As previously reported, in October 2014 TracFone filed an Emergency Petition with the FCC asking it to preempt state 911 fees on Lifeline subscribers who receive no-charge wireless Lifeline service. In 2015, it tweaked its strategy and argued in its first and second supplements that the FCC should instead revise the FCC’s rules to prohibit states from imposing taxes that:

  1. Would reduce Lifeline customers’ net support below FCC mandated levels; and
  2. Create a financial burden on ETCs by requiring them to pay taxes on behalf of their Lifeline customers.

On Jan. 8, 2016, however, TracFone withdrew its Emergency Petition from the FCC altogether. In its withdrawal letter, TracFone explained that the issue should instead be adjudicated by the federal courts in two pending cases, the latter of which involves TracFone: Virgin Mobile USA, L.P. v. State of Indiana and Indiana Statewide 911 Board, No. 1:15-cv 1105 SEB-DKL (S.D. Ind.) and Indiana Statewide 911 Board v. Virgin Mobile USA. L.P., et al, No. 1:15-cv-1376-WTL-TAB (S.D. Ind.).

Both cases were filed in 2015 and their respective outcomes could have significant financial implications for ETCs moving forward, particularly those whose offer service packages entirely paid for by the $9.25 federal Lifeline subsidy. In the first case listed above, Virgin Mobile is challenging the legality of a new Indiana law that imposes 911 surcharges on Lifeline providers. In the latter case, the Indiana Statewide 911 Board is seeking to collect approximately $3.72 million in allegedly past-due 911 fees from competing providers of Lifeline service.