commission reports in the context of its broadband progress reports,
for example).
320. In a county where the first two criteria of our forbearance
condition are met, our forbearance from the Lifeline voice service
obligation is further conditioned on the High-Cost/Lifeline ETC not
actually receiving federal high-cost universal service support. Thus,
for any county where the first two criteria of our forbearance
condition are met, our conditional forbearance from the Lifeline voice
obligation only applies in those areas within the county where the
High-Cost/Lifeline ETC is not, in fact, receiving federal high-cost
universal service support. In areas where the ETC does receive federal
high-cost universal service support, the public, through the federal
universal service fund, is making an ongoing investment in the ETC's
provision of voice telephony service and in the underlying broadband-
capable network used to offer that service. In that context, we are
persuaded that there is an ongoing, overriding policy interest that
such networks and services--already being supported by universal
service support, with the associated high-cost voice service
obligation--continue to be available to advance our low-income voice
policy goals, as well. By contrast, where there is no such ongoing
federal high-cost universal service investment, we are persuaded that
the potential to advance our broadband policy goals tips the balance in
favor of forbearance for all the reasons described in this Section
above. (In the context of the overall balancing of policy interests
with respect to the conditional forbearance we grant, we thus reject
arguments that high-cost ETCs should perpetually have Lifeline voice
service obligations throughout their entire designated service areas).
321. To effectuate this condition on forbearance, we direct USAC,
one year after the effective date of this Order and annually
thereafter, to submit data to the Bureau to enable the identification
of counties where the subscribership and competition criteria are met.
After review, within thirty days of the receipt of these data from
USAC, we direct the Bureau to issue a Public Notice announcing the
counties where the subscribership and competition criteria of our
forbearance condition are met. Sixty days after the release of that
Public Notice, forbearance from the Lifeline voice service obligation
will apply to each High-Cost/Lifeline ETC in the identified counties
insofar as each ETC is not receiving high-cost support. This
forbearance will continue to apply in each county identified in the
Public Notice--subject to the high-cost support condition--until sixty
days after the next year's Public Notice. At that time, the list of
counties identified in the next year's public notice will govern,
including any additions of newly-qualifying counties or the elimination
of counties that no longer meet the criteria (and thus no longer fall
within the scope of the conditional forbearance).
(iii) Lifeline Broadband Provider ETCs
322. As explained above, we interpret Section 214(e)(1) to impose
service obligations on ETCs that mirror the service defined as
supported under Section 254(c) in the context of the specific universal
service rules, mechanisms, or programs for which they were designated.
Consequently, providers that obtain an ETC designation as an LBP
receive a designation that is specific to the Lifeline broadband
program and will only have Section 214(e)(1) service obligations for
BIAS. Thus, by default, providers do not have any Lifeline voice
service obligations as a result of their designation specifically as an
LBP.
d. Obligation To Advertise the Availability of and Charges for Lifeline
Service
323. In addition to the actions described above, we further
encourage competition and market entry in the Lifeline program by
interpreting ETCs' obligation to advertise the availability of Lifeline
services and the charges thereof for purposes of receiving
reimbursement from the Lifeline program. We find that interpreting
ETCs' obligations under Section 214(e)(1)(B) will provide clarity and
reduce burdens on providers, making it easier to enter and remain in
the Lifeline program.
324. Under Section 214(e)(1)(B) of the Act, an ETC must, among
other requirements, ``advertise the availability of such services and
the charges therefor using media of general distribution.'' The
requirement to advertise the availability and price of service on
``media of general distribution'' creates ambiguity that, added with
other obligations for ETCs, can discourage providers from seeking
designation and entering the Lifeline program. This ultimately harms
Lifeline-eligible consumers, who are left with few choices among
discounted services. However, as Free Press and New America's Open
Technology Institute have argued, we acknowledge that the requirement
to advertise the availability and price of service need not necessarily
be overly burdensome if implemented properly.
325. We therefore find that, while the requirement to advertise the
availability and price of service is a useful one, the Commission can
reduce the perhaps unintended burden of this provision on carriers by
interpreting the phrase ``media of general distribution'' to provide
further clarity. Under Section 214(e)(1)(B), ``media of general
distribution'' is any media reasonably calculated to reach the general
public or, for an LBP, the specific audience that makes up the
demographic for a particular service offering. For example, for an LBP
partnering with a school to offer Lifeline-discounted BIAS to that
school's community, ``media of general distribution'' may include
flyers, newspaper advertisements, or local television advertisements in
that school's geographic area. For a Lifeline-only broadband ETC
offering a service designed with eligible low-income subscribers with
hearing disabilities, ``media of general distribution'' may include web
advertisements reasonably
[[Page 33074]]
calculated to reach the relevant community, mail, email, or other text-
based methods of advertising.
326. Combined with our other actions in this Order to encourage
provider participation in the Lifeline program and create a robust,
competitive market for Lifeline subscribers, we expect that our
interpretation of the requirement of Section 214(e)(1)(B) will give
clarity to participating providers and remove one more potential source
of uncertainty to encourage providers to enter the program.
F. Lifeline Service Innovation
327. To fully obtain the benefits of a modernized Lifeline program,
the Commission and others must encourage and facilitate the meaningful
access and adoption to quality advanced telecommunications services
among low-income households. We recognize that in order to access and
adopt advanced telecommunications services, households will require
devices that enable them to bridge the digital divide. We therefore
require Lifeline providers that provide both supported mobile broadband
service and devices to their consumers to provide devices that are Wi-
Fi enabled, and we also require the same providers to offer the choice
to Lifeline customers of devices that are equipped with hotspot
functionality. We also require fixed broadband Lifeline providers that
provide devices to their customers to provide devices that are Wi-Fi
enabled. The requirement to provide Wi-Fi-enabled devices does not
apply to devices provided to consumers prior to the effective date of
the requirement. Additionally, we direct the Consumer and Governmental
Affairs Bureau (CGB) to develop a comprehensive plan for the Commission
to better understand the non-price barriers to digital inclusion and to
propose how the Commission can facilitate efforts to address those
barriers.
1. Bridging the ``Homework Gap'' and ``Digital Divide'' With Wi-Fi and
Hotspot-Enabled Devices
328. In recognition of the need for students, job applicants, and
others to access the Internet on multiple platforms and in various ways
we now require Lifeline providers that provide supported broadband
service and devices to their consumers to provide devices that are Wi-
Fi enabled, and to offer devices that are equipped with hotspot
functionality. We adopt these requirements because Wi-Fi enabled phones
are essential tools to help individuals stay connected, and because the
hotspot requirement will help to ensure that households without fixed
Internet access will be able to share their access to the Internet
among multiple members if so desired.
329. Discussion. In the 2015 Lifeline FNPRM the Commission
recognized the need for forward-thinking, innovative solutions to
address the ``digital divide'' and the ``homework gap,'' and emphasized
that it was vital for low-income consumers to ``have access to
broadband-capable devices that provide the ability to send and receive
critical information, as well as broadband service with sufficient
capacity, security, and reliability to be dependable in times of
need.'' In its comments TracFone emphasized a similar point, and stated
that ``Lifeline providers offering no charge Lifeline services can--and
should be--required to provide such Wi-Fi enabled devices.'' We
conclude that Lifeline providers who make devices available with or
without charge for use with a Lifeline-supported fixed or mobile
broadband service must ensure that all such devices are Wi-Fi enabled.
(This requirement does not apply to devices provided to consumers prior
to the date that the new requirement goes into effect.) Lifeline
providers who make devices available with or without charge for use
with a Lifeline-supported mobile broadband service must also offer
devices that are capable of being used as a hotspot. (We note that
while we decline to support devices as discussed supra in para. 105,
these requirements are only conditions for receiving support if the
Lifeline provider chooses to provide devices for the purpose of
extending the connectivity supported by Lifeline. Lifeline providers
retain the flexibility to decide whether to provide devices in general
and if so, what amount to charge, if any, for a device). By
conditioning support for Lifeline services in this way, we seek to
increase the value of the supported connection so that Lifeline
consumers can regularly and reliably access the Internet.
330. As explained in more detail in the paragraphs that follow,
this condition on support under the Lifeline broadband mechanism for
providers that make devices available to Lifeline subscribers promotes
Lifeline subscribers' access to advanced services and the affordability
of those services. Importantly, the condition guards against the risk
that the Lifeline subscribers and their households would be hindered in
their ability to avail themselves of options for using the Internet
that are less expensive than purchasing additional usage or additional
services as could be necessitated if Lifeline providers only provided
devices that lack the capabilities required under this condition.
Adopting this condition on the Lifeline broadband support mechanism
advances the objectives in Section 254(b) and (i) of the Act, as well
as our responsibilities under Section 706 of the 1996 Act. The
Commission has invoked Section 254(b) of the Act and Section 706 of the
1996 Act to place conditions on the receipt of universal service
support in the past, and courts likewise have affirmed conditions on
the receipt of universal service support in other ways. Greater
availability of devices with the capabilities we require under our
condition also provides greater incentives for the public to fund
advanced services to schools and libraries, including those in low-
income areas, given that a larger proportion of the students or patrons
can avail themselves of the opportunities made available, thereby
advancing additional objectives of Section 254 of the Act and Section
706 of the 1996 Act. We discuss the specific elements of our condition
on Lifeline broadband funding in greater detail below.
331. Wi-Fi Enabled. Wi-Fi enabled devices help many of the most
vulnerable members of society stay connected. Many public buildings,
such as schools and libraries, offer public Wi-Fi access and a Lifeline
consumer with a Wi-Fi enabled device will be able to take advantage of
public Wi-Fi networks and look for jobs, check email, or make a
doctor's appointment, all without using any mobile data. This ensures
consistent Internet access even when a Lifeline consumer is away from
home, and it allows the consumer to save money and avoid going over any
data caps, and it also helps to bridge the homework gap, as students
with Wi-Fi enabled devices can utilize public Internet networks to
complete their assignment. As we noted in the 2015 Lifeline FNPRM, in
some communities students must go to local restaurants to use Wi-Fi to
study. While this situation is far from ideal, it highlights the vital
importance of Wi-Fi enabled devices as a complement to a consumer's
primary broadband service, because without these devices many students
would be unable to access the Internet outside of the classroom at all.
Additionally, a ``substantial majority'' of American consumers already
own Wi-Fi enabled smartphones, as 88 percent of new phone purchases,
and 77 percent of total mobile phones, are Wi-Fi enabled smartphones.
Furthermore, Wi-Fi enabled routers and modems for use with fixed
broadband service also increase the value of the connection by
[[Page 33075]]
allowing simultaneous use of multiple devices of varying types.
332. Hotspot Functionality. Next, we adopt a phased-in requirement
that recognizes the importance of devices with hotspot functionality to
help connect households to the Internet. Many of the most economically
vulnerable members of society do not have fixed Internet access, and
rely solely on mobile devices. A recent report indicates that 7 percent
of Americans are ``smartphone dependent,'' meaning that a smartphone
provides their only access to the Internet. In households without fixed
broadband, using a smartphone or other device as a mobile hotspot can
help to partially alleviate this limitation and permit others in that
household to access the Internet. The Commission previously stated that
tethering can provide mobile broadband consumers ``access to the same
applications and functionalities as consumers served through fixed
connections.'' A typical American household has 2.3 smartphones, along
with additional devices capable of accessing the Internet. In a
household with Wi-Fi enabled devices and no fixed Internet connection,
a tethered connection can help to ensure Internet access for multiple
family members. A student can do research for a homework assignment at
the same time her parents send emails or apply for jobs. This assists
in bridging the homework gap for those students, helping make them
competitive academically and better preparing them for the challenges
of the 21st Century. A hotspot enabled device also helps bridge the
digital divide, and efficiently maximizes the value of a single mobile
broadband connection. Devices with hotspot functionality are also
becoming increasingly ubiquitous, and in order for a consumer to
utilize the benefits of mobile broadband, the consumer should have to
the choice of a device that provides access to hotspot functionality.
Because devices that are equipped with hotspot functionality are
valuable tools to keep individuals and families connected to the
Internet, we conclude that Lifeline providers who provide devices to
their consumers should include devices with this capability among other
offerings. (We clarify that this does not require Lifeline providers
offering broadband service to necessarily provide a device.
Furthermore, this requirement does not prevent a subscriber using a
device not provided by the Lifeline provider of the supported service.
Rather, to the extent the Lifeline provider, its affiliate(s), or
business partner make devices available to the Lifeline subscriber,
such devices must be Wi-Fi-enabled, and hotspot-enabled devices must be
offered if the Lifeline provider is to receive Lifeline support). In
addition, because of the importance of tethering to bridging the
``digital divide,'' providers may not impose an additional cost on
tethering service for tethering that does not exceed the relevant
minimum service standard for mobile broadband data usage allowance. (As
an example, if the applicable minimum service standard for mobile
broadband data usage allowance is 2 GB, a provider may not impose a
tethering-specific fee or surcharge for tethering if the 2 GB data
usage allowance has not been reached. Providers may charge consumers
who choose to purchase data above the minimum data usage allowance).
333. To ensure that the market can adjust and reflect the evolution
of available devices while also ensuring that consumers have affordable
choices, we adopt a phase in transition for this requirement. Beginning
in December 1, 2016, we require that providers of broadband Lifeline
service that make devices available include at least one device that
has hotspot capability. Building on that, fifteen percent of the
devices a provider makes available from December 1, 2017 to November
30, 2018 shall be hotspot enabled. Twenty percent of the devices a
provider makes available from December 1, 2018 to November 30, 2019,
shall be hotspot enabled. Twenty-five percent of the devices a provider
makes available from December 1, 2019 to November 30, 2020 shall be
hotspot enabled. Thirty-five percent of the devices a provider makes
available from December 1, 2020 to November 30, 2021 shall be hotspot
enabled. Forty-five percent of the devices a provider makes available
from December 1, 2021 to November 30, 2022 shall be hotspot enabled.
Fifty-five percent of the devices a provider makes available from
December 1, 2022 to November 30, 2023 shall be hotspot enabled. Sixty-
five percent of the devices a provider makes available from December 1,
2023 to November 30, 2024 shall be hotspot enabled. Seventy-five
percent of the devices a provider makes available beginning December 1,
2024 onward shall be hotspot enabled. We believe that this approach
ensures that consumers have robust choices--both with and without
hotspot functionality. Accordingly, we amend Section 54.422(b) of our
rules to require carriers to certify their compliance with these
requirements on our Form 481.
2. Importance of Digital Inclusion
334. In this Section, we direct the Consumer and Governmental
Affairs Bureau (CGB) to develop a comprehensive plan for the Commission
to better understand the non-price barriers to digital inclusion and to
propose how the Commission can facilitate efforts to address those
barriers. This plan should address promoting digital inclusion
generally and also as it particularly relates to the new Lifeline
program established in this Order. CGB should specifically work with
other bureaus and offices, as well as USAC, to ensure all Lifeline
stakeholders' views are incorporated into this effort. We direct CGB to
submit this plan to the Commission within six months of the effective
date of the order. Through this effort, we initiate an ongoing campaign
to build the Commission's digital literacy capacity and to keep us
apprised and abreast of the state of digital inclusion across the
country.
335. Lowering non-price barriers to digital inclusion is an
important component of increasing the availability of broadband service
for low-income consumers. As explained above, the key purpose of our
actions in this order is to increase the affordability of broadband
service, which remains the chief impediment to broadband adoption among
low-income consumers. We nonetheless recognize, and concur with, the
findings of other governmental and private researchers that there are
multiple barriers to digital inclusion among low-income consumers.
(Digital inclusion includes but reaches beyond broadband adoption and
affordability). Notably, lack of digital literacy and perceived
relevance are significant non-price barriers. All of these barriers are
interrelated. Recent studies confirm that consumers may consider
broadband service to be relevant if other barriers, such as digital
literacy and price are overcome. The fact that a consumer may not be
able to afford broadband service may also reduce the relevance of
broadband service to that consumer. Many low-income consumers that are
online may not be able to take advantage of all that the Internet has
to offer. By one estimate, approximately 36 million Americans don't use
the Internet at all and approximately 70 million Americans have low
digital skills. Based on the foregoing, we believe that low-cost
broadband coupled with strategic, effective digital inclusion efforts
will significantly impact the lives of millions of consumers across the
Nation, particularly those with lower incomes and in key demographic
groups, such as
[[Page 33076]]
seniors, veterans, persons with disabilities, rural communities, and
those living on Tribal lands, many of which may also have an increased
need for access to educational, public health and/or public safety
services. Accordingly, we find that the public interest would be served
by building upon earlier efforts by the Commission and others to study
and monitor the impact of digital inclusion efforts.
336. We recognize the important role consumer groups, community and
philanthropic organizations, local government, and industry
stakeholders play in assisting consumers in overcoming the non-price
barriers to digital inclusion. Therefore, CGB's plan should include
proposals for engagement of these groups to explore strategies for
promoting increased broadband adoption as well as increased digital
literacy of low-income and other consumers. In its plan, CGB should
explore how to connect efforts to increase the availability of
affordable service and equipment, digital literacy training, and
relevance programming to make digital inclusion a reality in light of
the modernized regulatory framework.
337. In addition, we encourage Lifeline providers to work with
schools, libraries, community centers and other organizations such as
food banks and senior citizen centers that serve low-income consumers
to increase broadband adoption and address non-price barriers to
adoption. Providers should make available contact information for
Lifeline subscribers as part of their outreach. CGB's plans should
further this objective. Broadband can be a critical tool for seniors to
realize many economic and health gains as well as increased
socialization, but seniors lag behind other demographic groups in terms
of adoption and digital inclusion. Education and awareness programs
targeting seniors can be effective in overcoming these barriers and
increasing broadband adoption among low-income seniors.
338. CGB's plan should propose how it will convene stakeholders,
including both Lifeline and non-Lifeline broadband providers, community
and philanthropic organizations, local governments, and anchor
institutions to explore how digital inclusion efforts can be tailored
to local conditions by trusted community-based partners to maximize
their effect. Digital inclusion organizations have found that the most
successful training is provided through a trusted, community-based
partner that provides the social support necessary for increasing
broadband access. Moreover, local social and demographic conditions may
make one solution work in one place while another approach is more
appropriate elsewhere. Based on their experience, many digital
inclusion organizations have moved from classes to one-on-one training
to improve outcomes. One-on-one training can be the most effective in
part because it helps lower the barrier of perceived relevance; each
consumer learns how the Internet can assist them accomplish tasks of
particular importance to them. CGB's plan should address how digital
inclusion organizations can share their experience in tailoring digital
inclusion efforts to local conditions.
339. In addition, CGB's plan should address information and studies
available from digital inclusion experts regarding best practices for
increasing the digital skills of those already online and how those
best practices can be spread throughout the digital inclusion
community. Digital literacy efforts can increase the digital inclusion
of those who already have access to the Internet to be fully
``digitally ready.'' Schools, libraries, and community organizations
across the country have already begun developing digital learning
curriculums that have enabled low-income populations to more
meaningfully engage with all the Internet has to offer. Some of the
same community-based, grass-roots approaches to increasing digital
inclusion for those who do not have access may also be useful in
closing the digital readiness gap among those that already have access
to broadband. As with programs promoting digital inclusion generally, a
``one-size-fits all'' solution to increasing digital skills may not be
the most efficient or effective approach. CGB's plan should propose how
to facilitate communication among these organizations regarding how to
tailor digital inclusion efforts to deepen the value of broadband to
those already online.
3. Lifeline Service Stability
340. To further incentivize investment in high-qualify Lifeline
service offerings, we implement Lifeline benefit port freezes--of 12
months for data services and 60 days for voice services--that will give
providers greater certainty when planning new or updated Lifeline
offerings. Providers may not seek or receive reimbursement through the
Lifeline program for service provided to a subscriber who used the
Lifeline benefit to enroll in a qualifying Lifeline-supported BIAS
offering with another Lifeline provider within the previous 12 months.
Providers also may not seek or receive reimbursement through the
Lifeline program for service provided to a subscriber who used the
Lifeline benefit to enroll in a qualifying Lifeline-supported voice
telephony service offering with another Lifeline provider within the
previous 60 days. These port freeze rules for both BIAS and voice
service will be subject to certain conditions to ensure Lifeline
consumers are sufficiently protected.
341. Twelve-month benefit port freeze for Lifeline-supported
broadband service. To facilitate market entry for Lifeline-supported
BIAS offerings, provide additional consumer benefits, and encourage
competition, we now establish that providers may not seek or receive
reimbursement through the Lifeline program for service provided to a
subscriber who used the Lifeline benefit to enroll in a qualifying
Lifeline-supported BIAS offering with another Lifeline provider within
the previous 12 months, except as explained below. (For the purposes of
this Section, the use of the term ``transfer'' is meant to include any
mechanism to move a subscriber from one carrier to another, and the 12-
month period will be measured from the subscriber's service initiation
date. As a function of the 12-month port freeze, USAC will determine
the best method and practices to handle carrier de-enrollments to
prevent improper practices by carriers to circumvent the port freeze.)
We find that allowing broadband providers the security of a longer term
relationship with subscribers will incentivize greater up-front
investments from providers. Those investments in broadband-capable
devices and broadband services should improve the quality of new offers
for subscribers and further spur competition among providers to offer
more innovative services. While we acknowledge that this rule will
decrease Lifeline providers' incentive to compete for customers that
have recently signed up with another Lifeline provider, we find that
Lifeline-eligible consumers will nonetheless benefit more from a
Lifeline market in which a benefit port freeze gives providers stronger
incentive to vigorously compete for eligible customers through better
broadband service offerings and outreach.
342. Except in circumstances described below, providers may not
seek or receive reimbursement through the Lifeline program for service
provided to a subscriber who used the Lifeline benefit to enroll with
another Lifeline provider for qualifying Lifeline-supported BIAS
service within the previous 12 months. For a subscriber to continue
receiving the Lifeline benefit after the subscriber has received
Lifeline-supported service from a provider for 12 months, the
subscriber
[[Page 33077]]
must be recertified as eligible, at which point the subscriber may
choose to receive Lifeline-supported service from the same Lifeline
provider month-to-month, being recertified every 12 months. If,
however, the subscriber switches to a different Lifeline provider after
the initial 12-month period, a new initial 12-month period will begin
with the new Lifeline provider. (If the subscriber opts to continue
receiving service from her current Lifeline provider at the end of the
initial 12-month period, that provider may not temporarily
``terminate'' the subscriber's service for purposes of obtaining a
second 12-month port freeze immediately following the first.
Additionally, as part of the transfer of the subscriber's benefit, the
new Lifeline provider will follow the same subscriber enrollment rules
for a new subscriber, such as verifying eligibility and beginning a new
12-month recertification cycle). Lifeline disbursements will be made by
USAC to the Lifeline provider each month, as in the current program,
and we expect this eligibility modification to encourage Lifeline
providers to offer more robust services in light of the additional
customer certainty this rule change provides.
343. A provider that enrolls Lifeline-eligible subscribers cannot
materially change the initial terms or conditions of that service
offering without the consent of the subscriber until the end of the 12
months, except to increase the offering's speeds or usage allowances.
Changes that lower the quality or speed of service, lower the
offering's usage allowance, or increase the service's price are
presumptively material changes to the terms or conditions of service,
even if such changes are made in response to an amendment to the
Commission's rules or a change to the Lifeline program's minimum
service standards. If a subscriber cancels service or is de-enrolled
for non-usage, the Lifeline provider cannot continue to receive
reimbursement for that subscriber, nor can the subscriber re-enroll in
the program with another provider until the end of the initial 12-month
period. Where permitted by the terms and conditions of the service
offering, a Lifeline subscriber at any time may move their Lifeline
benefit to a different qualifying Lifeline service offered by the same
provider, whether broadband, voice, or a bundled offering so long as
the service is eligible for support by the Lifeline program. However,
if the subscriber switches to another plan offered by the Lifeline
provider that offers Lifeline qualifying voice telephony service but
not Lifeline qualifying BIAS, the subscriber's 12-month port freeze
will end immediately and the subscriber will instead be subject to a
60-day benefit port freeze.
344. Sixty-day benefit port freeze for Lifeline-supported voice
telephony service. A Lifeline provider also may not seek or receive
reimbursement through the Lifeline program for service provided to a
subscriber who used the Lifeline benefit to enroll in a qualifying
Lifeline-supported voice telephony service offering with another
Lifeline provider within the previous 60 days, except in circumstances
explained below. (For the purposes of the 60-day port freeze, the
period will begin to run from the subscriber's service initiation
date). We find that, for the reasons described above, a benefit port
freeze will encourage provider investment and high-quality service
offerings in voice telephony service as well as BIAS. However, since
the service and device costs associated with standalone voice telephony
service are generally lower than costs for comparable broadband
offerings, the benefit port freeze for Lifeline-supported offerings
that do not meet the program's minimum service standards for BIAS need
not be a full 12 months. Instead, we find that the existing 60-day
period administered by USAC is sufficient to encourage investment and
quality offerings for voice services, and we accordingly codify that
period in our rules.
345. Exceptions to the BIAS and voice telephony Lifeline benefit
port freezes. In certain circumstances, however, an eligible low-income
subscriber may transfer their Lifeline benefit to another provider
prior to completion of the 12-month period. A subscriber may transfer
their Lifeline benefit to another provider prior to completion of the
12-month period if:
The subscriber moves their residential address;
the provider ceases operations or otherwise fails to
provide service;
the provider has imposed late fees for non-payment related
to the supported service(s) greater than or equal to the monthly end-
user charge for service; or
the provider is found to be in violation of the
Commission's rules during the benefit year and the subscriber is
impacted by such violation.
346. In any of the above circumstances, Lifeline subscribers may
cancel service and receive a new Lifeline-supported service with
another provider until the end of the original 12-month period. In
these circumstances, the subscriber is not required to re-verify
eligibility until the end of the original 12-month period. In such
cases, we direct USAC to implement a process for facilitating the
necessary sharing of information between the Lifeline providers so the
subscriber's benefit can be transferred to the new provider in
accordance with Commission rules. We also direct USAC to make necessary
modifications to the NLAD for enforcing these rules and to incorporate
such functionality into the National Verifier. We also require states
that have opted-out of the NLAD, in coordination with USAC, to update
their systems and processes to implement this rule. We insert Section
54.411 of our rules to establish when and under what circumstances a
subscriber may transfer his or her Lifeline benefit to a new provider.
Our addition of Section 54.411 of the Commission's rules, as discussed
in this Section, will become effective 60 days after announcement in
the Federal Register of OMB approval of the subject information
collection requirements or December 1, 2016, whichever is later.
G. Managing Program Finances
347. In the 2015 Lifeline FNPRM, we sought comment on establishing
a budget for the Lifeline program, and determining an appropriate
budget amount. While many commenters supported instituting a budget,
some worried that a budget would lead to eligible consumers being
denied Lifeline support or being placed on waiting lists. Still others
argued that sufficient data to set a budget for the program is not
available and the Commission should decline to adopt a budget at this
time. We conclude that a budget mechanism, implemented as described
below, will ensure the financial stability of the Lifeline program and
guarantee access to all eligible consumers, and we revise Section
54.423 the rules. Given the significant changes we adopt today, we find
it prudent to apply this budget to the Lifeline program at this time
rather than wait until after implementation of the changes. In so
doing, we must balance the need to ensure that the Lifeline program
continues to reduce the contribution burden on the nation's ratepayers,
will continue to support service to eligible consumers, and will
provide information to the Commission as it monitors the Lifeline
program's growth following such significant programmatic changes.
348. Initial Budget Amount. We adopt an initial annual budget of
$2.25 billion based on our projections of how the program will be
updated once BIAS is a supported service. This budget will apply for
the calendar year beginning January 1, 2017. We arrive at this level
[[Page 33078]]
by considering current participation rates, possible growth of the
program as we seek to raise awareness of its benefits, and the
safeguards already in place to reduce waste, fraud, and abuse.
349. Currently, approximately 13.1 million households are enrolled
in Lifeline, and USAC estimates a 32 percent participation rate. As
occurred after the last major expansion of Lifeline, we can expect
program participation to increase. We note, however, that the
Commission has instituted many significant safeguards against waste,
fraud, and abuse in the last five years and that some measures we adopt
in this item today--such as the imposition of new minimum service
standards that may result in higher subscriber out-of-pocket costs
versus today's program--may depress demand for Lifeline services in the
near term. For the purpose of establishing a budget for this program,
we prepare for participation in the program to increase. A $2.25
billion budget would allow over 20 million households to participate in
the program with basic support for an entire year before the budget is
reached. We believe this budget establishes a ceiling with appropriate
room for organic growth in the modernized, accountable Lifeline program
we adopt today. (While some Lifeline subscribers will receive enhanced
tribal support, it is difficult to forecast the number well in light of
other changes that we make to the program).
350. Reporting on Budget. While we believe this budget level will
provide ample room for new households to enroll in the program, we must
also monitor the program and account for the reasons for growth in the
program in order to make adjustments, if necessary. We therefore direct
the Bureau to issue a report to the Commission by July 31 of the
following year if total Lifeline disbursements exceeded 90 percent of
the budget in the previous calendar year. For example, if in calendar
year 2017, when the budget is set at $2.25 billion, the total
disbursements for 2017 totaled $2 billion, equal to 90.9 percent of
$2.25 billion, then by July 31, 2018 the Bureau would be required to
issue such a report. This report should offer an evaluation of program
disbursements, including the causes of program growth, an evaluation of
the different services and technologies supported by Lifeline,
disbursement amounts by state or other geographic areas, and any other
information relevant to the Commission's necessary oversight of the
Lifeline program. The report should also make recommendations about
what should be done, for example, including making adjustments to the
minimum service standards, changing the support levels, altering other
requirements, or modifying the budget amount. We expect the full
Commission will take appropriate action to address the Lifeline budget
within six months of receiving the report.
351. Indexing the Budget for Inflation. The budget amount will be
indexed to inflation in accordance with the Consumer Price Index for
all items from the Department of Labor, Bureau of Labor Statistics. The
budget for the next calendar year beginning January 1 shall be
announced in a Public Notice on or before July 31 of each year.
H. Efficient Program Administration
1. Program Evaluation
352. In this Section, we clarify our goals and goal measurements to
better align them with the modernized Lifeline program. We also direct
the Bureau, working with USAC, to conduct a program evaluation of the
newly reformed program so that the Commission and the public may have
better information about the operation and effectiveness of the
program.
353. Discussion. This order creates a revitalized broadband-
centered Lifeline program. In light of these changes, we revise our
program goals and call for evaluating the efficacy and efficiency of
our newly revamped program in reaching its goals.
354. First, we explicitly include affordability of voice and
broadband service as a component of our first and second program goals
and separately measure progress towards that goal component. We clarify
that the Lifeline program includes as its goal ensuring the
affordability of voice and broadband service. We will measure progress
toward this component of our first two goals by measuring the extent to
which voice and broadband service expenditures exceed two percent of
low-income consumers' disposable household income as compared to the
next highest income group. (This approach is similar to the approach
taken in other measures of affordability. We note that the United
Nations set a goal for developing countries that, by 2015 ``entry
level'' broadband Internet access should account for no more than 5% of
disposable income. The most recent data from 2014 indicates that for
the poorest 20 percent of U.S. households, a fixed broadband connection
constitutes 2.47 percent of monthly disposable income while a 500MB
month mobile broadband plan is 4.94 percent of disposable income). We
direct the Bureau to implement the details of this measurement, examine
the available data, and publish the results in the annual Universal
Service Monitoring Report.
355. Second, we begin a thorough, long-term process of evaluating
the newly revitalized Lifeline program. Within 12 months of Federal
Register publication of this Order, we direct USAC to begin a
procurement process for an outside, independent, third-party evaluator
to complete a program evaluation of the Lifeline program's design,
function, and administration. The evaluation should be consistent with
current GAO guidance on program evaluations. If appropriate, the
evaluation should discuss ways in which resources and data from other
agencies can be helpful in evaluating the program. The outside
evaluator must complete the evaluation and USAC must submit the
findings to the Commission by December 31, 2020 so that the evaluation
can be incorporated, as appropriate, into the State of the Lifeline
Marketplace Report, due June 30, 2021. The Commission will make the
final evaluation publicly available to the extent not otherwise
precluded by law. We believe that an extended period until completion
of the final report is necessary to evaluate whether the newly revised
Lifeline program is operating efficiently and effectively in
fulfillment of its goals.
356. Our direction here is consistent with prior direction given to
USAC to undertake reviews of the extent to which our universal service
rules, as implemented, are advancing relevant program goals. Because a
key element of this forthcoming review will involve the evaluation of
whether the implementation of the modified Lifeline rules is achieving
our program goals, we follow a similar approach here. We also note that
the efficacy of the legacy voice program has already been studied in
depth by third parties, and therefore find that limited USF funds
should be better spent designing and implementing, as soon as possible
to enable a full analysis of a revamped program, an evaluation of the
Lifeline program, which includes analysis of its effectiveness in
meeting its newly revised goals.
2. Non-Usage Reforms
357. We next provide additional flexibility for those Lifeline
subscribers and service providers who must demonstrate that the
subscriber has used the service within the established time frame,
while still maintaining fiscal responsibility. In the 2012 Lifeline
Reform Order, as a measure intended to reduce waste in the program, the
[[Page 33079]]
Commission introduced a requirement that a Lifeline service provider
who did not assess and collect from its subscribers a charge (e.g., a
pre-paid provider) could not receive support for subscribers who had
either not initiated service, or who had not used the service for a
consecutive 60-day period. In this way, service providers would only
receive support for eligible low-income subscribers who actually use
the service. The Commission established ways in which a subscriber
could establish ``usage'' for purposes of the rule.
358. In the 2015 Lifeline FNPRM, we proposed to amend Section
54.407(c)(2) of our rules to allow the sending of a text message by a
subscriber to constitute ``usage.'' We recognized that, while text
messaging was not a supported service, it is widely used by wireless
consumers for their basic communications needs. Moreover, there was an
indication that there is increasing reliance on text messaging by
individuals who are deaf, hard of hearing, or have difficulty with
speech. We also asked whether it was appropriate to base a subscriber's
intention to use a supported service on that subscriber's use of a non-
supported service. The 2015 Lifeline FNPRM also sought comment on the
conclusion not to allow the receipt of text messages to qualify as
usage. Finally, the 2015 Lifeline FNPRM proposed to reduce the non-
usage interval from 60 to 30 days, as part of our ongoing efforts to
reduce waste and inefficiency in the Lifeline program.
359. All those who commented on whether to allow the sending of
text messages to constitute usage for purposes of Section 54.407(c)(2)
of our rules supported this broadening of our requirements. Many
commenters stated that for many of today's wireless consumers,
including Lifeline subscribers, text messaging is the prevalent means
of communication. Sprint, for example, stated that a significant
percentage of Assurance Wireless customers used their Lifeline handset
for text messaging even when they did not have any voice usage. Several
commenters also highlighted that texting is the primary means by which
many people with disabilities communicate.
360. Based on our review of the record and the communications
landscape overall, we conclude that it is appropriate to allow the
sending of a text message by the subscriber to qualify as ``usage'' for
purposes of Section 54.407(c)(2). (This determination should not be
confused with any decision regarding the regulatory status of texting
service. Likewise, we make no decisions at this time regarding whether
text messaging qualifies as a Lifeline-supported service). Our decision
is based on the reality that many consumers today view texting, voice,
and broadband as interchangeable means of communication and often use
text messages as the sole or primary means of communication. Many
Lifeline subscribers may assume that using any of the services
available from the device provided by their Lifeline service provider
will qualify as usage, and it seems unnecessarily burdensome to require
them to distinguish among the services to ensure compliance with the
program's usage requirement. While TracFone continues to urge the
Commission to allow both the sending and receipt of texts to qualify as
``usage,'' we conclude, consistent with the 2015 Lifeline FNPRM, that
only the sending of texts from the subscriber's device will qualify as
sufficient indication of usage. We will, therefore, modify Section
54.407(c)(2) of our rules to reflect the inclusion of outbound texts as
a means for establishing ``usage.'' In addition, given this Order's
inclusion of BIAS as a supported service, we also make certain
modifications to Sec. 54.407(c)(2)(i) and (ii) of our rules to account
for the inclusion of broadband service as a supported service.
361. Broadening the list of services that can be used to
demonstrate ``usage'' for purposes of Section 54.407(c)(2) of our rules
should greatly ease consumers' ability to show their desire to retain
Lifeline service. Consequently, we find it appropriate at this time to
shorten the non-usage period from 60 to 30 days, along with a
corresponding reduction in the time allotted for service providers to
notify their subscribers of possible termination from 30 to 15 days.
Under this scheme, Lifeline service providers must notify subscribers
of possible termination on the 30th day and terminate service if,
during the subsequent 15 days, the subscriber has not used the service.
In this way, the subscriber will have a total of 45 days in which to
demonstrate ``usage.'' In making this determination, we are mindful of
the concerns raised by commenters such as Sprint who assert that
decreasing the time period may lead to a higher number of de-
enrollments. We note, however, that such assessments are based on a
scenario in which the Commission did not permit texting, one of the
most prevalent means of wireless communications, to be used as a basis
for demonstrating usage. Moreover, we expect that Lifeline service
providers will educate their subscribers about the usage requirements
and de-enrollment that will result from non-usage. Hence, we will
modify Section 54.405(e)(3) of our rules to reflect the change in the
non-usage interval. Finally, we emphasize that only if a carrier bills
on a monthly basis and collects or makes a good faith effort to collect
any money owned within a reasonable amount of time will the carrier not
be subject to the non-usage requirements. Carriers that fail to take
such steps and do not de-enroll subscribers pursuant to the non-usage
requirements may be subject to enforcement action or withholding of
support.
3. Rolling Recertification
362. In the 2015 Lifeline FNPRM, we also sought comment on whether
we should make any changes to the recertification process as we
modernize the administration of the Lifeline program. We find that
requiring Lifeline customers' eligibility to be recertified every 12
months, as measured from the subscriber's service initiation date, will
result in administrative efficiencies and avoid imposing undue burdens
on providers, USAC, or the National Verifier. Previously, Lifeline
providers were required to annually recertify all subscribers except in
states where the state Lifeline administrator or other state agency is
responsible for recertification.'' Recertification was considered
complete when a carrier had, by December 31, de-enrolled all
subscribers who did not respond to recertification efforts.
363. We find that, particularly as the National Verifier is
launched in multiple states, annually recertifying subscribers on a
rolling basis, based on the subscriber's service initiation date, will
prevent the entity responsible for recertification from processing
recertification and potential de-enrollment procedures for all
subscribers at the same time. This will make the recertification
process more manageable and result in a recertification process that
reflects the amount of time the subscriber has actually been enrolled
in the Lifeline program. We also expect that this change will enable
providers and the National Verifier to respond to any customers who
need assistance in the recertification process without being
overwhelmed by customer service requests.
364. Prior to the implementation of the National Verifier in a
state, to prevent the enrollment of ineligible customers, we require
providers to conduct an initial eligibility
[[Page 33080]]
determination for every enrolling customer, regardless of whether that
customer had previously received Lifeline-discounted service from
another provider. That provider must then recertify the customer's
eligibility 12 months after the subscriber's service initiation date
with that provider. However, after the National Verifier has been
implemented in a state, the National Verifier's eligibility records for
a subscriber will permit the National Verifier to only recertify the
subscriber's eligibility every 12 months after the subscriber's first
initiation of a Lifeline-discounted service. Thus, even if a subscriber
changes Lifeline providers during the course of the year, the National
Verifier will only need to recertify eligibility 12 months after the
subscriber's first service initiation date, and every 12 months
thereafter. We therefore revise Section 54.410(f) of our rules to
reflect this change. The rules establishing and related to rolling
recertification will be effective for all enrollments made beginning
the later of January 1, 2017 or upon PRA approval. Subscribers enrolled
on or after such date will be subject to recertification requirements
at the end of the 12-month period that begins with their service
initiation date. (Subscribers already enrolled prior to January 1, 2017
will be subject to rolling recertification based on their current
service initiation date. We direct USAC to communicate with carriers
and consumers as necessary to provide information on each subscriber's
relevant date). For subscribers enrolled prior to January 1, 2017,
recertification for 2016 will be conducted in accordance with current
Lifeline practices and require recertification by December 31, 2016.
Additionally for subscribers enrolled prior to January 1, 2017, rolling
recertification will begin July 1, 2017. Beginning July 1, 2017, all
subscribers enrolled prior to January 1, 2017 will need to be
recertified on a rolling basis based on the subscriber's service
initiation date. (We recognize that in this interim period subscribers
will be recertified in a period ranging from six months to 18 months
from the subscriber's last recertification. This interim period is
required to effectively transition the program to rolling
recertification. The period from January 1, 2017 to July 1, 2017 is
meant to provide the appropriate transition for ETCs and subscribers,
while preventing immediate recertification of subscribers with service
initiation dates during those six months. Additionally, the transition
to rolling recertification for existing subscribers needs to begin
promptly to maintain program integrity and guard against improper
payments).
365. We also revise Section 54.410(f) to clarify that the entity
responsible for recertifying subscribers must first query the
appropriate state or federal database to determinate on-going
eligibility prior to using other means to recertify subscribers. In the
2012 Lifeline Reform Order, the Commission specifically required ``in
instances where ongoing eligibility [could] not be determined through
access to a qualifying database either by the ETC or the state,''
service providers could then recertify subscribers using other methods,
including in person, in writing, by phone, by text message, by email or
otherwise through the Internet to confirm continued eligibility.'' The
revised recertification rules reflect the Commission's determination.
366. Further, we revise Section 54.405(e)(4) to require a
subscriber be given 60 days to respond to recertification efforts, and
consistent with our other de-enrollment rules, non-responsive
subscribers will be de-enrolled within five days following the
expiration of the 60-day response window. We take this step to ease the
recertification burden for providers and the National Verifier.
Expanding the recertification period will allow batching of daily
subscriber recertification deadlines into more manageable weekly or
monthly groupings.
367. Finally, we revise Section 54.405(e)(1) to require de-
enrollment within five business days after the expiration of the
subscriber's time to demonstrate eligibility. In so doing, we add
consistency to the various provisions in Section 54.405 related to de-
enrollment due to ineligibility. We also adopt Section 54.405(e)(5) to
require service providers to de-enroll a subscriber who has requested
de-enrollment within two business days after making such a request. We
take this action to ensure that subscriber de-enrollment requests are
resolved in a timely manner.
4. Publishing Lifeline Subscriber Counts
368. Discussion. We direct USAC before December 1, 2016 to modify
its online Lifeline tool to make available to the public information
about the Lifeline program, such as the total number of subscribers for
which a provider seeks support for each SAC, including how many
subscribers are receiving enhanced Tribal support. Although the public
can already derive the Lifeline subscriber counts by referencing
information from USAC's Web site and Quarterly Reports, relatively
simple changes to USAC's systems can make this and other information
about the Lifeline program far easier to access. Moreover, having USAC
directly publish subscriber counts increases transparency and continues
to promote accountability in the program. USAC shall also make
available information about the number of subscribers receiving support
for each of the supported services. Commenters also agree that
publishing the amount of subscribers served by providers will increase
transparency.
369. We direct USAC to work with the Bureau and OMD to formulate a
plan for making available additional Lifeline information consistent
with the Commission's historical commitment to transparency as well as
taking into consideration any valid concerns about divulging non-public
information. USAC should consider how other useful information can be
made publically available, such as by using the National Verifier. In
addition, we direct USAC to consider new ways in which states or other
government entities may be given increased access to the National
Verifier or NLAD for the purposes of better program administration.
Before giving such access, USAC should obtain approval from the Bureau.
5. Audits
370. In this Section, we adopt our proposal to revise Section
54.420 of our rules requiring all Lifeline providers to undergo an
audit within their first year of receiving Lifeline disbursements.
Adopting the revised Section 54.420 will allow the Commission
flexibility to determine the appropriate and most cost effective time
to audit entities that are new providers in the Lifeline program.
371. Discussion. We now modify our rule to delegate to OMD, in its
role overseeing the USF audit programs, to work with USAC to identify
those audits of first-year Lifeline providers that will be conducted
within the one-year deadline and those that will be audited after the
one-year deadline. Given the three years of experience auditing these
carriers, we have found that many new providers have not yet had a
sufficient number of subscribers to draw conclusions regarding
compliance with the program rules. To be clear, this approach is a
strengthening of the audit process because it will allow USAC to more
efficiently direct audit resources to audit providers that have a
higher risk of non-compliance and/or receive a larger percentage of the
total Lifeline program disbursements, rather than being required to
conduct audits that may be of little practical value. Further,
[[Page 33081]]
we do not expect such audit flexibility to result in these entities not
being audited, and we delegate to OMD, working with USAC, to determine
the most cost-effective time to audit an entity when it has sufficient
data to conduct a meaningful audit, to provide OMD with recommendations
on which first-year service providers would be cost effective to audit
after their first year, and which service providers should be audited
after their first year. We direct USAC to provide all first-year
service providers notice within 30 days of their one-year deadline
regarding whether the audit will or will not be conducted.
372. We also believe that the overall audit program should include
a check on whether the service was provided and whether the service
provided met the standards articulated in this Order. We delegate to
OMD working with USAC to include such performance auditing in its
overall audit plan. We view our audit program as a key factor in
promoting program integrity and direct USAC working with OMD to
continue to improve and focus the overall program on providers for whom
the risk of non-compliance is high and whose non-compliance would have
a large impact on the overall fund.
6. Universal Consumer Certification, Recertification, and Household
Worksheet Forms
373. In this Section we delegate to the Bureau to create uniform,
standardized Lifeline forms approved by the Office of Management and
Budget (OMB) for all subscribers receiving a federal Lifeline benefit,
if it believes that doing so will aid program administration.
374. Discussion. In this Order, we delegate to the Bureau to
propose to OMB Lifeline forms for certification, recertification and
the one-per-household requirement, if it believes that doing so will
aid program administration. (We also delegate to the Bureau the ability
to phase out and/or combine forms as needed. With implementation of the
National Verifier, many forms may need to be adjusted, phased-out, or
combined). We revise Section 54.410 to reflect the use of certification
and recertification forms, and one-per-household worksheets for the
Lifeline program, if such forms are implemented. (Our revisions to the
rule recognize that certification and recertification forms and one-
per-household worksheets are used by entities enrolling subscribers.
Currently, such forms are developed by service providers and must
include the items required by Section 54.410 and the 2012 Lifeline
FNPRM). We believe that the enormous benefits to the program, such as
increased understanding and compliance by both subscribers and
providers, outweigh any concerns with the standardized approach. (While
we create federal forms by this order, states are free to require
subscribers to complete additional state forms to assist with state
programs). If the Bureau moves forward on uniform forms, it may use the
forms that we sought comment on, displayed on USAC's Web site, as such
forms contain the information on eligibility and certification, the
one-per-household requirement, the obligations of the subscriber, that
should be included at a minimum on these Lifeline forms. We will
continue to require that subscribers sign the forms under penalty of
perjury, regardless of whether they are forms created by the service
providers or by the Bureau. However, we expect that if the Bureau
adopts forms, any such forms will explain the meaning and import of
those terms to the subscriber and the consequences of providing false
and misleading information. We expect that the above-mentioned concepts
will be contained in any Bureau form and we delegate to the Bureau the
ability to create wording and formatting that is easily understood by
the consumer and improves program compliance, if it chooses to adopt
such forms. We also delegate to the Bureau to amend the forms as
necessary as changes in the program are made, such as the deployment of
the National Verifier. (Once deployed, we direct the National Verifier
to adapt the OMB-approved forms to the methods available to consumers
to contact the National Verifier, such as paper and electronic
versions). Recognizing that there may continue to be relevant program
differences across states and territories, we direct the Bureau to
account for such differences in any standardized forms, as necessary.
In this way, we seek to be responsive to some concerns that a uniform
approach may not fit every situation. We expect that, if the Bureau
creates standardized forms, the forms will be responsive to evolving
program needs and that the Bureau can and should propose changes to OMB
as needed.
I. Delegation to the Bureau
375. Given the complexities associated with modifying existing
rules as well as other reforms adopted in this Order, we delegate
authority to the Wireline Competition Bureau to make any further rule
revisions as necessary to ensure the reforms adopted in this Order are
reflected in the rules. This includes correcting any conflicts between
the rules and this Order. If any such rule changes are warranted, the
Bureau shall be responsible for such change, but in no event shall such
change create new or different policy than that articulated by this
Order. We note that any entity that disagrees with a rule change made
on delegated authority will have the opportunity to file an Application
for Review by the full Commission.
IV. Further Report and Order
376. In the Map Implementation Order, released on February 2, 2016,
the Wireline Competition Bureau (Bureau) granted a request for
extension of time for the implementation of the Oklahoma Historical Map
until June 8, 2016, in order to complete the consultation process with
Tribal leaders and allow providers time to implement the map and
appropriately notify customers. In the Map Implementation Order, the
Bureau specifically emphasized the need to further discuss the status
of the Cherokee Outlet, and whether it should remain as a ``former
reservation in Oklahoma'' for purposes of the Lifeline Program. The
Bureau also released a shapefile containing the boundaries of the
Cherokee Outlet in order to give potentially affected parties advance
notice of any potential changes. After completing consultations, and
upon recommendation from the Bureau as required by the 2015 Lifeline
FNPRM, we are convinced that the Cherokee Outlet, due to its long
history of usage by the Cherokee Nation, is properly defined as a
``former reservation in Oklahoma'' for our purposes of defining areas
eligible for enhanced Lifeline support. Accordingly, residents of the
Cherokee Outlet will remain eligible for enhanced Tribal support. The
Oklahoma Historical Map will become effective on June 8, 2016.
V. Order On Reconsideration
377. In this Section, we grant petitions filed by GCI, USTelecom,
TracFone and Sprint asking that we reconsider three rules, adopted in
the 2012 Lifeline Reform Order, related to the reporting of temporary
addresses. These rules were put in place to ensure that the often
mobile Lifeline population can obtain service while protecting the fund
against waste, fraud and abuse from duplicative support. However, based
on our experience, we find that the burden of these rules outweighs any
countervailing benefit. Existing measures, including the robust
identify verification and checks for duplicative support already built
into the NLAD that do not rely on the temporary address rules, as well
as the
[[Page 33082]]
actions we take in this order, including the establishment of the
National Verifier, provide adequate protections against waste and abuse
in the absence of the temporary address rules. While Lifeline providers
may still enroll eligible subscribers using a temporary address, those
subscribers will no longer be required to certify to the temporary
address every 90 days and those providers will no longer be required
recertify the temporary address every 90 days. (We note that this
temporary address recertification process is separate from subscriber
recertification of program or income eligibility).
378. Discussion. On reconsideration, we now eliminate Sec.
54.410(g) and (d)(3)(v) and the portion of Section 54.405(e)(4) related
to temporary addresses. As explained by the parties seeking
reconsideration of this rule, we conclude that these rules impose a
burden on providers without a significant benefit. While these rules
were put in place to prevent possible waste, fraud and abuse from
customers representing a ``small portion of an ETC's Lifeline
subscriber base,'' experience has shown that, in fact, the other
subscriber data (e.g. address at time of application, name, last four
digits of social security number and date of birth) collected by USAC
has been sufficient to verify subscriber's identity and check for
duplicative support. Additional protections put in place in this order,
including the establishment of a National Verifier, further reduce the
need for these rules. As explained elsewhere in this order, we conclude
that the elimination of unnecessary and burdensome requirements will
increase the incentive and likelihood of additional providers entering
the Lifeline marketplace. We therefore conclude that elimination of
these rules is in the public interest. We will, however, continue to
require subscribers to indicate on their certification forms whether
the address is permanent or temporary. We find that this requirement
assists the Commission and USAC by providing important demographic
information about the Lifeline subscriber-base. (USAC data indicates
that, as of March 2016, almost 6 percent (or approximately 700,000) of
Lifeline subscribers in the NLAD) have temporary addresses,
underscoring the critical benefit that Lifeline provides to the most
vulnerable Americans).
VI. Severability
379. All of the Lifeline rules that are adopted in this Order are
designed to work in unison to make telecommunications services more
affordable to low-income households and to strengthen the efficiency
and integrity of the program's administration. However, each of the
separate Lifeline reforms we undertake in this Order serve a particular
function toward those goals. Therefore, it is our intent that each of
the rules adopted herein shall be severable. If any of the rules is
declared invalid or unenforceable for any reason, it is our intent that
the remaining rules shall remain in full force and effect.
VII. Procedural Matters
A. Final Regulatory Flexibility Analysis
380. As required by the Regulatory Flexibility Act of 1980 (RFA),
the Commission has prepared a Final Regulatory Flexibility Analysis
(FRFA) relating to this Third Report and Order, Further Report and
Order, and Order on Reconsideration. The FRFA is set forth in in
section VII.D of this document.
B. Paperwork Reduction Act Analysis
381. This Third Report and Order, Further Report and Order, and
Order on Reconsideration contains new information collection
requirements subject to the Paperwork Reduction Act of 1995 (PRA),
Public Law 104-13. It will be submitted to the Office of Management and
Budget (OMB) for review under Section 3507(d) of the PRA. OMB, the
general public, and other Federal agencies will be invited to comment
on the revised information collection requirements contained in this
proceeding. In addition, we note that pursuant to the Small Business
Paperwork Relief Act of 2002, Public Law 107-198, the Commission
previously sought specific comment on how it might further reduce the
information collection burden on small business concerns with fewer
than 25 employees.
C. Congressional Review Act
382. The Commission will include a copy of this Third Report and
Order, Further Report and Order, and Order on Reconsideration in a
report to be sent to Congress and the Government Accountability Office
(GAO) pursuant to the Congressional Review Act, see 5 U.S.C.
801(a)(1)(A).
D. Final Regulatory Flexibility Analysis
383. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Federal Communications Commission (Commission)
included an Initial Regulatory Flexibility Analysis (IRFA) of the
possible significant economic impact on a substantial number of small
entities by the policies and rules proposed in the Lifeline Second
FNPRM in WC Docket Nos. 11-42, 09-197, 10-90. The Commission sought
written public comment on the proposals in the Lifeline Second FNPRM,
including comment on the IRFA. This Final Regulatory Flexibility
Analysis (FRFA) conforms to the RFA.
1. Need for, and Objectives of, the Final Rules
384. The Commission is required by section 254 of the
Communications Act of 1934, as amended, to promulgate rules to
implement the universal service provisions of section 254. The Lifeline
program was implemented in 1985 in the wake of the 1984 divestiture of
AT&T. On May 8, 1997, the Commission adopted rules to reform its system
of universal service support mechanisms so that universal service is
preserved and advanced as markets move toward competition. Since the
2012 Lifeline Reform Order, the Commission has aggressively addressed
waste, fraud and abuse in the Lifeline program and improved program
administration and accountability. In this Third Report and Order,
Further Report and Order, and Order on Reconsideration (Order), we
recognize the importance of broadband access in today's world. Those
who have access use the Internet to, among other things, connect with
family, work, and friends, stay abreast of the news, monitor important
civic activities, research issues, stay in contact with healthcare
providers. However, not all American can access the Internet and enjoy
the benefits of broadband access in today's society. In this Order, we
therefore take measures to reform the Lifeline program to become part
of the solution to the Nation's broadband affordability challenge by
focusing the Lifeline program on broadband and encouraging broadband
providers to offer supported broadband services that meet specific
Commission established standards. We also take steps to improve the
management and design of the Lifeline program by streamlining program
rules and eliminating outdated obligations with the goal of providing
incentives for broadband providers to participate and increasing
meaningful broadband offerings to Lifeline subscribers.
385. Specifically, in this Order, to create a competitive Lifeline
broadband program, we take a variety of actions to encourage more
Lifeline providers to deliver supported broadband services. Most
significantly, we allow support for robust, standalone fixed and mobile
broadband services to ensure meaningful levels of connectivity. At the
same time, we transition the Lifeline program from primarily supporting
voice services to targeting support at
[[Page 33083]]
modern broadband services. Additionally, to encourage entry of new
Lifeline providers to supply broadband, we create a streamlined
Lifeline Broadband Provider designation process, and modernize the
obligations of broadband providers by reinterpreting parts of the
statute and granting providers forbearance from parts of the statute in
order to ensure just and reasonable rates and the protection of
consumers.
386. Additionally, in order to ensure that the Lifeline program is
designed to operate in an efficient, and highly accountable manner with
the reorientation of the Lifeline program to broadband, we take a
number of additional actions in this Order to reform the program. Most
significantly, we set minimum service standards for broadband and
mobile services to ensure those services meet the needs of consumers;
create a National Lifeline Eligibility Verifier (National Verifier) to
transfer the responsibility of making eligibility determinations away
from Lifeline providers and remove the opportunities for Lifeline
providers to inappropriately enroll subscribers; streamline the
criteria for Lifeline program qualification in recognition of the way
the vast majority of Lifeline subscribers gain entry to the program;
require Lifeline providers to make available Wi-Fi enabled devices and
hotspot capable devices when providing devices for use with Lifeline-
supported service; and adopt a budget for the Lifeline program to bring
the Lifeline program in to alignment with the other three universal
service fund programs, each of which operates within a budget, and to
ensure that the program is designed to operate in an efficient, highly
accountable manner. We also take several other measures to improve the
efficient administration and accountability of the Lifeline program,
such as establishing an annual eligibility process, imposing a port
freeze on Lifeline services, revising the audit procedures, and
creating standardized Lifeline forms. We believe that these new rules
and reforms, taken together, will greatly expand the reach of the
Lifeline program to all consumers and further increase utilization of
the Lifeline program.
2. Summary of Significant Issues Raised by Public Comments to the IRFA
387. We received one comment specifically addressing the IRFA from
the Small Carriers Coalition (Coalition). In the 2015 Lifeline Second
FNPRM, in order to increase eligible telecommunications carrier (ETC)
accountability and compliance with the Lifeline rules, we proposed a
requirement that all company employees and third-party agents
interfacing with customers receive sufficient training on the Lifeline
rules, and that such persons receive training annually. The Coalition
notes that the Commission's analysis of the compliance burden of this
requirement on small entities was insufficient. Specifically, the
Coalition asserts that, while the burden of executing a certification
that appropriate training has been received may be minor, the burden of
arranging and paying for such training, and requiring employees and
agents to undergo such training, is much higher. The Coalition asserts
that the burden of arranging and paying for such training was not
addressed as well as the burden of requiring a 24-hour customer service
call center requirement for the sole purpose of de-enrolling Lifeline
customers. The Coalition recommends that the training requirement be
eliminated, or, if retained for small carriers, reduced such that only
one supervisory employee be required to undergo training. The Coalition
asserts that, by tailoring this requirement, it would more closely
align the burden of training with the limited public interest benefit
of requiring training for carriers with few Lifeline customers. The
Coalition also recommends that the 24-hour customer service requirement
not be applied to small carriers, because such requirement dwarfs the
potential public interest benefit.
388. In this Order, we do not adopt this proposal as a final rule.
We recognize the additional compliance burden and cost imposed upon
small entities of this requirement. As an alternative measure to
increase eligible telecommunications carrier (ETC) accountability and
compliance with the Lifeline rules, in this Order, we have established
the National Verifier with its primary function being to verify
customer eligibility for Lifeline support. The National Verifier will
also perform a variety of other functions necessary to enroll eligible
subscribers into the Lifeline program, such as, but not limited to,
enabling access by authorized users, providing support payments to
providers, and conducting recertification of subscribers, to add to the
efficient administration of the Lifeline program. Additionally, we have
streamlined eligibility for Lifeline support to increase efficiency and
improve the program for consumers, Lifeline providers, and other
participants. By relying on highly accountable programs that
demonstrate limited eligibility fraud, we will reduce the potential of
waste, fraud, and abuse occurring due to eligibility errors. These
alternative measures therefore will help ensure compliance with the
Commission's rules and reduce the potential risk for error when
interfacing with customers while at the same time limiting any
additional burden upon small businesses.
3. Response to Comments by the Chief Counsel for Advocacy of the Small
Business Administration
389. Pursuant to the Small Business Jobs Act of 2010, which amended
the RFA, the Commission is required to respond to any comments filed by
the Chief Counsel of the Small Business Administration (SBA), and to
provide a detailed statement of any change made to the proposed rule(s)
as a result of those comments.
390. The Chief Counsel did not file any comments in response to the
proposed rule(s) in this proceeding.
4. Description and Estimate of the Number of Small Entities to Which
the Final May Apply
391. 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
28.2 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.''
392. Small Entities, Small Organizations, Small Governmental
Jurisdictions. Our actions, over time, may affect small entities that
are not easily categorized at present. We therefore describe here, at
the outset, three comprehensive small entity size standards that could
be directly affected herein. As of 2014, according to the SBA, there
were 28.2 million small businesses in the U.S., which represented 99.7
percent of all businesses in the United States.
[[Page 33084]]
Additionally, a ``small organization is generally any not-for-profit
enterprise which is independently owned and operated and not dominant
in its field''. Nationwide, as of 2007, there were approximately
1,621,215 small organizations. Finally, 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 2011
indicate that there were 90,056 local governmental jurisdictions in the
United States. We estimate that, of this total, as many as 89,327
entities may qualify as ``small governmental jurisdictions''. Thus, we
estimate that most local governmental jurisdictions are small.
a. Wireline Providers
393. 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 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 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.
Thus under this category and the associated small business size
standard, the majority of these incumbent local exchange service
providers can be considered small.
394. 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 category for this service is the
category Wired Telecommunications Carriers. Under the category of Wired
Telecommunications Carriers, such a business is small if it has 1,500
or fewer employees. Census Bureau data for 2007 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 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 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.
395. Interexchange Carriers. Neither the Commission nor the SBA has
developed a small business size standard specifically for providers of
interexchange services. The appropriate category for Interexchange
Carriers is 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.
396. Operator Service Providers (OSPs). Neither the Commission nor
the SBA has developed a small business size standard specifically for
operator service providers. The appropriate category for Operator
Service Providers is the category Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or
fewer employees. Under that size standard, such a business is small if
it has 1,500 or fewer employees. Census Bureau data for 2007 show that
there were 3,188 firms in this category that operated for the entire
year. Of the 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, 33 carriers have reported that they are engaged in the
provision of operator services. Of these, an estimated 31 have 1,500 or
fewer employees and 2 have more than 1,500 employees. Consequently, the
Commission estimates that the majority of OSPs are small entities that
may be affected by our proposed action.
397. 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 1000 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.
398. 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 1000 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.
[[Page 33085]]
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.
399. 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 1000 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.
400. 800 and 800-Like Service Subscribers. (We include all toll-
free number subscribers in this category, including those for 888
numbers.) 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 category for these
services is the category Telecommunications Resellers. Under that
category and corresponding 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 1000 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, as
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.
b. Wireless Carriers and Service Providers
401. Wireless Telecommunications Carriers (except Satellite). This
industry comprises establishments engaged in operating and maintaining
switching and transmission facilities to provide communications via the
airwaves. Establishments in this industry have spectrum licenses and
provide services using that spectrum, such as cellular phone services,
paging services, wireless Internet access, and wireless video services.
The appropriate size standard under SBA rules is for the category
Wireless Telecommunications Carriers. The size standard for that
category is that a business is small if it has 1,500 or fewer
employees. For this category, census data for 2007 show that there were
11,163 establishments that operated for the entire year. Of this total,
10,791 establishments had employment of 999 or fewer employees and 372
had employment of 1000 employees or more. (Available census data do not
provide a more precise estimate of the number of firms that have
employment of 1,500 or fewer employees; the largest category provided
is for firms with ``100 employees or more.''). Thus under this category
and the associated small business size standard, the Commission
estimates that the majority of wireless telecommunications carriers
(except satellite) are small entities that may be affected by our
proposed action.
402. 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 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.
403. Satellite Telecommunications Providers. Two economic census
categories address the satellite industry. The first category has a
small business size standard of $32.5 million or less in average annual
receipts, under SBA rules. The second has a size standard of $32.5
million or less in annual receipts.
404. 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.
405. 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
[[Page 33086]]
connections are also included in this industry.'' The SBA has developed
a small business size standard for All Other Telecommunications, which
consists of all such firms with gross annual receipts of $ 32.5 million
or less. 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.
406. Common Carrier Paging. As noted, since 2007 the Census Bureau
has placed paging providers within the broad economic census category
of Wireless Telecommunications Carriers (except Satellite).
407. In addition, in the Paging Second Report and Order, the
Commission adopted a size standard for ``small businesses'' for
purposes of determining their eligibility for special provisions such
as bidding credits and installment payments. A small business is an
entity that, together with its affiliates and controlling principals,
has average gross revenues not exceeding $15 million for the preceding
three years. The SBA has approved this definition. An initial auction
of Metropolitan Economic Area (``MEA'') licenses was conducted in the
year 2000. Of the 2,499 licenses auctioned, 985 were sold. Fifty-seven
companies claiming small business status won 440 licenses. A subsequent
auction of MEA and Economic Area (``EA'') licenses was held in the year
2001. Of the 15,514 licenses auctioned, 5,323 were sold. One hundred
thirty-two companies claiming small business status purchased 3,724
licenses. A third auction, consisting of 8,874 licenses in each of 175
EAs and 1,328 licenses in all but three of the 51 MEAs, was held in
2003. Seventy-seven bidders claiming small or very small business
status won 2,093 licenses.
408. Currently, there are approximately 74,000 Common Carrier
Paging licenses. According to the most recent Trends in Telephone
Service, 291 carriers reported that they were engaged in the provision
of ``paging and messaging'' services. Of these, an estimated 289 have
1,500 or fewer employees and two have more than 1,500 employees. We
estimate that the majority of common carrier paging providers would
qualify as small entities under the SBA definition.
409. 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 2010 Trends
Report, 413 carriers reported that they were engaged in wireless
telephony. Of these, an estimated 261 have 1,500 or fewer employees and
152 have more than 1,500 employees. We have estimated that 261 of these
are small under the SBA small business size standard.
c. Internet Service Providers
410. 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 $32.5 million or less.
5. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
411. A number of our rule changes will result in additional
reporting, recordkeeping, or compliance requirements for small
entities. For all of those rule changes, we have determined that the
benefit the rule change will bring for the Lifeline program outweighs
the burden of the increased requirement/s. Other rule changes decrease
reporting, recordkeeping, or compliance requirements for small
entities. We have noted the applicable rule changes below impacting
small entities.
a. Increase in Projected Reporting, Recordkeeping and Other Compliance
Requirements
412. Compliance burdens. All of the rules we implement impose some
compliance burdens on small entities by requiring them to become
familiar with the new rules to comply with them. For several of the new
rules, such as the new budget and the revised audit procedures, the
burden of becoming familiar with the new rule in order to comply with
it is the only additional burden the rule imposes.
413. Broadband as a Supported Service. Expanding the Lifeline
program to support broadband Internet access service (BIAS) at a
discounted rate by Lifeline providers will increase recordkeeping and
compliance burdens for small entities since they will now be required
to revise their business plans and make any necessary IT changes to
account for the delivery of broadband services and the gradual
reduction in monthly support for voice-only service. Additionally,
small entities seeking designation as a Lifeline Broadband Provider
will also be subject to additional reporting and compliance
requirements, such as submitting information describing the terms and
conditions of any BIAS plans offered to Lifeline subscribers. However,
the benefit of providing a robust, affordable broadband service
offering to low-income consumers who may not otherwise be able to
afford and utilize the service outweighs any additional recordkeeping
or compliance obligations upon small businesses. Moreover, an
overwhelming majority of commenters support the inclusion of broadband
in the Lifeline program as broadband access is of critical importance
for consumers of all incomes.
414. Minimum Service Standards. Requiring broadband providers
claiming Lifeline support to certify compliance with the minimum
service standards and making them subject to the Commission's audit
authority increases recordkeeping, reporting, and compliance
requirements for those fixed broadband providers claiming Lifeline
support. These certification and compliance requirements are necessary,
however, in order to ensure that Lifeline customers obtain the type of
robust service which is essential to participate in today's society.
Additionally, these standards ensure that service offerings will be
affordable for small entities.
415. Wi-Fi Enabled Devices. Requiring Lifeline providers who make
devices available with or without charge for use with a Lifeline-
supported fixed or mobile broadband service to ensure that all such
devices are Wi-Fi enabled, and requiring Lifeline providers who make
devices available with or without charge for use with a Lifeline-
supported mobile broadband service to also offer devices that are
capable of being used as a hotspot, will increase the compliance and
reporting burdens upon small businesses. This requirement will require
businesses to offer certain products that they may not have otherwise
provided to consumers and
[[Page 33087]]
certify to such compliance consistent with our rules. Conditioning
support for Lifeline services in this way, however, will increase the
value of the supported connection so that Lifeline consumers can
regularly and reliably access the Internet. Additionally, in order to
reduce the immediate burden upon small businesses, we have provided for
a transition period for complying with this requirement.
416. De-enrollment. In revising our rules regarding de-enrollment
to add consistency and clarity, we now require de-enrollment within
five business days after the expiration of the subscriber's time to
demonstrate eligibility. This change may increase the compliance burden
on small entities where previously their systems did not have to track
the timeframe for de-enrollment. This burden, however, is outweighed by
the benefit this rule change will bring to the Lifeline program by
ensuring that subscriber de-enrollment requests are resolved on a
timely basis.
b. Decrease in Projected Reporting, Recordkeeping and Other Compliance
Requirements
417. Annual Recertification. Requiring Lifeline providers to
annually recertify all subscribers on a rolling basis, based on the
subscriber's date of enrollments, decreases the burden of the
recordkeeping requirement for small businesses by eliminating the need
to process recertification and potential de-enrollment procedures for
all subscribers at the same time. Thus, making the recertification
process more manageable for small businesses and enable providers (and
the National Verifier) to respond to any customers who need assistance
in the recertification process without being overwhelmed by customer
service requests.
418. Eliminating the Reporting of Temporary Addresses. Eliminating
certain sections of the Commission's rules related to requiring service
providers to recertify the temporary addresses of their subscribers
will reduce reporting and recordkeeping burden upon small entities. The
elimination of these unnecessary and burdensome requirements should
also increase the incentive and likelihood of additional small
businesses entering the Lifeline marketplace.
419. National Lifeline Eligibility Verifier. The establishment of a
National Verifier to make eligibility determinations and perform a
variety of other functions necessary to enroll eligible subscribers
into the Lifeline Program will lessen the recordkeeping and compliance
burden on small entities by relieving them of the obligation to conduct
eligibility determinations. Further, the establishment of the National
Verifier will, among other things, help to not only lower costs to the
Fund but also to Lifeline providers, including small businesses,
through increasing administrative efficiencies.
420. Streamlining Lifeline Eligibility. Streamlining eligibility
for Lifeline support by eliminating certain programs from the default
federal assistance eligibility and removing income-based eligibility
and state-specified eligibility criteria as avenues to access Lifeline
support will reduce the recordkeeping burden upon small entities to
make eligibility determinations, and increase efficiency and improve
the Lifeline program for not only consumers but also providers.
421. Program Audits. Allowing the Office of Managing Director (OMD)
to determine if a Lifeline provider should be audited within the first
year of receiving Lifeline benefits in the state in which it was
granted ETC status, rather than requiring all first-year Lifeline
providers to undergo an audit within the first year of receiving
Lifeline benefits, will minimize the burden on a substantial number of
small entities within the first year of receiving Lifeline benefits to
respond to requests for information as part of an audit. This
requirement, while reducing the number of audits conducted within the
first year of receiving Lifeline benefits, nonetheless, is essential in
promoting program integrity and ensuring compliance with the
Commission's rules.
422. Universal FCC Forms. The implementation of standardized FCC
Forms that all ETCs, where applicable, must use in order to certify a
consumers' eligibility for Lifeline benefits and the one-per-household
requirements should decrease recordkeeping and compliance burdens upon
small entities by having the Commission develop Lifeline forms for the
use by providers and subscribers. Ultimately, this standardized
approach will increase overall compliance with the Commission's rules
and facilitate administration of the Lifeline program.
6. Steps Taken To Minimize the Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
423. The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed 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 and
reporting requirements under the rule for such 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 such small
entities.''
424. This rulemaking could impose minimal additional burdens on
small entities. We considered alternatives to the rulemaking changes
that increase projected reporting, recordkeeping and other compliance
requirements for small entities.
a. Alternatives Permitted
425. Lifeline Obligations for ETCs (Lifeline Voice Service
Obligation). We grant a conditional forbearance from the Lifeline voice
service obligation for existing ETCs that are not Lifeline-only ETCs.
426. Lifeline Obligations for ETCs (Lifeline Broadband Service
Obligation). We also grant a forbearance to Lifeline-only ETCs from the
requirement to offer BIAS to allow such ETCS to solely offer voice
service. Further, we grant a forbearance to ETCs that are not Lifeline-
only from the requirement to offer Lifeline-BIAS to allow such ETCs to
solely offer voice service in the Lifeline program.
427. While the above forbearances could have a significant impact
on small entities insofar as it would make this conditional forbearance
theoretically available to many small entities (all rate-of-return
incumbent local exchange carriers (ILECs), for instance), it would be a
benefit to small entities, not a burden. However, it is unclear how
many small entities (vs. large entities like price cap ILECs) actually
will take advantage of the forbearances provided.
b. Alternatives Considered and Rejected
428. Minimum service standards (Fixed Broadband). The best source
of subscriber data to obtain minimum service standards for fixed
broadband is the FCC Form 477. Although there were other proposed
methods provided by commenters, such as specific numeric thresholds and
existing Commission testing mechanisms, providers are already required
to report extensively on their offerings on the FCC Form 477 twice a
year; therefore, it is the less burdensome method to acquire data to
set and regularly update the minimum service standards for fixed
broadband speeds.
[[Page 33088]]
429. Minimum service standards (Mobile Broadband). The best source
of data to set and update minimum service standards for mobile
broadband data usage is data set forth in the Commission's annual
Mobile Competition Report. Although a commenter proposed a method
utilizing a numeric threshold, this report is updated annually with
mobile subscriber data; therefore, it is the less burdensome method to
calculate and regularly update the mobile data usage level for mobile
broadband standards.
430. Report to Congress: The Commission will send a copy of this
Third Report and Order, Further Report and Order, and Order on
Reconsideration, including this FRFA, in a report to be sent to
Congress pursuant to the SBREFA. In addition, the Commission will send
a copy of this Third Report and Order, Further Report and Order, and
Order on Reconsideration, including the FRFA, to the Chief Counsel for
Advocacy of the SBA. A copy of the Third Report and Order, Further
Report and Order, and Order on Reconsideration, and the FRFA (or
summaries thereof) will also be published in the Federal Register.
VIII. Ordering Clauses
431. Accordingly, it is ordered, that pursuant to the authority
contained in sections 1 through 4, 201 through 205, 254, 303(r), and
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of
the Telecommunications Act of 1996, 47 U.S.C. 1302, this Third Report
and Order, Further Report and Order, and Order on Reconsideration is
adopted effective June 23, 2016, except to the extent provided herein
and expressly addressed below.
432. It is further ordered, that pursuant to the authority
contained in Sections 1 through 4, 201 through 205, 254, 303(r), and
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of
the Telecommunications Act of 1996, 47 U.S.C. 1302, part 54 of the
Commission's rules, 47 CFR part 54, is amended, and such rule
amendments to Sections 54.201, 54.400, and 54.423 shall be effective 30
days after announcement in the Federal Register of OMB approval of the
subject information collection requirements or December 1, 2016,
whichever is later.
433. It is further ordered that, pursuant to the authority
contained in Sections 1 through 4, 201 through 205, 254, 303(r), and
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of
the Telecommunications Act of 1996, 47 U.S.C. 1302, part 54 of the
Commission's rules, 47 CFR part 54, that the rule amendments to
Sections 54.202(a)(6), (d), and (e) and 54.205(c) are subject to the
PRA and will become effective immediately upon announcement in the
Federal Register of OMB approval of the subject information collection
requirements.
434. It is further ordered that, pursuant to the authority
contained in Sections 1 through 4, 201 through 205, 254, 303(r), and
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of
the Telecommunications Act of 1996, 47 U.S.C. 1302, part 54 of the
Commission's rules, 47 CFR part 54, that the rule amendments to
Sec. Sec. 54.101, 54.401(a)(2), (b), (c), and (f), 54.403(a),
54.405(e)(1) and (e)(3) through (5), 54.407(a), (c)(2), and (d),
54.408, 54.409(a)(2), 54.410(b) through (e) and (g) through (h),
54.411, 54.416(a)(3), 54.420(b), and 54.422(b)(3) are subject to the
PRA and will become effective 60 days after announcement in the Federal
Register of OMB approval of the subject information collection
requirements or December 1, 2016, whichever is later.
435. It is further ordered that, pursuant to the authority
contained in sections 1 through 4, 201 through 205, 254, 303(r), and
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of
the Telecommunications Act of 1996, 47 U.S.C. 1302, part 54 of the
Commission's rules, 47 CFR part 54, that the rule amendment to Sec.
54.410(f) is subject to the PRA and will become effective 60 days after
announcement in the Federal Register of OMB approval of the subject
information collection requirements or January 1, 2017, whichever is
later.
436. It is further ordered that, pursuant to the authority
contained in Sections 1 through 5 and 254 of the Communications Act of
1934, as amended, 47 U.S.C. 151 through 155 and 254, and Sec. 1.429 of
the Commission's rules, 47 CFR 1.429, the Petitions for Reconsideration
filed by GCI on April 2, 2012, Sprint Nextel on April 2, 2012, and the
Petitions for Reconsideration and Clarification filed by TracFone on
April 2, 2012 and USTelecom on April 2, 2012 are granted.
437. It is further ordered that the Commission shall send a copy of
this Third Report and Order, Further Report and Order and Order on
Reconsideration to Congress and to the Government Accountability Office
pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
438. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of the Third Report and Order, Further Report and Order, and Order
on Reconsideration, including the Final Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
List of Subjects in 47 CFR Part 54
Communications common carriers, Reporting and recordkeeping
requirements, Telecommunications, Telephone.
Federal Communications Commission.
Gloria J. Miles,
Federal Register Liaison Officer, Office of the 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: Section 1, 4(i), 5, 201, 205, 214, 219, 220, 254,
303(r), and 403 of the Communications Act of 1934, as amended, and
section 706 of the Communications Act of 1996, as amended; 47 U.S.C.
151, 154(i), 155, 201, 205, 214, 219, 220, 254, 303(r), 403, and
1302 unless otherwise noted.
0
2. Revise Sec. 54.101 to read as follows:
Sec. 54.101 Supported services for rural, insular and high cost
areas.
(a) Services designated for support. Voice telephony services and
broadband service shall be supported by federal universal service
support mechanisms.
(1) Eligible voice telephony services must provide voice grade
access to the public switched network or its functional equivalent;
minutes of use for local service provided at no additional charge to
end users; access to the emergency services provided by local
government or other public safety organizations, such as 911 and
enhanced 911, to the extent the local government in an eligible
carrier's service area has implemented 911 or enhanced 911 systems; and
toll
[[Page 33089]]
limitation services to qualifying low-income consumers as provided in
subpart E of this part.
(2) Eligible broadband Internet access services must provide the
capability to transmit data to and receive data by wire or radio from
all or substantially all Internet endpoints, including any capabilities
that are incidental to and enable the operation of the communications
service, but excluding dial-up service.
(b) An eligible telecommunications carrier eligible to receive
high-cost support must offer voice telephony service as set forth in
paragraph (a)(1) of this section in order to receive federal universal
service support.
(c) An eligible telecommunications carrier (ETC) subject to a high-
cost public interest obligation to offer broadband Internet access
services and not receiving Phase I frozen high-cost support must offer
broadband services as set forth in paragraph (a)(2) of this section
within the areas where it receives high-cost support consistent with
the obligations set forth in this part and subparts D, K, L and M of
this part.
(d) Any ETC must comply with subpart E of this part.
0
3. Amend Sec. 54.201 by adding paragraph (j) to read as follows:
Sec. 54.201 Definition of eligible telecommunications carriers,
generally.
* * * * *
(j) A state commission shall not designate a common carrier as a
Lifeline Broadband Provider eligible telecommunications carrier.
0
4. Amend Sec. 54.202 by adding paragraph (a)(6) and adding paragraphs
(d) and (e) to read as follows:
Sec. 54.202 Additional requirements for Commission designation of
eligible telecommunications carriers.
(a) * * *
(6) For common carriers seeking designation as an eligible
telecommunications carrier for purposes of receiving support only under
subpart E of this part, submit information describing the terms and
conditions of any broadband Internet access service plans offered to
Lifeline subscribers, including details on the speeds offered, data
usage allotments, additional charges for particular uses, if any, and
rates for each such plan. To the extent the eligible telecommunications
carrier offers plans to Lifeline subscribers that are generally
available to the public, it may provide summary information regarding
such plans, such as a link to a public Web site outlining the terms and
conditions of such plans.
* * * * *
(d) A common carrier seeking designation as a Lifeline Broadband
Provider eligible telecommunications carrier must meet the requirements
of paragraph (a) of this section. The Commission should process such
petitions for designation as follows:
(1) If the petitioning common carrier has offered broadband
Internet access service to the public for at least two years before the
date of the filing and serves at least 1,000 non-Lifeline customers
with voice telephony and/or broadband Internet access service as of the
date of the filing, the common carrier's petition for designation as a
Lifeline Broadband Provider eligible telecommunications carrier shall
be deemed granted within 60 days of the submission of a completed
filing unless the Commission notifies the common carrier that the grant
will not be automatically effective.
(2) If the petitioning common carrier provides service on Tribal
lands and is a facilities-based provider more than 50 percent owned by
one or more federally recognized Tribal Nations or Tribal consortia and
actually controlled by one or more federally recognized Tribal Nations
or Tribal consortia, the common carrier's petition for designation as a
Lifeline Broadband Provider eligible telecommunications carrier shall
be deemed granted within 60 days of the submission of a completed
filing unless the Commission notifies the common carrier that the grant
will not be automatically effective.
(3) If the petitioning common carrier does not qualify under
paragraph (d)(1) or (2) of this section, the common carrier's petition
for designation as a Lifeline Broadband Provider eligible
telecommunications carrier shall be acted upon within six months of the
submission of a completed filing.
(e) A provider designated as a Lifeline Broadband Provider (LBP)
may obtain designation as an LBP in additional service areas by
submitting to the Commission a request identifying the service areas in
which the LBP plans to offer Lifeline-supported service and a
certification that there has been no material change to the information
submitted in the petition for which the LBP received designation as an
LBP. Such a request shall be deemed granted five business days after it
is submitted to the Commission, unless the Commission notifies the
applicant that the grant will not be automatically effective.
0
5. Amend Sec. 54.205 by adding paragraph (c) as follows:
Sec. 54.205 Relinquishment of universal service.
* * * * *
(c) In the case of a Lifeline Broadband Provider eligible
telecommunications carrier, a Lifeline Broadband Provider's notice of
relinquishment shall be deemed granted by the Commission 60 days after
the notice is filed, unless the Commission notifies the Lifeline
Broadband Provider that the relinquishment will not be automatically
effective. This paragraph (c) shall not apply to Lifeline Broadband
Providers that also receive high-cost universal service support.
0
6. Amend Sec. 54.400 by revising paragraphs (f) and (j) and adding
paragraphs (l) through (o) to read as follows:
Sec. 54.400 Terms and definitions.
* * * * *
(f) Income. ``Income'' means gross income as defined under section
61 of the Internal Revenue Code, 26 U.S.C. 61, for all members of the
household. This means all income actually received by all members of
the household from whatever source derived, unless specifically
excluded by the Internal Revenue Code, Part III of Title 26, 26 U.S.C.
101 et seq.
* * * * *
(j) Qualifying assistance program. A ``qualifying assistance
program'' means any of the federal or Tribal assistance programs the
participation in which, pursuant to Sec. 54.409(a) or (b), qualifies a
consumer for Lifeline service, including Medicaid; Supplemental
Nutrition Assistance Program; Supplemental Security Income; Federal
Public Housing Assistance; Veterans and Survivors Pension Benefit;
Bureau of Indian Affairs general assistance; Tribally administered
Temporary Assistance for Needy Families (Tribal TANF); Head Start (only
those households meeting its income qualifying standard); or the Food
Distribution Program on Indian Reservations (FDPIR).
* * * * *
(l) Broadband Internet access service. ``Broadband Internet access
service'' is defined as a mass-market retail service by wire or radio
that provides the capability to transmit data to and receive data from
all or substantially all Internet endpoints, including any capabilities
that are incidental to and enable the operation of the communications
service, but excluding dial-up service.
(m) Voice telephony service. ``Voice telephony service'' is defined
as voice grade access to the public switched
[[Page 33090]]
network or its functional equivalent; minutes of use for local service
provided at no additional charge to end users; access to the emergency
services provided by local government or other public safety
organizations, such as 911 and enhanced 911, to the extent the local
government in an eligible carrier's service area has implemented 911 or
enhanced 911 systems; and toll limitation services to qualifying low-
income consumers as provided in subpart E of this part.
(n) Supported services. Voice Telephony services and broadband
Internet access services are supported services for the Lifeline
program.
(o) National Lifeline Eligibility Verifier. The ``National Lifeline
Eligibility Verifier'' or ``National Verifier'' is an electronic and
manual system with associated functions, processes, policies and
procedures, to facilitate the determination of consumer eligibility for
the Lifeline program, as directed by the Commission.
0
7. Amend Sec. 54.401 by revising paragraphs (a)(2) and (b) and
paragraph (c) introductory text and adding paragraph (f) to read as
follows:
Sec. 54.401 Lifeline defined.
(a) * * *
(2) That provides qualifying low-income consumers with voice
telephony service or broadband Internet access service as defined in
Sec. 54.400. Toll limitation service does not need to be offered for
any Lifeline service that does not distinguish between toll and non-
toll calls in the pricing of the service. If an eligible
telecommunications carrier charges Lifeline subscribers a fee for toll
calls that is in addition to the per month or per billing cycle price
of the subscribers' Lifeline service, the carrier must offer toll
limitation service at no charge to its subscribers as part of its
Lifeline service offering.
(b) Eligible telecommunications carriers may allow qualifying low-
income consumers to apply Lifeline discounts to any residential service
plan with the minimum service levels set forth in Sec. 54.408 that
includes fixed or mobile voice telephony service, broadband Internet
access service, or a bundle of broadband Internet access service and
fixed or mobile voice telephony service; and plans that include
optional calling features such as, but not limited to, caller
identification, call waiting, voicemail, and three-way calling.
(1) Eligible telecommunications carriers may permit qualifying low-
income consumers to apply their Lifeline discount to family shared data
plans.
(2) Eligible telecommunications carriers may allow qualifying low-
income consumers to apply Lifeline discounts to any residential service
plan that includes voice telephony service without qualifying broadband
Internet access service prior to December 1, 2021.
(3) Beginning December 1, 2016, eligible telecommunications
carriers must provide the minimum service levels for each offering of
mobile voice service as defined in Sec. 54.408.
(4) Beginning December 1, 2021, eligible telecommunications
carriers must provide the minimum service levels for broadband Internet
access service in every Lifeline offering.
(c) Eligible telecommunications carriers may not collect a service
deposit in order to initiate Lifeline for voice-only service plans
that:
* * * * *
(f) Eligible telecommunications carriers may aggregate eligible
subscribers' benefits to provide a collective service to a group of
subscribers, provided that each qualifying low-income consumer
subscribed to the collective service receives residential service that
meets the requirements of paragraph (a) of this section and Sec.
54.408.
0
8. Amend Sec. 54.403 by revising paragraph (a)(1), redesignating
paragraph (a)(2) as paragraph (a)(3), adding a new paragraph (a)(2),
removing and reserving paragraph (b)(2), and removing paragraph (c) to
read as follows:
Sec. 54.403 Lifeline support amount.
(a) * * *
(1) Basic support amount. Federal Lifeline support in the amount of
$9.25 per month will be made available to an eligible
telecommunications carrier providing Lifeline service to a qualifying
low-income consumer, except as provided in paragraph (a)(2) of this
section, if that carrier certifies to the Administrator that it will
pass through the full amount of support to the qualifying low-income
consumer and that it has received any non-federal regulatory approvals
necessary to implement the rate reduction.
(2) For a Lifeline provider offering either standalone voice
service, subject to the minimum service standards set forth in Sec.
54.408, or voice service with broadband below the minimum standards set
forth in Sec. 54.408, the support levels will be as follows:
(i) Until December 1, 2019, the support amount will be $9.25 per
month.
(ii) From December 1, 2019 until November 30, 2020, the support
amount will be $7.25 per month.
(iii) From December 1, 2020 until November 30, 2021, the support
amount will be $5.25 per month.
(iv) On December 1, 2021, standalone voice service, or voice
service not bundled with broadband which meets the minimum standards
set forth in Sec. 54.408, will not be eligible for Lifeline support
unless the Commission has previously determined otherwise.
(v) Notwithstanding paragraph (a)(2)(iv) of this section, on
December 1, 2021, the support amount for standalone voice service, or
voice service not bundled with broadband which meets the minimum
standards set forth in Sec. 54.408, provided by a provider that is the
only Lifeline provider in a Census block will be the support amount
specified in paragraph (a)(2)(iii) of this section.
* * * * *
0
9. Amend Sec. 54.405 by revising paragraphs (e)(1), (3), and (4) and
adding paragraph (e)(5) to read as follows:
Sec. 54.405 Carrier obligation to offer Lifeline.
* * * * *
(e) * * *
(1) De-enrollment generally. If an eligible telecommunications
carrier has a reasonable basis to believe that a Lifeline subscriber no
longer meets the criteria to be considered a qualifying low-income
consumer under Sec. 54.409, the carrier must notify the subscriber of
impending termination of his or her Lifeline service. Notification of
impending termination must be sent in writing separate from the
subscriber's monthly bill, if one is provided, and must be written in
clear, easily understood language. A carrier providing Lifeline service
in a state that has dispute resolution procedures applicable to
Lifeline termination that requires, at a minimum, written notification
of impending termination, must comply with the applicable state
requirements. The carrier must allow a subscriber 30 days following the
date of the impending termination letter required to demonstrate
continued eligibility. A subscriber making such a demonstration must
present proof of continued eligibility to the carrier consistent with
applicable annual re-certification requirements, as described in Sec.
54.410(f). An eligible telecommunications carrier must de-enroll any
subscriber who fails to demonstrate eligibility within five business
days after the expiration of the subscriber's time to respond. A
carrier
[[Page 33091]]
providing Lifeline service in a state that has dispute resolution
procedures applicable to Lifeline termination must comply with the
applicable state requirements.
* * * * *
(3) De-enrollment for non-usage. Notwithstanding paragraph (e)(1)
of this section, if a Lifeline subscriber fails to use, as ``usage'' is
defined in Sec. 54.407(c)(2), for 30 consecutive days a Lifeline
service that does not require the eligible telecommunications carrier
to assess or collect a monthly fee from its subscribers, an eligible
telecommunications carrier must provide the subscriber 15 days' notice,
using clear, easily understood language, that the subscriber's failure
to use the Lifeline service within the 15-day notice period will result
in service termination for non-usage under this paragraph. Eligible
telecommunications carriers shall report to the Commission annually the
number of subscribers de-enrolled for non-usage under this paragraph.
This de-enrollment information must be reported by month and must be
submitted to the Commission at the time an eligible telecommunications
carrier submits its annual certification report pursuant to Sec.
54.416.
(4) De-enrollment for failure to re-certify. Notwithstanding
paragraph (e)(1) of this section, an eligible telecommunications
carrier must de-enroll a Lifeline subscriber who does not respond to
the carrier's attempts to obtain re-certification of the subscriber's
continued eligibility as required by Sec. 54.410(f); or who fails to
provide the annual one-per-household re-certifications as required by
Sec. 54.410(f). Prior to de-enrolling a subscriber under this
paragraph, the eligible telecommunications carrier must notify the
subscriber in writing separate from the subscriber's monthly bill, if
one is provided, using clear, easily understood language, that failure
to respond to the re-certification request will trigger de-enrollment.
A subscriber must be given 60 days to respond to recertification
efforts. If a subscriber does not respond to the carrier's notice of
impending de-enrollment, the carrier must de-enroll the subscriber from
Lifeline within five business days after the expiration of the
subscriber's time to respond to the re-certification efforts.
(5) De-enrollment requested by subscriber. If an eligible
telecommunications carrier receives a request from a subscriber to de-
enroll, it must de-enroll the subscriber within two business days after
the request.
0
10. Amend Sec. 54.407 by revising paragraphs (a), (c)(2), and (d) to
read as follows:
Sec. 54.407 Reimbursement for offering Lifeline.
(a) Universal service support for providing Lifeline shall be
provided directly to an eligible telecommunications carrier based on
the number of actual qualifying low-income customers it serves directly
as of the first day of the month. After the National Verifier is
deployed in a state, reimbursement shall be provided to an eligible
telecommunications carrier based on the number of actual qualifying
low-income customers it serves directly as of the first day of the
month found in the National Verifier.
* * * * *
(c) * * *
(2) After service activation, an eligible telecommunications
carrier shall only continue to receive universal service support
reimbursement for such Lifeline service provided to subscribers who
have used the service within the last 30 days, or who have cured their
non-usage as provided for in Sec. 54.405(e)(3). Any of these
activities, if undertaken by the subscriber, will establish ``usage''
of the Lifeline service:
(i) Completion of an outbound call or usage of data;
(ii) Purchase of minutes or data from the eligible
telecommunications carrier to add to the subscriber's service plan;
(iii) Answering an incoming call from a party other than the
eligible telecommunications carrier or the eligible telecommunications
carrier's agent or representative;
(iv) Responding to direct contact from the eligible communications
carrier and confirming that he or she wants to continue receiving
Lifeline service; or
(v) Sending a text message.
(d) In order to receive universal service support reimbursement, an
officer of each eligible telecommunications carrier must certify, as
part of each request for reimbursement, that:
(1) The eligible telecommunications carrier is in compliance with
all of the rules in this subpart; and
(2) The eligible telecommunications carrier has obtained valid
certification and recertification forms to the extent required under
this subpart for each of the subscribers for whom it is seeking
reimbursement.
* * * * *
0
11. Add Sec. 54.408 to read as follows:
Sec. 54.408 Minimum service standards.
(a) As used in this subpart, with the following exception of
paragraph (a)(2) of this section, a minimum service standard is:
(1) The level of service which an eligible telecommunications
carrier must provide to an end user in order to receive the Lifeline
support amount.
(2) The minimum service standard for mobile broadband speed, as
described in paragraph (b)(2)(i) of this section, is the level of
service which an eligible telecommunications carrier must both
advertise and provide to an end user.
(b) Minimum service standards for Lifeline supported services will
take effect on December 1, 2016. The minimum service standards set
forth below are subject to the conditions in Sec. 54.401. The initial
minimum service standards, as set forth in paragraphs (b)(1) through
(3) of this section, will be subject to the updating mechanisms
described in paragraph (c) of this section.
(1) Fixed broadband will have minimum service standards for speed
and data usage allowance, subject to the exceptions in paragraph (d) of
this section.
(i) The minimum service standard for fixed broadband speed will be
10 Megabits per second downstream/1 Megabit per second upstream.
(ii) The minimum service standard for fixed broadband data usage
allowance will be 150 gigabytes per month.
(2) Mobile broadband will have minimum service standards for speed
and data usage allowance.
(i) The minimum service standard for mobile broadband speed will be
3G.
(ii) The minimum service standard for mobile broadband data usage
allowance will be:
(A) From December 1, 2016 until November 30, 2017, 500 megabytes
per month;
(B) From December 1, 2017, until November 30, 2018, 1 gigabyte per
month;
(C) From December 1, 2018 until November 30, 2019, 2 gigabytes per
month; and
(D) On and after December 1, 2019, the minimum standard will be
calculated using the mechanism set forth in paragraphs (c)(2)(ii)(A)
through (D) of this section. If the data listed in paragraphs
(c)(2)(ii)(A) through (D) do not meet the criteria set forth in
paragraph (c)(2)(iii) of this section, then the updating mechanism in
paragraph (c)(2)(iii) will be used instead.
(3) The minimum service standard for mobile voice service will be:
(i) From December 1, 2016, until November 30, 2017, 500 minutes;
(ii) From December 1, 2017, until November 30, 2018, 750 minutes;
and
[[Page 33092]]
(iii) On and after December 1, 2018, the minimum standard will be
1000 minutes.
(c) Minimum service standards will be updated using the following
mechanisms:
(1) Fixed broadband will have minimum service standards for speed
and data usage allowance. The standards will updated as follows:
(i) The standard for fixed broadband speed will be updated on an
annual basis. The standard will be set at the 30th percentile, rounded
up to the nearest Megabit-per-second integer, of subscribed fixed
broadband downstream and upstream speeds. The 30th percentile will be
determined by analyzing FCC Form 477 Data. The new standard will be
published in a Public Notice issued by the Wireline Competition Bureau
on or before July 31, which will give the new minimum standard for the
upcoming year. In the event that the Bureau does not release a Public
Notice, or the data are older than 18 months, the minimum standard will
be the greater of:
(A) The current minimum standard; or
(B) The Connect America Fund minimum speed standard for rate-of-
return fixed broadband providers, as set forth in 47 CFR 54.308(a).
(ii) The standard for fixed broadband data usage allowance will be
updated on an annual basis. The new standard will be published in a
Public Notice issued by the Wireline Competition Bureau on or before
July 31, which will give the new minimum standard for the upcoming
year. The updated standard will be the greater of:
(A) An amount the Wireline Competition Bureau deems appropriate,
based on what a substantial majority of American consumers already
subscribe to, after analyzing Urban Rate Survey data and other relevant
data; or
(B) The minimum standard for data usage allowance for rate-of-
return fixed broadband providers set in the Connect America Fund.
(2) Mobile broadband will have minimum service standards for speed
and capacity. The standards will be updated as follows:
(i) The standard for mobile broadband speed will be updated when,
after analyzing relevant data, including the FCC Form 477 data, the
Wireline Competition Bureau determines such an adjustment is necessary.
If the standard for mobile broadband speed is updated, the new standard
will be published in a Public Notice issued by the Wireline Competition
Bureau.
(ii) The standard for mobile broadband capacity will be updated on
an annual basis. The standard will be determined by:
(A) Dividing the total number of mobile-cellular subscriptions in
the United States, as reported in the Mobile Competition Report by the
total number of American households, as determined by the U.S. Census
Bureau, in order to determine the number of mobile-cellular
subscriptions per American household. This number will be rounded to
the hundredths place and then multiplied by;
(B) The percentage of Americans who own a smartphone, according to
the Commission's annual Mobile Competition Report. This number will be
rounded to the hundredths place and then multiplied by;
(C) The average data used per mobile smartphone subscriber, as
reported by the Commission in its annual Mobile Competition Report.
This number will be rounded to the hundredths place and then multiplied
by;
(D) Seventy (70) percent. The result will then be rounded up to the
nearest 250 MB interval to provide the new monthly minimum service
standard for the mobile broadband data usage allowance.
(iii) If the Wireline Competition Bureau does not release a Public
Notice giving new minimum standards for mobile broadband capacity on or
before July 31, or if the necessary data needed to calculate the new
minimum standard are older than 18 months, the data usage allowance
will be updated by multiplying the current data usage allowance by the
percentage of the year-over-year change in average mobile data usage
per smartphone user, as reported in the Mobile Competition Report. That
amount will be rounded up to the nearest 250 MB.
(d) Exception for certain fixed broadband providers. Subject to the
limitations in paragraphs (d)(1) through (4) of this section, the
Lifeline discount may be applied for fixed broadband service that does
not meet the minimum standards set forth in paragraph (b)(1) of this
section. If the provider, in a given area:
(1) Does not offer any fixed broadband service that meets our
minimum service standards set forth in paragraph (b)(1) of this
section; but
(2) Offers a fixed broadband service of at least 4 Mbps downstream/
1 Mbps upstream in that given area; then,
(3) In that given area, a fixed broadband provider may receive
Lifeline funds for the purchase of its highest performing generally
available residential offering, lexicographically ranked by:
(i) Download bandwidth;
(ii) Upload bandwidth; and
(iii) Usage allowance.
(4) A fixed broadband provider claiming Lifeline support under this
section will certify its compliance with this section's requirements
and will be subject to the Commission's audit authority.
(e) Except as provided in paragraph (d) of this section, eligible
telecommunications carriers shall not apply the Lifeline discount to
offerings that do not meet the minimum service standards.
(f) Equipment requirement. (1) Any fixed or mobile broadband
provider, which provides devices to its consumers, must ensure that all
such devices provided to a consumer are Wi-Fi enabled.
(2) A provider may not institute an additional or separate
tethering charge for any mobile data usage that is below the minimum
service standard set forth in paragraph (b)(2) of this section.
(3) Any mobile broadband provider which provides devices to its
consumers must offer at least one device that is capable of being used
as a hotspot. This requirement will change as follows:
(i) From December 1, 2017 to November 30, 2018, a provider that
offers devices must ensure that at least 15 percent of such devices are
capable of being used as a hotspot.
(ii) From December 1, 2018 to November 30, 2019, a provider that
offers devices must ensure that at least 20 percent of such devices are
capable of being used as a hotspot.
(iii) From December 1, 2019 to November 30, 2020, a provider that
offers devices must ensure that at least 25 percent of such devices are
capable of being used as a hotspot.
(iv) From December 1, 2020 to November 30, 2021, a provider that
offers devices must ensure that at least 35 percent of such devices are
capable of being used as a hotspot.
(v) From December 1, 2021 to November 30, 2022, a provider that
offers devices must ensure that at least 45 percent of such devices are
capable of being used as a hotspot.
(vi) From December 1, 2022 to November 30, 2023, a provider that
offers devices must ensure that at least 55 percent of such devices are
capable of being used as a hotspot.
(vii) From December 1, 2023 to November 30, 2024, a provider that
offers devices must ensure that at least 65 percent of such devices are
capable of being used as a hotspot.
(viii) On December 1, 2024, a provider that offers devices must
ensure that at least 75 percent of such devices are capable of being
used as a hotspot.
[[Page 33093]]
0
12. Amend Sec. 54.409 by revising paragraph (a)(2) and removing
paragraph (a)(3) to read as follows:
Sec. 54.409 Consumer qualification for Lifeline.
(a) * * *
(2) The consumer, one or more of the consumer's dependents, or the
consumer's household must receive benefits from one of the following
federal assistance programs: Medicaid; Supplemental Nutrition
Assistance Program; Supplemental Security Income; Federal Public
Housing Assistance; or Veterans and Survivors Pension Benefit.
* * * * *
0
13. Amend Sec. 54.410 by
0
a. Revising paragraphs (b)(1) introductory text, (b)(1)(i)(B),
(b)(1)(ii), (b)(2) introductory text, (b)(2)(i), (c)(1) introductory
text, (c)(1)(ii), (c)(2) introductory text, (c)(2)(i), (d) introductory
text, (d)(1) introductory text, (d)(2) introductory text, and (d)(3)
introductory text;
0
b. Removing paragraph (d)(3)(v);
0
c. Redesignating paragraphs (d)(3)(vi) through (ix) as paragraphs
(d)(3)(v) through (viii);
0
d. Revising paragraphs (e), (f)(1), and (f)(2)(ii) and (iii);
0
e. Adding paragraph (f)(2)(iv);
0
f. Revising paragraphs (f)(3) introductory text, (f)(3)(ii) and (iii),
(f)(4) and (5), and (g); and
0
g. Adding paragraph (h).
The revisions and additions read as follows:
Sec. 54.410 Subscriber eligibility determination and certification.
* * * * *
(b) * * *
(1) Except where the National Verifier, state Lifeline
administrator or other state agency is responsible for the initial
determination of a subscriber's eligibility, when a prospective
subscriber seeks to qualify for Lifeline using the income-based
eligibility criteria provided for in Sec. 54.409(a)(1) an eligible
telecommunications carrier:
(i) * * *
(B) If an eligible telecommunications carrier cannot determine a
prospective subscriber's income-based eligibility by accessing income
databases, the eligible telecommunications carrier must review
documentation that establishes that the prospective subscriber meets
the income-eligibility criteria set forth in Sec. 54.409(a)(1).
Acceptable documentation of income eligibility includes the prior
year's state, federal, or Tribal tax return; current income statement
from an employer or paycheck stub; a Social Security statement of
benefits; a Veterans Administration statement of benefits; a
retirement/pension statement of benefits; an Unemployment/Workers'
Compensation statement of benefit; federal or Tribal notice letter of
participation in General Assistance; or a divorce decree, child support
award, or other official document containing income information. If the
prospective subscriber presents documentation of income that does not
cover a full year, such as current pay stubs, the prospective
subscriber must present the same type of documentation covering three
consecutive months within the previous twelve months.
(ii) Must securely retain copies of documentation demonstrating a
prospective subscriber's income-based eligibility for Lifeline
consistent with Sec. 54.417, except to the extent such documentation
is retained by National Verifier.
(2) Where the National Verifier, state Lifeline administrator, or
other state agency is responsible for the initial determination of a
subscriber's eligibility, an eligible telecommunications carrier must
not seek reimbursement for providing Lifeline service to a subscriber,
based on that subscriber's income eligibility, unless the carrier has
received from the National Verifier, state Lifeline administrator, or
other state agency:
(i) Notice that the prospective subscriber meets the income-
eligibility criteria set forth in Sec. 54.409(a)(1); and
* * * * *
(c) * * *
(1) Except in states where the National Verifier, state Lifeline
administrator, or other state agency is responsible for the initial
determination of a subscriber's program-based eligibility, when a
prospective subscriber seeks to qualify for Lifeline service using the
program-based criteria set forth in Sec. 54.409(a)(2) or (b), an
eligible telecommunications carrier:
* * * * *
(ii) Must securely retain copies of the documentation demonstrating
a subscriber's program-based eligibility for Lifeline, consistent with
Sec. 54.417, except to the extent such documentation is retained by
the National Verifier.
(2) Where the National Verifier, state Lifeline administrator, or
other state agency is responsible for the initial determination of a
subscriber's eligibility, when a prospective subscriber seeks to
qualify for Lifeline service using the program-based eligibility
criteria provided in Sec. 54.409(a)(2) or (b), an eligible
telecommunications carrier must not seek reimbursement for providing
Lifeline to a subscriber unless the carrier has received from the
National Verifier, state Lifeline administrator or other state agency:
(i) Notice that the subscriber meets the program-based eligibility
criteria set forth in Sec. 54.409(a)(2) or (b); and
* * * * *
(d) Eligibility certification form. Eligible telecommunications
carriers and state Lifeline administrators or other state agencies that
are responsible for the initial determination of a subscriber's
eligibility for Lifeline must provide prospective subscribers Lifeline
certification forms that provide the information in paragraphs (d)(1)
through (3) of this section in clear, easily understood language. If a
Federal eligibility certification form is available, entities enrolling
subscribers must use such form to enroll a qualifying low-income
consumer into the Lifeline program.
(1) The form provided by the entity enrolling subscribers must
provide the information in paragraphs (d)(1)(i) through (vi) of this
section:
* * * * *
(2) The form provided by the entity enrolling subscribers must
require each prospective subscriber to provide the information in
paragraphs (d)(2)(i) through (viii) of this section:
* * * * *
(3) The form provided by the entity enrolling subscribers shall
require each prospective subscriber to initial his or her
acknowledgement of each of the certifications in paragraphs (d)(3)(i)
through (viii) of this section individually and under penalty of
perjury:
* * * * *
(e) The National Verifier, state Lifeline administrators or other
state agencies that are responsible for the initial determination of a
subscriber's eligibility for Lifeline must provide each eligible
telecommunications carrier with a copy of each of the certification
forms collected by the National Verifier, state Lifeline administrator
or other state agency for that carrier's subscribers.
(f) * * *
(1) All eligible telecommunications carriers must re-certify all
subscribers 12 months after the subscriber's service initiation date
and every 12 months thereafter, except for subscribers in states where
the National Verifier, state Lifeline administrator, or other state
agency is responsible for the annual re-certification of subscribers'
Lifeline eligibility.
(2) * * *
[[Page 33094]]
(ii) Querying the appropriate income databases, confirming that the
subscriber continues to meet the income-based eligibility requirements
for Lifeline, and documenting the results of that review.
(iii) If the subscriber's program-based or income-based eligibility
for Lifeline cannot be determined by accessing one or more state
databases containing information regarding enrollment in qualifying
assistance programs, then the National Verifier, state Lifeline
administrator, or state agency may obtain a signed certification from
the subscriber on a form that meets the certification requirements in
paragraph (d) of this section. If a Federal eligibility recertification
form is available, entities enrolling subscribers must use such form to
re-certify a qualifying low-income consumer.
(iv) In states in which the National Verifier has been implemented,
the eligible telecommunications carrier cannot re-certify subscribers
not found in the National Verifier by obtaining a certification form
from the subscriber.
(3) Where the National Verifier, state Lifeline administrator, or
other state agency is responsible for re-certification of a
subscriber's Lifeline eligibility, the National Verifier, state
Lifeline administrator, or state agency must confirm a subscriber's
current eligibility to receive a Lifeline service by:
* * * * *
(ii) Querying the appropriate income databases, confirming that the
subscriber continues to meet the income-based eligibility requirements
for Lifeline, and documenting the results of that review.
(iii) If the subscriber's eligibility for Lifeline cannot be
determined by accessing one or more databases containing information
regarding enrollment in qualifying assistance programs, then the
National Verifier, state Lifeline administrator, or state agency may
obtain a signed certification from the subscriber on a form that meets
the certification requirements in paragraph (d) of this section. If a
Federal eligibility recertification form is available, entities
enrolling subscribers must use such form to recertify a qualifying low-
income consumer.
(4) Where the National Verifier, state Lifeline administrator, or
other state agency is responsible for re-certification or subscribers'
Lifeline eligibility, the National Verifier, state Lifeline
administrator, or other state agency must provide to each eligible
telecommunications carrier the results of its annual re-certification
efforts with respect to that eligible telecommunications carrier's
subscribers.
(5) If an eligible telecommunications carrier is unable to re-
certify a subscriber or has been notified by the National Verifier, a
state Lifeline administrator, or other state agency's inability to re-
certify a subscriber, the eligible telecommunications carrier must
comply with the de-enrollment requirements provided for in Sec.
54.405(e)(4).
(g) One-Per-Household Worksheet. The prospective subscriber will
complete a form certifying compliance with the one-per-household rule
upon initial enrollment. Such form will provide an explanation of the
one-per-household rule; include a check box that the applicant can mark
to indicate that he or she lives at an address occupied by multiple
households; a space for the applicant to certify that he or she shares
an address with other adults who do not contribute income to the
applicant's household and share in the household's expenses or benefit
from the applicant's income; and the penalty for consumer's failure to
make the required one-per-household certification, i.e. de-enrollment.
At re-certification, if there are changes to the subscriber's household
that would prevent the subscriber from accurately certifying to Sec.
54.410(d)(3)(vi), then the subscriber must complete a new One-Per-
Household Worksheet. If a Federal One Per Household Form is available,
entities enrolling subscribers must use such form.
(h) National Verifier transition. As the National Verifier is
implemented in a state, the obligations in paragraphs (b) through (g)
of this section with respect to the National Verifier and eligible
telecommunications carriers will also take effect.
0
14. Add Sec. 54.411 to read as follows:
Sec. 54.411 Lifeline benefit portability.
(a) A provider shall not seek or receive reimbursement through the
Lifeline program for service provided to a subscriber who has used the
Lifeline benefit to enroll in a qualifying Lifeline-supported broadband
Internet access service offering with another Lifeline provider within
the previous 12 months.
(b) A provider shall not seek or receive reimbursement through the
Lifeline program for service provided to a subscriber who has used the
Lifeline benefit to enroll in a qualifying Lifeline-supported voice
telephony service offering with another Lifeline provider within the
previous 60 days.
(c) Notwithstanding paragraphs (a) and (b) of this section, a
provider may seek and receive reimbursement through the Lifeline
program for service provided to a subscriber prior to the completion of
the 12-month period described in paragraph (a) of this section or the
60-day period described in paragraph (b) of this section if:
(1) The subscriber moves their residential address;
(2) The subscriber's current provider ceases operations or
otherwise fails to provide service;
(3) The provider has imposed late fees for non-payment greater than
or equal to the monthly end-user charge for the supported service; or
(4) The subscriber's current provider is found to be in violation
of the Commission's rules during the 12-month period and the subscriber
is impacted by such violation.
(d) If a subscriber transfers his or her Lifeline benefit pursuant
to paragraph (c) of this section, the subscriber's Lifeline benefit
will apply to the newly selected service until the end of the original
12-month period. In these circumstances, the subscriber is not required
to re-certify eligibility until the end of the original 12-month
period. The subscriber's original provider must provide the
subscriber's eligibility records to either the subscriber's new
provider or the subscriber to comply with the 12-month service period.
0
15. Amend Sec. 54.416 by adding paragraph (a)(3) to read as follows:
Sec. 54.416 Annual certifications by eligible telecommunications
carriers.
(a) * * *
(3) An officer of the eligible telecommunications carrier must
certify that the carrier is in compliance with the minimum service
levels set forth in Sec. 54.408. Eligible telecommunications carriers
must make this certification annually to the Administrator as part of
the carrier's submission of re-certification data pursuant to this
section.
* * * * *
0
16. Amend Sec. 54.420 by revising paragraph (b) to read as follows:
Sec. 54.420 Low income program audits.
* * * * *
(b) Audit requirements for new eligible telecommunications
carriers. After a company is designated for the first time in any state
or territory, the Administrator will audit that new eligible
telecommunications carrier to assess its overall compliance with the
rules in this subpart and the company's internal controls regarding
these regulatory requirements. This audit should be conducted within
the carrier's first twelve months of seeking federal low-income
Universal Service Fund
[[Page 33095]]
support, unless otherwise determined by the Office of Managing
Director.
0
17. Amend Sec. 54.422 by revising paragraph (b)(3) to read as follows:
Sec. 54.422 Annual reporting for eligible telecommunications carriers
that receive low-income support.
* * * * *
(b) * * *
(3) Certification of compliance with applicable minimum service
standards, as set forth in Sec. 54.408, service quality standards, and
consumer protection rules;
* * * * *
0
18. Add Sec. 54.423 to read as follows:
Sec. 54.423 Budget.
(a) Amount of the annual budget. The initial annual budget on
federal universal support for the Lifeline program shall be $2.25
billion.
(1) Inflation increase. In funding year 2016 and subsequent funding
years, the $2.25 billion funding cap on federal universal service
support for Lifeline shall be automatically increased annually to take
into account increases in the rate of inflation as calculated in
paragraph (a)(2) of this section.
(2) Increase calculation. To measure increases in the rate of
inflation for the purposes of paragraph (a) of this section, the
Commission shall use the Consumer Price Index for all items from the
Department of Labor, Bureau of Labor Statistics. To compute the annual
increase as required by this paragraph (a), the percentage increase in
the Consumer Price Index from the previous year will be used. For
instance, the annual increase in the Consumer Price Index from 2015 to
2016 would be used for the 2017 funding year. The increase shall be
rounded to the nearest 0.1 percent by rounding 0.05 percent and above
to the next higher 0.1 percent and otherwise rounding to the next lower
0.1 percent. This percentage increase shall be added to the amount of
the annual funding cap from the previous funding year. If the yearly
average Consumer Price Index decreases or stays the same, the annual
funding cap shall remain the same as the previous year.
(3) The Wireline Competition Bureau shall issue a public notice on
or before July 31 containing the results of the calculations described
in Sec. 54.403(a)(2) and setting the budget for the upcoming year
beginning on January 1.
(b) If spending in the Lifeline program meets or exceeds 90 percent
of the Lifeline budget in a calendar year, the Wireline Competition
Bureau shall prepare a report evaluating program disbursements and
describing the reasons for the program's growth along with any other
information relevant to the operation of the Lifeline program. The
Bureau shall submit the report to the Commission by July 31st of the
following year.
[FR Doc. 2016-11284 Filed 5-23-16; 8:45 am]
BILLING CODE 6712-01-P