On Aug. 5, 2011, the Federal Communications Commission (FCC) issued a Public Notice seeking further comments in its proceeding to reform the federal Lifeline and Link Up programs, which are funded by the Universal Service Fund. (The Public Notice may be accessed here. This further inquiry seeks additional comment on four issues that were initially raised in the FCC’s March 4, 2011 notice of proposed rulemaking (NPRM) that seeks to implement comprehensive reform of the program. See prior client update here.)

The four areas of particular focus in this latest inquiry are:

  1. How to structure a pilot program to fund broadband services with Lifeline and Link Up support in order to encourage greater consumer adoption;
  2. Whether and how to enforce a rule limiting Lifeline service to one line per residential address or family (and when exceptions should be made);
  3. Whether to revise the definition of Link Up and/or reduce Link Up support; and
  4. How to improve the methodology for annual verification of consumer eligibility.

Broadband pilot program

The Public Notice asks for further comments on several aspects of the broadband pilot program that was proposed last March. There is widespread support at the FCC for transitioning Lifeline and Link Up support to funding broadband services, although not likely to the exclusion of telephone service. Second, the FCC asks about its statutory authority to permit the funding of broadband equipment and training, as some have proposed, with federal universal service funds. Equipment and consumer training are seen by many as barriers to broadband adoption. Third, it asks whether it should adjust eligibility criteria for the pilot program (as opposed to the criteria used for consumers seeking telephone service) in order to maximize participation. Fourth, the FCC seeks more information about whether the pilot program should mandate that participants not be required to switch service providers or purchase bundled service packages in order to enroll. Fifth, the FCC asks for recommendations about the best structure for the pilot program and its evaluation of its success.

One-per-residence limitation

The Public Notice also seeks more comments about whether a rule limiting Lifeline services to one line per residence or per household is administratively feasible. Currently, the rules implementing the FCC’s “one per residence” policy are unclear and provide service providers with little guidance in complex living arrangements such as group homes and homeless shelters. At issue specifically is how to define “household” and how to incorporate important exceptions to the one-per-residence rule, such as whether to adopt a one-per-room rule for group homes.

Link up

The FCC seeks further comments on whether the Link Up program should provide reimbursement only for service initiations that involve the physical installation of facilities, which is a rare event these days even for traditional wireline services. Currently, the FCC’s rule governing Link Up reimburses carriers for discounts to their standard charges for “service activation,” rather than a physical installation. The FCC also asks whether Link Up support should be scaled down below the current maximum of $30 per activation or eliminated altogether except in certain circumstances such as new builds.  Although elimination of Link Up support is one that was proposed by Sprint and is supported by some state commissions, it is anticipated that the reduction or elimination of Link Up will be controversial for providers who focus on marketing to low income consumers—especially those that offer very low priced Lifeline plans and thus have limited alternative sources for recovering their activation costs. 

Verification of consumer eligibility through sampling

Finally, the Public Notice asks for comments regarding proposed changes to its rules that would establish a uniform sampling methodology for conducting the annual consumer eligibility verification that would apply to ETCs in all states. Specifically, the FCC asks whether there are any modifications to its proposal that would make it easier to administer for smaller ETCs, such as permitting these ETCs to survey a smaller number of respondents.

Comments addressing these issues are due by Aug. 26, 2011. Reply comments will be due on Sept. 2, 2011. DWT is working closely with clients that provide Low Income services to consumers in this proceeding, as well as in matters pending before the Universal Service Administrative Company (USAC) and state public utility commissions. In addition, DWT is representing multiple carriers throughout the development and implementation of an interim duplicate resolution process designed to reduce waste, fraud, and abuse in the Lifeline program. If you have any questions regarding the potential impact of the reforms considered in the new Public Notice or the earlier NPRM on your business, or proceedings at USAC or state commissions, please do not hesitate to contact us.