[Federal Register Volume 76, Number 56 (Wednesday, March 23, 2011)]
[Proposed Rules]
[Pages 16482-16519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-6557]



[[Page 16481]]

Vol. 76

Wednesday,

No. 56

March 23, 2011

Part II





Federal Communications Commission





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47 CFR Part 54



Lifeline and Link Up Reform and Modernization; Federal-State Joint 
Board on Universal Service; Lifeline and Link-Up; Proposed Rule

  Federal Register / Vol. 76 , No. 56 / Wednesday, March 23, 2011 / 
Proposed Rules  

[[Page 16482]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 11-42 and 03-109, CC Docket No. 96-45; FCC 11-32]


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

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) puts forward a set of proposals to reform and modernize 
Lifeline/Link Up, including recommendations of the Federal-State Joint 
Board on Universal Service, Government Accountability Office, and the 
National Broadband Plan. The reforms proposed will significantly 
bolster protections against waste, fraud, and abuse; control the size 
of the program; strengthen program administration and accountability; 
improve enrollment and outreach efforts; and support pilot projects 
that would assist the Commission in assessing strategies to increase 
broadband adoption, while not increasing overall program size.

DATES: Comments are due on or before April 21, 2011, reply comments on 
Sections IV, V (Subsection A), VII (Subsections B & D) are due on or 
before May 10, 2011, and reply comments on the remaining sections are 
due on or before May 25, 2011.

ADDRESSES: You may submit comments, identified by CC Docket No. 96-45 
and WC Docket Nos. 03-109 and 11-42, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: [email protected] or phone: (202) 
418-0530 or TTY: (202) 418-0432.
     In addition to filing comments with the Secretary, a copy 
of any comments on the Paperwork Reduction Act information collection 
requirements contained herein should be submitted to the Federal 
Communications Commission via e-mail to [email protected] and to 
[email protected] and to Nicholas A. Fraser, Office of Management 
and Budget, via e-mail to [email protected] or via fax 
at 202-395-5167.

For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Kimberly Scardino, Wireline 
Competition Bureau, (202) 418-1442 or TTY: (202) 418-0484. For 
additional information concerning the Paperwork Reduction Act 
information collection requirements contained in this document contact 
Cathy Williams on (202) 418-2918.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rulemaking (NPRM) in WC Docket Nos. 03-109 and 11-
42, CC Docket No. 96-45, FCC 11-32, adopted March 3, 2011, and released 
March 4, 2011. The complete text of this document is available for 
inspection and copying during normal business hours in the FCC 
Reference Information Center, Portals II, 445 12th Street, SW., Room 
CY-A257, Washington, DC 20554. The document may also be purchased from 
the Commission's duplicating contractor, Best Copy and Printing, Inc., 
445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 
(800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898, or via the 
Internet at http://www.bcpiweb.com. It is also available on the 
Commission's Web site at http://www.fcc.gov.
    Pursuant to Sec. Sec.  1. 1.415 and 1.419 of the Commission's 
rules, interested parties may file comments and reply comments on or 
before the dates indicated on the first page of this document. Comments 
may be filed using: (1) The Commission's Electronic Comment Filing 
System (ECFS); (2) the Federal Government's eRulemaking Portal; or (3) 
by filing paper copies. See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121, May 1, 1998.
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/
or the Federal eRulemaking Portal: http://www.regulations.gov. Filers 
should follow the instructions provided on the Web site for submitting 
comments.
    [cir] For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket or rulemaking number. Parties may also submit 
an electronic comment by Internet e-mail. To get filing instructions, 
filers should send an e-mail to [email protected], and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
    [cir] Paper Filers: Parties who choose to file by paper must file 
an original and four copies of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
     Filings can be sent by hand or messenger delivery, by 
commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although we continue to experience delays in 
receiving U.S. Postal Service mail). All filings must be addressed to 
the Commission's Secretary, Office of the Secretary, Federal 
Communications Commission.
    [cir] The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
    [cir] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [cir] U.S. Postal Service first-class, Express, and Priority mail 
should be addressed to 445 12th Street, SW., Washington, DC 20554.
    In addition, one copy of each pleading must be sent to the 
Commission's duplicating contractor, Best Copy and Printing, Inc, 445 
12th Street, SW., Room CY-B402, Washington, DC 20554; Web site: http://www.bcpiweb.com; phone: 1-800-378-3160. Furthermore, three copies of 
each pleading must be sent to Kimberly Scardino, Telecommunications 
Access Policy Division, Wireline Competition Bureau, 445 12th Street, 
Room 5-B448, Washington, DC 20554; e-mail [email protected], 
and Charles Tyler, Telecommunications Access Policy Division, Wireline 
Competition Bureau, 445 12th Street, SW., Room 5-A452, Washington, DC 
20554; e-mail: [email protected].

[[Page 16483]]

    Filings and comments are also available for public inspection and 
copying during regular business hours at the FCC Reference Information 
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 
20554. Copies may also be purchased from the Commission's duplicating 
contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554. Customers may contact BCPI through its Web site: http://www.bcpiweb.com, by e-mail at [email protected], by telephone at (202) 
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (tty), or by 
facsimile at (202) 488-5563.
    To request materials in accessible formats for people with 
disabilities (braille, large print, electronic files, audio format), 
send an e-mail to [email protected] or call the Consumer & Governmental 
Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY). 
Contact the FCC to request reasonable accommodations for filing 
comments (accessible format documents, sign language interpreters, 
CART, etc.) by e-mail: [email protected]; phone: (202) 418-0530 or TTY: 
(202) 418-0432.
    To view or obtain a copy of this information collection request 
(ICR) submitted to OMB: (1) Go to this OMB/GSA Web page: http://www.reginfo.gov/public/do/PRAMain, (2) look for the section of the Web 
page called ``Currently Under Review,'' (3) click on the downward-
pointing arrow in the ``Select Agency'' box below the ``Currently Under 
Review'' heading, (4) select ``Federal Communications Commission'' from 
the list of agencies presented in the ``Select Agency'' box, (5) click 
the ``Submit'' button to the right of the ``Select Agency'' box, and 
(6) when the list of FCC ICRs currently under review appears, look for 
the OMB control number of this ICR as shown in the Supplementary 
Information section below (or its title if there is no OMB control 
number) and then click on the ICR Reference Number. A copy of the FCC 
submission to OMB will be displayed.
    For further information regarding this proceeding, contact Kimberly 
Scardino, Wireline Competition Bureau at (202) 418-1442, 
[email protected].

Initial Paperwork Reduction Act of 1995 Analysis

    This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments 
are due May 23, 2011.
    Comments on the proposed information collection requirements should 
address: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology. In 
addition, pursuant to the Small Business Paperwork Relief Act of 2002, 
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment 
on how we might further reduce the information collection burden for 
small business concerns with fewer than 25 employees.
    OMB Control Number: 3060-0819.
    Tile: Lifeline Assistance (Lifeline) Connection Assistance (Link-
Up) Reporting Worksheet and Instructions (47 CFR 54.400-54.417).
    Form Number: 497.
    Type of Review: Revision of a currently approved collection.
    Respondents: Individuals or households; Business or other for-
profit.
    Number of Respondents and Responses: 8,601,400 respondents; 
8,601,400 responses.
    Estimated Time per Response: 2.5 Hours.
    Obligation to Respond: Required to retain benefits.
    Frequency of Response: On occasion, Monthly, Annually, Other 1-
Time.
    Total Annual Burden: 878,874 hours.
    Annual Cost Burden: $829,487.5.
    Privacy Impact Assessment: Yes. The Commission is preparing the 
Privacy Impact Assessment.
    Nature and Extent of Confidentiality: The Commission is not 
requesting that the respondents submit confidential information to the 
FCC. Respondents may, however, request confidential treatment for 
information they believe to be confidential under 47 CFR 0.459 of the 
Commission's rules.
    Needs and Uses: Eligible Telecommunications carriers are permitted 
to receive universal service support reimbursement for offering certain 
services to qualifying low-income customers. The telecommunciations 
carriers must file FCC Form 497 to solicit reimbursement. Collection of 
this data is necessary for the administor to accurately provide 
settlements for the low-income programs according to Commission rules. 
The Commission has issued a Notice of Proposed Rulemaking (FCC 11-32) 
that proposes new and/or modified Commission rules to improve the 
effectiveness of the low-income support mechanism. As part of the 
Lifeline and Link Up Reform and Modernization NPRM, the Commission 
proposes a series of revisions to the information collected by ETCs and 
their Lifeline and Link Up subscribers, and provided to USAC to 
strengthen protections against waste, fraud, and abuse. The NPRM also 
proposes a Lifeline Broadband Pilot Program.

I. Introduction

    1. Lifeline and Link Up are a critical part of the Commission's 
universal service mission, ensuring that we implement Congress's 
directive to ensure the availability of basic communications services 
to all Americans, including low-income consumers. For more than two 
decades, Lifeline and Link Up (together, ``Lifeline/Link Up'' or ``the 
program'') have helped tens of millions of Americans afford basic phone 
service, providing a ``lifeline'' for essential daily communications as 
well as emergencies. But recent technological, market, and regulatory 
changes have put increasing strain on the program. Today, we begin to 
comprehensively reform and modernize the Lifeline and Link Up program. 
Building on proposals from the National Broadband Plan, as well as 
recent recommendations from the Federal-State Joint Board on Universal 
Service (``Joint Board'') and the Government Accountability Office 
(GAO), the reforms proposed here will significantly bolster protections 
against waste, fraud, and abuse; control the size of the program; 
strengthen program administration and accountability; improve 
enrollment and outreach efforts; and support pilot projects that would 
assist the Commission in assessing strategies to increase broadband 
adoption, while not increasing overall program size.
    2. Our effort is consistent with the Commission's ongoing 
commitment to re-examine and modernize all components of USF to 
increase accountability and efficiency, while supporting broadband 
deployment and adoption. The Commission has already made important 
strides in this area: We have modernized our E-rate program so schools 
and libraries can get faster Internet connections and access 21st 
century learning tools. We have proposed changes to our rural health

[[Page 16484]]

care program so patients at rural clinics can benefit from broadband-
enabled care such as remote consultations with specialists anywhere in 
the country. And we have proposed a Mobility Fund and a Connect America 
Fund to spur the build out of broadband networks, both mobile and 
fixed, in areas of the country that are uneconomic to serve.
    3. The Commission has not systematically re-examined Lifeline/Link 
Up since the passage of the 1996 Act. During this period, consumers 
have increasingly turned to wireless service, and Lifeline/Link Up now 
provides many participants discounts on wireless phone service. In the 
last several years, Lifeline/Link Up has grown significantly, from an 
inflation-adjusted $667 million in 2000 to $1.3 billion in 2010, with 
new participation by firms, such as pre-paid wireless providers, that 
focus on serving low-income consumers. The time has come to review the 
program holistically, address the risks and challenges it now presents, 
and ensure that it is on a firm footing to efficiently and effectively 
achieve its statutory purpose.
    4. Accordingly, last year the Commission asked the Joint Board to 
recommend reforms focused on eliminating waste, fraud, and abuse; 
controlling costs; and improving program performance and 
accountability. In response, the Joint Board recommended that the 
Commission: (1) Encourage automatic enrollment as a best practice for 
all States; (2) adopt uniform minimum verification procedures and 
sampling criteria that would apply to all ETCs in all States; (3) allow 
States to utilize different and/or additional verification procedures 
so long as these procedures are at least as effective in detecting 
waste, fraud, and abuse as the uniform minimum required procedures; (4) 
require all ETCs in all States to submit the data results of their 
verification sampling to the Commission, the States, and the Universal 
Service Administrative Company and make the results publicly available; 
and (5) adopt mandatory outreach requirements for all ETCs that receive 
low-income support and maintain advisory guidelines for States with 
respect to performing low-income outreach. We seek comment on the Joint 
Board's recommendations here. The Wireline Competition Bureau has also 
taken a number of steps to combat waste, fraud, and abuse, including 
requiring one provider to contact annually all of its Lifeline 
subscribers to ensure those customers are only receiving one benefit 
per household and requiring another provider to remove customers from 
its Lifeline roster if they do not use their phones for sixty days. And 
late last year, the GAO issued a report with recommendations for 
program reforms, which also inform our proposals here.
    5. This Notice of Proposed Rulemaking (NPRM) puts forward a set of 
proposals to reform and modernize Lifeline/Link Up, including 
recommendations of the Joint Board, GAO, and the National Broadband 
Plan.
    6. We begin by proposing specific performance goals for the 
program, and metrics to measure its performance in advancing the 
universal service objectives established by Congress. We then propose 
immediate steps to address waste, fraud, and abuse and to bolster 
mechanisms to detect and deter rule violations. In particular, we 
propose to strengthen our rules and improve the incentives of program 
participants to ensure that the program does not provide multiple, 
duplicative discounts to the same residential address. We also propose 
to eliminate reimbursement for certain services, including initiation 
fees that may be inflated or selectively applied only to low-income 
households. To reduce waste by ensuring that the program supports only 
communications services that consumers actually use, we propose to 
eliminate funding for services that go unused for more than sixty days. 
We seek comment on expanding oversight, including through more 
extensive audits. We also seek comment on a proposal to impose an 
annual funding cap on Lifeline/Link Up, either temporarily--until 
implementation of the reforms proposed in this NPRM--or permanently.
    7. This NPRM also addresses the unique situations facing residents 
on Tribal lands, who historically have had phone penetration 
substantially below the national average. We propose to clarify 
eligibility requirements for low-income Tribal households, and to 
permit Tribal enrollment based on participation in the Food 
Distribution Program on Indian Reservations.
    8. This NPRM also seeks comment on a number of proposals to 
streamline and improve overall program administration. We ask whether 
the current system--in which responsibility for enrolling customers and 
ensuring their continued eligibility is split among carriers, State 
agencies, and third-party administrators--provides the right framework 
for prudent management of public resources and effective program 
administration. We propose to require all States to utilize the same 
baseline eligibility requirements that exist in our Federal rules, 
which could streamline enrollment and facilitate verification of 
ongoing eligibility, and seek comment on allowing States to use 
eligibility standards that supplement the minimum Federal uniform 
standards. Consistent with the recommendation of the Joint Board, we 
propose uniform national standards for the minimum verification of 
ongoing customer eligibility to stay enrolled in Lifeline and seek 
comment on whether States should be permitted to impose additional 
verification requirements beyond that Federal standard. We also seek 
comment on a proposal to use an automated information management system 
to prevent duplicate claims for support, provide real-time electronic 
verification of consumer eligibility, and provide a means of ongoing 
verification of eligibility.
    9. We also ask how the program should be modernized in light of 
significant marketplace changes in the last fifteen years. We seek to 
develop a record on what basic services the program should support, and 
we seek comment on whether the current framework for determining 
reimbursement levels remains appropriate in an environment when many 
service offerings are not rate regulated.
    10. We also propose reforms to put Lifeline/Link Up on a more solid 
footing to achieve Congress's goal of addressing the 21st century 
challenge of helping low-income households adopt broadband. Although 
access to affordable voice service remains vital to consumers, 
supporting basic voice service alone may no longer be adequate to meet 
the basic communications needs of low-income Americans. Broadband is 
becoming an essential communications platform. Broadband can help 
working parents stay involved in their child's education, enroll in and 
complete a distance-learning class to improve professional skills, and 
complete everyday tasks like paying bills and shopping for necessities. 
Broadband can help children in inner-city neighborhoods and remote 
rural towns access high-quality online educational content that might 
not otherwise be available to them. Broadband can help the unemployed 
search for jobs and apply for job postings, many of which are simply 
not available offline.
    11. But many low-income Americans cannot afford a home broadband 
connection. Our 2010 Broadband Consumer Survey found that while 93 
percent of households with incomes greater than $75,000 have broadband 
at home, only 40 percent of adults with household incomes less than 
$20,000 have broadband at home. And consumers cited cost as a primary

[[Page 16485]]

obstacle to adoption. This gap in broadband adoption is significantly 
greater than the gap in telephone penetration rates. While Lifeline and 
Link Up have significantly narrowed the telephone subscribership gap 
between low-income households and the national average, a new divide 
has emerged for broadband.
    12. Consistent with our statutory obligation to ensure access to 
quality, affordable communications, we seek comment on proposals to 
ensure Lifeline and Link Up meet the modern communications needs of 
low-income consumers. In particular, we propose that eligible 
households be permitted to use Lifeline discounts on bundled voice and 
broadband service offerings. We also seek comment on how best to design 
a broadband pilot program that will help inform the Commission's 
inquiry into meeting the 21st century communications needs of low-
income consumers.

II. Establishing Program Goals and Measuring Performance

    13. As we move forward to reform and modernize the Commission's 
low-income support mechanisms, we seek comment on the program's 
performance goals, consistent with our statutory obligations, and on 
how best to measure the program's performance in achieving those goals.
    14. In establishing performance goals, we are guided in the first 
instance by the Act. Section 254(b) outlines the principles upon which 
the Commission and the Joint Board are to base policies for the 
``preservation and advancement of universal service.'' These principles 
include the notion that quality services should be available at ``just, 
reasonable and affordable'' rates, and that consumers in all regions of 
the nation, including low-income consumers, should have access to 
telecommunications and information services that are reasonably 
comparable to services in urban areas at reasonably comparable rates. 
The statute specifies that there should be specific, predictable, and 
sufficient Federal and State mechanisms to preserve and advance 
universal service. Section 254(c)(1) of the Act also sets forth certain 
criteria that we should consider when deciding what services are 
eligible for universal service support, including the extent to which 
those services are ``essential to education, public health, or public 
safety;'' and ``consistent with the public interest, convenience, and 
necessity.''
    15. Historically, the primary goal for the Lifeline/Link Up program 
has been to facilitate the availability of affordable phone service to 
low-income households. Over time, telephone penetration rates for low-
income consumers have increased, although they still remain below the 
national average and a six percent gap has remained relatively stable 
in recent years.
    16. In 2007, the Commission took initial steps to improve the 
management of the low-income program by adopting measures of efficiency 
and effectiveness. At that time, however, the Commission concluded that 
it did not have sufficient data to determine appropriate performance 
goals. In 2010, GAO noted that while the Commission had developed 
performance measures, it had not quantified its goal of increased 
telephone subscribership among low-income households. GAO also noted 
the importance of developing baseline and trend data for past 
performance, and of identifying target performance levels for multi-
year goals.
    17. Clear performance goals and measures should enable the 
Commission to determine not just whether Federal funding is used for 
intended purposes, but whether that funding is accomplishing the 
program's ultimate objectives. We now propose to establish explicit 
performance goals in order to provide a basis for determining whether 
Lifeline/Link Up is successfully promoting and advancing the 
availability of quality services at just, reasonable, and affordable 
rates for low income consumers.
    18. Consistent with the Act and GAO's recommendations, we seek 
comment on three specific goals and related performance measures for 
the Lifeline/Link Up program.
    19. We propose that our first performance goal be to preserve and 
advance the availability of voice service for low-income Americans. We 
note the vital role that voice telephony continues to play for 
consumers, particularly for public safety and public health. We propose 
to define ``availability'' of voice service for purposes of Lifeline/
Link Up to mean that low-income households have access to that service. 
We propose to adopt a goal of eliminating any difference in the 
availability of voice service for low-income consumers compared to non-
low-income consumers.
    20. We seek comment on how to measure availability of voice 
services for low-income households. The Commission has historically 
measured telephone penetration, which measures voice service 
subscriptions, as a proxy for availability. We propose to establish as 
an outcome measure the difference between voice service subscribership 
rates for low-income households eligible for the Lifeline and Link Up 
program and voice service subscribership rates for the households in 
the next higher income level as defined in the CPS. Based on the most 
recent information this would suggest a target subscribership rate for 
low-income households of 96.9 percent, which is the subscribership rate 
for households with incomes in the $35,000-$39,999 range. We seek 
comment on whether we should use another measure of availability. We 
seek comment on how we should define ``low-income household'' for the 
purpose of this performance goal in light of the differing eligibility 
standards that exist today from State to State. For instance, for 
simplicity, should we use 135% of the Federal Poverty Guidelines for a 
family of four as the threshold for monitoring program performance? We 
seek comment on whether we should instead compare subscribership rates 
for eligible low-income households with some other measure, such as the 
mean or median subscribership rate for all non-low income households.
    21. We propose as our second performance goal to ensure that low-
income consumers can access supported services at just, reasonable, and 
affordable rates. We have concluded in the past that the concept of 
affordability has both an absolute and a relative component. The 
absolute component takes into account whether an individual has enough 
money to pay for a service, and the relative component takes into 
account whether the cost of a service would require a consumer to spend 
a disproportionate amount of his or her income on that service. 
Comparing subscribership or adoption rates among low-income households 
to nationwide subscribership and adoption rates may be useful in 
evaluating whether supported services are available to low-income 
households and affordable in absolute terms, but those comparisons may 
not be dispositive in evaluating whether low-income households can 
afford those services in relative terms. We seek comment on whether an 
appropriate performance measure for this goal would be to compare the 
percentage of low-income household income spent on a voice service to 
the percentage of household income spent on voice service for the next 
highest income range as identified by the Bureau of Labor Statistics.
    22. As our third performance goal, we propose to ensure that our 
universal service policies provide Lifeline/Link Up support that is 
sufficient but not excessive to achieve our goals. Administering USF 
requires balancing

[[Page 16486]]

competing demands, recognizing that increased demand for funds imposes 
a greater contribution burden on consumers and businesses. As we have 
noted previously, the principles outlined in section 254 require us to 
ensure that quality services are affordable for all consumers but we 
must also be ``mindful of the effects that expanded universal service 
mechanisms may have on consumers.'' This goal includes ensuring that 
the Lifeline/Link Up program is accountable and fiscally responsible, 
with support disbursed efficiently and effectively only to those who 
need it.
    23. In the Connect America Fund Notice, 76 FR 11632, March 2, 2011, 
we sought comment on measuring the relative contribution burden on 
consumers over time, defined as total inflation-adjusted expenditures 
of the Fund each year, divided by the number of American households. We 
seek comment here on whether a similar measure would be appropriate for 
Lifeline/Link Up, specifically tracking whether the inflation-adjusted 
Lifeline/Link Up expenditure per American household is increasing or 
decreasing over time. In 2010, the contribution burden for Lifeline/
Link Up was equivalent to approximately $0.95 per U.S. household per 
month.
    24. We also recognize that a key component of achieving our goal of 
providing support that is sufficient but not excessive is to protect 
the universal service fund against waste, fraud, and abuse. That 
benefits consumers and keeps rates more affordable for all consumers by 
reducing the need to collect funds for the program that are not 
appropriately utilized. We propose a number of rule changes in this 
NPRM that would reduce waste, fraud, and abuse in the program. We seek 
comment on whether we should establish as a performance measure keeping 
erroneous payments in the program below a specified level, for instance 
by reducing levels of ineligible recipients to a specified percentage.
    25. We also seek comment on appropriate efficiency metrics. For 
example, is there a way to measure increases in the percentage of low-
income household subscribership relative to the amount of funding spent 
per household receiving Lifeline/Link Up? We seek comment on this and 
other measures of efficiency.
    26. Although we are committed to taking all necessary steps to 
eliminate reduce waste, fraud, and abuse, we also recognize the 
potential negative impact of increased government regulatory burden, 
especially on small companies, of some of the measures that can assist 
in detecting and deterring waste, fraud and abuse. We seek comment on 
how best to balance these competing interests.
    27. We seek comment on whether these three goals and associated 
performance measures are appropriate for the Lifeline/Link Up program 
and ask that commenters consider the reform proposals below in light of 
the proposed goals and performance measures outlined here. Are there 
additional or alternative goals and performance measures that we should 
consider? To the extent that these three goals and performance 
measures, or any others that the Commission may adopt, may be in 
tension with each other, commenters should suggest how we should 
prioritize among competing goals.
    28. Last month we sought comment on whether broadband should be a 
supported service. If broadband becomes a supported service, should we 
adopt a performance goal of advancing the availability of broadband to 
low-income households? Analogous to our proposal in the voice context, 
we seek comment on whether the Commission should establish as an 
outcome measure the difference between the broadband penetration rates 
for low-income households and non-low-income households in the next 
higher income level as defined in the CPS, if broadband becomes a 
supported service. Should we consider broadband usage in addition to 
broadband adoption? Unlike voice service, there is a much larger gap in 
penetration rates for broadband between low-income households and the 
general population. Should we establish a specific numerical target for 
narrowing that gap over a particular time period?
    29. If Lifeline is modernized to support broadband, how should we 
measure affordability for broadband? Should we measure affordability 
separately for voice, broadband, and bundled offerings? We seek comment 
on what data we would need to monitor the program's progress if we were 
to adopt such a performance measure, and the least burdensome means of 
obtaining such data.
    30. We invite commenters to propose additional or alternative goals 
and measures for the program. We also seek comment on how our 
performance measures should take into account the actions of other 
governmental agencies, such as State regulators, that may impact the 
Commission's ability to meet its universal service goals. We note that 
developing the record on these issues is consistent with GAO's 
suggestions.

III. Immediate Reforms To Eliminate Waste, Fraud, and Abuse

    31. We are committed to eliminating waste, fraud, and abuse in 
Lifeline/Link Up, and to identifying and penalizing program violations 
when they occur. We recognize that the recent expansion in program 
demand, as well as marketplace developments, present increased concerns 
about potential waste and misconduct. We propose to strengthen our 
rules to more rigorously ensure that the program subsidizes no more 
than one subscription per eligible residential address, and to improve 
audits of the program. We also propose rule changes to ensure that 
carriers are reimbursed only for the provision of Lifeline services to 
current customers. Finally, we propose to modify our rules to the 
extent that they offer unnecessary reimbursement to carriers for 
expenses that may be inflated or unjustified. The continued success of 
Lifeline/Link Up depends on targeting support to those who qualify, and 
ensuring that support does not extend beyond the confines of our rules.

A. Duplicate Claims

    32. We propose rules that will reduce the likelihood that residents 
of a single address will receive more than one subsidized service 
through the program. We understand that there may be reasons to create 
limited exceptions to the one-per-residential-address rule that we 
propose in Section V. In this proceeding, we plan to develop a full 
record to craft appropriately narrow exceptions to application of this 
proposed rule. We intend to consult with ETCs, Tribal communities, the 
States, and other interested parties to devise a rule that maximizes 
the number of Americans with access to communications services, but 
also protects the fund from waste, fraud, and abuse.
    33. In addition, it may be necessary for the Commission to take 
action on an interim basis while this proceeding is pending to address 
immediately the harm done to the Fund by USAC reimbursing ETCs for 
duplicate claims. The purpose of the Lifeline program is to provide 
telecommunications access to low-income subscribers. Recent audit 
results indicate there is a risk that a significant number of Lifeline 
consumers may be unnecessarily and improperly receiving support for 
more than one service per residential address. To address the problem 
of wasteful, duplicate Lifeline support, it may soon be necessary to 
adopt interim rules in this area while the record develops on

[[Page 16487]]

the issues on which we are seeking comment.
    34. To ensure that Lifeline support is limited to the amount 
necessary to provide access to telecommunications service for low-
income subscribers, we propose several approaches to address 
duplicative support. We propose to adopt a new section 54.408 and to 
adopt several amendments to sections 54.400, 54.405, and 54.410 that 
would facilitate the enforcement of a one-per-residential address 
limitation. We also propose to amend section 54.410 to require ETCs to 
submit to USAC unique household-identifying information for every 
supported household to help determine whether two or more ETCs are 
providing Lifeline-supported service to the same residential address. 
We also propose remedies to address situations in which a consumer has 
received duplicate support and to deter such abuses. These proposals 
are a first step in deterring waste, fraud, and abuse, and we recognize 
there may be other appropriate actions that would take longer to 
implement, such as the creation of a database.
    35. With these proposed rules, we seek to create incentives for 
carriers to avoid requesting support for duplicative services, and to 
impose penalties for those who continue to do so. We also seek to 
ensure that our rules protect subscribers' privacy and service 
providers' proprietary business information.
    36. Measures To Assist in Detecting Duplicate Claims. A unique 
household identifier may be helpful to ensure that a residential 
address does not receive more than one subscription that is subsidized 
by the program. Specifically, we seek comment on amending section 
54.410 by requiring ETCs to provide such information as customer names, 
addresses, social security numbers (either the full number or the last 
four digits), birthdates, or other unique household-identifying 
information to USAC on their Forms 497. Would the benefits of requiring 
subscribers to provide such information outweigh the burdens, including 
possibly deterring some households from applying for benefits?
    37. We seek comment on the best way to accomplish this efficiently 
and effectively consistent with privacy statutes, such as the 
Electronic Communications Privacy Act (ECPA) and section 222 of the 
Communications Act. For example, what information could an ETC be 
required to provide to USAC on its Form 497 that would ensure that a 
household is not receiving multiple subsidized subscriptions at the 
residence? What measures could USAC put in place to ensure compliance 
with ECPA or other applicable laws, such as requiring ETCs first to 
obtain subscriber consent to share information? To the extent that use 
of customer proprietary network information (CPNI) is needed to ensure 
that a subscriber at a single residential address is not receiving 
multiple subsidized subscriptions, how do commenters suggest we ensure 
compliance with section 222 of the Communications Act and our 
implementing rules? Are there other laws we need to consider and 
address? We also seek comment on how best to address any other concerns 
about privacy, security, or proprietary data issues resulting from 
collection of this data. To streamline enforcement, we propose to 
require all ETCs to provide USAC with data in a consistent electronic 
format to facilitate USAC's detection of duplicate claims. We seek 
comment on the burdens this would impose on carriers participating in 
the program.
    38. Remedies To Address Duplicate Claims. On January 21, 2011, the 
Wireline Competition Bureau provided guidance to USAC on how to resolve 
duplicate subsidies when more than one ETC seeks support from USAC for 
the same subscriber. We propose to amend section 54.405 to codify this 
guidance. We propose that when a duplicate subsidy is discovered, USAC 
is to notify the ETCs to discontinue including the duplicate subscriber 
in their list of subscribers for which the ETCs are claiming Lifeline 
support on the FCC Form 497. ETCs must notify the subscriber by phone, 
and in writing where possible, and explain that the subscriber has 30 
days to select one Lifeline provider or face de-enrollment from the 
program. Once the subscriber selects a single Lifeline provider for the 
household by signing a new certification, the chosen ETC must so notify 
USAC and the other ETC. The selected ETC may then seek reimbursement 
for the subscriber going forward, while the other ETC must de-enroll 
the household from its Lifeline service and may not seek reimbursement 
for that subscriber going forward. We seek comment on this proposal.
    39. Several ETCs and trade associations have suggested an 
alternative duplicate resolution process to the Commission. Under their 
proposal, USAC would send written notification, approved by the 
Commission, to all subscribers it identifies as receiving duplicate 
Lifeline subsidies. Such notice would require them to select one 
Lifeline provider from a list of providers on a form, which the 
subscriber would send back to USAC within 30 days. USAC would, in turn, 
notify the affected ETCs about the written notification to the 
subscriber, and the ETCs would continue to provide Lifeline-supported 
service to the subscriber and seek reimbursement from the Fund until 
the USAC resolution process is complete. When USAC receives a completed 
form from the customer with its selection, it would notify only the ETC 
not selected by the subscriber, and that ETC would be required to de-
enroll the subscriber from its Lifeline service. Under this proposal, 
if USAC does not receive a completed form from the customer, USAC would 
be instructed to either notify both ETCs to de-enroll the subscriber, 
or contact the subscriber by phone to determine the subscriber's 
provider selection. We seek comment on this proposal. Specifically, we 
seek comment on the advantages and disadvantages of USAC notifying the 
subscribers receiving duplicate support, as opposed to requiring ETCs 
to do so. Would subscribers be more or less likely to respond to an 
inquiry from USAC (an entity they likely are unfamiliar with) as 
opposed to their service provider? Would the form that USAC sends to 
the subscriber include every ETC serving the area or just the two ETCs 
involved with the request for duplicative support? To what extent would 
implementation of such a proposal increase administrative costs for 
USAC, and thereby impact the size of the Fund?
    40. In the alternative, we could adopt a rule that when duplicate 
payments are identified, ETCs must notify the customer that they have 
30 days to select a single ETC to provide Lifeline service going 
forward. If the customer makes a timely selection, the carrier not 
selected will no longer receive Lifeline support for that customer. If 
the customer fails to make a timely selection, the carrier that has 
provided continuous Lifeline service to the customer for the longest 
period of time would continue to receive Lifeline support and the other 
carrier would no longer receive support for that customer. We seek 
comment on this proposal.
    41. We also seek comment on whether consumers receiving duplicative 
support should be de-enrolled in Lifeline after violating the one-per-
residential-address requirement one or more times. After more than one 
duplicate subsidy is discovered, should the consumer listed as the 
subscriber, or the entire household, be de-enrolled from Lifeline? If 
de-enrollment is temporary, for how long should the exclusion from the 
program last? If

[[Page 16488]]

permanently, on what basis? Should we deny eligibility only if there is 
evidence of intent to violate the ``single support per residential 
address'' provision, or if this is not the subscriber or household's 
first such violation? Should we impose stricter penalties on a consumer 
or household with multiple violations? Should we impose stricter 
penalties on a household receiving more than two Lifeline/Link Up 
subsidies? Should we first provide an opportunity for the subscriber to 
demonstrate that the household's dual enrollment was due to an 
inadvertent mistake or misunderstanding of applicable requirements? 
What information would need to be collected and maintained by USAC in 
order to ensure that certain subscribers are prohibited from 
participating in the program in the future? If we do not permanently or 
temporarily bar such subscribers, what would be an appropriate remedy? 
Finally, we seek comment the potential impact on the telephone 
penetration rate among low-income households if this proposal were 
adopted.
    42. We also propose a mechanism for reimbursing the Universal 
Service Fund in the event of duplicate claims. Our rules currently 
direct USAC to suspend or delay discounts, offsets, and support amounts 
provided to a carrier if the carrier fails to provide adequate 
verification of those discounts, offsets, or support amounts upon 
reasonable request, or ``if directed by the Commission to do so.'' We 
propose that USAC be required to seek recovery for funds from all ETCs 
with duplicates for the applicable period--i.e., if one or more 
individual residing at the same address have been obtaining Lifeline 
support from two or more providers simultaneously, USAC would be 
required to seek recovery from all implicated providers for all support 
received during the period of duplicative service, which we propose to 
define as the period beginning at the time a duplicate is identified 
until the time at which it can be demonstrated that the consumer or 
household is no longer receiving duplicate benefits. This approach 
would create appropriately strong incentives for providers to take 
measures to ensure that they are not seeking excessive support. We note 
that in this situation support would have been provided in 
contravention of our ``single support per residential address'' rule, 
and thus, arguably, neither ETC should have received support during the 
period of duplicative support. Further, if the customer does not reply 
to the notice and is terminated from Lifeline by both ETCs, we propose 
that USAC recover all Lifeline support sought for that subscriber from 
both ETCs for the period of time between when the duplicate was first 
identified to the point at which the customer is terminated from the 
Lifeline program. We seek comment on this proposal. We also seek 
comment on, alternatively, requiring that USAC seek recovery only from 
the ETC that is not chosen by the consumer for the period of time over 
which duplicate Lifeline support was provided. We seek comment on this 
proposal. Further, we seek comment on whether we should enable ETCs to 
avoid reimbursement obligations if they demonstrate responsible efforts 
to avoid duplicative funding. What would those efforts be and how could 
they be shown? Should we establish certain minimum safeguards that 
could act as a safe harbor for ETCs? Should we restrict recovery only 
upon a showing of negligence by the ETC? Should the ETCs be permitted 
to seek reimbursement for any recovered funds from the subscriber? For 
all of the above proposals, and any other approaches suggested by 
commenters, we seek comment on how we should determine the period of 
duplicative coverage.
    43. Addresses. Several stakeholders have noted that customers have 
not been permitted to obtain Lifeline or Link Up service when using a 
P.O. Box as their mailing address. Rather, ETCs have required 
applicants seeking support to provide a unique residential address. 
This practice has been used to ensure that the subscriber is eligible 
for supported service and is not receiving more than one subsidized 
service. We note that the other information we propose to collect--such 
as name, birth date, and social security number--are unique to 
individuals but do not fully address concerns that different members of 
the same household are receiving subsidized service. In contrast, 
address information might be particularly suitable to prevent that 
situation. We seek comment on whether to codify as a rule the current 
practice of requiring unique residential addresses, in order to assist 
both ETCs and USAC in determining whether an applicant is already 
receiving Lifeline- or Link Up-supported services. Under such a rule, 
ETCs would be required to collect the residential addresses of their 
Lifeline and Link Up applicants before they provided discounted 
service. Even if a customer receives mail at a P.O. Box, the customer 
would have to provide a residential address to which its service would 
be tied.
    44. We seek comment on this proposal. Are there circumstances where 
a residential address could not be provided? Are there privacy concerns 
that we should take into account when requiring customers to provide a 
residential address? How should we treat transient applicants who do 
not have a fixed address, or consumers who use rural route addresses, 
for whom there may be no other U.S. Postal Service address? Is there 
substitute information that we should require in the event that no 
residential address is available?

B. Pro Rata Reporting Requirements

    45. We propose to codify the rule that all ETCs must report partial 
or pro rata dollars when claiming reimbursement for Lifeline customers 
who receive service for less than a month. Such a rule would ensure 
that all ETCs comply with the requirement that support may only be 
claimed for active subscribers, and thereby minimize waste of Lifeline 
funds. Carriers routinely bill customers for partial months, and should 
have the capacity in their billing systems to determine whether a 
customer is a Lifeline subscriber for the full billing period. We seek 
comment on our proposal.

C. Eliminating Reimbursement for Toll Limitation Service

    46. We propose amending our rules to eliminate Lifeline support for 
the costs of providing TLS to Lifeline customers. This rule, adopted 
more than a decade ago, may have outlived its usefulness, given 
reductions in long-distance calling rates. We also note that there is 
great variance in TLS costs claimed by ETCs seeking reimbursement, 
ranging from $0 to $36 per Lifeline customer per month. Such variance 
may be due in part to the ambiguity of our rule governing TLS support, 
which States that support for TLS will be equal to the ETC's 
incremental costs, but does not define incremental TLS costs eligible 
for Lifeline reimbursement. It is unclear, however, whether providing 
TLS imposes any incremental costs on carriers, since a number of ETCs 
do not seek any reimbursement for TLS costs, despite providing TLS to 
their subscribers. Moreover, the wide variance in support sought by 
ETCs suggests that some may be inflating their true costs. Elimination 
of Lifeline support for TLS could save the program roughly $23 million 
in 2011, which, in turn, could be used to conduct pilot programs to 
provide broadband support or otherwise utilized to provide eligible 
households with Lifeline discounts. We seek comment on this proposal. 
In the alternative, should we adopt a flat amount of reimbursement for 
TLS, and

[[Page 16489]]

if so, what would be an appropriate amount?

D. Customary Charges Eligible for Link Up

    47. Defining Customary Charge. We seek to eliminate any incentive 
or opportunity for carriers to impose charges on program participants 
in order to increase universal service support, as that would represent 
a waste of funds. We therefore propose to amend our rules to define 
``customary charge for commencing telecommunications service'' as the 
ordinary initiation charge that an ETC routinely imposes on all 
customers within a State. We seek comment on our proposed amendment.
    48. We also propose that Link Up rules make clear that activation 
charges that are waived, reduced, or eliminated when activation is 
accompanied by purchase of additional products, services, or minutes 
are not customary charges eligible for universal service support. 
TracFone's petition indicates that it supports this proposal, but other 
ETCs disagree, arguing that there are legitimate reasons for an ETC to 
waive customary activation charges for low-income consumers, including 
compliance with some State requirements. For instance, some commenters 
suggest we create an exception to the proposed rule in instances where 
a State commission has ordered ETCs to waive the remainder of the 
connection charge not reimbursed by USF. We seek comment on whether, if 
we amend our rules as described, we should recognize exceptions for 
certain categories or types of fee waivers or reductions.
    49. We also seek to develop a record regarding the prevalence of 
situations in which ETCs seek reimbursement for connecting the same 
customer more than one time, at the same location. For example, if a 
customer's service was disconnected for non-payment, do ETCs ever 
impose another connection charge to resume service to that address? Do 
they do so frequently, or as a matter of course? How would we evaluate 
whether such charges are reasonable? We seek comment on whether our 
rules should be clarified to prohibit ETCs from seeking more than one 
Link Up subsidy for the same customer at the same location.
    50. We seek comment on whether our Link Up rules should be further 
amended to address concerns with waste, fraud and abuse in this area. 
For example, one commenter suggests that we require each ETC to certify 
that its activation charge is equally applicable to all customers. We 
seek comment on whether such a certification process would effectively 
prevent waste, and how burdensome such a certification requirement 
would be. In addition, we seek comment on whether we should adopt a 
rule that prohibits resellers from imposing a connection charge on 
consumers when the underlying wholesale provider has not assessed a 
similar connection charge on the reseller.
    51. Link Up Support Amount. Historically, incumbent telephone 
companies incurred costs in initiating service, such as the cost of 
visiting the housing unit to physically connect a telephone line to 
initiate service. In contrast, today, service initiation in virtually 
all instances for both wireless and wireline providers is done remotely 
via software, with the actual costs of installation likely to be 
significantly lower than several decades ago.
    52. Our rules specifying Link Up amounts have not been updated to 
reflect the changes in the industry that have occurred relating to 
service initiation. We seek comment on what the typical service 
initiation fee is for non-Lifeline subscribers and ask whether we 
should reduce the current $30 cap on Link Up support to some lower 
figure.
    53. Our current rules specify that ETCs may receive Link Up support 
for the revenue they forgo in reducing their customary charge for 
commencing telecommunications service. In order to receive Link Up 
support, ETCs are required to keep accurate records of the revenues 
they forgo in reducing their customary charge for commencing service. 
The forgone revenues for which the ETCs may receive reimbursement shall 
include only the difference between the carrier's customary connection 
and the charges actually assessed to the participating low-income 
consumer. Moreover, the reduction shall be half of the customary charge 
or $30, whichever is less. As discussed above, there is concern that 
some ETCs may be inflating connection charges in an effort to collect 
money from the Fund. In order to make Link Up reimbursement more 
transparent and limit potential waste of funds, we seek comment on 
whether we should require all ETCs seeking Link Up reimbursement to 
submit cost support to USAC for the revenues they forgo in reducing 
their customary charges. Since ETCs are required to keep accurate 
records of the revenues they forgo for Link Up, it may not be too 
burdensome to require the ETCs to submit such data to USAC. We seek 
comment on this proposal and whether there are alternative ways to 
ensure that Link Up reimbursement is based on actual revenues forgone 
as a result of connecting low-income consumers. We also seek comment on 
what underlying costs may be recovered through Link Up. For instance, 
should Link Up be provided for costs associated with marketing and 
customer acquisition, or limited to costs associated with activating a 
phone line or establishing a billing relationship?

E. Customer Usage of Lifeline-Supported Service

    54. We want to ensure that Lifeline support is used for the benefit 
of low-income subscribers that are actually using the supported 
service, and we propose to amend our rules to prevent ETCs from 
obtaining Lifeline support for inactive consumers. Specifically, we 
propose to prohibit ETCs from seeking reimbursement from the Universal 
Service Fund for any Lifeline customer who has failed to use his or her 
service for 60 consecutive days. We seek comment on whether a 
customer's failure to use service for a specific period of time may 
reasonably demonstrate, or serve as a proxy for, service 
discontinuation. If so, we seek comment on whether 60 days is a 
reasonable period, or whether the period of inactivity should be 
shorter (e.g., 30 days) or longer (e.g., 90 days).
    55. The proposed rule is intended to (1) prevent subsidies going to 
ETCs for customers that are not using the service; and (2) eliminate 
incentives that carriers might have to ignore or fail to report that a 
customer has (or appears to have) discontinued service. We do not seek 
to penalize subscribers for non-usage, and our proposed rule would not 
affect the terms or conditions of service that might exist between the 
ETC and the customer. Nor do we propose to require ETCs to disconnect 
subscribers for non-usage. We recognize that some customers may use 
their telephones sparingly, for emergencies or occasional 
communication. To protect consumers, we propose to require ETCs to 
alert customers if the ETC imposes any obligation to use service during 
a specified period of time in order to maintain subsidized service. We 
seek comment on how ETCs can best inform their Lifeline customers of 
any requirement to use the phone during a specified period of time. We 
also seek comment on whether our proposed rules could affect access to 
911 services, and if so, how we can ensure that consumers maintain 
access to emergency services. We note that the Commission's rules 
require commercial mobile radio service (CMRS) providers subject to the 
Commission's 911 rules to transmit all wireless 911 calls, including

[[Page 16490]]

those from non-service initialized phones, to Public Safety Answering 
Points (PSAPs). We do not seek to modify this rule and our proposed 
rule would still require ETCs to transmit a Lifeline customer's 
wireless 911 calls, even if the ETC is no longer providing service to 
that customer.
    56. Although the concern that ETCs may continue to count 
subscribers that have stopped using service appears greatest with 
respect to pre-paid wireless service, those concerns are not limited to 
pre-paid wireless service. We seek comment on whether the rules we 
propose in this subsection should be limited to particular types of 
service, or should apply to all types of service.
    57. Minimum Consumer Charges. In the 2010 Recommended Decision, the 
Joint Board expressed concern about consumers receiving Lifeline 
service offerings that are offered at no cost to the subscriber. In 
particular, the Joint Board raised concerns about prepaid wireless 
ETCs, which do not provide a monthly bill and, in some cases, provide 
handsets and service at no charge to consumers. The Joint Board 
recommended that, to guard against waste, fraud, and abuse in the 
Lifeline program, the Commission consider whether a minimum monthly 
rate should be paid by all Lifeline subscribers, including eligible 
Tribal subscribers.
    58. We seek comment on how best to prevent waste of universal 
service funds without creating unnecessary obstacles for low-income 
households to obtaining vital communications services. For instance, 
one option would be to adopt a rule requiring all ETCs in all States to 
collect some minimum monthly amount from participating households. If 
we were to adopt such a rule, what should that monthly amount be--e.g., 
$1 or some other amount? Alternatively, should we consider requiring 
ETCs to assess a monthly fee on all Lifeline consumers equivalent to 
half of the customary monthly Lifeline charges or half of the maximum 
subsidy provided for under our rules, whichever is less? Would either 
of these requirements, if adopted, appropriately balance the need to 
guard against waste, fraud, and abuse in the Lifeline program by 
ensuring that low-income households have the incentive to make 
appropriate use of their Lifeline-supported services, with the need to 
avoid deterring eligible consumers from participating in the program?
    59. Another option would be to require ETCs to collect some amount, 
such as $10 or $15, on a one-time basis from each Lifeline household 
prior to commencing Lifeline service. Such a rule could create 
appropriate incentives to ensure that Lifeline consumers genuinely want 
phone service and should deter situations in which Lifeline-supported 
service has been activated on a phone that is unused or improperly 
transferred to third parties.
    60. Would either of these proposals create an unreasonable barrier 
to enrollment for households that need support but cannot afford to pay 
any fee? What would be the proper amount of financial contribution from 
low-income consumers that would appropriately balance our dual 
objectives of deterring waste, fraud, and abuse, while enabling those 
in need to obtain phone service? Should this amount vary based on the 
income of the qualifying low-income household?
    61. We seek comment on the administrative burdens for ETCs of a 
requirement to collect a minimal amount, such as $1 per month, from 
participating consumers. We acknowledge that in other, non-Lifeline 
contexts, carriers may choose not to bill their customers monthly, and 
it may not be cost-effective to send a bill to collect such a small 
amount. Should we allow ETCs to collect a monthly fee on a bi-monthly 
basis? If we were to adopt a program-wide monthly fee requirement, 
should we explicitly prohibit carriers from waiving the fee? How can we 
adopt an approach that is technologically neutral and can be 
implemented easily by ETCs with diverse business models?
    62. Application of Minimum Charge to Tribal Consumers. The 
Commission's rules currently require that the basic local residential 
rate for Tier 4 subscribers (i.e., eligible low-income households 
residing on Tribal lands) may not fall below $1 per month. We have 
learned anecdotally that some carriers do not currently collect the $1 
from their Tribal customers. While the Commission's current rules 
specify what the carrier must charge the Tribal subscriber, they do not 
explicitly require the ETC to collect such amounts, thereby allowing 
ETCs to waive the $1 per month fee.
    63. If we adopt a proposal to require all ETCs to collect a minimum 
monthly fee from subscribers, we seek comment on whether to amend 
section 54.403(a)(4)(i) of the Commission's rules to specifically 
require a $1 monthly payment to be provided by each participating 
household to their ETC. Would this proposal, if adopted, adequately 
balance our objective of ensuring affordable service for eligible 
Tribal consumers while also guarding against waste, fraud, and abuse in 
the Lifeline program?
    64. How would any of these proposals impact subscribership for low-
income households on Tribal lands, which continue to lag significantly 
behind subscribership for the nation as a whole?

F. De-Enrollment Procedures

    65. We propose rules requiring ETCs to de-enroll their Lifeline 
customers or households from the program under specified circumstances. 
Specifically, we propose to require ETCs to de-enroll their Lifeline 
subscribers when: (1) The subscriber is receiving duplicate support and 
fails to select one ETC in the allotted time after being notified of a 
duplicate claim; (2) the subscriber does not use his or her Lifeline-
supported service for 60 days and fails to confirm continued desire to 
maintain the service; or (3) the customer does not respond to the 
eligibility verification survey. Under our proposed rules, the 
subscriber would receive notice that they could be de-enrolled from the 
program if they did not take action by a specified date. Should that 
timeframe be 60 days?
    66. Some ETCs have argued that section 54.405(d) of our rules 
requires that they give customers 60-days' notice prior to terminating 
their Lifeline benefits. In addition, some State laws may require 
similar notice provisions. The notice provisions currently set forth in 
section 54.405(d) of our rules are tied to consumer eligibility for 
Lifeline, and are not applicable to situations involving subscriber 
non-responsiveness as a result of a duplicate claim or non-usage of the 
Lifeline service. For administrative simplicity, should the same 
timeframe be adopted for mandatory de-enrollment in the circumstances 
described above, or should we adopt a shorter period, such as de-
enrollment within a 30-day period? We seek comment on our proposal to 
require ETCs to de-enroll Lifeline subscribers involved in the three 
scenarios described above. Would a shorter period be consistent with 
specific State notification requirements that may exist in non-default 
States? To the extent that commenters object to our proposal for 
mandatory de-enrollment, they should offer specific alternative 
solutions to protect the fund against waste, fraud, and abuse.

G. Audits

    67. Waste, fraud, and abuse in the universal service program 
jeopardizes the availability of funds for supported services and 
imposes unjustifiable costs on carriers and ratepayers. We therefore 
seek to ensure there is a focused and effective system for identifying 
and

[[Page 16491]]

deterring program abuse. We seek comment on ways to improve the current 
low-income audit program in light of growing concerns about such issues 
as duplicate payments and consumer ineligibility. In particular, we 
seek comment on ways to improve the audit process to reduce improper 
payments and assess risks. In doing so, how can audits be targeted to 
better uncover the scope of errors associated with improper payments? 
What additional measures should be taken to mitigate the potential for 
program violations? Are there additional measures or incentives, beyond 
those that currently exist, that we should implement to encourage 
people to report abuses? Should we impose additional penalties, beyond 
de-enrollment from the program, to discourage program abuse?
    68. With the growth of newly designated ETCs in a number of States, 
there may be a need for a more rigorous audit program to provide 
assurance that new participants have established adequate internal 
controls to meet their obligations. For that reason, we propose that 
all new ETCs be audited after the first year of providing Lifeline-
supported service. We seek comment on the appropriate geographic scope 
of the initial audit. How should such audits be designed to ensure that 
any problem areas are easily and thoroughly identified? Most audits 
examine an ETC's compliance with a wide variety of Commission 
requirements. Should initial audits focus on a smaller number of more 
important requirements, and if so, which ones? Although we seek comment 
on more rigorous, focused audits for new program participants, we note 
that we will also continue to direct USAC to conduct random audits to 
ensure ongoing compliance with our rules.
    69. We also seek comment on how to improve the Commission's 
directive to USAC to establish a systematic approach to assessing 
internal controls and learning from audit findings. For example, we 
propose that negative audit findings above a specified dollar 
threshold, or impacting a specific percentage of an ETC's Lifeline 
customers, trigger shorter intervals between audits, an expanded audit 
for the company at issue, and/or an additional audit the following year 
in the relevant study area. What should that dollar threshold be? Would 
the cost associated with such audits outweigh the benefits that would 
accrue? What follow-up should the Commission require of USAC in light 
of negative Lifeline/Link Up audit findings?
    70. We also seek comment on appropriate Commission responses to 
multiple findings of non-compliance, including repeated non-compliance 
above the specified thresholds or multiple findings of non-compliance 
with Lifeline or Link Up requirements in a single audit.
    71. The Commission's rules already direct USAC to ``suspend or 
delay discounts, offsets and support amounts provided to a carrier if 
the carrier fails to provide adequate verification of discounts, 
offsets and support amounts provided upon reasonable request.'' Should 
we establish a threshold (either aggregate dollar amount or percentage 
of support payments) that would automatically result in a freeze on 
future payments from the program until the carrier remediates 
identified issues? Under what circumstances should we consider revoking 
an ETC's grant of forbearance or designation as an ETC? We seek comment 
on other consequences that should result from negative audit findings.
    72. In 2005, the Commission sought comment on subjecting all USF 
recipients to independent audits, but ultimately did not adopt any such 
requirement. In light of increased concerns about potential waste, 
fraud, and abuse in the program, we again seek comment on whether to 
require some or all ETCs in the program to engage an independent firm 
to assess compliance with the program's requirements. If we were to 
impose such a requirement, how often should we require the review 
(e.g., annually, or every few years)? Should all ETCs that participate 
in the program be subject to the requirement, or only some? If we were 
to limit this requirement to only certain ETCs, what would be the 
appropriate criteria for imposing such a requirement? For example, we 
might impose the requirement on ETCs that have been found to have 
committed violations in the past, that receive more than a particular 
amount of program support, or that have experienced significant 
increases in program support. Audits paid for by the ETCs could create 
a self-policing environment that would guard against waste, fraud, and 
abuse, but would also impose an expense on providers. We seek comment 
on the advantages and disadvantages of such a system, and on the burden 
of such a requirement on different carriers, including small ETCs. 
Commenters should discuss whether a lack of negative audit findings, or 
alternatively, proof of resolution of all negative findings, should 
impact the scope or frequency of future audits. We also seek comment on 
what type of audit engagements should be required, if we were to adopt 
such a requirement. If we were to adopt such a requirement, we propose 
to mandate that covered ETCs provide audit reports to the FCC, USAC, 
and relevant States, and that the FCC and USAC should be deemed 
authorized users of such reports.

IV. Clarifying Consumer Eligibility Rules

A. One-per-Residence

    73. In this NPRM, we propose to adopt a one-per-residential address 
requirement in section 54.408 of our rules. We seek comment on whether 
codifying this requirement as ``one-per-residence'' would aid in 
administration of the requirement by providing a bright line that could 
be determined by reference to external sources. The Commission has not 
codified any definition of a ``household'' for purposes of Lifeline and 
Link Up, and various qualifying programs may utilize different 
definitions of households. We also note that in other contexts, 
consumers seeking benefits from State or other Federal assistance 
programs may undergo a more robust process to qualify for benefits, 
such as an interview by social service agencies to determine 
eligibility, which may provide an additional level of assurance that 
the applicant in fact complies with relevant program criteria. We seek 
to adopt a rule that provides a bright line that is easy for USAC and 
ETCs to administer.
    74. The one-per-residential address rule that we propose to adopt 
is consistent with our existing single-line per residence requirement. 
But some ETCs dispute the validity of the single-line-per residence 
limitation, which raises concern that they are not adhering to an 
existing requirement that is designed to minimize waste, fraud and 
abuse; target support where it is needed most; and maximize the number 
of Americans with access to communications services. As noted above, it 
may be necessary for the Commission to take action on an interim basis 
while this proceeding is pending to address concerns with USAC 
reimbursing ETCs for duplicate claims.
    75. We understand that there may be situations--such as residents 
of commercially zoned buildings, those living on Tribal lands, and 
group living facilities--where application of the one-per-residential 
address rule may produce unintended consequences that would deprive 
deserving low-income consumers of the support that they otherwise would 
be entitled to. We encourage ETCs, Tribal Communities, the States and 
other interested parties to

[[Page 16492]]

provide input on a rule that maximizes the number of Americans with 
access to communications services, but also protects the fund from 
waste, fraud and abuse.
    76. We seek comment on how best to achieve the purposes for which 
the single line per residence requirement was designed. We propose to 
maintain this longstanding requirement, which balances our statutory 
obligation to ensure that low-income consumers have access to phone 
service at reasonable rates and to ensure that support is sufficient, 
but not excessive. We seek comment below on how to define a 
``residential address'' for the purposes of the Lifeline and Link Up 
programs. We also seek comment on how best to interpret the one-per-
residential address restriction in light of current service offerings 
and in the context of group living arrangements or other situations 
that may pose unique circumstances.''
    77. In addition, we seek input on whether a different approach 
would better serve the needs of low-income consumers in light of our 
statutory obligations, as well as the changing communications 
marketplace. We note that several commenters in the Joint Board 
proceeding suggested that the Lifeline/Link-Up program should provide 
support for one wireless service per eligible adult, rather than one 
service per residential address, with some suggesting that would be in 
keeping with the statutory principle that low-income consumers should 
have access to services that are reasonably comparable to the services 
enjoyed in urban areas. This approach would take into account the fact 
that telephone use has changed since we first implemented the 1996 Act. 
Fifteen years ago, wireless service was not a mainstream consumer 
offering; today, 93 percent of the general population has wireless 
service. At the same time, providing support to each low-income adult 
rather than to each residential address could significantly increase 
the size of the program. Would allowing support for one wireless 
subscription per eligible adult be inconsistent with our statutory 
obligation to ensure that support is sufficient, but not excessive? We 
seek comment on whether the benefit that wireless service affords low-
income consumers outweighs concerns associated with growth of the fund. 
If the funding dedicated to the program were capped, as discussed more 
fully below, a one-per-adult rule would likely mean that a much smaller 
benefit would be available to each program participant than under a 
one-per-residential address rule. We seek comment on these issues.
1. Defining ``Residence''
    78. We propose a rule in section 54.408 to limit program support to 
a single subscription per U.S. Postal Service address, and seek comment 
on whether this approach would promote affordable access to telephone 
service consistent with the goals of section 254. Under this proposal, 
where unrelated individuals and/or families share a U.S. Postal Service 
address, such individuals and/or families would be limited to one 
subscription for that ``residence.'' We seek comment on whether this 
approach best serves program goals. The program was established to 
ensure that all consumers, even those of limited means, would have a 
``lifeline''--a basic telephone service to connect them to the rest of 
society. Supporting one service at each residential address may 
effectively fulfill this goal, and may also help prevent waste and 
abuse of program resources. Moreover, this approach may be more 
administratively feasible than other options for defining who is 
eligible for support, such as family-based definitions that require an 
accurate determination of whether people living together are 
independent or related.
    79. Pursuant to this proposal, upon receiving an application for 
Lifeline support, an ETC could use the U.S. Postal Service residential 
address as a proxy to determine whether the ETC is already providing 
Lifeline support to that address. If so, the ETC would reject the 
application for support. Additionally, as discussed infra, we propose 
to require that Lifeline subscribers initially certify when applying 
for service, and thereafter verify annually, that they are receiving 
support for only one line per residential address (defined for these 
purposes as all of the persons who reside at a unique U.S. Postal 
Service address).
    80. We recognize that there may be some residences for which there 
is no unique U.S. Postal Service address. For example, we understand 
that there are apartment buildings where the residents live separately, 
but their units lack distinct identifiers and mail is delivered to and 
distributed by a single point of contact such as the building manager. 
Similarly, when multiple persons or families share a residence, unique 
addresses may not be available. Customers in rural areas may share a 
rural route address. We seek comment on what actions could be taken in 
such situations to ensure that Lifeline and Link Up benefits are 
available to eligible consumers. Is there other information that a 
carrier could collect to verify that the residence does not already 
receive support from the program? Alternatively, if one subsidized 
service were available for such locations, would that satisfy the 
congressional goal of ensuring affordable access to telephone service?
    81. As noted above, some customers rely on a P.O. Box rather than a 
U.S. Postal Service residential address. How should we determine 
eligibility in those situations? Should we require ETCs to collect 
additional verifying information, and if so, what?
    82. Our rules also limit support to the subscriber's principal 
residence. We seek comment on how to ensure that a subscriber does not 
obtain support at more than one location. We propose that each 
subscriber provide unique identifying information (as discussed in 
Section IV) to prevent the same subscriber from receiving support at 
multiple locations. We seek comment on this proposal. We also seek 
comment on whether we should require subscribers to certify that the 
address provided is their principal residence, in order to receive 
Lifeline and Link Up support.
    83. We seek comment on whether our U.S. Postal Service address-
based proposal should be modified to accommodate different types of 
living situations, and if so, how. For example, should the proposed 
definition of ``residential address'' be modified to accommodate 
certain living arrangements? Should there be an exception for unrelated 
adult roommates or multiple families sharing a residence? Should we 
allow more than one discount per residence in the case of multi-
generational families, for example if the low-income family includes an 
eligible adult child or elderly relative? Commenters that propose a 
different definition of ``residence'' from the one we propose above, or 
exceptions to that definition, should explain how the Commission could 
ensure, in administratively feasible ways, that support is being 
provided appropriately, however that term is defined.
2. Application of the One-per-Residence Rule to Commercially Zoned 
Buildings
    84. Although the Commission's rules provide low income support for 
residential customers, the Commission has learned of instances where 
otherwise eligible applicants have been denied Lifeline and Link Up 
service because they live in facilities that are zoned for commercial, 
rather than residential use. This may occur, for example, when 
individuals reside in single-room occupancy buildings, lodging houses, 
rooming houses,

[[Page 16493]]

shelters, and other group quarters. This appears to be a particular 
problem in urban areas.
    85. We seek comment on how we can ensure that consumers have access 
to low-income support even if they reside in a commercially-zoned 
location. We note that commercial residences tend to be group living 
facilities rather than individual residences. If the Commission adopted 
special rules for group living facilities, would those rules resolve 
concerns about providing support to eligible subscribers who live in 
commercially-zoned areas? Are there additional steps we should take to 
verify that Lifeline and Link Up subsidies are not being provided to 
commercial entities?
3. Application of the One-per-Residence Rule in Tribal Communities
    86. On some Tribal lands, several households may occupy a single 
housing unit. We seek comment on whether we should adopt a special 
definition of ``residence'' on Tribal lands that will ensure that 
Lifeline and Link Up service is provided to eligible consumers. For 
example, to the extent there are multi-generational families sharing a 
residence in Tribal communities, should there be an exception to our 
proposed one-per-residence rule? How can the Commission ensure that the 
program does not provide duplicative support to households on Tribal 
lands? In order to craft a rule that appropriately takes into account 
conditions on Tribal lands, we seek additional information about 
housing arrangements in Tribal areas.
    87. Some commenters responding to the ``One-Per-Household'' Public 
Notice state that residents of Tribal Lands frequently lack unique U.S. 
Postal Service addresses, and instead receive mail at communal P.O. 
boxes. We thus seek comment on how to apply the ``one-per-residence'' 
rule to Tribal lands if we were to adopt the proposal generally to 
define residential address on the basis of a U.S. Postal Service 
address. Given the very low telephone penetration rate on Tribal lands, 
we do not want our rules to impose barriers to consumers or households 
living on Tribal lands that are eligible for, and desperately need, 
Lifeline discounts. At the same time, we must act as responsible 
stewards of the Fund. If the Commission were to exempt Tribal members 
from providing a unique U.S. Postal Service address, what measures 
should the Commission adopt to guard against the possibility of waste, 
fraud, and abuse?
4. Ensuring Access for Residents of Group Living Quarters
    88. Some commenters have suggested that the Commission should 
consider how better to ensure that the program is effectively serving 
low-income residents of group living quarters, such as residential 
facilities for seniors or for victims of domestic violence. We seek 
comment on how eligibility should be defined for residents of group 
living quarters, including the effects on eligibility when a resident 
moves out of a group living facility, and what measures are necessary 
to prevent waste, fraud, and abuse.
    89. Under the proposed rule, related or unrelated, living together 
at a single postal address, residents of a group living facility--which 
could be dozens or even hundreds of individuals--would be eligible for 
only a single Lifeline supported service. Is this approach adequate to 
ensure availability of basic communications services to all Americans, 
including low-income consumers, as section 254 requires? If not, how 
should the program support service to low-income consumers residing in 
group living facilities? Should the program provide support to each 
separate and unrelated individual or family (e.g., a married couple 
living together at a nursing home) living in group facilities?
    90. Alternatively, should we create an exception to our proposed 
one-per-residence rule for eligible consumers in a group living 
facility to obtain Lifeline or Link Up service? Is there an 
administratively feasible way to approach this challenge that also 
provides protections against waste, fraud, and abuse? For instance, 
should we require the administrator of group living facilities to 
certify to ETCs and/or USAC the number of separate and unrelated 
individuals or families in the facility? In that situation, the 
facility would be responsible for applying for Lifeline/Link Up support 
on behalf of its residents. Under this approach, how could our rules 
ensure verification of the income eligibility of the subscribers for 
which a group facility is seeking support? Should the facility be 
required to provide the ETC documentation of the residents' 
eligibility?
    91. Should we require that consumers residing in group facilities 
provide certification from facility staff that corroborates applicants' 
residence in a group living facility, as well as information about the 
number and types of persons served by the facility? Should the 
Commission set different eligibility criteria for permanent and 
temporary residents of group living facilities?
    92. We seek comment on the feasibility of making Lifeline funding 
available to agencies or non-profit organizations that are able to 
provide communications services to residents of group living 
facilities. As the Joint Board acknowledged, such institutions do not 
qualify as ETCs eligible for support, and we therefore seek comment on 
the application of section 254(e) of the Act, which limits the 
recipients of universal service support to ETCs. If funding were made 
available to such organizations, what if any additional measures would 
be needed to guard against waste, fraud, and abuse? For example, in a 
situation where the applicant lacks a residential or mailing address, 
how would the ETC verify the customer's initial and ongoing eligibility 
for Lifeline services?

B. Tribal Lifeline Eligibility

    93. It is well established that Federally recognized Tribes have 
sovereignty, and exercise jurisdiction over their members and territory 
with the obligation to ``maintain peace and good order, improve their 
condition, establish school systems, and aid their people'' within 
their jurisdictions. In 2000, the Commission formally recognized Tribal 
sovereignty in its Statement of Policy on Establishing a Government-to-
Government Relationship with Indian Tribes. The Federal government also 
has a trust relationship with Indian Tribes, as reflected in the 
Constitution of the United States, treaties, Federal statutes, 
Executive orders, and numerous court decisions. Consistent with this 
relationship, the Commission, in its June 2000 Tribal Order, 65 FR 
47941, August 4, 2000, adopted measures to promote telecommunications 
subscribership and infrastructure deployment within American Indian and 
Alaska Native Tribal communities. Accordingly, in the Tribal Order, the 
Commission modified its rules to create enhanced Lifeline and Link Up 
programs intended to provide access to telecommunications services for 
low-income consumers living on Tribal lands.
    94. Income-based eligibility. The Commission's current rules 
regarding Tribal eligibility for Lifeline support have been subject to 
differing interpretations. Specifically, ETCs, USAC, and Tribal groups 
have indicated there has been inconsistency and confusion among Federal 
default and non-default states regarding whether residents of Tribal 
lands may qualify for participation in the program based on income, 
even though there is language in Commission orders so indicating.

[[Page 16494]]

    95. We propose to revise sections 54.409(a) and 54.409(c) to more 
clearly reflect that residents of Tribal lands are eligible for 
Lifeline and Link Up support based on: (1) Income; (2) participation in 
any Tribal-specific Federal assistance program identified in our rules; 
or (3) any other program identified in section 54.409(b) of our 
Lifeline and Link Up rules. We seek comment on this proposal.
    96. Program-based eligibility. Under section 54.409 of the 
Commission's rules, participation in the Federal Food Stamp Program (or 
the Supplemental Nutrition Assistance Program (SNAP) as it is currently 
named), qualifies residents of Tribal lands for Lifeline/Link Up 
support. The Lifeline/Link Up rules do not, however, grant eligibility 
based on participation in the Food Distribution Program on Indian 
Reservations (FDPIR), a Federal program that provides food to low-
income households living on Indian reservations, and to Native American 
families residing in designated areas near reservations and in the 
State of Oklahoma. As discussed more fully below, eligible residents of 
Tribal lands for the purposes of the Lifeline/Link Up program are 
qualifying low-income households on a reservation, where 
``reservation'' is defined as any Federally-recognized Indian Tribe's 
reservation, pueblo, or colony, including former reservations in 
Oklahoma, and Alaska Native regions.
    97. The service and eligibility criteria for FDPIR are similar to 
those of SNAP, and are based on income levels that must be recertified 
on a periodic basis. A household may not participate in both FDPIR and 
SNAP, and any given reservation could have certain households 
participating in FDPIR and others participating in SNAP. Approximately 
276 Tribes currently receive benefits under FDPIR, suggesting that 
there are households on Tribal lands that are not be served by the 
Lifeline/Link Up program simply because they have chosen to receive 
FDPIR benefits instead of SNAP benefits. Further, we understand that 
Tribal elders, a particularly vulnerable population, often seek FDPIR 
benefits rather than SNAP benefits. As such, allowing residents on 
Tribal lands to qualify for low-income support based on participation 
in FDPIR is consistent with the purpose of the current Tribal 
eligibility criteria, furthers the goal of providing access to 
telecommunications services by low-income households on Tribal lands, 
and the goal of targeting those in the greatest need.
    98. Accordingly, we propose to amend section 54.409(c) of the 
Commission's rules to allow program eligibility for residents of Tribal 
lands participating in FDPIR. We seek comment on this proposal. We also 
seek comment on whether there are any other Federally- or Tribally-
administered, income-based assistance programs, such as those focused 
on the elderly, which should be included in our program eligibility 
rules for residents of Tribal lands.
    99. Location-based conditions. In the Tribal Order, the Commission 
defined the terms ``Tribal lands,'' ``reservation,'' and ``near 
reservation'' for the purposes of establishing eligibility for the 
Tribal Lifeline and Link-Up programs. Specifically, the Commission 
modified its rules to provide support to individuals residing on ``any 
federally recognized Indian [T]ribe's reservation, Pueblo, or Colony, 
including former reservations in Oklahoma, Alaska Native regions 
established pursuant to the Alaska Native Claims settlement Act (85 
Stat. 688), and Indian allotments,'' as well as those residing in 
``those areas or communities adjacent or contiguous to reservations 
that are designated as such by the Department of Interior's 
Commissioner of Indian Affairs, and whose designations are published in 
the Federal Register.''
    100. In its August 2000 Tribal Stay Order and Further Notice, 65 FR 
58721, October 2, 2000, however, the Commission stayed implementation 
of the Tribal Lifeline and Link Up programs as they applied to 
qualified low-income households ``near reservations.'' The Commission 
noted that, after its adoption of the definition of ``Tribal lands'' in 
the Tribal Order, it learned that the term ``near reservation,'' as 
defined by the Bureau of Indian Affairs (BIA), might include ``wide 
geographic areas that do not possess the characteristics that warranted 
the targeting of enhanced Lifeline and Link[-]Up support to 
reservations, such as geographic isolation, high rates of poverty, and 
low telephone subscribership.'' Accordingly, in its Tribal Stay Order 
and Further Notice and its May 2003 Second Tribal Order, 68 FR 41936, 
July 16, 2003, the Commission sought comment on how to identify 
geographic areas adjacent to reservations that share similar 
characteristics with the reservations. Since then, the Commission has 
not taken further action regarding the definition of ``near 
reservation,'' and currently provides enhanced low-income support only 
to those living on, not near, Tribal lands.
    101. We now propose to amend section 54.400(e) of our rules to 
remove the term and definition of ``near reservation,'' as its 
inclusion in the rules creates confusion. We also propose to adopt a 
new rule section 54.402 to adopt a designation process for those Tribal 
groups and communities seeking designation as Tribal lands under the 
Commission's rules. We seek comment on this proposal. The designation 
process we propose is consistent with the process recently proposed by 
the Commission in the Rural Radio Service Second R&O. That Order 
addresses the definitions of ``Tribal lands'' and ``near reservation 
areas'' for the purpose of determining whether a radio station 
application seeking to serve a Tribal community of license is a 
``licensable community'' that qualifies for special consideration. The 
Commission adopted a process whereby an applicant seeking to establish 
eligibility may submit any probative evidence of a connection between a 
defined community or area and the Tribe itself. We propose to adopt a 
similar process for Tribal groups and communities seeking to receive 
Lifeline and Link Up support, but whose land is not defined by section 
54.400(e). Use of such a process would serve the public interest by 
affording flexibility to Tribes in non-landed situations, particularly 
given that the circumstances of such Tribes are so varied.
    102. We propose to delegate authority to resolve such designations 
to the Wireline Competition Bureau. We propose that such a request to 
designate an area as a Tribal land for purposes of Lifeline and Link Up 
should be formally requested by an official of a Federally recognized 
Tribe who has proper jurisdiction. The request should explain why the 
communities or areas associated with the Tribe do not fit the 
definition of Tribal lands set forth in the Commission's Lifeline/Link 
Up program rules, but which are regions so Native in their character or 
location, as to support the purpose of providing enhanced Tribal 
Lifeline/Link Up program support. A showing should also detail how 
providing program support to the area would aid the Tribe in serving 
the needs and interests of its citizens in that community, and thus 
further the Commission's goals of providing Tribal support. Most 
probative would be evidence that a Tribe delivers services to the area 
at issue. However, the Tribe could offer other evidence, including the 
Federal government's provision of services to Tribal members in the 
identified area. Probative evidence might also include a showing that 
the Census Bureau defines the area as a Tribal service area that is 
used by agencies like the Department of Housing

[[Page 16495]]

and Urban Development. Further, persuasive evidence of a nexus between 
a community and a Tribe might also include showings that a Tribal 
government has a defined seat, such as a headquarters or office, in the 
area, combined with evidence that Tribal citizens live and/or are 
served by the Tribal government in the area at issue. A Tribe might 
also provide evidence that a majority of members of the Tribal council 
or board live within a certain radius of the area. An applicant might 
also show that more than 50 percent of Tribal members live exclusively 
in the geographical area. Additionally, Tribes might provide other 
indicia of a connection, such as Tribal institutions (e.g., hospitals 
or clinics, museums, businesses) or activities (e.g., conferences, 
festivals, fairs). We seek comment on any other factors that could help 
determine whether a geographical area is predominantly Tribal, such 
that low-income residents in the area should receive the benefits of 
enhanced Tribal program support.
    103. In addition to the showing required, it is important that an 
applicant seeking to take advantage of enhanced Tribal program support 
set forth a clearly defined area to be covered. The need for such a 
demonstration is in line with the purposes of enabling Tribes to serve 
their citizens, to perpetuate Tribal culture, and to promote self-
government. In evaluating such requests, we propose to delineate the 
``Tribal Lands'' equivalents as narrowly as possible and view most 
favorably proposals that describe narrowly defined Tribal lands, to 
enable the provision of services to Tribal citizens rather than to non-
Tribal members living in adjacent areas or communities. We seek comment 
on this proposal.
    104. ETC Designation on Tribal lands. Additionally, we acknowledge 
that carriers serving households residing on Tribal lands could benefit 
from greater clarity regarding the ETC designation process for Tribal 
lands. However, as this issue has broader applicability beyond just the 
Lifeline/Link Up program, the corresponding issues and request for 
comment are addressed in the Office of Native Affairs and Policy's 
Native Nations Notice of Inquiry. For example, the Notice of Inquiry 
seeks comment on how specific an ETC designation including Tribal lands 
should be, particularly for carriers seeking designation for the sole 
purpose of participating in the Lifeline program. The Notice of Inquiry 
also seeks comment on the nature of consultation with Tribal 
governments that should be included in the ETC designation process and 
whether carriers and Tribal governments should be required to file a 
proposed plan to serve with the Tribal lands. Finally, the Notice of 
Inquiry seeks comment on whether varying amounts of Lifeline support 
should be available on Tribal lands. We also seek comment on these 
issues and on the Lifeline program proposals contained in the Native 
Nations Notice of Inquiry.
    105. Self-Certification of Tribal land residence. Section 54.409(c) 
of the Commission's rules require that ETCs offering Lifeline services 
to residents of Tribal lands must obtain the consumer's signature on a 
document certifying that the consumer receives benefits from at least 
one of the qualifying programs and lives on a reservation. On April 25, 
2008, Qwest Communications International Inc. (Qwest) filed a request 
for review of certain USAC audit findings. The USAC audit found that, 
among other things, Qwest provided Tier 4 support for subscribers who 
were not residing on eligible Tribal lands and did not provide Tier 4 
support to subscribers who were eligible residents of Tribal lands. 
Qwest asked the Commission to find that USAC erred when it concluded 
that Qwest is inappropriately seeking enhanced Lifeline support for 
customers that do not reside on Tribal lands. Qwest argued that it has 
fulfilled its obligation to ascertain whether a customer lives on a 
reservation by obtaining a signed certifications stating that the 
customer lives on a reservation. USAC responded that Qwest should 
establish additional controls. The Commission sought comment on the 
Qwest Petition in 2008.
    106. As discussed above, Tribal land addresses are often not 
straightforward. AT&T and the US Telecom Association (USTelecom) filed 
comments supporting Qwest, stating that the Commission did not intend 
ETCs to take additional steps beyond obtaining a self-certification, to 
determine whether an applicant lives on Tribal lands. Alltel 
Communications, LLC (Alltel, which subsequently was acquired by 
Verizon), Rural Cellular Corporation (Rural Cellular), and Smith 
Bagley, Inc. (SBI) also filed reply comments supporting Qwest. Alltel 
acknowledged that Tribal lands are historically underserved areas in 
which residents and experience very low telephone penetration rates. 
Alltel argued that an increased burden on ETCs to verify Tribal 
residency would not improve service on Tribal lands, but would only 
serve to discourage ETCs from serving these areas as conducting 
additional verification procedures is very challenging due to the 
unique living arrangements and identification practices of many Tribes. 
For example, the Rosebud Sioux Tribe acknowledged that there are no 
physical addresses on the Rosebud Indian Reservation. Additionally, the 
Spirit Lake Tribe stated that all mail sent to the reservation is 
addressed to P.O. Boxes or General Delivery.
    107. We propose to amend section 54.409(c) of the Commission's 
rules to disallow self-certification of income or program eligibility 
for residents of Tribal lands receiving Lifeline/Link Up support, 
consistent with our proposal below to require all Lifeline/Link Up 
recipients to provide proof of income or participation in a qualifying 
program. We propose to require a consumer receiving low-income support 
and living on Tribal lands to show documented proof of participation in 
an eligible program or eligibility based on income, like all other low-
income consumers as there do not appear to be unique reasons why Tribal 
households should be exempt from a general requirement to produce 
documentation of qualification for program support. We seek comment on 
this proposal.
    108. We do, however, recognize there may be challenges in verifying 
Tribal residency due to unique living arrangements on Tribal lands, and 
therefore maintain the self-certification requirement as to Tribal land 
residence. We propose to clarify that receipt of self-certification of 
residence on Tribal lands, along with documentation of income or 
participation in an eligible program, is sufficient documentation for 
an ETC to provide enhanced Lifeline support. The current rules do not 
require the ETC to establish further verification processes or controls 
to ascertain that the customer is a Tribal member or lives on Tribal 
lands before providing enhanced Lifeline support. We seek comment on 
this proposed clarification.

V. Constraining the Size of the Low-Income Fund

    109. We are mindful of the impact of the growth in the program on 
the consumers and businesses that ultimately support USF through fees 
on their phone bills. As we undertake comprehensive reform and 
modernization of USF, we are committed to controlling costs and 
constraining the overall size of the Fund. Many of the proposals 
contained herein to eliminate waste, fraud, and abuse and improve 
program administration could reduce expenditures and the size of the 
program. For example, eliminating duplicate claims and tightening our 
rules on customary charges eligible for Link Up support should result 
in

[[Page 16496]]

reduced expenditures. We note that fund growth is not necessarily 
indicative of waste, fraud, and abuse. We recognize that demand for 
low-income support fluctuates based on a number of factors, including 
changes in qualifying assistance programs and macroeconomic conditions. 
We also note that the program has an ultimate cap in that only a 
defined population of eligible low-income households may participate in 
the program, and support is limited to a maximum of $10 per month per 
household (other than on Tribal lands). We seek comment generally on 
how to balance these principles, while retaining our commitment to 
enabling households in economic distress to obtain access to essential 
communications services.
    110. In light of concerns about the growth of Lifeline/Link Up, we 
seek comment on a proposal to cap the size of the Lifeline/Link Up 
program, for example at the 2010 disbursement level of $1.3 billion. We 
ask whether and how a capped fund could continue to ensure telephone 
access for low-income households and support potential expansion for 
broadband as discussed below. We seek comment on whether any cap should 
be permanent or temporary, perhaps lasting for a set period of years or 
until the implementation of structural reforms proposed in this NPRM.
    111. If the Commission were to cap the program, either as an 
interim measure or permanently, what would be an appropriate cap level? 
How should such a level be determined? For example, should it be higher 
or lower than the 2010 size of the program? Should a cap be indexed to 
inflation, similar to other USF program funds subject to caps, or 
adjusted based on unemployment rates? We seek comment on whether there 
should be exceptions to a cap. For example, should low-income support 
for eligible residents of Tribal lands be exempt, given the very low 
telephone penetration rate on Tribal lands, as well as the unique 
circumstances and challenges faced by residents of Tribal lands? If we 
were to adopt a cap, should that cap be adjusted, for instance, if 
national or local unemployment exceeded a specified level?
    112. We also seek comment on the appropriate way to administer a 
cap. Is a national cap more efficient, or would a State-by-State cap be 
a more equitable way to administer the Low Income program fund? As 
noted above, the Act contemplates achieving reasonably comparable 
access in all regions of the country. Should regional differences be 
accounted for under a cap?
    113. If the Commission were to cap the program, we may also need to 
implement methods for prioritizing support among potential recipients. 
Should current participants in the program receive priority funding 
within a capped system? Alternatively, should funding be available on a 
first-come, first-served basis after a specified date for re-enrollment 
in the program? If so, given that disbursements vary monthly, how could 
ETCs be notified when the cap had been reached? If a participant loses 
services for any reason, such as non-use, should that participant 
necessarily receive funding upon re-enrollment, or would that person 
potentially have to wait until the next funding year? Should monthly 
benefits be reduced to ensure that all eligible households that seek to 
participate in the program can do so, even if they would receive a 
smaller benefit than program participants currently receive? We seek 
comments on these issues and other practical and operational issues 
that would need to be addressed if the program were capped.
    114. If the Commission adopts a rule capping the low-income fund, 
should that cap be maintained if the Commission decides to support 
broadband with program funds? Would the inclusion of broadband 
necessitate different a different approach to prioritizing benefit 
allocations?

VI. Improving Program Administration

    115. In this section, we seek comment on how to improve key aspects 
of the current administration of Lifeline/Link Up, consistent with our 
goals of reducing waste, fraud, and abuse and modernizing the program. 
As discussed above, the Commission has historically provided 
considerable discretion to the States to administer key aspects of the 
program, such as eligibility, enrollment, and ongoing verification of 
eligibility. In order to bolster oversight of this Federal program, we 
propose a core set of Federal eligibility, certification, and 
verification requirements that would apply in all States, while seeking 
comment on allowing States to adopt additional measures that could 
complement the Federal standards. Specifically, we propose to eliminate 
the option of self-certifying eligibility and to require all consumers 
in all States to present documentation of program eligibility when 
enrolling. We propose to increase sample sizes for ongoing verification 
and to require ETCs in all States to submit verification data to USAC 
and the Commission.
    116. We also seek comment on ways to reduce barriers to 
participation in the program by service providers and low-income 
households, specifically through the use of coordinated enrollment with 
other social service assistance programs and the development of a 
national database that could be used for enrollment and verification of 
ongoing eligibility. These proposals are intended to improve 
administrative efficiency, improve service delivery, and protect and 
improve program access for eligible beneficiaries.

A. Eligibility Criteria for Lifeline and Link Up

    117. We propose to amend our rules to require all States to 
utilize, at a minimum, the program criteria currently utilized by 
Federal default states. We further propose to allow States to maintain 
existing State-specific eligibility criteria that supplement the 
Federal criteria. Currently, some States' criteria are more permissive 
than the Federal criteria. For example, Georgia extends program 
eligibility to senior citizens participating in low-income discount 
plans offered by local power and gas companies. If we were no longer to 
allow States to utilize these existing State-specific eligibility 
criteria, current subscribers would become ineligible for Lifeline 
benefits, which could result in considerable consumer disruption. We 
seek comment on whether, going forward, States should be able to impose 
additional permissive eligibility criteria they deem appropriate, so 
long as these additional eligibility criteria are reasonably tied to 
income and the State in question provides additional monetary support 
to supplement the Federal support. We recognize that more permissive 
eligibility criteria could increase the number of Lifeline subscribers, 
and seek comment on how to strike the right balance between national 
uniformity and State flexibility to address local circumstances. We 
further seek comment on the nature and magnitude of the potential 
impact, costs, and benefits of imposition of our proposed minimum 
eligibility requirements.
    118. Today, ETCs operating in multiple States have to develop 
State-specific policies and procedures to assure compliance with State-
specific program eligibility requirements. More uniform eligibility 
requirements could potentially lead to more streamlined and effective 
enrollment of eligible consumers, while lessening regulatory burdens on 
service providers. Moreover, as we explore cost-effective ways to 
strengthen the process of certification and validation of household 
eligibility, more uniform requirements could also lessen administrative 
costs for the program and facilitate more effective

[[Page 16497]]

monitoring and auditing. We ask whether requiring all States to utilize 
the Federal eligibility criteria would simplify ETC processes for 
enrolling eligible households and verifying ongoing eligibility.
    119. Would establishing a Federal baseline of eligibility criteria 
place any burdens upon the States? What administrative changes would be 
required in those States where enrollment and ongoing verification of 
eligibility functions are performed by a State governmental agency or 
third-party administrator? Would any such burdens be justified by the 
benefits of a minimum uniform system? From the perspective of States or 
service providers, what are the benefits or burdens of maintaining the 
current system in which requirements vary from State to State? We ask 
whether allowing States to maintain and add permissive eligibility 
criteria beyond any minimum uniform criteria would prevent existing 
eligible Lifeline customers from losing Lifeline support. Finally, we 
ask whether a Federal baseline of eligibility criteria would increase 
program participation.
    120. In its 2010 Recommended Decision, the Joint Board also 
recommended that we seek comment on raising the program's income 
eligibility criteria of 135 percent or below of Federal Poverty 
Guidelines to 150 percent or below of the FPGs. We seek comment on 
raising the Federal income threshold for program participation to 150 
percent or below of the Federal Poverty Guidelines. Some Federal 
programs linked by the low-income program, such as LIHEAP, already have 
a 150 percent threshold. A number of commenters in the Joint Board 
proceeding urged that the income eligibility standard be increased in 
150 percent. The FPG formula has been criticized as dated and 
inaccurate, with the Consumer Groups noting that some studies have 
suggested income levels for economic ``self-sufficiency'' at 161 
percent of the poverty level. In 2004, the Commission sought comment on 
whether the income-based criteria for Federal default states should be 
increased to 150 percent of the Federal Poverty Guidelines. At that 
time, the Commission presented a staff analysis that concluded that 
raising the income threshold might only have minimal on telephone 
penetration rates, but could result in many new Lifeline subscribers, 
potentially resulting in an additional $200 million in demand for 
Lifeline. We seek to update the record on this issue. We also seek 
comment on lowering the threshold from the current level (135 percent 
of the FPG).

B. Certification and Verification of Consumer Eligibility for Lifeline

    121. The applicability of Federal and State rules governing initial 
certification and ongoing verification of consumers' eligibility for 
support currently depends on whether the customer resides in a Federal 
default state or non-Federal default state. Accordingly, ETCs providing 
service in multiple States may be required to comply with various State 
and/or Federal certification and verification procedures. 
``Certification'' refers to the initial determination of eligibility 
for the program; ``verification'' refers to subsequent determinations 
of ongoing eligibility.
    122. We believe it is time to take a fresh look at these rules, 
taking into account both our experience with the program over the past 
15 years and the many changes in service offerings since the program 
began. Our analysis is informed by the Joint Board's Recommended 
Decision, and by the recent GAO review of the program. According to 
GAO, some States find that consumers are deterred from enrolling by the 
difficulty of certification and verification procedures. GAO also notes 
that there are risks associated with the self-certification of 
subscriber eligibility and the accuracy of amounts claimed by ETCs for 
reimbursement. Our proposals are intended to improve the integrity of 
the program by improving Federal requirements and introducing greater 
consistency throughout the country. We seek to balance the need to 
ensure that the program supports only intended beneficiaries, with the 
need for administratively workable requirements that do not impose 
excessive burdens or costs.
    123. One-per-residential address certification and verification. We 
propose to amend section 54.410 of our rules to require that all ETCs 
obtain a certification when initially enrolling a subscriber in 
Lifeline that only one Lifeline service will be received at that 
address. We also propose to amend section 54.410 of our rules to 
require that all ETCs obtain a certification from every subscriber 
verified during the annual verification process that the subscriber is 
receiving Lifeline support for only one line per residence. Requiring 
``one-per-residence'' certification initially at sign-up and then on an 
ongoing basis should highlight and remind the consumer that support is 
available for only one line per residence and reduce inadvertent 
program violations. We seek comment on these proposals.
    124. The form used for such certification shall explain in clear 
and simple terms that this Federal benefit is available for only one 
line per residence, and that consumers are not permitted to receive 
benefits from multiple providers. Further, the certification form shall 
contain language stating that violation of this requirement would 
constitute a violation of the Commission's rules and may constitute the 
Federal crime of fraud, which will be prosecuted to the fullest extent. 
We seek comment on this proposal and ask whether there is any other 
language that should be required on the form.
    125. We propose that compliance with the one-per-residence rule 
shall be verified annually, using the same procedures and forms 
described above. Annual one-per-residence verification results should 
be reported along with the sampling data to USAC and the Commission, as 
discussed more fully below. Finally, any subscriber indicating they are 
receiving more than one subsidy per address shall be de-enrolled 
pursuant to the process for duplicates described above. Any non-
responders shall also be de-enrolled pursuant to the termination 
process identified in our rules. We seek comment on these proposals.
    126. Modifying certification procedures. We propose to amend 
section 54.409(d)(1) to eliminate the self-certification option and 
require all consumers in all States to present documents to establish 
eligibility for the program. We are concerned that the self-
certification process does not provide adequate assurance that support 
is being provided only to qualifying customers. Self-certification 
offers minimal protection against those intentionally seeking to 
defraud the program and fails to exclude customers that are not 
eligible to participate but simply misunderstand the eligibility 
requirements. This proposal would reduce the number of ineligible 
consumers in the program and reduce opportunities for waste, fraud, and 
abuse.
    127. We seek comment on this proposed rule change to eliminate 
self-certification for program eligibility. Will the rule change help 
identify and eliminate ineligible consumers from enrolling in the 
program? To the extent that any commenter opposes this proposed change, 
we encourage alternative suggestions that we could implement quickly to 
reduce opportunities for ineligible customers to participate in the 
program. We seek comment on whether this proposed change would present 
an undue burden on ETCs and/or consumers.
    128. We also propose to amend section 54.409(d)(3) to require that 
a

[[Page 16498]]

consumer notify the ETC within 30 days if the consumer has knowledge 
that he or she no longer qualifies for Lifeline program support. A 
consumer would be required to notify its carrier upon knowledge that 
they no longer meet the income criteria, no longer participate in a 
qualifying program, are receiving duplicate support, or otherwise no 
longer qualify for program support. We seek comment on this proposal.
    129. Modifying annual verification procedures. We are concerned 
that although the current sampling methodology for Federal default 
states may provide some insights into the percentage of ineligible 
subscribers for a given ETC, we are concerned that it may not 
adequately protect the program from waste, fraud, and abuse as it does 
not result in de-enrollment of all ineligible subscribers.
    130. We propose changes to our annual verification procedures in 
three areas. First, consistent with the Joint Board's recommendation, 
we propose to amend section 54.410 of the Commission's rules to adopt a 
uniform Federal rule to serve as a minimum threshold for verification 
sampling. Second, we propose to require ETCs to de-enroll from the 
program consumers who decline to respond to an ETC's verification 
attempts. Third, consistent with the Joint Board recommendations, we 
propose uniform procedures for the collection and submission of 
verification data across all states. We seek comment on these proposals 
and ask whether there are other verification issues for which we should 
consider adopting a set of uniform procedures. We also seek comment how 
these proposals would impact existing ETC compliance plans for specific 
wireless providers.
    131. We propose that these uniform minimum standards apply to all 
ETCs in all states regardless of any variances in state eligibility 
criteria. We recognize that individual states may have state-specific 
Lifeline programs, and therefore may have concerns that are not 
applicable to ETCs in all states. Therefore, we propose that states be 
allowed to implement additional verification procedures beyond the 
uniform minimum required procedures to accommodate those differences. 
We seek comment on this proposal. We also seek comment on whether there 
are any state verification processes that would be useful to adopt as a 
minimum uniform verification requirement to be applicable in all 
states.
    132. The Joint Board also recommended that ``states be allowed to 
utilize different and/or additional verification procedures so long as 
those procedures are at least as effective in detecting waste, fraud, 
and abuse as the uniform minimum required procedures.'' We seek comment 
on this proposal. For commenters that support this option, how, if at 
all could the Commission monitor whether different state procedures are 
``at least as effective'' as the Federal standards? Would this proposal 
adequately address our concerns about the administrative burdens 
created by inconsistent standards among states?
    133. Uniform sampling methodology. We propose to amend section 
54.410 of the Commission's rules to establish a uniform methodology for 
conducting verification sampling that would apply to all ETCs in all 
states and provide additional protections against waste, fraud and 
abuse.
    134. As noted above, the Commission's rules require ETCs in Federal 
default states to implement procedures to verify annually the continued 
eligibility of a statistically valid random sample of Lifeline 
consumers and provide findings to USAC. The Commission has previously 
specified that the size of annual samples should be based on a number 
of factors, including the number of Lifeline subscribers served by the 
ETC and the previously estimated proportion of Lifeline subscribers 
served that are ``inappropriately taking'' Lifeline service. The Joint 
Board recommended that the Commission reconsider the equation used to 
calculate acceptable sample sizes, suggesting that current samples are 
not large enough to reveal the percentage of ineligible consumers 
receiving support. The Joint Board also stated that a uniform minimum 
standard for conducting the ``statistically valid random sample'' would 
help ensure accuracy, improve consistency among the sampling data, and 
assist in analyzing regional and national verification issues.
    135. There are several potential issues with our current sampling 
methodology. First, although our calculation method is designed so that 
poor results from prior years require an ETC to sample a larger number 
of customers in following years, the current methodology assumes that 
no more than six percent of customers would be found ineligible in any 
given year. As such, the tables that many ETCs use to determine the 
number of customers they must survey do not contemplate a situation in 
which more than six percent of customers are found ineligible. To 
illustrate the point, the minimum number of customers surveyed 
increases as the number found ineligible in the previous year increases 
from zero to fifty percent. However, because our instructions set a 
``cut off'' of six percent ineligible, an ETC with 400,000 Lifeline 
subscribers (half of whom were estimated to be ineligible) would only 
need to survey 244 customers. As such, some ETCs may be sampling too 
few customers for their annual verification survey results to be 
statistically valid.
    136. Second, our current methodology creates little incentive for 
the ETCs to obtain responses from all consumers in the sample; the only 
consequence for non-response is to de-enroll an admittedly small number 
of consumers in the sample population. The penalties for non-response 
largely fall on the subscriber (who may lose service despite 
eligibility), while there is little incentive for the ETC to educate 
customers about the importance of a prompt response.
    137. Third, a statistically valid sample by definition provides 
only a basis for estimating the total number of ineligible consumers 
for a particular ETC; it does not result in de-enrollment of all (or 
even most) ineligible subscribers for that ETC. A hypothetical example 
illustrates the problem: If the annual verification survey estimates 
that half of a large ETC's customers are ineligible in one year, the 
ETC need only survey 0.27% of its customers the following year. In 
other words, if an ETC has 400,000 Lifeline subscribers and half (or 
200,000) were estimated to be ineligible, the ETC would only need to 
survey 1,082 Lifeline customers the following year for the sample to be 
statistically valid (and assuming the same ineligibility rate, would 
then de-enroll no more than half, or 541, of the sampled customers for 
ineligibility). In short, the current methodology fails to identify the 
ineligibles who are not part of the sample.
    138. Given these potential issues, we propose to amend section 
54.410 of the Commission's rules to establish a uniform methodology to 
be used by all states for determining minimum verification sample sizes 
to provide additional protections against waste, fraud and abuse. 
Specifically, we set forth two alternative proposals for determining 
how many Lifeline customers an ETC must survey each year. The first 
alternative is a sample-and-census proposal, which would allow an ETC 
to sample its customers so long as the rate of ineligibility among 
responders to the survey is below a fixed threshold. If that 
ineligibility rate exceeds the threshold, however, the ETC would be 
required to take a census of all customers. The second alternative is 
to modify the current formula used in the Federal default states and 
apply it

[[Page 16499]]

uniformly to all states. Both alternative proposals are intended to 
address the three issues with our current sampling methodology, but in 
distinct ways. We describe each alternative below and invite comment on 
the relative advantages and disadvantages of these two alternatives.
    139. We describe the possible implementation of the sample-and-
census approach by providing an example using 5 percent as the 
threshold for a full census: Each year, ETCs would sample enough 
customers so that at least 300 customers respond to the verification 
survey; if the lower bound of the confidence interval for the estimate 
of ineligible subscribers is at or above 5 percent of total 
respondents, then the ETC would be required to take a census of all 
Lifeline customers that year and verify that each and every customer is 
eligible to participate in the Lifeline program. We seek comment on 
each component of the sample-and-census approach: (1) The minimum 
number of customers that must respond to the survey for each ETC, (2) 
the threshold rate that would determine when the number of ineligible 
respondents is unacceptably high, and (3) the census requirement to 
remove ineligible customers from Lifeline's rolls if that threshold is 
crossed.
    140. First, we seek comment on the appropriate minimum number of 
respondents needed for an accurate sample. We note that under our 
current rules, an ETC with 400,000 Lifeline subscribers in a given 
state is required to sample no more than 244 customers, while an ETC 
with 10,000 subscribers is required to sample no more than 238 
customers, and an ETC with 500 subscribers is required to sample no 
more than 164 customers. Our objective is to establish a minimum 
required number of respondents that would provide sufficient assurance 
that the results of the sample are indicative of the population at 
large, regardless of the expected margin of error. As set forth more 
fully in Appendix C, a sample size of 300 would have a margin of error 
no greater than 5.7 percent, regardless of the number of ineligibles 
ultimately identified. Thus, for instance, if there were 300 
respondents, and the survey identified a 10 percent ineligibility rate, 
that would suggest the actual eligibility rate in the entire subscriber 
base is somewhere between 6.6 percent and 13.4 percent. Should we 
consider a larger or smaller sample size based on the number of 
Lifeline customers an ETC has in a state? Reducing the required number 
of respondents for smaller ETCs could result, for example, in sizably 
larger margins of error. On the other hand, a uniform number of 
respondents applicable to all ETCs could require smaller ETCs to survey 
all or most of their Lifeline customers each year, which could be 
burdensome. Such a requirement also could pose burdens to the extent 
that not all of the surveyed subscribers respond to the survey. Our 
goal is to establish a minimum number of respondents that is expansive 
enough to fully understand the scope of violations and de-enroll those 
who are ineligible, but that does not impose unnecessary costs on the 
program or on ETCs. We seek comment on how to appropriately balance the 
costs and benefits associated with implementing a standard minimum 
number of respondents, including the burdens that may be imposed on 
consumers as well as ETCs.
    141. Next, we seek comment on the threshold rate that would be used 
to determine when the number of ineligible customers found in the 
survey warrants a full census. For these purposes, we distinguish 
between Lifeline subscribers that fail to respond to a verification 
attempt and those that are affirmatively are found to be ineligible. 
The example above set the threshold at 5% of respondents. Is this 
threshold appropriate? If not, what should be the triggering threshold? 
Should the threshold be higher in recognition of the fact that program 
rules allow a subscriber to remain in the program for a period of sixty 
days after becoming ineligible? Should it be lower, in order to further 
reduce waste, fraud, and abuse? In the same vein, should we establish 
an analogous threshold for the percentage of customers who do not 
respond to the ETC's verification survey? In other words, is there a 
level of non-responsiveness that should be deemed acceptable? If so, 
how could the Commission determine that threshold? If non-response 
rates exceed a specified threshold, should that level of non-response 
also trigger a full census, or are less burdensome measures to verify 
subscriber eligibility more appropriate.
    142. Finally, we seek comment on the census component, i.e., on the 
requirement that an ETC must verify the eligibility of all Lifeline 
customers in a state if the ineligibility rate of survey respondents 
exceeds the threshold. Should an ETC be required to conduct the census 
immediately, i.e., within a specified number of months of completing 
the survey, or the following year (in place of the annual verification 
sample)? If the number of ineligible respondents found during the 
census exceeds the threshold rate, should the ETC be required to 
conduct another census the following year in lieu of a statistically 
valid sample? Should an ETC whose ineligibility rate exceeds the 
threshold be required to perform a census of all Lifeline customers 
each year until the ETC can establish that fewer than 5 percent of 
respondents are ineligible?
    143. Should we establish another, higher threshold of ineligibility 
that would trigger a proceeding to determine whether that ETC's ability 
to participate in the Lifeline program should be revoked? For example, 
if two censuses in a row show that more then 10% of a particular ETC's 
Lifeline customers are ineligible, would that be evidence that the ETC 
has failed to implement adequate internal controls to assure compliance 
with Commission rules to such degree that it would be appropriate to 
revoke that ETC's designation to receive Federal Lifeline and Link Up 
support? If so, what would be the effect on subscribers receiving 
service from the offending ETC? For example, should subscribers be 
offered an automatic transfer to a different ETC or be required to re-
enroll?
    144. In the alternative, we seek comment on how to modify the 
current formula used in Federal default states and applying that 
revised formula in all states. We propose to eliminate the current cap 
on the estimated ineligibility rate of 6 percent. Should we require a 
larger sample size that would gradually increase the number of 
customers that an ETC must survey each year when a specified level of 
ineligibility is found? We recognize that a statistically valid sample 
is likely sufficient when the percentage of customers found ineligible 
is very low and the sample size is sufficiently large. But if the 
number of ineligible subscribers (including those that do not respond 
to the verification survey) becomes significant, should ETCs be 
required to verify eligibility of a proportionately larger number of 
customers than necessary for a statistically valid sample, to provide 
increasing incentives for the ETC to root out any potential waste, 
fraud, and abuse? We seek comment on potential modifications to the 
existing formula to better comport with our goals for revising the 
annual verification sampling procedures of ETCs.
    145. We seek comment on both alternative proposals. To what extent 
would each proposal address the potential issues with today's 
methodology? Each proposal would eliminate the 6 percent ``cut-off'' 
that may distort the statistical reliability of today's sampling 
methodology. Each could incentivize ETCs to educate their customers and 
increase the response

[[Page 16500]]

rates of customers--the sample-and-census proposal would do so by 
putting the onus on ETCs to get a sufficient number of respondents, 
while a modified formula potentially could allow smaller verification 
surveys the following year if more customers respond to the 
verification survey. The first proposal includes a method for weeding 
out ineligible customers when one year's survey suggests that the 
number of ineligible customers is unacceptably high. Under the second 
approach, it could take several years to more fully identify ineligible 
subscribers for a given ETC and in the meanwhile, ineligible consumers 
would continue to receive support in contravention of our rules. We 
also acknowledge while our current statistical sampling methodology may 
work well for ETCs with a large number of subscribers, there is a risk 
of highly uncertain results for ETCs with small Lifeline subscriber 
populations.
    146. We seek comment on these two proposals. We also seek comment 
on alternative proposals. Are there other ways to modify the current 
Federal methodology to improve it as we seek to make that the uniform 
minimum Federal standard in all states? We also seek comment on methods 
used by non-Federal default states to select a sample of subscribers 
that might provide a model for a uniform Federal standard. What sample 
size and confidence intervals are used by the various states that 
require statistical sampling?
    147. Procedures to be followed after sampling. When an ETC samples 
its customers, there are three possible outcomes: (1) Some subscribers 
will not respond; (2) some respondents are eligible; and (3) other 
respondents are ineligible.
    148. We propose to require ETCs to de-enroll from the program 
consumers who decline to respond to the ETC's verification attempts. 
Our rules require ETCs in all states and territories to terminate 
Lifeline service if the carrier has a reasonable basis to believe that 
a subscriber no longer satisfies the qualifying criteria. Codifying the 
specific requirement that they be de-enrolled for non-response in our 
rules would further protect the program from waste, fraud, and abuse. 
ETCs conducting verification surveys typically receive responses from 
only some of the consumers surveyed. We note that ETCs already 
routinely de-enroll customers that do not respond to the ETC's 
verification efforts, so this rule would not impose significant burdens 
on ETCs. We seek comment on this proposal.
    149. Collection and submission of verification sampling data. Under 
current rules, the Commission has access to verification results only 
from ETCs in Federal default states and in a handful of states that 
require ETCs to submit information annually to USAC. The Joint Board 
noted that gathering the same minimal data from all states would 
provide the Commission a more complete picture of how the Lifeline 
program is utilized, and would help identify regional and national 
verification issues. A more comprehensive data set would also allow the 
Commission to continue refining its rules and policies to reduce waste, 
fraud, and abuse in the program. We propose to require all states to 
submit verification sampling data to USAC. We seek comment on this 
proposal.
    150. Consistent with the Joint Board's recommendation, we seek 
comment on whether verification results submitted to USAC and the 
Commission should be shared with all states. The Joint Board also 
points out that making aggregate verification results available to the 
public could better inform interested parties about whether universal 
service funds are being used for their intended purposes. Accordingly, 
we seek comment on whether the Commission should periodically publish 
aggregated verification results. Finally, we seek comment on whether 
information relating to any other Lifeline or Link-Up eligibility 
criteria should be gathered by ETCs and submitted to USAC and the 
Commission during the certification and verification processes.
    151. Certification and verification best practices. Consistent with 
the Joint Board's recommendation, we seek comment on states' 
certification and verification practices. The Joint Board noted that it 
received limited information regarding state certification and 
verification practices. More comprehensive data on states' practices 
would assist the Commission with establishing appropriate uniform 
minimum standards. Therefore, we seek to build the record regarding 
best practices for certifying and verifying household eligibility. We 
encourage states, ETCs, Tribal governments, consumer groups, and others 
to provide us with their experiences with different certification and 
verification procedures, and to identify those that could be adopted as 
uniform minimum standards for all states.
    152. In particular, we seek data on how program eligibility is 
verified in particular states, how frequently verification is required, 
by whom verification is conducted, and the scope of the verification 
process (e.g., the proportion of subscribers that are sampled). We also 
seek data on whether states impose different verification 
responsibilities on different types of carriers. For example, we 
understand that in some states Lifeline-only pre-paid wireless carriers 
may be subject to verification requirements different from other types 
of carriers.
    153. Certification and verification responsibilities and cost. 
Consistent with the Joint Board's 2010 Recommended Decision, we seek to 
develop a fuller record on who should be certifying and verifying 
continued eligibility. In the Federal default states ETCs perform these 
functions, while in other states, third-party administrators or social 
services agencies may perform them. Comprehensive data on certification 
and verification responsibilities and costs would assist the Commission 
in determining the most appropriate entity to certify and verify 
Lifeline consumers' eligibility. Specifically, as suggested by the 
Joint Board, we seek comment on the costs of requiring ETCs, states, or 
third-parties to undertake certification and verification procedures.
    154. Requiring ETCs to verify eligibility by interacting with 
consumers may present challenges, including consumers' hesitancy to 
provide personal information to ETCs. We also note that to the extent 
an ETC is seeking to build a Lifeline customer base, it may not have 
the same incentives to verify continued eligibility for benefits as 
would a neutral third party or government agency. Additionally, 
Federal, state, or Tribal agencies administering qualifying programs 
may be able to provide more reliable and more accurate information than 
consumers for verifying program or income eligibility. Therefore, we 
seek comment on whether ETCs should continue to be responsible for 
conducting eligibility certification and verification directly with 
Lifeline consumers, and on how income-based eligibility can be verified 
if not directly through the consumer. Further, we seek comment on the 
relative merits of relying upon ETCs, state agencies, Tribal 
governments, or other third-party entities to conduct initial 
certification and subsequent verification of eligibility. We seek 
comparisons of state practices or procedures, including how various 
practices have impacted the number of ineligible subscribers and 
duplicates, and other forms of waste, fraud, and abuse.

[[Page 16501]]

C. Coordinated Enrollment

    155. We agree with the Joint Board's recommendation that 
coordinated enrollment should be encouraged as a best practice by the 
states. Coordinated enrollment can provide an important protection 
against fraud because eligibility is certified by the appropriate state 
or Tribal agency. We also agree with the Joint Board and many 
commenters that there are certain administrative, technological, and 
funding issues associated with coordinated enrollment. We seek comment 
on whether mandating coordinated enrollment would be appropriate, 
though we note that the record is not yet well developed on this issue. 
We seek further information about the costs and benefits of coordinated 
enrollment. We also seek to understand what if any steps the Commission 
might take to facilitate coordinated enrollment in all states.
    156. Administrative issues. We seek to build on the information we 
have collected from states and Tribal governments that are developing 
electronic interfaces to administer the Lifeline/Link Up program 
through coordinated enrollment. In the Joint Board proceeding, a few 
states provided detailed information regarding their coordinated 
enrollment best practices. For example, California explained that it 
moved from an automatic enrollment system to a system that pre-
qualifies eligible consumers who must then affirmatively accept the 
service. Additionally, the GAO Report noted that states in its survey 
found that using various types of automatic enrollment procedures has a 
positive impact on reaching and enrolling eligible consumers. We seek 
comment on ways to ensure that coordinated enrollment provides fair and 
equivalent access to all providers of Lifeline service in a state, how 
to provide prompt and accurate notification of customer eligibility to 
carriers, and whether and how to ensure that a coordinated enrollment 
program would not prevent eligible consumers from qualifying under the 
income criteria. We also seek comment on how many and which states and 
Native Nations would require changes in state or Tribal laws to 
effectuate coordinated enrollment.
    157. Technological issues. Individual states or Tribal governments 
may face unique technological circumstances and burdens that make it 
impractical or unduly burdensome to implement coordinated enrollment. 
For example, the ability of a state or Tribal government to implement 
coordinated enrollment may depend upon the capabilities of existing 
data processing equipment, software, and data communication networks. 
We seek comment on these burdens and seek detailed information on the 
technological hurdles that states or Tribal governments would face, and 
how these challenges can be overcome. How many states and Tribal 
governments would need to upgrade or add data processing equipment, 
software, data networks, or other technology solutions in order to 
implement coordinated enrollment?
    158. Funding issues. We are aware that there could be significant 
costs associated with coordinated enrollment, including the costs of 
safeguarding consumers' privacy and security, administering the 
program, and developing and maintaining software and equipment. How 
have states that have implemented coordinated enrollment funded 
associated costs? If the Commission were to mandate coordinated 
enrollment, should states and Tribal governments be required to provide 
all of the necessary funding, or should the Universal Service Fund bear 
some of those costs, and if so, what portion? We ask states that have 
developed or are developing coordinated enrollment programs to provide 
data on the associated costs. We also seek comment on the overall cost 
savings, if any, associated with coordinated enrollment, and on any 
other benefits that arise from coordinated enrollment. For example, 
have coordinated enrollment procedures helped states or Tribal 
governments better target benefits to intended beneficiaries? We ask 
for comment on the extent to which coordinated enrollment might lead to 
increased participation in the low income program. We seek comment on 
whether coordinated enrollment would reduce fraud if participants were 
required to use a coordinated enrollment process in order to obtain 
benefits. We encourage commenters to quantify, to the extent possible, 
the magnitude of any administrative costs and potential savings of 
coordinated enrollment.

D. Database

    159. Administration. We seek comment on who should administer the 
program database. Should USAC be the primary administrator of a 
centralized system, or should the Commission select another third-party 
to administer the database? Is a governmental agency in a better 
position to safeguard consumers' highly sensitive information, such as 
household income, than a third-party? Several commenters note that 
state social service agencies interact most closely with the program's 
target population, and may be most competent to deal with low-income 
households' sensitive documents. What models or best practices are 
there in other contexts for social service programs?
    160. Functionality. We have heard from several ETCs that a national 
database may be the best means to protect against waste, fraud, and 
abuse. We seek comment on how we can create and implement a database 
that would enable efficient enrollment by households in the program, 
but also guard against waste, fraud and abuse. For example, AT&T 
proposes a national PIN database that would answer two questions: (1) 
Has a consumer been deemed eligible by the state; and (2) is the 
consumer already receiving Lifeline discounts? Under AT&T's proposal, 
states would assume responsibility for determining consumer eligibility 
and assigning a PIN that would be provided in blocks to various states 
by USAC. ETCs would access the database and be able to determine and 
change the status of a consumer.
    161. We seek comment on what functions should be served by a 
centralized database and the priorities for implementation. We are 
interested in understanding whether there are databases or systems used 
to facilitate other government-supported programs that can serve as 
models.
    162. First, we seek comment on the functionality that should be 
included in any information system that facilitates enrollment 
certification, and ongoing verification of eligibility. For example, 
how could a system simplify the certification process and provide real-
time electronic verification of consumer eligibility? How can we ensure 
that the database provides ongoing verification of consumer 
eligibility? In addition, we seek comment on the type of information 
that the database would need to contain regarding a consumer's current 
Lifeline enrollment status. How would ETCs access eligibility 
information? CGM notes that Wisconsin provides real-time certification 
of customer eligibility at the time of enrollment. Could Wisconsin's 
system provide a model for a nationwide database?
    163. In addition, we seek comment on whether a nationwide database 
could efficiently and effectively facilitate ongoing verification of 
customer eligibility. We seek comment on how a database would receive 
updates on changes in consumers' eligibility from appropriate social 
service agencies so that eligibility for Lifeline could be monitored in 
a timely manner. For

[[Page 16502]]

example, if a database is linked to a Federal or state system that 
contains information regarding customer enrollment in a qualifying 
program and the subscriber becomes ineligible in that qualifying 
program sometime after enrolling in Lifeline, how would the system 
notify the ETC that the subscriber is no longer eligible for Lifeline? 
Would the system alert the ETCs on a periodic basis or every time a 
subscriber drops out of the qualifying program? We seek comment on the 
procedures ETCs would follow when a subscriber becomes ineligible. For 
example, would the subscriber be given a grace period to secure 
alternative service once de-enrolled in Lifeline? How, if at all, could 
a database be updated to reflect changes in income eligibility?
    164. We also seek comment on whether a national database would 
resolve the issue of annual verification by providing an effective 
means of verifying customer eligibility monthly, quarterly, or 
annually? How could a nationwide database accommodate the differences 
in state Lifeline practices, which include varying Lifeline eligibility 
criteria and verification mechanisms? Additionally, we seek comment on 
the impact a national database would have on carriers' administrative 
burden.
    165. Second, we seek comment on the functionality required to 
eliminate duplicate claims for support and generally guard against 
waste, fraud, and abuse. Stakeholders have stated that a national 
database could eliminate fraudulent and duplicate claims for Lifeline 
support by performing a pre-qualification address verification. 
Currently, only Texas has a database that can identify duplicate 
claims, but the database does not allow ETCs to determine immediately 
if a household is enrolled in another program. Rather, ETCs must wait 
to hear from the system administrator whether the potential household 
is being served by another ETC. Because the Texas database is not 
updated in real-time, stakeholders report that there is significant 
lag-time in signing up customers. Is it necessary or desirable to 
update the database on a real-time basis?
    166. Third, we seek comment on how the database would be populated 
and by whom. Some commenters have pointed out that a national database 
populated by the states as well as ETCs could simplify the 
certification process by providing accurate and up-to-date information 
on eligibility. Other commenters explain that state social service 
agencies are best situated to provide these inputs. We seek comment on 
what authority the Commission has to require state social service 
agencies to provide inputs in the database. We seek comment on who 
should be charged with populating the database.
    167. A national database would need to have the ability to 
normalize or standardize data into a common format in order to account 
for variations in consumer- or ETC-provided data fields, especially 
addresses. What entity or entities would be responsible for populating 
a national database with the necessary customer eligibility 
information? Would ETCs populate the database for all customer data, 
and if that is the responsibility of ETCs, should we impose different 
deadlines for completion depending on the number of Lifeline 
subscribers for each ETC. Would a phased implementation schedule be an 
appropriate way to populate such a national database? If we were to 
adopt such an approach, what threshold should we establish to determine 
when different providers are required to participate, and should that 
be based on the size of the ETC (total subscribers) or the number of 
low-income subscribers it has?
    168. Fourth, we seek comment on the system requirements of a 
national database. For example, Emerios noted that a database must be 
flexible enough to allow for consumers to easily switch between 
providers, and CTIA points out that a database should include enough 
fields so that if the fund supports other services in the future that 
the database would remain relevant and useful. We seek comment on these 
issues as well as other matters implicated by a national database.
    169. Costs and Funding. We seek comment on the best way to fund and 
maintain a national database. Should database administration be funded 
completely or partially from the Universal Service Fund? Alternatively, 
if fees are assessed on ETCs to fund a national database, should fees 
be assessed on a per Lifeline-applicant basis, per instance of 
accessing the database (per ``dip'' into the database), or both? 
Emerios estimates that a centralized database would cost approximately 
$1 per application to administer. CGM and YourTel suggest that ETCs pay 
$.05-$.10 per dip. How many ``dips'' would be expected per year? Is 
there some other ETC assessment mechanism that would be more 
appropriate, such as a one-time flat fee? Verizon suggests that 
California's model of funding a third-party administrator using a 
customer-billed surcharge is an effective strategy. Are there examples 
of funding for program participation databases in other contexts that 
could serve as a model?
    170. We seek comment on what costs the states might incur if a 
national database were established. For example, what costs would be 
associated with set-up, continuous operation, and updating of 
appropriate state databases that may be used for state low-income 
programs, as well as establishing appropriate telecommunications and 
information links and electronic data interfaces (EDIs) with a national 
database. Additionally, would existing state databases need to be 
modified in order to be compatible with a national database and at what 
cost? Could a national database have the inherent capability to perform 
seamless data protocol conversions while interacting with the state 
databases? The existing proposals have not addressed how the related 
non-recurring and recurring costs would be allocated among the 
individual states, the national/Federal level, and ETCs. However, as 
Emerios points out, states could be incentivized to connect to an 
existing national database because of the reduced costs of interfacing 
with a single database rather than potentially interacting with 
numerous providers. Thus, even in the absence of a state mandate to 
interface with a national database, states may find moving towards 
automation to be fiscally sound. Alternatively, are there Federal 
agencies with which we could partner to populate consumer eligibility 
data?
    171. Data Security and Privacy Issues. We note that the privacy-
based limitations on the government's access to customer information in 
Title II of Electronic Communications Privacy Act (ECPA), section 222 
of the Communications Act, and our implementing rules and the privacy 
provisions of the Cable Act, may be implicated by collection of the 
data discussed here. We seek comment on whether any of these pre-
existing regulatory or statutory requirements would impose any 
restrictions on the storage by a database administrator of customer 
eligibility, certification, and verification data. We seek comment on 
how best to address these concerns. We ask commenters to suggest ways 
in which a database could comply with any such requirements, and how 
could it be set up both to get useful data and to minimize the burden 
on consumers and reporting entities? Are the concerns alleviated if 
consumers provide information directly to the Commission, or if the ETC 
obtains consumer consent through a waiver at the time of enrollment? If 
the latter, what steps could the Commission take to ensure

[[Page 16503]]

that consumers have provided consent? How could the Commission address 
any other privacy issues, and any other legal impediments to the 
creation and maintenance of such a database? Are there other databases 
that have been constructed that could serve as a model for developing a 
database for Lifeline/Link Up? Specifically, we seek input from the 
states that have developed similar databases on how best to achieve our 
goal of allowing ETCs to access relevant data while protecting 
consumers' privacy.
    172. We note that different states have different laws governing 
privacy of consumer data. We seek comment to better understand the 
differences in state privacy and security laws concerning the program 
eligibility data. We also seek comment to explore how to construct an 
IT platform that could ensure data security while enabling convenient 
access for all Lifeline providers across the country. Emerios points 
out that having a single platform, populated by ETCs, which all states 
can access, decreases the risk of security breaches by reducing the 
number of portals for inputting sensitive information. Would a national 
database be a more effective way to ensure consumer privacy than 
requiring individual ETCs to gather documentation establishing 
household eligibility?
    173. State/Regional Database. We also seek comment regarding the 
feasibility and potential advantages and disadvantages of regional and 
state databases as opposed to, or in addition to, a national database. 
We seek comment on several key factors that parallel the critical 
issues outlined above for a national database, such as administration, 
cost and funding, privacy, and data security issues. We are interested 
in the advantages and disadvantages of these possible models. 
Consistent with the goal of preventing waste, fraud, and abuse, where a 
state has taken steps to automate the process to streamline or enhance 
eligibility and certification procedures and/or to prevent duplicate 
claims, we propose to require all ETCs operating in that state to 
utilize that state-managed process. We seek comment on this proposal.

E. Electronic Signature

    174. Section 54.409(d) requires carriers to ``obtain [a] consumer's 
signature on a document certifying under penalty of perjury'' that the 
consumer meets certain Lifeline eligibility requirements. Section 
54.410 requires carriers to verify continued eligibility by surveying 
consumers who must prove their continued eligibility and ``self-certify 
under penalty of perjury'' to certain requirements relevant to 
continued eligibility. Virgin Mobile has requested to enroll Lifeline 
consumers online by allowing applicants to electronically sign the 
application and to enroll customers by telephone using an Interactive 
Voice Response (IVR) system, which records and saves by phone an 
applicant's certification of eligibility.
    175. The Electronic Signatures in Global and National Commerce Act 
(E-Sign Act) and Government Paperwork Elimination Act make clear that 
electronic signatures have the same legal effect as written signatures. 
We propose to allow consumers to electronically sign the ``penalty of 
perjury'' requirements of sections 54.409(d) and 54.410 of the 
Commission's rules. Because there is no general Commission rule on use 
of electronic signatures, we seek comment on the rules defining and 
guidelines for accepting electronic signatures for Lifeline enrollment, 
certification, and verification. For example, should sections 54.409(d) 
and 54.410 be amended to make clear that electronic signature is an 
acceptable ``signature on a document'' as required by the rules? We 
seek comment on how we can ensure that ETCs maintain copies of the 
household certifications in the event of duplicates or other questions 
concerning compliance with our rules.
    176. We seek comment on whether an IVR telephone system is an 
acceptable method to verify a consumer's signature under sections 
54.409(d) and 54.410 of the Commission's rules. Unlike section 54.410, 
section 54.409(d) specifically requires a signature by an eligible 
consumer, and we seek comment on whether an interactive voice response 
(IVR) telephone system satisfies the signature requirement of the 
rules. We note that the Commission has allowed the use of automated 
processes in other instances requiring verification by adopting rules 
specifically authorizing the use of such automated processes. How would 
ETCs satisfy the recordkeeping requirements of section 54.417 using an 
IVR telephone system?

VII. Consumer Outreach & Marketing

    177. Section 214(e)(1)(B) of the Act requires ETCs to advertise the 
availability of services supported by universal service funds ``using 
media of general distribution.'' Over the years, the Commission has 
highlighted the importance of outreach to low-income consumers, 
including by adopting outreach guidelines in its 2004 Lifeline and Link 
Up Order, 69 FR 34590, June 22, 2004.
    178. Advertising the availability of discounted services available 
to low-income households falls into two related categories: Outreach 
and marketing. Outreach entails increasing public awareness of the 
program, while marketing relates to how ETCs describe and sell their 
USF-supported products to consumers. The Commission wants to ensure 
that eligible consumers are made aware of the availability of Lifeline 
and Link Up and seeks comment below on effective outreach methods to 
low-income households. Moreover, as discussed below, some ETCs are 
energetically marketing Lifeline- and Link Up-supported products. We 
seek comment on whether we should impose marketing guidelines on ETCs 
to ensure that consumers fully understand the benefit being offered, 
which may help prevent the problem of duplicate support.
    179. In its 2010 Recommended Decision, the Joint Board looked at 
both outreach and marketing and urged the Commission to adopt mandatory 
outreach requirements for all ETCs that receive low-income support from 
the Universal Service Fund. In support, the Joint Board cited USAC data 
showing that, in 2009, only 36 percent of eligible consumers 
participated in Lifeline. Based on this statistic, the Joint Board 
expressed concern that current outreach is ineffective or that some 
ETCs are neglecting low-income outreach altogether. The Joint Board 
also recommended that the Commission review carrier best practices on 
community-based outreach; clarify the role of the states in performing 
low-income outreach, including working with ETCs to formulate methods 
to reach households that do not currently have telephone and/or 
broadband service; and monitor ETCs' outreach efforts. With respect to 
marketing, the Joint Board encouraged the Commission to provide ETCs 
with the flexibility to market their service offerings to eligible 
consumers in accordance with their respective business models, and 
recommended that the Commission seek comment on whether ETCs should be 
required to submit a marketing plan to the state or Commission 
describing outreach efforts.
    180. Outreach to Households Without Telephone Service. In 2004, the 
Commission adopted an outreach guideline recommended by the Joint Board 
that states and carriers utilize materials and methods designed to 
reach low-income households that do not currently have telephone 
service. In its 2010 Recommended Decision, the Joint Board recommended 
that states should assist ETCs in two primary ways

[[Page 16504]]

in formulating methods to reach households that do not currently have 
telephone and/or broadband service. First, states can identify 
appropriate community institutions to participate in public-private 
partnerships. Second, states can assist ETC outreach efforts by 
identifying unserved and underserved populations for whom outreach 
would be beneficial.
    181. We seek comment on the efficacy of current efforts by states 
and ETCs to reach low-income consumers without phone service, and what 
more can be done to improve outreach, particularly in states where 
adoption of phone service is below the national average. We seek 
examples of public-private partnerships that have been effective in 
reaching low-income households without phone service. In addition, we 
would like to better understand how state social service agencies or 
public utility commissions identify unserved populations in their 
states, and whether and how they could share such information with ETCs 
operating within their states. We also seek comment on the role of 
Tribal governments and organizations in identifying and reaching out to 
members of their communities who lack telephone service and could 
benefit from Lifeline and Link Up. Moreover, we are interested in any 
data regarding whether outreach to low-income households results in 
increased telephone penetration rates.
    182. Outreach to Non-English Speaking Populations. The Commission 
has encouraged states and carriers to use advertising that can be read 
or accessed by any sizable non-English speaking populations within the 
ETC's service area. The Joint Board also emphasized the importance of 
outreach to non-English speaking communities in its 2010 Recommended 
Decision. We seek comment on whether current outreach efforts to non-
English speaking communities by states and ETCs are effective, or 
whether more should be done in this area. As discussed in more detail 
below, we seek information on community-based partnerships or 
initiatives that have been effective in educating non-English speaking 
populations about the Lifeline/Link Up program.
    183. Role of the States and Outreach with Government Assistance 
Programs. Since 2004, the Commission has urged states and carriers to 
coordinate their outreach efforts with governmental agencies that 
administer any of the relevant government assistance programs. The 
Commission's 2004 outreach guidelines make clear that states play an 
important role in working with ETCs to advertise the availability of 
Lifeline supported services. Recently, the National Broadband Plan 
noted that requiring ETCs to conduct Lifeline outreach may not be the 
most effective way to reach underserved, low-income populations. 
Rather, the Broadband Plan suggested that state social service agencies 
should take a more active role in consumer outreach by making Lifeline 
and Link-Up applications routinely available when the agencies discuss 
other assistance programs with consumers. A few ETCs have pointed out 
that social service agencies are in a much better position than ETCs to 
approach potential consumers with information about Lifeline-assisted 
programs.
    184. We seek comment on what steps this Commission could take to 
encourage state and Tribal social service agencies to take a more 
active role in reaching potential Lifeline-eligible consumers going 
forward. For example, should we encourage the states to distribute to 
low income consumers comparative guides detailing the competitive 
Lifeline offerings available in their states? We seek comment on who 
should bear the cost associated with state outreach efforts, and 
whether outreach costs should come out of the Universal Service Fund. 
And we ask commenters to identify any best practices in the area of 
state outreach. We also inquire whether coordinating outreach with 
government assistance programs should be the preferred method of 
outreach, as opposed to imposing mandatory outreach requirements on 
ETCs.
    185. Outreach by ETCs. As noted above, the Commission has not 
imposed mandatory outreach obligations on ETCs, but rather adopted 
outreach guidelines in 2004 designed to encourage states and carriers 
to work together to educate consumers about Lifeline-assisted programs. 
The Joint Board's 2010 Recommended Decision recommended that the 
Commission adopt mandatory outreach requirements for all ETCs that 
receive low-income support from the Universal Service Fund. Looking at 
the current Lifeline participation rate, the Joint Board expressed 
concern that ETCs may not be doing enough to promote their Lifeline 
offerings to low-income households. The Joint Board also recommended 
that the Commission seek comment on whether ETCs should be required to 
submit a marketing plan to the state or Commission outlining their 
outreach efforts.
    186. We seek comment on whether we should impose specific outreach 
requirements on ETCs, as recommended by the Joint Board. If the 
Commission were to adopt mandatory requirements, what should those 
requirements be? Would a uniform national rule be effective in 
achieving program goals, and what burdens would such a rule place on 
ETCs? In response to the Recommended Decision, Qwest argues that ETC 
advertisements do not necessarily result in more customers enrolling in 
the program, and that the better approach is for the state or social 
services agencies to promote the program. TracFone notes that it spent 
$41 million on advertising in 2010 to promote its Lifeline-supported 
SafeLink product, which included targeted marketing and advertisements 
in community newspapers. We seek to develop a fuller record on this 
issue, as suggested by the Joint Board. We are interested in 
understanding what are the most effective outreach methods to reach 
consumers, and how the Commission could evaluate the impact of outreach 
methods over time.
    187. Community-Based Outreach. In its 2010 Recommended Decision, 
the Joint Board noted that community-based outreach may be an effective 
means to reach low-income households and encouraged the Commission to 
collect data on best practices in this area. We ask ETCs, community-
based organizations, and other interested parties to highlight 
community-based outreach that has been successful in educating low-
income households about the Lifeline program. For example, we seek 
comment on the role of Tribal governments and other Tribal 
organizations in reaching low-income households on Tribal lands.
    188. Marketing and Uniform Language to Describe Lifeline. Some ETCs 
market their Lifeline-supported products under a trade name. For 
example, TracFone offers Lifeline-supported service under the name 
SAFELINK WIRELESS[supreg], while Virgin Mobile's competing offering is 
Assurance Wireless. Some eligible consumers may not understand that 
these products are Lifeline-supported offerings, and therefore may not 
realize they are violating our prohibition against having more than one 
Lifeline-supported service per household. To prevent consumer confusion 
and reduce the number of consumers receiving duplicate support, we seek 
comment on whether we should require all ETCs to include language in 
the name of their service offering or in description of the service to 
make clear that the offering is supported by Lifeline. Should ETCs be 
required to expressly identify the service as a Lifeline-supported 
product in all advertising and outreach to

[[Page 16505]]

consumers? Would it inhibit effective marketing by ETCs to require such 
language on the product name, potentially reducing competition for 
Lifeline-supported services? We seek comment on whether the other 
actions we propose in this NPRM to eliminate waste, fraud, and abuse 
alleviate the need to set policies related to the marketing of Lifeline 
services to consumers.
    189. We also seek comment on whether ETCs should be required to 
include in all marketing and advertising materials for Lifeline-
supported offerings clear and prominent language explaining that 
consumers are entitled to only one Lifeline subsidy per household. 
Should the Commission develop model language that would be required for 
ETCs to use, or that would be a safe harbor for ETCs to use? If so, 
what should that language be? We request that ETCs provide us with the 
language they currently use to describe their Lifeline and Link Up 
service offerings.

VIII. Modernizing the Low Income Program To Align With Changes in 
Technology and Market Dynamics

A. The Current Lifeline Program

1. Voice Services Eligible for Discounts
    190. In light of the marketplace changes noted above, it is also an 
appropriate time to evaluate the definition of ``Lifeline'' to ensure 
it is keeping pace with the basic connectivity needs of low-income 
consumers. We question whether Lifeline should continue to be defined 
as ``basic local service.'' As noted above, distinctions between local 
and long distance calling are becoming irrelevant in light of flat rate 
service offerings that do not distinguish between local and toll calls. 
Is the ``local'' qualifier outdated in light of marketplace changes? 
How should we define ``basic'' voice telephony for purposes of the 
Lifeline and Link Up programs?
    191. We propose, consistent with the USF/ICC Transformation NPRM, 
76 FR 11632, March 2, 2011, to amend the definition of ``Lifeline'' in 
section 54.401 to provide support for a set of defined functionalities 
known as ``voice telephony service.'' This amended definition may 
provide simplicity for ETCs who provide and advertise Lifeline 
services, and will ensure consistency across universal service support 
mechanisms.
    192. We seek comment on this proposal. Should this definition of 
voice telephony service encompass the nine functionalities currently 
specified in section 54.401? Is there any reason to modify the 
functionalities to be provided to ensure quality service for low-income 
customers? As noted by the Commission in the USF/ICC Transformation 
NPRM, with respect to the performance characteristics for voice 
telephony service, ``voice grade access'' to the public switched 
network is defined in section 54.101 of the Commission's rules as ``a 
functionality that enables a user of telecommunications services to 
transmit voice communications, including signaling the network that the 
caller wishes to place a call, and to receive voice communications, 
including receiving a signal indicating there is an incoming call. For 
the purposes of this part, bandwidth for voice grade access should be, 
at a minimum, 300 to 3,000 Hertz.'' Is this definition appropriate for 
Lifeline households? How should we define services supported by 
Lifeline in a way that is technologically neutral and can evolve over 
time as technologies used to deliver voice service change in the years 
ahead?
2. Support Amounts for Voice Service
    193. We seek comment on whether there is a more appropriate 
reimbursement framework than the current four-tier system for 
determining Federal support amounts for the program that will provide 
support for low-income households that is sufficient, but not 
excessive, consistent with section 254. Should the low-income tiers of 
support be modified in light of the marketplace changes that have 
occurred since the Universal Service First Report and Order, 62 FR 
32862, June 17, 1997? Such a change could be an important step toward 
reducing waste in the Lifeline program. How can the Commission ensure 
that low-income households can continue to benefit from the expanded 
array of service offerings, including pre-paid wireless service, while 
ensuring that universal service funds are primarily benefiting 
consumers, rather than the carriers that serve those consumers?
    194. Given the growth of the program in recent years, it is vital 
that the Commission ensure that funds are distributed in a targeted and 
meaningful way. In particular, we seek comment on whether it makes 
sense to continue to tie Lifeline support amounts to the Federal 
subscriber line charge, which may not be the appropriate metric of 
whether service is affordable to a low-income household. Should we 
adopt a different framework for carriers that do not charge a 
subscriber line charge, or that do not allocate their costs between the 
intrastate and interstate jurisdictions? Is there an amount that would 
better ensure affordable service for eligible households? What might be 
the appropriate reimbursement structure be in the future, when voice 
service is provided as an application over broadband networks, 
potentially at no additional cost to the consumers?
    195. We also seek comment on whether to maintain Tiers 2 and 3 of 
Lifeline support as currently set forth in the Commission's rules. 
Should consumers be entitled to a higher or lower baseline Federal 
support amount, justifying a change in the amount of available Tier 2 
support? Similarly, should the Commission raise or lower the amount of 
Federal matching support that is available under Tier 3? Finally, does 
$25 remain a reasonable additional reimbursement rate for consumers 
receiving enhanced Tribal support pursuant to Tier 4? Does providing 
such a flat amount effectively create a price floor for carriers 
serving Tribal lands, even though it may be possible in some instances 
to serve eligible households at a lower cost (i.e., for less than $25 
per month)? We emphasize that in asking this question we are not 
seeking to limit benefits for low-income households, but rather looking 
at ways to restructure support levels to create incentives for carrier 
efficiency.
    196. If the Commission were to create a new reimbursement structure 
for carriers providing Lifeline service to low-income households, 
should the reimbursement mechanism be different for wireless and 
wireline ETCs, based on their potentially divergent costs for providing 
service? Would there be any reason to adopt a different framework for 
pre-paid wireless providers as opposed to post-paid? Should the 
Commission maintain a tiered reimbursement structure? If so, what costs 
should be used as the basis for setting a support amount? Would 
adoption of a single, uniform flat discount amount without tiers be 
appropriate? Would a percentage discount rate, subject to an overall 
dollar cap, better assist low-income households in securing the best 
retail rates offered by their chosen ETC? In the alternative, should we 
establish national parameters of a basic Lifeline service, and require 
ETCs to specify the minimum price per household they would accept to 
provide such service? We seek comment on these alternatives.
3. Minimum Service Requirements for Voice Service
    197. We seek comment on the advantages and disadvantages of 
adopting minimum standards for all ETCs offering Lifeline service. In 
the section above, we asked whether we

[[Page 16506]]

should establish national parameters for a basic Lifeline service. 
Accordingly, if we were to adopt minimum service requirements for 
Lifeline-only ETCs, what should those requirements be? Should we 
establish a set minimum number of monthly minutes to be included in 
ETCs' Lifeline service offerings, and if so, what would be an 
appropriate number of minutes? Should we establish a minimum number of 
free long-distance calls? Is there a need for service quality standards 
when consumers often have the choice of several Lifeline providers? We 
seek comment on whether the Commission should impose minimum service 
requirements on all ETCs, as opposed to just wireless ETCs, and how we 
could impose standards that are technologically neutral. We note that 
wireless providers offer the benefits of mobility and often additional 
features and functionality, such as voicemail, caller ID, and call 
waiting, at no extra charge. Similarly, low-income households that 
select Lifeline offerings from wireless providers may have the ability 
to call distant family members and friends without incurring toll 
charges. Can uniform minimum standards be developed for all 
technologies, or is there a benefit to having standards tailored to 
different technologies? What are the relevant attributes or features 
that should be standardized across Lifeline offerings?
    198. We also seek comment on the relevant costs and benefits 
associated with setting minimum standards of service. We note that 
minimum standards of service could increase the costs of Lifeline 
service to ETCs and could thus provide a disincentive for additional 
carriers to seek ETC status for the program. Would minimum standards 
deter companies from seeking ETC designation? Would high minimum 
standards make Lifeline offerings more attractive to low-income 
households, and thereby increase demand for the program?
4. Support for Bundled Services
    199. We seek comment on amending the Commission's rules to adopt a 
uniform Federal requirement that Lifeline and Link Up discounts may be 
used on any Lifeline calling plan offered by an ETC with a voice 
component, including bundled service packages combining voice and 
broadband, or packages containing optional calling features. We note 
that section 254(f) of the Act bars states from adopting regulations 
that are inconsistent with the rules established by the Commission to 
preserve and advance universal service.
    200. In a number of states where ETCs are not precluded by state 
requirements from allowing consumers to apply their Lifeline discounts 
to the purchase of bundled packages or optional services, many 
carriers--including large carriers like Sprint Nextel, Verizon 
Wireless, and AT&T Mobility--limit Lifeline offerings to basic voice 
service. We seek comment on whether to adopt a national rule that would 
require all ETCs to offer Lifeline and Link Up discounts on all of 
their service plans with a voice component. Under such a rule, ETCs 
could be required to apply Federal Lifeline support to reduce the cost 
of any calling plan or package selected by an eligible low-income 
household that allows local calling, rather than offering a discount 
only on the carrier's lowest tariffed or otherwise generally available 
residential rate plan. However, each eligible household's Lifeline 
discount would be capped at the amount the subscriber would have 
received if it had selected a basic voice plan. Additionally, we seek 
comment on requiring all ETCs to permit eligible households to apply 
the Link Up discount amounts set forth in section 54.411(a) of the 
Commission's rules to any service plan with a voice component. As with 
the Lifeline program, each eligible household's Link Up discount could 
be capped at the amount the household would have received pursuant to 
the Commission's rules if it had selected a basic voice plan.
    201. We seek comment on whether amending our rules in this way 
would further the statutory principle that consumers have access to 
quality services at ``just, reasonable, and affordable rates.'' 
Restrictions on use of Lifeline discounts, whether imposed under state 
law or by an ETC, may preclude a significant number of eligible low-
income households from the expanded service options available in the 
marketplace, such as packages that include broadband or data service. 
Further, as compared to carriers' basic plans, bundled packages of 
services may offer better value for Lifeline and Link Up consumers.
    202. We seek to develop a fuller record on current ETC practices 
regarding the provision of Lifeline discounts on bundled offerings. To 
what extent do ETCs currently offer Lifeline and/or Link Up discounts 
on plans that include bundles of services or optional calling features? 
If so, what services are Lifeline and Link Up consumers permitted to 
purchase? We also seek comment on the extent to which specific states 
mandate that ETCs allow the application of Lifeline and/or Link Up 
discounts to expanded service plans. Is there any evidence that 
Lifeline and Link Up participation rates have been positively affected 
by policies requiring the extension of program discounts to the 
purchase of bundled packages and optional services? Where available, 
commenters are encouraged to submit supporting documentation of ETC or 
state practices along with any written submissions.
    203. We seek comment on the potential administrative and practical 
consequences of amending our rules in this fashion. What changes to 
internal back office systems (e.g., for ordering service and billing) 
would be required to implement such a rule, and what costs would that 
impose on ETCs? How long would it take to implement such a change? If 
we were to adopt such a rule, should ETCs be obligated to offer a 
Lifeline discount on all of their service plans, including premium 
plans and packages? Conversely, are there certain service plans or 
packages that ETCs should not be required to make available to 
consumers seeking to apply Lifeline discounts? Should consumers be 
prohibited from applying a Lifeline discount to bundled offerings that 
contain a video component?
    204. Would allowing consumers to choose from an array of expanded 
packages create a greater likelihood that Lifeline and Link Up 
consumers may be unable to pay for the remaining portion of their 
chosen calling plan and therefore risk termination of voice service? 
What are the options for reducing that risk? If we were to adopt such a 
rule, one option would be to require ETCs to offer methods of managing 
usage (whether minutes of use or data) that otherwise would yield 
higher monthly charges beyond the monthly fee. For instance, Lifeline 
consumers could elect to set maximum usage amounts for themselves that 
may not be exceeded per billing cycle. We seek comment on the 
feasibility of this proposal. What capabilities exist today, or are 
anticipated in the near term, for carriers to assist Lifeline consumers 
in managing their service usage? What would be the administrative 
burdens and costs for a carrier if it were required to offer this to 
Lifeline subscribers?
    205. We seek comment on how we can identify and measure the 
potential benefits of this proposal. As residential broadband usage 
becomes more common, many companies have begun offering consumers the 
option to purchase broadband as part of a ``bundled package'' that 
provides a combination of voice, data, and video services to the 
customer, delivered over a shared infrastructure. As noted above,

[[Page 16507]]

compared to carriers' basic plans, bundled packages of services may 
offer better value for consumers. Would this proposal, if adopted, be 
likely to make broadband more affordable for low-income households and 
stimulate broadband adoption by low-income households?
    206. We also seek comment on how we can identify and measure the 
potential costs of this proposal. For example, would this proposed rule 
change be likely to have an impact on the size of the universal service 
fund? What are the potential costs to carriers (e.g., administrative 
costs) in complying with the proposed rule? Finally, are there any 
potential costs to consumers associated with the proposed rule? To the 
extent that it is available, commenters are encouraged to submit 
supporting data along with any written submissions.

B. The Transition to Broadband

1. Support for Broadband
    207. The Commission seeks comment on revising the definition of 
``Lifeline'' to ensure it is keeping pace with the needs of low-income 
households, consistent with the statutory principle that ``consumers in 
all regions of the country, including low-income consumers * * * should 
have access to telecommunications and information services.'' Lifeline/
Link Up does not currently support broadband. We seek comment on 
whether the Commission should amend the definition of Lifeline to 
explicitly allow support for broadband.
    208. As noted above, the Commission has sought comment in the USF/
ICC Transformation NPRM on whether to make broadband a supported 
service and has sought comment on extending universal service support 
to broadband. If the Commission does not make broadband a supported 
service, what would be the legal basis for our authority to support 
broadband in the Lifeline and Link Up program? If the Commission makes 
broadband a supported service, what are the associated practical and 
operational challenges that we would need to address when expanding 
Lifeline support to broadband? For example, how should a broadband 
Lifeline service be defined and measured? Should Lifeline support be 
available on services that do not meet whatever speed threshold the 
Commission ultimately adopts for purposes of setting infrastructure 
deployment requirements under the Connect America Fund? For instance, 
some parties have suggested that for purposes of Lifeline, consumers 
should be free to choose to use discounts on services that provide 768 
kbps or 1.5 Mbps downstream, rather than being forced to use the 
discount only on higher-speed offerings. Should there be any minimum 
performance requirements for Lifeline broadband offerings?
    209. What would be the appropriate framework for determining 
support levels for broadband services, given that the price of the 
retail service is not regulated at either the Federal or state level? 
We are mindful of the need to ensure that contributions to our 
universal service support mechanisms do not jeopardize our ability to 
promote quality services at affordable rates for all consumers. How 
should we balance these competing goals as we consider modernizing 
Lifeline and Linkup to support broadband?
    210. If broadband is made a supported service, should we impose any 
terms and conditions on the Lifeline support that is available for 
broadband? For example, should there be any limitations on the types of 
services that are offered as part of a Lifeline plan? We sought comment 
above on whether low-income households should be able to use their 
Lifeline discounts on any plan with a voice component; should ETCs 
similarly be required to offer Lifeline discounts on all broadband 
plans, or just some? We note that several wireless ETCs currently offer 
text messaging services as part of their Lifeline calling plans. Should 
consumers be permitted to select ``data only'' Lifeline plans? Is there 
a risk that low-income households might incur excessive charges for 
data plans, absent some form of data or usage cap? We note that some 
Lifeline consumers already subscribe to broadband services. We ask that 
ETCs provide any data they may have regarding broadband subscribership 
among current Lifeline recipients. We also recognize that our analysis 
of these questions may depend, in part, on what we learn from the 
broadband pilots described below.
2. Broadband Pilot
    211. We propose to set aside a discrete amount of universal service 
funds reclaimed from eliminating inefficiencies and/or waste, fraud, 
and abuse to create a pilot program to evaluate whether and how 
Lifeline/LinkUp can effectively support broadband adoption by low-
income households. A broadband pilot program could help us gather 
comprehensive and statistically significant data about the 
effectiveness of different approaches in making broadband more 
affordable for low-income Americans and providing support that is 
sufficient but not excessive. This data could assist the Commission in 
considering the costs and benefits of various approaches prior to using 
Lifeline to support broadband on a permanent basis. We recognize that 
the ultimate success of using Lifeline funds to support broadband may 
hinge on the sufficiency and effectiveness of preliminary testing 
conducted through a pilot program. As identified by the GAO, the 
Commission has recognized the importance of developing an assessment of 
the telecommunications needs of low-income households to inform the 
design and implementation of broadband pilot programs.
    212. Scope of the Pilot Program. We propose using the pilot program 
to fund a series of projects that would test different approaches to 
providing support for broadband to low-income consumers across 
different geographic areas. The projects could also try to take into 
account unique barriers faced by certain groups of low-income non-
adopters such as Tribal communities or Americans for whom English may 
be a second language. While individual projects might involve only one 
type of provider or technology, the overall objective would be to 
design a pilot program that would be competitively and technologically 
neutral.
    213. We propose structuring the pilot program as a joint effort 
among the Commission, one or more broadband providers, and/or one or 
more non-profit institutions or independent researchers with experience 
in program design and evaluation. The pilot also could include 
participation from other stakeholders such as private foundations; non-
profits experienced in outreach and digital literacy training; desktop 
computer, laptop, or mobile device manufactures or retailers; and state 
social service or economic development agencies. We seek comment on 
these proposals to structure the pilot program as a joint effort among 
a variety of stakeholders focused on conducting a series of projects to 
test different approaches to providing support. We expect that the 
projects would test several variations on program design, including 
experimenting with different techniques to combine discounts on service 
and/or hardware with efforts to address other barriers to broadband 
adoption such as digital literacy.
    214. Consistent with our historic role in providing support for 
services and not equipment, we seek comment on funding projects that 
would test variations in the monthly discount for broadband services, 
including variations on the discount amount, the duration of

[[Page 16508]]

the discount (limited or unlimited, phased-down over time or constant), 
and the treatment of bundled services. We also propose to test 
variations in Linkup-like discounts to reduce or eliminate installation 
fees, activation fees, or similar upfront charges associated with the 
initiation of service. We seek comment on these proposals.
    215. We propose to require at least some pilot participants to 
either offer hardware directly or partner with other entities to 
provide the necessary devices as a condition of participating in the 
pilot program. The cost of customer equipment necessary to access the 
Internet (including computers or other devices) has been shown to be a 
major barrier to adoption, particularly for low-income households. Some 
stakeholders have suggested that the cost of Internet-enabled devices 
poses a significant burden on an ETC's ability to provide affordable 
broadband to low-income consumers. It would be valuable for pilot 
projects to test variations in discounts to reduce the cost of 
hardware, including discounts for air cards or modems. Because we 
intend to evaluate the impact of ETCs' providing different types of 
discounts on hardware versus not providing any discount, some consumers 
would not be offered discounted hardware. If we require some applicants 
for pilot program funding to offer discounted hardware, should all 
applicants be required to agree to do so even though we do not expect 
all consumers to receive discounts? We seek comment on these proposals.
    216. We propose that applicants for pilot program funding should be 
prepared to experiment with different approaches to overcoming digital 
literacy barriers, other non-cost barriers to adoption, and variations 
in other program design elements that may help the Commission implement 
a permanent support mechanism. The National Broadband Plan and 
subsequent research identified the lack of digital literacy among low-
income Americans as a major barrier to broadband adoption. Skills such 
as being able to use a computer or other Internet-enabled device to 
retrieve and interpret information or to communicate and collaborate 
with other users, and even such fundamental steps as navigating a Web 
site and creating a username and password, may pose significant 
difficulties for many consumers. Any program seeking to effectively 
increase adoption of broadband may need to address this barrier. We 
specifically seek comment on what subset of the following additional 
program design elements should be tested:
     Training methods;
     Outreach methods;
     Contract terms;
     Product offerings/service restrictions or requirements 
(such as establishing minimum or maximum speed offerings for consumers 
participating in the pilot); and/or
     Administration/enrollment methods such as automated 
enrollment through low-income housing facilities or other social 
service entities.

We also seek comment on how the Commission should take into account 
elements beyond its control, such as programs or services provided by 
the private sector, other governmental agencies, or non-profits in 
conjunction with support provided as part of a broadband Lifeline and 
Link Up program.
    217. We intend for the pilot program as a whole to test the impact 
of these varying factors; we are not suggesting that each project 
funded through the pilot test every variable of interest to the 
Commission. We seek comment on this proposal. We also ask commenters to 
consider how many settings of key variables should be tested for each 
program design element (e.g. discount amount, duration of the 
discount). How many households should participate to test each element 
and variation in a way suitable for generalizing to a large scale 
program? Should all elements be tested simultaneously, or should they 
be sequenced in some manner?
    218. We note that the goal of the pilot program is to conduct 
experiments to collect information that would help inform future policy 
decisions. The pilot is not intended to have an immediate impact on 
low-income consumers on a large-scale. Similarly, the structure and 
rules governing pilot projects may differ in important ways from rules 
that the Commission may ultimately adopt to expand Lifeline to support 
broadband.
    219. Pilot Program Funding. We seek comment on how much money 
should be allocated to support discounts on broadband and 
administrative costs associated with the pilot projects. Because the 
goal of the pilot program is to conduct test projects that would 
produce meaningful data by experimenting with different program design 
elements, we believe that only a relatively small sample size is needed 
to develop statistically valid results. Depending on the parameters 
assessed by different pilot programs, the program may be able to gather 
statistically valid data from a smaller number of participating 
households.
    220. Consistent with our over-arching objective of ensuring fiscal 
responsibility, we propose to fund the pilot projects by utilizing at 
least some of the savings from the proposal to eliminate reimbursement 
for Toll Limitation Services, as well as some of the savings realized 
by eliminating waste, fraud, and abuse from the program. USAC's most 
recent projections forecast total annual 2011 TLS support of 
approximately $23 million. Are there other funding sources available 
that we should consider in implementing these pilot programs? Should we 
require entities applying for pilot program funding to contribute some 
sort of matching funds or in-kind contribution?
    221. Duration of Pilot Program. Commenters have recommended pilot 
programs ranging from six months to multiple years. USTelecom 
suggested, for instance, that a period of 18 to 24 months would be 
needed to produce ``meaningful data that would permit the Commission to 
thoughtfully design a permanent program.'' We seek comment on the 
appropriate duration of a pilot program. Commenters who suggest 
schedules should explain the relative advantages and disadvantages of 
specific lengths of time.
    222. At the Commission's broadband pilot roundtable, several 
parties suggested that it might be appropriate to provide subsidies 
only for a limited period of time to address the initial adoption 
hurdle of realizing the benefit of broadband. If some of the variables 
tested include variations on the length of time that a subsidy is 
available or a reduction in the amount of subsidy over time, for how 
long would researchers need to follow subscribers after the reduction 
to test whether adoption outcomes stay the same, or whether consumers 
drop service when the subsidy is eliminated or reduced?
    223. Role of the States. We seek comment on the role that states 
should play in any pilot program integrating broadband service into the 
low-income program. For instance, could states assist in identifying 
target populations or assist in administration? Are there services or 
funding support that states are uniquely situated to provide in a 
broadband pilot program? How should low-income universal service 
support for broadband be integrated into other Federal, state, 
regional, private, or non-profit programs that help address barriers to 
broadband adoption?
    224. Consumer Eligibility To Participate in Pilot Projects. We 
propose using the Lifeline eligibility rules currently in effect in 
Federal default states as a uniform set of consumer

[[Page 16509]]

eligibility requirements to be used in all pilot projects. We believe 
uniform eligibility rules will lower administrative costs associated 
with the pilots and help the Commission more easily compare results 
from different pilot projects. Is there any reason to allow some pilot 
projects to deviate from the Federal default rules? For example, should 
the Commission consider funding a pilot project that tested the impact 
of more stringent or more lenient eligibility requirements to help 
assess the potential impact such requirements might have? 
Alternatively, are there reasons that the Commission should consider 
pilot projects that limit eligibility to a more narrowly defined group 
of households currently eligible under the Federal default rules, such 
as households with children participating in the National School Lunch 
Program?
    225. Eligibility To Apply for Funding for Proposed Pilot Projects. 
We seek comment on whether funding for the pilot program should be 
limited to ETCs or whether non-ETCs could be eligible to receive 
funding during the pilot. Several commenters have suggested eligibility 
for funding for broadband pilots, or any broadband Lifeline support, 
should be independent from the traditional ETC requirements established 
under section 214 of the Act. Could we forbear from our current ETC 
requirements to allow non-ETCs (e.g, broadband providers who are not 
ETCs or non-providers) to participate in the pilot? Forbearance from 
our ETC requirements may encourage participation by a greater number of 
broadband providers. What are the advantages and disadvantages of 
having a larger number of providers seek funding for pilot projects?
    226. We propose to allow non-ETCs (e.g., non-providers) to submit 
applications for pilot funding provided they have identified ETCs, 
which would receive the support disbursements, as partners. We believe 
allowing non-ETCs to apply for funding may increase participation by 
allowing ETCs to rely on other entities to help with pilot program 
administration. This approach may also encourage more multi-stakeholder 
partnerships designed to simultaneously address multiple barriers to 
adoption. We seek comment on this proposal.
    227. We also seek comment on limiting program participation to ETCs 
that partner with entities approved by the NTIA's State Broadband Data 
& Development (SBDD) Program. The SBDD program, led by state entities 
or non-profit organizations working at their direction, facilitates the 
integration of broadband and information technology into state and 
local economies. The program awarded a total of $293 million to 56 
grantees or their designees and the grantees use this funding to 
support the use of broadband technology. Among other objectives, these 
state-created projects use the grants to research and investigate 
barriers to broadband adoption and created state and local task forces 
to expand broadband access and adoption. ETCs could work with the SBDD 
grantees and other stakeholders to develop pilot projects that 
integrate Federal universal service support into a state's existing or 
planned adoption efforts. The potential benefits of encouraging ETCs to 
partner with these SBDD grantees to participate in this pilot program 
are numerous: Each of the grantees was selected by a state government 
that may be well positioned to develop targeted, state-specific 
adoption approaches; many of the grantees have experience with 
training, outreach, and surmounting barriers to adoption; and such a 
pilot could leverage the work already conducted by NTIA, such as the 
due diligence it performed on the grantees and ongoing program 
oversight over those grantees. We seek comment on limiting eligibility 
in the pilot program only to ETCs that are partnering with SBDD 
grantees. Is there another group of Federal or state program grantees 
that we should consider including in the pilot?
    228. Proposals. We propose to require entities interested in 
applying for pilot program funding to submit specific information about 
the proposed project, such as applicant information, including any and 
all private or corporate partners or investors; a detailed description 
of the program, including length of operation; product offerings and 
service restrictions; discount or discounts provided, the duration of 
the discounts; treatment of bundled services; whether discounts would 
reduce or eliminate installation fees, activation fees, or other 
upfront costs; how to address (if at all) the cost of hardware, 
including aircards, modems, laptops, desktops, or other mobile devices; 
training and outreach; testing; identification of costs associated with 
implementing the program, including equipment and training costs; how 
the project complies with relevant program rules, adequately protects 
against waste, fraud, and abuse, and achieves the goals of the program 
discussed above. We also propose to require applicants to provide a 
brief description of how their program would help inform the 
Commission's future decision-making related to providing low-income 
support to broadband on a nationwide basis. We seek comment on this 
process for submission of pilot proposals.
    229. Pilot Evaluation. We seek comment on how to evaluate the 
results of pilot projects and what reporting requirements should be 
adopted for pilot participants. How could the Commission evaluate 
whether approaches tested during the pilot program further the proposed 
goal of providing affordable broadband service? Should one goal of the 
pilot be to test the impact of the project's approach on increasing 
adoption? For instance, should we assess the total number of new 
adopters; new adopters as a percentage of eligible program 
participants; the number of program participants as a percentage of 
eligible participants; average percentage of participants' 
discretionary income spent on discounted broadband service through the 
pilot relative to the national average percentage of household 
discretionary income spent on broadband? How could we evaluate the 
relative impact of the service discount compared to other potential 
factors that may be tested, such as the provision of training or 
equipment? We propose that the Commission also seek to develop 
information about the cost per participant and cost per new adopter 
through the pilot program. This information could assist the Commission 
in assessing the costs and benefits of particular approaches to whether 
broadband should be supported, and if so, how. We seek comment on this 
proposal and whether there are other types of data that the Commission 
should review to evaluate whether a given approach would provide 
support that is sufficient but not excessive.
    230. We seek comment on other types of information the Commission 
should consider when assessing projects funded through the pilot 
program. For instance, how best can the Commission evaluate program 
administration costs and the feasibility of expanding any given test 
project to a national scale?
    231. Delegation of Authority. We propose to delegate authority to 
the Wireline Competition Bureau to select pilot participants and take 
other necessary steps to implement the proposed program. We seek 
comment on this proposal.
    232. Previously Submitted Proposals. A number of entities have 
developed and submitted ideas for different types of broadband low-
income pilots. For instance, US Telecom explains that an efficient 
broadband pilot program design should include three

[[Page 16510]]

components: research; program design and implementation; and 
evaluation. Nexus Communications proposes that a broadband pilot be 
conducted in four different cities using ``smart phones'' that would 
enable the Commission to obtain real-word data with regard to community 
response to four different pricing and service arrangements. One 
Economy proposes two distinct pilot programs, one involving a 4G public 
private partnership and another one involving a reverse auction design.
    233. We seek comment on these proposals. We ask commenters to 
identify how these proposals could be improved or altered and to 
explain how any measures that they suggest are consistent with our 
proposed goals of ensuring just, reasonable, and affordable service and 
providing support that is sufficient but not excessive.
    234. Finally, as discussed above, a number of other broadband 
adoption programs are currently underway, and other stakeholders have 
suggested that they may conduct their own projects on these issues. We 
are interested in learning more about the status of these projects and 
what data we can gather from those efforts. Is there information or 
data that the Commission is uniquely positioned to gather? What data 
can the Commission rely on outside sources to collect, and how could it 
design pilots to complement any private sector research efforts? Can 
the Commission gather sufficient information from existing adoption 
programs to inform its policies sufficiently to implement a long-term 
low-income support for broadband program without launching Lifeline and 
Link Up pilots? We welcome information from industry, academic 
institutions, governmental agencies, and other stakeholders that could 
assist in our evaluation of strategies to extend Lifeline to broadband.

C. Eligible Telecommunications Carrier Requirements

    235. We seek comment on whether the Commission should forbear from 
applying the Act's facilities requirement to all carriers that seek 
limited ETC designation to participate in the Lifeline program. Should 
every wireless reseller be eligible to become an ETC so long as it 
fulfills the conditions we have previously imposed as conditions of 
forbearance? If so, should the Commission adopt rules codifying the 
conditions rather than imposing them on a case-by-case basis?
    236. Some of those conditions previously imposed on resellers may 
have some benefit even if applied to facilities-based carriers that 
participate in the Lifeline program, such as the condition that 
carriers directly deal with their customers (rather than use a third-
party intermediary, like a retailer). Should the Commission adopt any 
of these conditions as rules that would apply to all ETCs that 
participate in the Lifeline program? Other conditions--such as the 
requirement to provide appropriate access to 911 and E911--may be 
applicable to facilities-based carriers that use their own facilities 
only in part. Should the Commission adopt such conditions as rules that 
would apply to ETCs that use other carriers' facilities to offer access 
to emergency services? In short, what rules should the Commission adopt 
if it forbears from the facilities requirement for a class of carriers?
    237. More broadly, should the Commission consider issuing blanket 
forbearance for other purposes? For example, several carriers have 
requested forbearance from the facilities requirement for purposes of 
participating in the Commission's Link Up program, but the Commission 
has thus far found that no carrier has shown that such forbearance 
would be in the public interest. Would blanket forbearance from the 
facilities requirement for this purpose, taking into account the 
differences between the Lifeline and Link Up programs, be in the public 
interest? What rules would be necessary to ensure that any such 
forbearance protects consumers, is in the public interest, and would 
not encourage waste, fraud, and abuse of universal service funds?
    238. Other carriers have requested forbearance from the Act's 
redefinition process as applied to low-income-only ETCs. Should the 
Commission consider forbearing from this process for a class of 
carriers, and if so, what rules and conditions would be necessary to 
protect the public interest?
    239. AT&T has proposed that the Commission adopt an entirely new 
ETC regulatory framework. Specifically, AT&T argues that we should 
allow all providers of voice and broadband services to provide Lifeline 
discounts on a competitively neutral basis where they offer service. 
Under this proposal, we would establish a ``Lifeline Provider'' 
registration process whereby provider participation is not tied to the 
existing section 214 requirements or ETC designations, and not 
necessarily mandatory. Under this framework, each provider of eligible 
voice and broadband Internet access service, including resellers and 
wireless providers, would be eligible to provide Lifeline discounts to 
qualifying households in the areas where the provider offers the 
service.
    240. Consistent with this alternative approach, AT&T proposes that 
the Commission abolish the current Lifeline tier support structure set 
forth in section 54.403 of our rules and replace it with a flat, fixed-
dollar discount amount that could be applied to the retail price of one 
eligible voice service and one eligible broadband service. Similarly, 
AT&T proposes a flat discount approach to Link-Up. AT&T's ETC proposal 
also includes a recommendation that we automate program eligibility and 
verification processes and procedures, which is discussed in more 
detail above in the Database section of this NPRM.
    241. We seek comment on AT&T's proposal, which would enable all 
providers of voice and broadband services to offer Lifeline discounts 
to eligible low-income households. In particular, we ask commenters to 
address: (1) Whether the current ETC designation process should be 
revised for Lifeline providers and, if so, how; (2) whether current 
ETCs should be able to opt out of providing Lifeline services; (3) 
whether it should be mandatory or optional for ETCs to participate in 
the Lifeline program; (4) whether consumers should be entitled to a 
single discount off of a single service or whether consumers should be 
allowed to receive multiple Lifeline discounts on multiple services, 
(e.g. voice and broadband); (5) how this new regulatory framework would 
be administered; (6) what processes and procedures would be necessary 
to support this new framework; (7) what additional steps the Commission 
should take to guard against waste, fraud, and abuse in the program if 
additional providers offering multiple services were to participate in 
the program; (8) the legal basis for adopting such a proposal; (9) 
whether there are any issues we would need to account for in terms of 
transition to this type of model, such as service contracts; and (10) 
how this proposal would impact the states, including their current 
roles associated with granting ETCs authority to operate in their 
states and overseeing their performance.

IX. Other Matters

    242. We propose to eliminate section 54.418 of our rules, which 
required ETCs to notify low-income consumers of the DTV transition. 
This rule is now obsolete given the completion of the DTV transition. 
We seek comment on this proposal.

X. Procedural Matters

    243. The proposed rules are attached. In addition to the changes 
discussed above, the proposed rules include non-substantive changes to 
the rules

[[Page 16511]]

applicable to the program. We seek comment on such changes.

A. Paperwork Reduction Act Analysis

    244. This document contains proposed new information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995. In addition, pursuant to the Small Business 
Paperwork Relief Act of 2002, we seek specific comment on how we might 
``further reduce the information collection burden for small business 
concerns with fewer than 25 employees.''

B. Initial Regulatory Flexibility Analysis

    245. Pursuant to the Regulatory Flexibility Act (RFA), the 
Commission has prepared this Initial Regulatory Flexibility Analysis 
(IRFA) of the possible significant economic impact on small entities by 
the policies and rules proposed in this Notice of Proposed Rulemaking. 
Written public comments are requested on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed on or before the 
dates indicated on the first page of this NPRM. The Commission will 
send a copy of the NPRM, including the IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration. In addition, the NPRM 
and IRFA (or summaries thereof) will be published in the Federal 
Register.

C. Need for, and Objectives of, the Notice of Proposed Rulemaking

    246. The Commission is required by section 254 of the Act to 
promulgate rules to implement the universal service provisions of 
section 254. On May 8, 1997, the Commission adopted rules that reformed 
its system of universal service support mechanisms so that universal 
service is preserved and advanced as markets move toward competition. 
Among other programs, the Commission adopted a program to provide 
discounts that make basic, local telephone service affordable for low-
income consumers.
    247. This NPRM is one in a series of rulemaking proceedings 
designed to implement the National Broadband Plan's (NBP) vision of 
improving and modernizing the universal service programs. In this NPRM, 
we propose and seek comment on comprehensive reforms to the universal 
service low-income support mechanism. We propose and seek comment on a 
package of reforms that address each of the major recommendations by 
the Universal Service Joint Board regarding the low-income program. We 
also propose a series of recommendations in accordance with a report on 
the program by the Government Accountability Office (GAO).
    248. Specifically, we propose and seek comment on the following 
reforms and modernizations that may be implemented in funding year 2011 
(January 1, 2011 to December 31, 2011): (1) Strengthening the 
Commission's rules to ensure that the low-income program subsidizes no 
more than one service per eligible residential address; (2) reducing 
waste, fraud, and abuse by addressing duplicate claims, subscriber 
reporting, and de-enrollment procedures; (3) streamlining and improving 
program administration through the establishment of uniform 
eligibility, verification, and certification requirements; and (4) 
establishing a centralized database for reporting.

D. Legal Basis

    249. This NPRM, including publication of proposed rules, is 
authorized under sections 1, 2, 4(i)-(j), 201(b), 254, 257, 303(r), and 
503 of the Communications Act of 1934, as amended, and section 706 of 
the Telecommunications Act of 1996, as amended, 47 U.S.C. 151, 152, 
154(i)-(j), 201(b), 254, 257, 303(r), 503, 1302.

E. Description and Estimate of the Number of Small Entities To Which 
the Proposed Rules Will Apply

    250. The RFA directs agencies to provide a description of and, 
where feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one that: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA). Nationwide, there are a total of approximately 
29.6 million small businesses, according to the SBA. A ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
Nationwide, as of 2002, there were approximately 1.6 million small 
organizations. The term ``small governmental jurisdiction'' is defined 
generally as ``governments of cities, towns, townships, villages, 
school districts, or special districts, with a population of less than 
fifty thousand.'' Census Bureau data for 2002 indicate that there were 
87,525 local governmental jurisdictions in the United States. We 
estimate that, of this total, 84,377 entities were ``small governmental 
jurisdictions.'' Thus, we estimate that most governmental jurisdictions 
are small.
1. Wireline Providers
    251. Incumbent Local Exchange Carriers (Incumbent LECs). Neither 
the Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census Bureau data for 
2007, which now supersede data from the 2002 Census, show that there 
were 3,188 firms in this category that operated for the entire year. Of 
this total, 3,144 had employment of 999 or fewer and 44 firms had had 
employment of 1000 or more. According to Commission data, 1,307 
carriers reported that they were incumbent local exchange service 
providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or 
fewer employees and 301 have more than 1,500 employees. Consequently, 
the Commission estimates that most providers of local exchange service 
are small entities that may be affected by the rules and policies 
proposed in the NPRM. Thus under this category and the associated small 
business size standard, the majority of these incumbent local exchange 
service providers can be considered small providers.
    252. Competitive Local Exchange Carriers (Competitive LECs), 
Competitive Access Providers (CAPs), Shared-Tenant Service Providers, 
and Other Local Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate size standard under SBA rules is for 
the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer and 44 firms had had employment

[[Page 16512]]

of 1,000 employees or more. Thus under this category and the associated 
small business size standard, the majority of these Competitive LECs, 
CAPs, Shared-Tenant Service Providers, and Other Local Service 
Providers can be considered small entities. According to Commission 
data, 1,442 carriers reported that they were engaged in the provision 
of either competitive local exchange services or competitive access 
provider services. Of these 1,442 carriers, an estimated 1,256 have 
1,500 or fewer employees and 186 have more than 1,500 employees. In 
addition, 17 carriers have reported that they are Shared-Tenant Service 
Providers, and all 17 are estimated to have 1,500 or fewer employees. 
In addition, 72 carriers have reported that they are Other Local 
Service Providers. Seventy of which have 1,500 or fewer employees and 
two have more than 1,500 employees. Consequently, the 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 NPRM.
    253. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for providers of 
interexchange services. The appropriate size standard under SBA rules 
is for the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer, and 44 firms had had employment of 1,000 employees or more. Thus 
under this category and the associated small business size standard, 
the majority of these Interexchange carriers can be considered small 
entities. According to Commission data, 359 companies reported that 
their primary telecommunications service activity was the provision of 
interexchange services. Of these 359 companies, an estimated 317 have 
1,500 or fewer employees and 42 have more than 1,500 employees. 
Consequently, the Commission estimates that the majority of 
interexchange service providers are small entities that may be affected 
by rules adopted pursuant to the NPRM.
    254. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
operator service providers. The appropriate size standard under SBA 
rules 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, which now 
supersede 2002 Census data, 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.
    255. 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 NPRM.
    256. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2007 show that 1,523 firms provided resale 
services during that year. Of that number, 1,522 operated with fewer 
than 1,000 employees and one operated with more than 1,000. Thus under 
this category and the associated small business size standard, the 
majority of these resellers can be considered small entities. According 
to Commission data, 881 carriers have reported that they are engaged in 
the provision of toll resale services. Of these, an estimated 857 have 
1,500 or fewer employees and 24 have more than 1,500 employees. 
Consequently, the Commission estimates that the majority of toll 
resellers are small entities that may be affected by our action.
    257. Pre-paid Calling Card Providers. Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
pre-paid calling card providers. The appropriate size standard under 
SBA rules is for the category Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2007 show that 1,523 firms provided resale 
services during that year. Of that number, 1,522 operated with fewer 
than 1,000 employees and one operated with more than 1,000. Thus under 
this category and the associated small business size standard, the 
majority of these pre-paid calling card providers can be considered 
small entities. According to Commission data, 193 carriers have 
reported that they are engaged in the provision of pre-paid calling 
cards. Of these, an estimated all 193 have 1,500 or fewer employees and 
none have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of pre-paid calling card providers are 
small entities that may be affected by rules adopted pursuant to the 
NPRM.
    258. 800 and 800-Like Service Subscribers. Neither the Commission 
nor the SBA has developed a small business size standard specifically 
for 800 and 800-like service (``toll free'') subscribers. The 
appropriate size standard under SBA rules is for the category 
Telecommunications Resellers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census data for 2007 show 
that 1,523 firms provided resale services during that year. Of that 
number, 1,522 operated with fewer than 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, at of September 2009, the number of 800 numbers

[[Page 16513]]

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 effected by our proposed rules, however we choose to include 
this category and seek comment on whether there will be an effect on 
small entities within this category.
2. Wireless Carriers and Service Providers
    259. Below, for those services subject to auctions, the Commission 
notes that, as a general matter, the number of winning bidders that 
qualify as small businesses at the close of an auction does not 
necessarily represent the number of small businesses currently in 
service. Also, the Commission does not generally track subsequent 
business size unless, in the context of assignments or transfers, 
unjust enrichment issues are implicated.
    260. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of Paging and Cellular and Other 
Wireless Telecommunications. Under the present and prior categories, 
the SBA has deemed a wireless business to be small if it has 1,500 or 
fewer employees. For the category of Wireless Telecommunications 
Carriers (except Satellite), Census data for 2007, which supersede data 
contained in the 2002 Census, show that there were 1,383 firms that 
operated that year. Of those 1,383, 1,368 had fewer than 100 employees, 
and 15 firms had more than 100 employees. Thus under this category and 
the associated small business size standard, the majority of firms can 
be considered small. Similarly, according to Commission data, 413 
carriers reported that they were engaged in the provision of wireless 
telephony, including cellular service, Personal Communications Service, 
and Specialized Mobile Radio Telephony services. Of these, an estimated 
261 have 1,500 or fewer employees and 152 have more than 1,500 
employees. Consequently, the Commission estimates that approximately 
half or more of these firms can be considered small. Thus, using 
available data, we estimate that the majority of wireless firms can be 
considered small.
    261. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years. The SBA has approved 
these definitions. The Commission auctioned geographic area licenses in 
the WCS service. In the auction, which commenced on April 15, 1997 and 
closed on April 25, 1997, seven bidders won 31 licenses that qualified 
as very small business entities, and one bidder won one license that 
qualified as a small business entity.
    262. Satellite Telecommunications Providers. Two economic census 
categories address the satellite industry. The first category has a 
small business size standard of $15 million or less in average annual 
receipts, under SBA rules. The second has a size standard of $25 
million or less in annual receipts.
    263. 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.
    264. The second category, i.e., All Other Telecommunications, 
comprises ``establishments primarily engaged in providing specialized 
telecommunications services, such as satellite tracking, communications 
telemetry, and radar station operation. This industry also includes 
establishments primarily engaged in providing satellite terminal 
stations and associated facilities connected with one or more 
terrestrial systems and capable of transmitting telecommunications to, 
and receiving telecommunications from, satellite systems. 
Establishments providing Internet services or voice over Internet 
protocol (VoIP) services via client-supplied telecommunications 
connections are also included in this industry.'' For this category, 
Census Bureau data for 2007 show that there were a total of 2,383 firms 
that operated for the entire year. Of this total, 2,347 firms had 
annual receipts of under $25 million and 12 firms had annual receipts 
of $25 million to $49,999,999. Consequently, the Commission estimates 
that the majority of All Other Telecommunications firms are small 
entities that might be affected by our action.
    265. Common Carrier Paging. The SBA considers paging to be a 
wireless telecommunications service and classifies it under the 
industry classification Wireless Telecommunications Carriers (except 
satellite). Under that classification, the applicable size standard is 
that a business is small if it has 1,500 or fewer employees. For the 
general category of Wireless Telecommunications Carriers (except 
Satellite), Census data for 2007, which supersede data contained in the 
2002 Census, show that there were 1,383 firms that operated that year. 
Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had 
more than 100 employees. Thus under this category and the associated 
small business size standard, the majority of firms can be considered 
small. The 2007 census also contains data for the specific category of 
Paging ``that is classified under the seven-number North American 
Industry Classification System (NAICS) code 5172101. According to 
Commission data, 291 carriers have reported that they are engaged in 
paging or messaging service. Of these, an estimated 289 have 1,500 or 
fewer employees, and 2 have more than 1,500 employees. Consequently, 
the Commission estimates that the majority of paging providers are 
small entities that may be affected by our action. In addition, in the 
Paging Third Report and Order, the Commission developed a small 
business size standard for ``small businesses'' and ``very small 
businesses'' for purposes of determining their eligibility for special 
provisions such as bidding credits and installment payments. A ``small 
business'' is an

[[Page 16514]]

entity that, together with its affiliates and controlling principals, 
has average gross revenues not exceeding $15 million for the preceding 
three years. Additionally, a ``very small business'' is an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues that are not more than $3 million for the preceding 
three years. The SBA has approved these small business size standards. 
An auction of Metropolitan Economic Area licenses commenced on February 
24, 2000, and closed on March 2, 2000. Of the 985 licenses auctioned, 
440 were sold. Fifty-seven companies claiming small business status 
won.
    266. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees. According to the 2008 Trends 
Report, 434 carriers reported that they were engaged in wireless 
telephony. Of these, an estimated 222 have 1,500 or fewer employees and 
212 have more than 1,500 employees. We have estimated that 222 of these 
are small under the SBA small business size standard.
3. Internet Service Providers
    267. The 2007 Economic Census places these firms, whose services 
might include voice over Internet protocol (VoIP), in either of two 
categories, depending on whether the service is provided over the 
provider's own telecommunications facilities (e.g., cable and DSL 
ISPs), or over client-supplied telecommunications connections (e.g., 
dial-up ISPs). The former are within the category of Wired 
Telecommunications Carriers, which has an SBA small business size 
standard of 1,500 or fewer employees. The latter are within the 
category of All Other Telecommunications, which has a size standard of 
annual receipts of $25 million or less. The most current Census Bureau 
data for all such firms, however, are the 2002 data for the previous 
census category called Internet Service Providers. That category had a 
small business size standard of $21 million or less in annual receipts, 
which was revised in late 2005 to $23 million. The 2002 data show that 
there were 2,529 such firms that operated for the entire year. Of 
those, 2,437 firms had annual receipts of under $10 million, and an 
additional 47 firms had receipts of between $10 million and 
$24,999,999. Consequently, we estimate that the majority of ISP firms 
are small entities.

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

    268. The reporting and recordkeeping requirements in this NPRM 
could have an impact on both small and large entities. Though the 
impact may be more financially burdensome for smaller entities, we 
believe the impact of such requirements is outweighed by their 
corresponding benefits to entities and consumers. Further, these 
requirements are necessary to ensure that the statutory goals of 
section 254 of the Telecommunications Act of 1996 are met without 
waste, fraud, or abuse.
    269. The Commission proposes several reporting, recordkeeping, and 
compliance requirements for the low-income program. We propose that 
Eligible Telecommunications Carriers (ETCs) seeking support would 
extend their reporting to the Universal Service Administrative Company 
(USAC) to include reporting of subscribers' partial participation. 
Further, we propose de-enrollment procedures to reduce waste in the 
program. We also propose to retain the existing verification 
requirements for Federal default states and extend these requirements 
to the remainder of states.
    270. Duplicate Claims and One-Per-Residential Address. The 
Commission proposes several reporting and recordkeeping requirements to 
reduce the likelihood that a residential address will receive more than 
one subsidized service through the low-income program. Specifically, we 
propose an information solicitation and submission process to enable 
USAC to identify duplicate claims of support and violations of the 
proposed rules, which, if adopted, will help USAC determine whether two 
or more ETCs are providing Lifeline-supported service to the same 
residential address. ETCs would be required to solicit identifying 
residential address information and certification from Lifeline 
subscribers. ETCs would then submit this data to USAC. Under the 
proposal, USAC would then notify ETCs of any duplicate claims of 
support. ETCs would also be required to notify customers with duplicate 
Lifeline service by phone and in writing when possible that the 
subscriber must select one Lifeline provider or face termination from 
the program. The selected ETC would then notify USAC as well as any 
other ETC providing Lifeline service to the customer.
    271. Line 9 Reporting. To help ensure that ETCs seek reimbursement 
only for active Lifeline subscribers, the Commission proposes to 
require ETCs to report partial or pro rata dollars when claiming 
reimbursement on Form 497. Compliance with the proposed rule would 
require ETCs to report the number of subscribers beginning or 
terminating Lifeline service mid-month as well as the length of service 
provided during that month to each partial-month subscriber, which is 
similar to ETCs' billing of partial-month service to non-Lifeline 
consumers.
    272. De-Enrollment Procedures and Customer Usage Requirements. As 
part of the effort to reduce waste in the program, and in accordance 
with the proposed one-per-residential address codification, the 
Commission proposes to require ETCs to de-enroll their Lifeline 
subscribers who: (1) Select another ETC after being notified of a 
duplicate claim; and (2) subscribers who do not use their phone for 60 
days. Compliance with the proposed de-enrollment procedures would 
require ETCs to monitor whether a Lifeline phone was used during any 
60-day period. After de-enrollment, the ETC would need to notify USAC 
of the de-enrollment. USAC could then pursue recovery actions against 
the ETC for past inappropriate support.
    273. Verification. The Commission's rules currently require ETCs in 
Federal default states to implement procedures to verify annually the 
continued eligibility of a statistically-valid random sample of 
Lifeline subscribers and to provide the results to USAC. We propose to 
extend these standards to all states. Furthermore, in accordance with 
the proposed one-per-residential address requirement, we propose to 
require ETCs to verify consumer certifications upon enrollment and 
annually thereafter.
    274. Service Deposit or Minimum Service Fee. Though we do not 
propose any rules on a service deposit for commencing Lifeline service 
or a minimum service fee for maintaining service, we seek comment on 
whether such rules would balance the competing needs of program 
efficacy with program efficiency. Specifically, we seek comment as to 
whether requiring ETCs to bill consumers would pose a disproportionate 
burden upon small entities, especially those, like pre-paid wireless 
resellers, that do not currently bill their consumers on a monthly 
basis.
    275. Database. We propose a comprehensive reform to the low-income 
program: we recommend the creation of a centralized database for online 
certification and verification of low-income subscribers. In the NPRM, 
we seek comment on which entity or

[[Page 16515]]

entities would be best suited to create and maintain such a database. 
Compliance with requirements associated with a centralized database 
would include reporting of information solicited from Lifeline 
subscribers for the purposes of certifying and verifying their 
eligibility.

G. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    276. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its approach, which may 
include the following four alternatives, among others: (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    277. In this NPRM, we make a number of proposals that may have an 
economic impact on small entities that participate in the universal 
service low-income support mechanism. Specifically, as addressed above, 
we seek comment on: (1) Mitigating duplicate claims of service through 
increased reporting to USAC, in accordance with the proposed one-per-
residential address rule; (2) requiring the reporting of consumers' 
partial-month Lifeline participation; (3) establishing clear de-
enrollment procedures; and (4) establishing a uniform verification 
regime. If adopted, these proposals will help USAC and ETCs reduce 
waste, fraud, and abuse in the low-income support mechanism.
    278. In seeking to minimize the burdens imposed on small entities 
where doing so does not compromise the goals of the universal service 
mechanism, we have invited comment on how these proposals might be made 
less burdensome for small entities. We again invite commenters to 
discuss the benefits of such changes on small entities and whether 
these benefits are outweighed by resulting costs to ETCs that might 
also be small entities. We anticipate that the record will reflect 
whether the overall benefits of such programmatic changes would 
outweigh the burdens on small entities, and if so, commenters will 
suggest alternative ways in which the Commission could lessen the 
overall burdens on small entities. We encourage small entities to 
comment.
    279. We have taken the following steps to minimize the impact on 
small entities. First, to ease the administrative burden on applicants, 
we propose an approach that minimizes reporting requirements by 
appropriating Form 497 for further information collection rather than 
creating an additional form. In accordance with the E-Sign Act, we 
propose to allow consumers to sign their certifications electronically, 
eliminating significant reporting and mailing burdens currently placed 
on all entities. In order to minimize the impact on ETCs, including 
small entities, we have placed the burden of checking addresses for 
duplicate claims upon USAC, rather than ETCs. Furthermore, in an effort 
to make verification simpler for all ETCs, we have proposed uniform 
rules of eligibility and verification. Most significantly, however, we 
contemplate a phased structure for reporting to a centralized database: 
Large entities would begin populating the proposed database initially, 
with small entities following suit after a period of time during which 
the process will be made less burdensome when possible.

H. Federal Rules That May Duplicate, or Conflict With Proposed Rules

    280. None.

I. Ex Parte Presentations

    281. The rulemaking this NPRM initiates shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules. Persons making oral ex parte presentations are reminded 
that memoranda summarizing the presentations must contain summaries of 
the substance of the presentations and not merely a listing of the 
subjects discussed. More than a one- or two-sentence description of the 
views and arguments presented generally is required. Other requirements 
pertaining to oral and written presentations are set forth in section 
1.1206(b) of the Commission's rules.

J. Comment Filing Procedures

    282. Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, 47 CFR 1.415, 1.419, interested parties may file comments and 
reply comments on or before the dates indicated on the first page of 
this document. Comments may be filed using: (1) The Commission's 
Electronic Comment Filing System (ECFS), (2) the Federal Government's 
eRulemaking Portal, or (3) by filing paper copies. See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 
1998.
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: http://www.regulations.gov.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8 a.m. to 7 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes must be disposed of before 
entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street, SW., Washington, DC 20554.
    283. In addition, one copy of each paper filing must be sent to 
each of the following: (i) The Commission's duplicating contractor, 
Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554; Web site: http://www.bcpiweb.com; phone: 1-800-
378-3160; (ii) Kimberly Scardino, Telecommunications Access Policy 
Division, Wireline Competition Bureau, 445 12th Street, SW., Room 5-
B448, Washington, DC 20554; e-mail: [email protected]; and 
(iii) Charles Tyler, Telecommunications, Access Policy Division, 
Wireline Competition Bureau, 445 12th Street, SW., Room 5-A452, 
Washington, DC 20554, e-mail: [email protected].
    284. People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an e-mail to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
    285. Filings and comments are also available for public inspection 
and copying during regular business hours at the FCC Reference 
Information Center, Portals II, 445 12th Street, SW.,

[[Page 16516]]

Room CY-A257, Washington, DC, 20554. Copies may also be purchased from 
the Commission's duplicating contractor, BCPI, 445 12th Street, SW., 
Room CY-B402, Washington, DC 20554. Customers may contact BCPI through 
its Web site: http://www.bcpiweb.com, by e-mail at [email protected], by 
telephone at (202) 488-5300 or (800) 378-3160, or by facsimile at (202) 
488-5563.
    286. Comments and reply comments must include a short and concise 
summary of the substantive arguments raised in the pleading. Comments 
and reply comments must also comply with section 1.49 and all other 
applicable sections of the Commission's rules. We direct all interested 
parties to include the name of the filing party and the date of the 
filing on each page of their comments and reply comments. All parties 
are encouraged to utilize a table of contents, regardless of the length 
of their submission. We also strongly encourage parties to track the 
organization set forth in the NPRM in order to facilitate our internal 
review process.
    287. For further information, contact Kimberly Scardino at (202) 
418-1442 in the Telecommunications Access Policy Division, Wireline 
Competition Bureau.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Reporting and recordkeeping 
requirements, Telecommunications, Telephone.

Federal Communications Commission.
Bulah P. Wheeler,
Deputy Manager.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR part 54 to read as 
follows:

PART 54--UNIVERSAL SERVICE

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

    Authority: 47 U.S.C. 1, 4(i), 201, 205, 214, and 254 unless 
otherwise noted.


Sec.  54.101  [Amended]

    2. Amend Sec.  54.101 by removing and reserving paragraph (a)(9).
    3. Amend Sec.  54.400 by:
    a. Revising paragraphs (a) and (b)
    b. Removing paragraph (c);
    c. redesignating paragraphs (e) and (f) as paragraphs (c) and (d), 
respectively;
    d. Revising newly redesignated paragraph (c); and
    e. Adding new paragraph (e).
    The revisions and addition read as follows:


Sec.  54.400  Terms and definitions.

    (a) Qualifying low-income consumer. A ``qualifying low-income 
consumer'' is a consumer who meets the qualifications for Lifeline, as 
specified in Sec.  54.409, and complies with the one-per-residence 
limitation, as specified in Sec.  54.402.
    (b) Duplicate support. Duplicate support exists when two or more 
ETCs are receiving Lifeline or Link Up support for the same residential 
address at the same time; or an ETC is receiving two or more Lifeline 
or Link Up support reimbursements for the same residence at the same 
time.
    (c) Eligible resident of Tribal lands. An ``eligible resident of 
Tribal lands'' is a ``qualifying low-income consumer,'' as defined in 
paragraph (a) of this section, living on a reservation or on Tribal 
lands designated as such by the Commission. A ``reservation'' is 
defined as any Federally recognized Indian Tribe's reservation, pueblo, 
or colony, including former reservations in Oklahoma, Alaska Native 
regions established pursuant to the Alaska Native Claims Settlement Act 
(85 Stat. 688), and Indian allotments. ``Tribal lands'' also shall mean 
any land designated as Tribal lands by the Commission for purposes of 
this subpart pursuant to the designation process in Sec.  54.402.
* * * * *
    (e) Customary charge for commencing telecommunications service. A 
``customary charge for commencing telecommunications service'' is the 
ordinary charge an ETC routinely imposes on all customers within a 
state to initiate service. Such a charge is limited to an actual charge 
assessed on all customers to initiate service with that ETC. A charge 
imposed only on Lifeline and/or Link Up customers to initiate service 
is not a customary charge for commencing telecommunications service. 
Activation charges waived, reduced, or eliminated with the purchase of 
additional products, services, or minutes are not customary charges 
eligible for universal service support.
    4. Amend Sec.  54.401 by revising paragraph (a)(3) and removing and 
reserving paragraph (c), to read as follows:


Sec.  54.401  Lifeline defined.

    (a) * * *
    (3) That provides voice telephony service as specified in Sec.  
54.101(a).
* * * * *
    5. Add Sec.  54.402, to read as follows:


Sec.  54.402  Tribal lands designation process.

    The Commission may designate specific areas as Tribal lands for 
purposes of this subpart for areas or communities that fall outside the 
boundaries of a designated reservation, but which maintain the same 
characteristics as those defined. A request for designation must be 
formally requested by an official of a Federally recognized Tribe who 
has proper jurisdiction and must be filed pursuant to the Commission's 
rules. Good cause for the designation may be shown by providing 
evidence of a nexus between the area or community and the Tribe, such 
as identifying an area in which the Federal government delivers 
services to Tribal citizens; detailing how program support to the area 
would aid the Tribe in serving the needs and interests of its citizens 
in that community and further the Commission's goals of providing 
Tribal support. The region or community areas associated with the 
Tribe, as outlined and described in a grant of designation request, 
shall be considered Tribal lands for the purposes of this Subpart.
    6. Amend Sec.  54.403 by revising paragraphs (a)(4) introductory 
text, (b), and (c) to read as follows:


Sec.  54.403  Lifeline support amount.

    (a) * * *
    (4) Tier Four. Additional Federal Lifeline support of up to $25 per 
month will be made available to an eligible telecommunications carrier 
providing Lifeline service to an eligible resident of Tribal lands, as 
defined in Sec.  54.400(c), to the extent that the eligible 
telecommunications carrier certifies to the Administrator that it will 
pass through the full Tier-Four amount to qualifying eligible residents 
of Tribal lands and that it has received any non-Federal regulatory 
approvals necessary to implement the required rate reduction, to the 
extent that:
* * * * *
    (b) Maximum Lifeline Support Amount. (1) For a qualifying low-
income consumer who is not an eligible resident of Tribal lands, as 
defined in Sec.  54.400(c), the Federal Lifeline support amount shall 
not exceed $3.50 plus the tariffed rate in effect for the primary 
residential End User Common Line charge of the incumbent local exchange 
carrier serving the area in which the qualifying low-income consumer 
receives service, as determined in accordance with Sec.  69.104 or 
Sec.  69.152(d) and (q) of this chapter, whichever is applicable.
    (2) For an eligible resident of Tribal lands, the Federal Lifeline 
support amount shall not exceed $28.50 plus

[[Page 16517]]

that same End User Common Line charge.
    (3) For a qualifying low-income consumer who purchases a bundled 
service package or a service plan that includes optional calling 
features, the Federal Lifeline support amount shall not exceed the 
maximum Lifeline support amount as determined in accordance with Sec.  
54.403(b)(1) or (2) of this subpart, whichever is applicable.
    (c) Application of Discount Amount. Eligible telecommunications 
carriers that charge Federal End User Common Line charges or equivalent 
Federal charges shall apply Tier-One Federal Lifeline support to waive 
the Federal End-User Common Line charges for Lifeline consumers. Such 
carriers shall apply any additional Federal support amount to a 
qualifying low-income consumer's intrastate rate, if the carrier has 
received the non-Federal regulatory approvals necessary to implement 
the required rate reduction. Other eligible telecommunications carriers 
shall apply the Tier-One Federal Lifeline support amount, plus any 
additional support amount, to reduce the cost of any eligible 
residential Lifeline service plan or package selected by a qualified 
low-income consumer that provides voice telephony service with the 
performance characteristics listed in Sec.  54.101(a), and charge 
Lifeline consumers the resulting amount.
    7. Amend Sec.  54.405 by adding a heading to the beginning of 
paragraph (c) and adding paragraph (e) to read as follows:


Sec.  54.405  Carrier obligation to offer Lifeline.

* * * * *
    (c) Termination for ineligibility. * * *
* * * * *
    (e) De-enroll for disqualification. Notwithstanding Sec.  54.405(c) 
of this section, notify Lifeline subscribers of impending termination 
of Lifeline service if the subscriber fails:
    (1) To respond to notifications regarding duplicate support;
    (2) To respond to ETC verification attempts made pursuant to Sec.  
54.410(d); or
    (3) To use the supported service during a 60-day period. ETCs shall 
provide the subscriber 30 days following the date of the impending 
termination letter in which to demonstrate that Lifeline service shall 
not be terminated. ETCs shall terminate the Lifeline service if the 
subscriber fails to demonstrate that Lifeline service shall not be 
terminated. ETCs shall not seek Lifeline reimbursement for the 
subscriber during the 30-day period.
    8. Amend Sec.  54.407 by revising paragraph (b) and adding 
paragraph (d) to read as follows:


Sec.  54.407  Reimbursement for offering Lifeline.

* * * * *
    (b) The eligible telecommunications carrier may receive universal 
service support reimbursement for each qualifying low-income consumer 
who has used the supported service to initiate or receive a voice call 
within the last 60 days.
* * * * *
    (d) The eligible telecommunications carrier seeking support must 
report partial or pro rata dollars when claiming reimbursement for 
discounted services to low-income consumers who receive service for 
less than a month.
    9. Add Sec.  54.408 to read as follows:


Sec.  54.408  One-per-residence.

    (a) Lifeline and Link Up support is limited to one Lifeline 
discount and/or one Link Up discount per billing residential address.
    (1) Billing Residential address. For purposes of the Lifeline and 
Link Up programs, a ``billing residential address'' is a unique 
residential address recognized by the U.S. Postal Service address.
    (2) Lifeline and Link Up support is available only to establish 
service at the qualifying low-income consumer's primary residential 
address. The consumer must initially certify at enrollment that the 
consumer's billing residential address of record is his or her primary 
residential address.
    (b) To be considered an eligible consumer for the purposes of 
Lifeline and Link Up support, a consumer must meet the criteria set 
forth in section Sec.  54.409 of this part.
    10. Revise Sec.  54.409 to read as follows:


Sec.  54.409  Consumer qualification for Lifeline.

    (a) To qualify to receive Lifeline service, a consumer's household 
income, as defined in Sec.  54.400(d), must be at or below 135% of the 
Federal Poverty Guidelines, or a consumer must participate in one of 
the following Federal assistance programs: Medicaid; Supplemental 
Nutrition Assistance Program; Supplemental Security Income; Federal 
Public Housing Assistance (Section 8); Low-Income Home Energy 
Assistance Program; National School Lunch Program's free lunch program; 
or Temporary Assistance for Needy Families.
    (b) A consumer that is an eligible resident of Tribal lands, as 
defined by Sec.  54.400(c) or Sec.  54.402, shall be a ``qualifying 
low-income consumer,'' as defined by 54.400(a), and shall qualify to 
receive Tiers One, Two, and Four Lifeline support if the consumer's 
residence:
    (1) Has income that meets the threshold established in paragraph 
(a) of this section or participates in one of the Federal assistance 
programs identified in paragraph (a) of this section; or
    (2) Participates in one of the following Tribal-specific Federal 
assistance programs: Bureau of Indian Affairs general assistance, 
Tribally administered Temporary Assistance for Need Families (TANF); 
Head Start (but only those households meeting its income qualifying 
standard); or Food Distribution Program on Indian Reservations (FDPIR). 
Such qualifying low-income consumer shall also qualify for Tier Three 
Lifeline support if the carrier offering the Lifeline service is not 
subject to the regulations of the state and provides carrier-matching 
funds, as described in Sec.  54.403(a)(3).
    (c) Each eligible telecommunications carrier providing Lifeline 
service to a qualifying low-income consumer pursuant to paragraphs (a) 
or (b) of this section must obtain that consumer's signature on a 
document certifying under penalty of perjury that:
    (1) The consumer's residence receives benefits from one of the 
programs listed in paragraph (a) or (b) of this section, and that the 
consumer presented documentation of program participation, as described 
in 54.410(b), which accurately represents the program participation of 
the consumer's residence; or the consumer's residence meets the income 
requirement of paragraph (a) of this section, and that the consumer 
presented documentation of income, as described in Sec. Sec.  
54.400(f), 54.410(a), which accurately represents the consumer's 
income; and
    (2) If an eligible resident of Tribal lands, that the consumer 
lives on a reservation or Tribal lands, as defined in Sec.  54.400(c) 
and Sec.  54.402; and
    (3) The consumer will notify the carrier within 30 days if that 
consumer ceases to participate in the program or programs, if the 
consumer's income exceeds 135% of the Federal Poverty Guidelines, or if 
the consumer otherwise ceases to meet the criteria for receiving 
program support.
    11. Revise Sec.  54.410 to read as follows:


Sec.  54.410  Certification and Verification of Consumer Qualification 
for Lifeline.

    (a) Certification of income qualification. Prior to enrollment in 
Lifeline, consumers qualifying for Lifeline under an income-based 
criterion must present documentation of

[[Page 16518]]

their income and certify that they will be receiving support for only 
one Lifeline discount per residence. By six months from the effective 
date of these rules, eligible telecommunications carriers in all states 
must implement certification procedures to document consumer-income-
based eligibility for Lifeline prior to a consumer's enrollment if the 
consumer is qualifying under the income-based criterion specified in 
Sec.  54.409(a). Acceptable documentation of income eligibility 
includes the prior year's state or Federal 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 benefits, Federal notice letter of 
participation in General Assistance, a divorce decree, child support, 
or other official document. If the consumer presents documentation of 
income that does not cover a full year, such as current pay stubs, the 
consumer must present the same type of documentation covering three 
consecutive months within that calendar year. States that mandate state 
Lifeline support may impose additional standards on eligible 
telecommunications carriers operating in their states to ensure 
compliance with the state Lifeline program.
    (b) Certification of program qualification. Consumers qualifying 
for Lifeline under a program-based criterion must present documentation 
of their household participation in a qualifying program and certify 
that they will be receiving support for only one Lifeline discount per 
residence prior to enrollment in Lifeline. By six months from the 
effective date of these rules, eligible telecommunications carriers in 
all states must implement certification procedures to document 
consumer-program-based eligibility for Lifeline prior to a consumer's 
enrollment if the consumer is qualifying under the program-based 
criterion specified in Sec.  54.409(a) and (b). Acceptable 
documentation of program eligibility includes the prior year's 
statement of benefits from the program, program participation 
documents, Federal notice letter of participation in the program, or 
other official document. If the consumer presents documentation of 
program participation that does not cover a full year, such as current 
program benefits, the consumer must present the same type of 
documentation covering three consecutive months within that calendar 
year. States that mandate State Lifeline support may impose additional 
standards on eligible telecommunications carriers operating in their 
States to ensure compliance with the State Lifeline program.
    (c) Self-certifications. After income and program based 
certification procedures are implemented, eligible telecommunications 
carriers are required to make and obtain certain self-certifications, 
under penalty of perjury, related to the Lifeline program. Eligible 
telecommunications carriers must retain records of all self-
certifications.
    (1) An officer of the eligible telecommunications carrier must 
certify that the eligible telecommunications carrier has procedures in 
place to review income and program documentation and that, to the best 
of his or her knowledge, the carrier was presented with documentation 
of the consumer's income qualification or program participation.
    (2) Lifeline and Link Up subscribers must initially certify at 
enrollment and during continued verification that they are receiving 
support for only one line per residence, consistent with the one-per-
residence limitation as specified in Sec.  54.408.
    (3) Consumers qualifying for Lifeline under an income-based 
criterion must certify the number of individuals in their residence on 
the document required in Sec.  54.409(c).
    (d) Verification of continued eligibility. Consumers qualifying for 
Lifeline shall be required to verify continued eligibility on an annual 
basis. By [DATE 6 MONTHS AFTER EFFECTIVE DATE OF FINAL RULE], eligible 
telecommunications carriers in all States shall implement procedures to 
verify annually the continued eligibility of a statistically valid 
sample [TBD] of their Lifeline subscribers for continued eligibility.
    (1) Eligible telecommunications carriers shall require each 
customer to certify that they are receiving support for only one line 
per residence. Eligible telecommunications carriers may verify directly 
with a State that particular customers continue to be eligible by 
virtue of participation in a qualifying program or income level. To the 
extent eligible telecommunications carriers cannot obtain the necessary 
information from the State, they may verify directly with the 
customers.
    (2) All eligible telecommunications carriers will be required to 
provide the results of their verification efforts to the Commission and 
the Administrator on the Annual Lifeline Certification and Verification 
Form (currently OMB 3060-0819) by August 31 each year. Eligible 
telecommunications carriers shall submit data to the Commission and 
Administrator regarding consumer qualifications for eligibility, 
including program-based and income-based eligibility, the number of 
customers that qualify based on income and program participation, the 
number of subscribers that qualify for each eligible program, the 
number of non-responders, and the number of customers de-enrolled and 
in the process of being terminated or de-enrolled. Eligible 
telecommunications carriers shall submit each customer name, address, 
and number of individuals in the customer's residence for those 
customers qualifying based on income criterion.
    (e) Preventing and Resolving Duplicate Support. ETCs shall provide 
the Administrator with their Lifeline and Link Up customer names, 
addresses, social security numbers, and/or other unique residence-
identifying information as specified in the form and format requested 
on the Form 497 for the purpose of preventing and resolving situations 
involving duplicate support.
    12. Amend Sec.  54.413 by revising the first sentence in paragraph 
(b) to read as follows:


Sec.  54.413  Reimbursement for revenue forgone in offering a Link Up 
program.

* * * * *
    (b) In order to receive universal service support reimbursement for 
providing Link Up, eligible telecommunications carriers must keep 
accurate records of the revenues they forgo in reducing their customary 
charge for commencing telecommunications service, as defined in Sec.  
54.400(e), and for providing a deferred schedule for payment of the 
charges assessed for commencing service for which the consumer does not 
pay interest, in conformity with Sec.  54.411. * * *
    13. Revise Sec.  54.415 to read as follows:


Sec.  54.415  Consumer qualification for Link Up.

    (a) The consumer qualification criteria for Link Up shall be the 
criteria set forth in Sec.  54.409(a).
    (b) Notwithstanding paragraph (a) of this section, the consumer 
qualification criteria for an eligible resident of Tribal lands, as 
defined in Sec.  54.400(c) and Sec.  54.402, shall qualify to receive 
Link Up support.
    14. Revise Sec.  54.416 to read as follows:


Sec.  54.416  Certification of consumer qualification for Link Up.

    Consumers qualifying under income-based or program-based criteria 
must present documentation of their qualification prior to enrollment 
in Link Up consistent with the requirements set forth in Sec. Sec.  
54.410(a) and (b).

[[Page 16519]]

    15. Amend Sec.  54.417 by revising paragraph (a) and the last 
sentence in paragraph (b) to read as follows:


Sec.  54.417  Recordkeeping requirements.

    (a) Eligible telecommunications carriers must maintain records to 
document compliance with all Commission and State requirements 
governing the Lifeline/Link Up programs for the three full preceding 
calendar years and provide that documentation to the Commission or 
Administrator upon request. Notwithstanding the preceding sentence, 
eligible telecommunications carriers must maintain the documentation 
required in Sec. Sec.  54.409(c) and 54.410(c) for as long as the 
consumer receives Lifeline service from that eligible 
telecommunications carrier or until audited by the Administrator. If an 
eligible telecommunications carrier provides Lifeline discounted 
wholesale services to a reseller, it must obtain a certification from 
that reseller that it is complying with all Commission requirements 
governing the Lifeline/Link Up programs.
    (b) * * * To the extent such a reseller provides discounted 
services to low-income consumers, it is obligated to comply with the 
eligible telecommunications carrier requirements listed in this 
subpart.


Sec.  54.418  [Removed and Reserved]

    16. Remove and reserve Sec.  54.418.

[FR Doc. 2011-6557 Filed 3-22-11; 8:45 am]
BILLING CODE 6712-01-P