Today, the U.S. District Court for the Northern District of Georgia issued a Preliminary Injunction halting implementation of a new Georgia Public Service Commission (GPSC) rule (Utility Rule 515-12-1-.35(3)(f)) that would have required Lifeline Eligible Telecommunications Carriers (ETCs) in the state to bill and collect a minimum monthly rate of $5 or to provide a minimum of 500 minutes per month to Lifeline customers.  This minimum rate rule was adopted by the GPSC on October 15 and would have become effective on January 31, 2014.  The injunction,  sought by CTIA-The Wireless Association in a challenge to the rule brought on behalf of wireless Lifeline ETCs, comes only one day after a hearing on the issue, and it effectively strikes down the Georgia rule unless the GPSC ultimately prevails on the merits of the lawsuit—a result that today’s decision renders very unlikely.

The short but pointed opinion issued by federal district judge Richard W. Story found that CTIA had demonstrated all of the four elements required to obtain an injunction: (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable injury if the injunction is not granted; (3) the threatened injury outweighs the damage to the opposing party; and (4) granting the injunction would not be adverse to the public interest.  Specifically, the court found that the requirement to bill and collect a minimum monthly service rate of $5.00 per month is clearly a rate regulation preempted by section 332(c)(3)(A) of the federal Communications Act, which provides that “no state or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service.”  The court also found that “the alternative minimum service requirement of 500 minutes per month also regulates rates because the GPSC chose a level of service at which it believed the ETCs would charge a rate high enough to deter households from signing up for multiple lines;” that a substantial threat of irreparable injury to Lifeline ETCs existed because they would be “likely to lose customers and goodwill” if they had to raise rates to comply with the rule; that the threat of harm to ETCs’ ability to participate in the Lifeline program outweighs the harm of maintaining the status quo; that even if the status quo may permit some level of fraud in the Lifeline program, the public interest tilts in favor of providing telephone services to low-income households that otherwise would be unable to afford mobile phones; and finally, that the injunction would not harm the public interest in light of Congress’s preemption of state regulation in this area.

The GPSC’s next step is unknown.  It could appeal the injunction order; continue to pursue the case on the merits while the injunction remains in place; or accept the court’s ruling and perhaps propose new rules that may survive in court.  Pending such new developments, the $5 minimum rate rule will not take effect.