[Federal Register Volume 77, Number 42 (Friday, March 2, 2012)]
[Rules and Regulations]
[Pages 12952-12980]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4978]



[[Page 12951]]

Vol. 77

Friday,

No. 42

March 2, 2012

Part III





Federal Communications Commission





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47 CFR Chapter 54





Lifeline and Link Up Reform and Modernization, Advancing Broadband 
Availability Through Digital Literacy Training; Final Rule

  Federal Register / Vol. 77, No. 42 / Friday, March 2, 2012 / Rules 
and Regulations  

[[Page 12952]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 11-42, 03-109, 12-23 and CC Docket No. 96-45; FCC 12-
11]


Lifeline and Link Up Reform and Modernization, Advancing 
Broadband Availability Through Digital Literacy Training

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
comprehensively reforms and begins to modernize the Universal Service 
Fund's Lifeline program. The reforms adopted in this document 
substantially strengthen protections against waste, fraud, and abuse; 
improve program administration and accountability; improve enrollment 
and consumer disclosures; initiate modernization of the program for 
broadband; and constrain the growth of the program in order to reduce 
the burden on all who contribute to the Universal Service Fund.

DATES: Effective April 2, 2012, except for the amendments to Sec. Sec.  
54.202(a), 54.401(c), 54.403, 54.407, 54.410, 54.416, 54.417, 54.420, 
54.222 which contain information collection requirements that are not 
effective until approved by the Office of Management and Budget. The 
Federal Communications Commission will publish a document in the 
Federal Register announcing the effective date for those sections, and 
except for the amendments contained herein to 47 CFR 54.411, 54.412, 
54.413 and 54.414 which shall become effective April 1, 2012; and 47 
CFR 54.409 which shall become effective June 1, 2012.

FOR FURTHER INFORMATION CONTACT: Kimberly Scardino, Wireline 
Competition Bureau, (202) 418-7400 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order (R&O) in WC Docket Nos. 11-42, 03-109, 12-23 and CC Docket 
No. 96-45; FCC 12-11, adopted on January 31, 2012 and released on 
February 6, 2012. There was also a companion document released with 
this item. The full text of this document is available for public 
inspection during regular business hours in the FCC Reference Center, 
Room CY-A257, 445 12th Street SW., Washington, DC 20554. Or at the 
following Internet address: http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0207/FCC-12-11A1.doc.

I. Introduction

    1. In this Order, the Commission comprehensively reforms and begins 
to modernize the Universal Service Fund's Lifeline program (Lifeline or 
the program). Building on recommendations from the Federal-State Joint 
Board on Universal Service (Joint Board), proposals in the National 
Broadband Plan, input from the Government Accountability Office (GAO), 
and comments received in response to the Commission's March Notice of 
Proposed Rulemaking, the reforms adopted in this Order substantially 
strengthen protections against waste, fraud, and abuse; improve program 
administration and accountability; improve enrollment and consumer 
disclosures; initiate modernization of the program for broadband; and 
constrain the growth of the program in order to reduce the burden on 
all who contribute to the Universal Service Fund (USF or the Fund). We 
take these significant actions, while ensuring that eligible low-income 
consumers who do not have the means to pay for telephone service can 
maintain their current voice service through the Lifeline program and 
those who are not currently connected to the networks will have the 
opportunity to benefit from this program and the numerous opportunities 
and security that telephone service affords.
    2. This Order is another step in the Commission's ongoing efforts 
to overhaul all USF programs to promote the availability of modern 
networks and the capability of all American consumers to access and use 
those networks. Consistent with previous efforts, we act here to 
eliminate waste and inefficiency, increase accountability, and 
transition the Fund from supporting standalone telephone service to 
broadband. In June 2011, the Commission adopted the Duplicative Program 
Payments Order, 76 FR 38040, June 29, 2011, which made clear that an 
eligible consumer may only receive one Lifeline-supported service, 
established procedures to detect and de-enroll subscribers receiving 
duplicative Lifeline-supported services, and directed the Universal 
Service Administrative Company (USAC) to implement a process to detect 
and eliminate duplicative Lifeline support--a process now completed in 
12 states and expanding to other states in the near future. Building on 
those efforts, the unprecedented reforms adopted in today's Order could 
save the Fund up to an estimated $2 billion over the next three years, 
keeping money in the pockets of American consumers that otherwise would 
have been wasted on duplicative benefits, subsidies for ineligible 
consumers, or fraudulent misuse of Lifeline funds.
    3. These savings will reduce growth in the Fund, while providing 
telephone service to consumers who remain disconnected from the voice 
networks of the twentieth century. Moreover, by using a fraction of the 
savings from eliminating waste and abuse in the program to create a 
broadband pilot program, we explore how Lifeline can best be used to 
help low-income consumers access the networks of the twenty-first 
century by closing the broadband adoption gap. This complements the 
recent USF/ICC Transformation Order, 76 FR 76623, December 8, 2011, 
which reoriented intercarrier compensation and the high-cost fund 
toward increasing the availability of broadband networks, as well as 
the recently launched ``Connect to Compete'' private-sector initiative 
to increase access to affordable broadband service for low-income 
consumers.
    4. To make the program more accountable, the Order establishes 
clear goals and measures and establishes national eligibility criteria 
to allow low-income consumers to qualify for Lifeline based on either 
income or participation in certain government benefit programs. The 
Order adopts rules for Lifeline enrollment, including enhanced initial 
and annual certification requirements, and confirms the program's one-
per-household requirement. The Order simplifies Lifeline reimbursement 
and makes it more transparent. The Commission adopts a number of 
reforms to eliminate waste, fraud and abuse in the program, including 
creating a National Lifeline Accountability Database to prevent 
multiple carriers from receiving support for the same subscribers; 
phasing out toll limitation service support; eliminating Link Up 
support except for recipients on Tribal lands that are served by 
eligible telecommunications carriers (ETCs) that participate in both 
Lifeline and the high-cost program; reducing the number of ineligible 
subscribers in the program; and imposing independent audit requirements 
on carriers receiving more than $5 million in annual support. These 
reforms are estimated to save the Fund up to $2 billion over the next 
three years. As part of these reforms we establish a savings target of 
$200 million in 2012 versus the program's status quo path in the 
absence of reform, create a mechanism for ensuring that target is met, 
and put the Commission in a position to determine the appropriate 
budget for Lifeline in early 2013 after

[[Page 12953]]

monitoring the impact of today's fundamental overhaul of the program 
and addressing key issues in the Further Notice of Proposed Rulemaking 
(FNPRM), including the appropriate monthly support amount for the 
program. Using savings from the reforms, the Order establishes a 
Broadband Adoption Pilot Program to test and determine how Lifeline can 
best be used to increase broadband adoption among Lifeline-eligible 
consumers. We also establish an interim base of uniform support amount 
of $9.25 per month for non-Tribal subscribers to simplify program 
administration.

II. Performance Goals & Measures

    5. The Order adopts three performance goals for the program: (1) 
Ensure the availability of voice service for low-income Americans; (2) 
ensure the availability of broadband service for low-income Americans; 
and (3) minimize the contribution burden on consumers and businesses. 
The Order adopts measurements for each of the goals, while delegating 
to the Bureau authority to resolve implementation aspects of such 
measurements (for example, determining how to define ``low-income'' and 
``next higher'' for the purpose of the measurement).

III. Voice Services Eligible for Discount

    6. Consistent with the actions taken in the CAF Order and Sua 
Sponte Order on Reconsideration, the Order amends the definition of 
``Lifeline'' to provide support for ``voice telephony service.'' The 
Order amends the rules to eliminate the ``basic local service 
qualifier'' that is currently part of the definition of Lifeline 
service, but explains that the Commission continues to expect Lifeline 
providers to provide service that enables consumers to communicate with 
others that live nearby, while acknowledging that service plans 
increasingly allow all distance communication. The Order declines to 
specify minimum service standards for Lifeline service, but states the 
Commission will monitor service levels to see if it should adopt 
standards in the future.

IV. Support Amounts for Voice Services

    7. Today, ETCs are reimbursed for Lifeline based on a rather 
complicated tiers structure that is, among other things tied to the 
ILEC Subscriber Line Charge. To simplify administration of the program 
and revise the rules to reflect the current marketplace in which more 
than half of the support is provided to wireless providers that do not 
charge a SLC, the Order adopts an interim rate of $9.25 to replace the 
current Tiers 1, 2, and 3, effective April 1, 2012. The interim support 
amount represents the nationwide average rate of reimbursement as of 
September 2011. Tier 4, which provides enhanced Lifeline support to 
residents of Tribal lands, remains unchanged. We seek further comment 
on setting appropriate permanent support amounts in a Further Notice of 
Proposed Rulemaking.

V. Consumer Eligibility and Enrollment

A. Uniform Eligibility Criteria

    8. The Order establishes a uniform floor of eligibility for 
Lifeline based on the current federal rules, while allowing states to 
include more permissive eligibility criteria. Additionally, the Order 
keeps the current federal income standard of 135% or below of the 
federal poverty guidelines. This uniformity will simplify program 
administration for USAC and for ETCs as well as provide a baseline 
level of program accessibility nationwide.

B. One-per-Household

    9. The order adopts a one-per-household requirement. ``Household'' 
is defined consistent with the Low-Income Home Energy Assistance 
Program as ``any individual or group of individuals who are living 
together at the same address as one economic unit,'' with an ``economic 
unit'' defined as ``all adult individuals contributing to and sharing 
in the income and expenses of a household.'' The Order permits Lifeline 
support to individuals living in group living facilities. The Order 
adopts procedures to enable Lifeline applicants to demonstrate when 
initially enrolling in the program that any other Lifeline recipients 
residing at their residential address are part of a separate household 
and directs USAC, within 30 days of the effective date of the Order, to 
develop a worksheet that will allow low-income households sharing an 
address to indicate they are part of a separate household. The Order 
also directs USAC, within 30 days of the effective date of the Order, 
to develop print and web materials to be posted on USAC's Web site that 
both USAC and ETCs can use to educate consumers about the one-per-
household rule (i.e., how to determine what persons comprise a 
household).

C. Determining Consumer Eligibility (At Enrollment and Annually 
Thereafter)

    10. The Order requires all Lifeline subscribers to provide certain 
certifications when enrolling in Lifeline and annually thereafter. 
These requirements are as follows:
1. Initial Certification Requirements
    11. The Order requires ETCs (or the state administrator, where 
applicable) to check the program-based eligibility of new Lifeline 
subscribers at enrollment by accessing available state or federal 
eligibility databases. Where underlying program eligibility data cannot 
be accessed, the Order requires new Lifeline subscribers to provide 
documentation of program-based eligibility, which the entity enrolling 
the subscriber should review (but not retain). Similarly, the Order 
extends the current requirement in federal default states that new 
Lifeline subscribers must present documentation to qualify for Lifeline 
based on income level to all states. The Order adopts additional 
certification requirements to protect the program from waste, fraud, 
and abuse, including requiring consumers to certify upon enrollment and 
annually thereafter that they are receiving support for only one line 
per household (as described above), and requires consumers to sign a 
certification form prior to enrolling in the Lifeline program.
2. Annual Re-Certification Requirements
    12. The Order replaces the existing annual verification process 
with a rule that requires each Lifeline subscriber (both existing 
subscribers and new subscribers) to provide annual self-certifications 
attesting to their continued eligibility for the program. The Order 
requires all ETCs, to re-certify by the end of 2012, all of their 
subscribers claimed on their June FCC Form 497 and report the results 
of this annual re-certification process to the Commission, USAC and the 
relevant state commission (where the state has jurisdiction over the 
ETC) annually by January 31, 2013. Beginning in 2013, where ETCs cannot 
re-certify their subscriber by accessing a database, they must re-
certify them on an annual basis or elect to have USAC re-certify them. 
The results of the re-certification process must be filed by January 
31st each year. Where ETCs can access underlying state or federal 
program data to confirm a consumer's ongoing eligibility for Lifeline, 
the Order allows them to do so in place of the annual re-certification 
process. The Order adopts a rule that consumers that do not respond to 
annual re-certifications must be de-enrolled from the program. The 
Order also adopts a rule requiring consumers to notify their ETC within 
30 days if the consumer no longer qualifies for Lifeline.

[[Page 12954]]

3. ETC Certifications
    13. The Order requires ETCs to make certain certifications annually 
and when submitting for reimbursement from the program.

D. Tribal Lifeline Eligibility

    14. The Order clarifies that residents of Tribal lands are eligible 
for Lifeline (and Link Up support if served by a high cost recipient) 
based on (1) Income level; (2) participation in any Tribal-specific 
federal assistance program identified in the Commission's rules; or (3) 
participation in any other program identified in the Commission's 
rules. The Order adopts the NPRM proposal to add the Food Distribution 
Program on Indian Reservations (FDPIR) to the list of programs that 
confer eligibility. The Order establishes a waiver and designation 
process for those Tribal communities that are located outside of 
reservations, but can show ties to defined Tribal communities, and 
removes the term ``near reservation'' from the Commission's definition 
of Tribal lands. The Order requires residents on Tribal lands to follow 
the same requirements for documentation of income and program based 
eligibility as other Lifeline recipients, but clarifies that we will 
continue to allow self-certification of residence on Tribal lands.

E. Electronic Signature

    15. The Order allows ETCs and state agencies to capture a 
subscriber's signature electronically at sign-up, including through the 
use of interactive voice response systems in compliance with the 
requirements of the E-Sign Act and the Government Paperwork Elimination 
Act. The E-Sign Act allows the use of electronic records to satisfy 
Commission regulations requiring that such information be provided in 
writing, if the consumer has affirmatively consented to such use and 
has not withdrawn such consent.

F. Automatic and Coordinated Enrollment

    16. The Order encourages states to facilitate coordinated 
enrollment, but makes clear that automatic enrollment whereby consumers 
receiving eligible benefits are automatically enrolled in a particular 
carrier's Lifeline program without their express consent is not 
permitted because it may increase the incidence of duplicative support.

VI. Reforms To Eliminate Waste, Fraud and Abuse

A. National Lifeline Accountability Database

    17. The Order adopts a national duplicates database to detect and 
eliminate duplicative Lifeline and Link Up support. The Order directs 
WCB to work with USAC and OMD to establish and implement the database 
and associated processes. ETCs will be required to query the database 
to determine whether a prospective subscriber is already receiving 
Lifeline support from another ETC. The order directs ETCs to (1) 
populate the database with the necessary information to implement these 
processes and (2) query the database for each new subscriber prior to 
receiving reimbursement from the fund for that subscriber. We seek 
further comment in an FNRPM on how to implement a database to check for 
eligibility.

B. TLS

    18. The Order clarifies that it does not consider a subscriber who 
has a Lifeline calling plan that includes a set number of calling 
minutes available for either local or domestic long distance calls to 
have voluntarily elected to receive TLS. Therefore, TLS support will 
not be provided to ETCs providing such plans effective April 1, 2012. 
To the extent an ETC offers service plans that still charge a fee for 
toll calls that is in addition to the per month or per billing cycle 
price for the Lifeline service plan, it must provide at no additional 
cost to the consumer the ability to limit or block calls that would 
result in additional charge, but the program will no longer provide 
additional support for this functionality. Support for TLS will be 
eliminated over two years to mitigate the impact of this change. The 
Order establishes a limit on TLS support of $3.00 per month per 
subscriber that will be implemented with April 2012 support payments 
through the remainder of 2012, beginning with April 2012 disbursements. 
TLS support will be reduced to $2.00 per month per subscriber in 2013, 
and eliminated at the beginning of 2014.

C. Link Up

    19. The Order eliminates Link Up support to all ETCs on non-Tribal 
lands, effective April 1, 2012, and limits Link Up on Tribal lands to 
high cost recipients deploying infrastructure. Marketplace trends 
indicate that Lifeline consumers increasingly have service options from 
ETCs that neither draw on Link Up support nor charge the consumer a 
service initiation fee. In balancing a number of universal service 
goals with finite resources, we conclude that dollars currently spent 
for Link Up can be more effectively spent to improve and modernize the 
Lifeline program.

D. Subscriber Usage of Customer Supported Service

    20. The Order establishes a rule that pre-paid ETCs offering 
service to subscribers for free may not seek reimbursement for 
subscribers until the subscriber initiates service in the first 
instance. Moreover, subscribers who fail to ``use'' the service (as 
that term is defined in the Order/Rules) within 60 consecutive days 
must be de-enrolled by the carrier and the duplicates database must be 
updated within one business day. Furthermore, pre-paid ETCs must inform 
their subscribers that Lifeline services are not transferable, that 
there is a usage requirement to retain the benefit, and that 
subscribers will be automatically de-enrolled for non-use.

E. Minimum Consumer Charge

    21. The Order does not adopt a minimum consumer charge in light of 
other W/F/A protections that will be implemented to ensure that 
consumers do not abuse the program, but notes that this issue could be 
revisited if the measures adopted fail to address the issues that 
currently exist. Further, the Order eliminates the current rule that 
imposes a $1 minimum local charge on Tribal subscribers.

F. Outreach and Marketing

    22. Within six months from the Order's effective date, ETCs must 
include in plain, easy-to-understand language in all of their Lifeline 
marketing materials (including print, internet, audio and video), that 
the offering is a Lifeline-supported service; Lifeline is a government 
assistance program; only eligible consumers may enroll in the program; 
what documentation is necessary for enrollment; the program is limited 
to one benefit per household, consisting of either wireline or wireless 
service; and consumers who willfully make false statements in order to 
obtain program benefits can be punished with a fine or imprisonment or 
barred from the program. Additionally, the Order requires ETCs to 
disclose the company name under which it does business and the details 
of its Lifeline service offerings in its Lifeline-related marketing and 
advertising. The Order does not adopt mandatory outreach requirements 
but directs the Wireline Competition and Consumer and Governmental 
Affairs Bureau to conduct

[[Page 12955]]

an outreach campaign regarding the new program rules.

G. Audits and Enforcement

    23. The order requires USAC to revise its existing oversight 
program (the Beneficiary Compliance Audit and Payment Quality Assurance 
programs) in light of the new rules. It also adopts a new first-year 
audit requirement for newly designated ETCs whereby they would be 
audited by USAC within their first year of providing service. The order 
also adopts a rule that ETCs drawing more than $5 million, at the 
holding company level, from the low-income program must conduct 
biennial independent audits and submit the audit reports to the 
Commission, USAC, and appropriate state commission. The Order requires 
ETCs to report to USAC their ownership information, including 
affiliates and holding companies, which is necessary to implement this 
new audit requirement. ETCs are put on notice that findings concerning 
improper payment of funds may result in recapture of those payments 
under the Improper Payments Elimination and Recovery Act (IPERA) and 
related Office of Management and Budget implementation guidelines and/
or revocation of ETC designation.

VII. Payment of Low-Income Support

    24. The order adopts a three-month transition for low-income 
support to be disbursed based on actual support in place of the current 
administrative process of paying low-income support based on projected 
service. The Order accelerates USAC's payment of low-income support for 
carriers filing the FCC Form 497 electronically by a monthly deadline. 
The window by which carriers must file revisions or original FCC Form 
497s is reduced from fifteen months from the end of a calendar year, to 
a rolling twelve-month window.

VIII. Modernizing the Program

A. Bundled Services

    25. The Order adopts a rule permitting ETCs in all states to allow 
qualifying low-income consumers to apply Lifeline discounts to all 
residential service plans that provide voice telephony service, 
including bundled service packages combining voice and broadband, or 
packages containing optional calling features. ETCs will be required to 
apply partial subscriber payments to the cost of the Lifeline voice 
component of a package before paying down any additional services, and 
must notify Lifeline consumers of this rule in writing. In a Further 
Notice, described below, we seek further comment on whether to adopt a 
rule mandating that ETCs offer Lifeline discounts on all bundled 
service packages and packages with optional calling features.

B. Broadband Pilot

    26. The Order establishes a broadband pilot program aimed at 
generating statistically significant data that will allow the 
Commission, ETCs, and the public to analyze the effectiveness of 
different approaches to using Lifeline funds to making broadband more 
affordable for low-income Americans while providing support that is 
sufficient but not excessive. The broadband pilot program will be 
funded with some of the savings from the duplicate resolution process.

C. Managing the Size of the Low Income Fund

    27. The Order sets a savings target of $200 million for 2012. The 
Bureau shall provide to each Commissioner an interim report no later 
than six months from the adoption of the Order analyzing the reforms' 
progress in meeting the savings target. Not later than one year after 
the adoption of the Order, the Bureau shall provide to each 
Commissioner a report as to whether the reforms have succeeded in 
meeting the savings target; and, if they have not, analyzing the 
causes, providing options for realizing those savings, and making 
specific recommendations for corrective action to realize those 
savings. Both reports shall be made available for public input on the 
Commission's Web site.

IX. Eligible Telecommunications Carrier Requirements

A. Facilities-Based Requirements for Lifeline-Only ETCs

    28. The Commission forbears from applying the Act's facilities 
requirement of section 214(e)(1)(A) to all telecommunications carriers 
that seek limited ETC designation to participate in the Lifeline 
program, subject to certain conditions. Specifically, each carrier must 
(i) comply with certain 911 requirements; and (ii) file, subject to 
Bureau approval, a compliance plan providing specific information 
regarding the carrier's service offerings and outlining the measures 
the carrier will take to implement the obligations contained in this 
Order. To avoid disruption to subscribers served by existing Lifeline-
only ETCs that previously received forbearance in those states where 
they were designated prior to December 29, 2011, those ETCs can 
continue to receive reimbursement in those states pending approval of 
their compliance plan, provided they submit their plan to the Bureau by 
July 1, 2012. Non-facilities-based carriers designated after December 
29, 2011 will not receive reimbursement from the Fund until the Bureau 
approves their compliance plans.

B. Impact of New Rules on Prior Forbearance Conditions

    29. To the extent that any of the conditions in the prior 
forbearance orders and compliance plans are inconsistent with the rules 
adopted in the Order, the newly adopted rules shall prevail. However, 
any carrier whose grant of forbearance was conditioned on more 
stringent compliance plans must comply with those additional 
obligations as well as the rules adopted in the Order.

C. Additional Rule Amendments

    30. The Order makes several changes to the rules regarding Lifeline 
providers to eliminate waste and inefficiency, and to increase 
accountability in the program. The Order amends section 54.202 to 
clarify that Lifeline-only ETCs are not required to submit a five-year 
improvement plan as part of its application for designation. Carriers 
seeking to be designated as a Lifeline-only ETC must demonstrate their 
technical and financial capacity to provide the supported services. All 
ETCs receiving Lifeline must annually report the names and identifiers 
used by the ETC, its holding company, operating companies and 
affiliates. Additonally, the Order requires every ETC receiving low-
income support to annually provide to the Commission and USAC general 
information regarding their Lifeline plans for voice telephony service 
offered specifically for low-income consumers.

X. APCC Petition

    31. The Order denies a petition for rulemaking and a petition for 
interim relief by the American Public Communications Council to 
subsidize the payphone industry through Lifeline.

XI. Procedural Matters

A. Paperwork Reduction Act Analysis

    32. This Report and Order contains new information collection 
requirements subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. The new requirements will be submitted to the Office 
of Management and Budget (OMB) for review under section 3507(d) of the 
PRA. OMB, the general public, and other Federal agencies are invited to 
comment on the new or modified

[[Page 12956]]

information collection requirements contained in this proceeding. In 
addition, we note that pursuant to the Small Business Paperwork Relief 
Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we 
previously sought specific comment on how the Commission might further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees. We describe the impacts that might affect 
small businesses, which include most businesses with fewer than 25 
employees, in the Final Rregulatory Flexibility Analysis below.

B. Congressional Review Act

    33. The Commission will send a copy of this Report and Order to 
Congress and the Government Accountability Office pursuant to the 
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

C. Final Regulatory Flexibility Analysis

    34. The Regulatory Flexibility Act (RFA) requires that an agency 
prepare a regulatory flexibility analysis for notice and comment 
rulemakings, unless the agency certifies that ``the rule will not, if 
promulgated, have a significant economic impact on a substantial number 
of small entities.'' Accordingly, we have prepared a Final Regulatory 
Flexibility Analysis concerning the possible impact of the rule changes 
contained in this Report and Order on small entities.
    35. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Lifeline and Link Up Reform and Modernization 
Notice of Proposed Rulemaking (Lifeline and Link Up NPRM), 76 FR 16482, 
March 23, 2011. The Commission sought written public comments on the 
proposals in the Lifeline and Link Up NPRM, including comment on the 
IRFA. This present Final Regulatory Flexibility Analysis (FRFA) 
conforms to the RFA.

D. Need for, and Objectives of, the Order

    36. 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.
    37. In this Order, we comprehensively reform and begin to modernize 
the Universal Service Fund's Lifeline program (Lifeline or the 
program). Building on recommendations from the Federal-State Joint 
Board on Universal Service (``Joint Board''), proposals in the National 
Broadband Plan, input from the Government Accountability Office (GAO), 
and comments received in response to the Commission's March Notice of 
Proposed Rulemaking the reforms adopted in this Order substantially 
strengthen protections against waste, fraud, and abuse; improve program 
administration and accountability; improve enrollment and consumer 
disclosures; initiate modernization of the program for broadband; and 
constrain the growth of the program in order to reduce the burden on 
all who contribute to the Universal Service Fund (USF or the Fund). We 
take these significant actions, while ensuring that eligible low-income 
consumers who do not have the means to pay for telephone service can 
maintain their current voice service through the Lifeline program and 
those who are not currently connected to the networks will have the 
opportunity to benefit from this program and the numerous opportunities 
and security that telephone service affords.
    38. This Order is another step in the Commission's ongoing efforts 
to overhaul all Universal Service Fund programs to fulfill the goals 
Congress gave us to promote the availability of modern networks and the 
capability of all American consumers to access and use those networks. 
Consistent with previous efforts, we act here to eliminate waste and 
inefficiency, increase accountability, and transition the Fund from 
supporting standalone telephone service to broadband. In June 2011, the 
Commission adopted the Duplicative Program Payments Order, which made 
clear that an eligible consumer may only receive one Lifeline-supported 
service, established procedures to detect and de-enroll subscribers 
receiving duplicative Lifeline-supported services, and directed USAC to 
implement a process to detect and eliminate duplicative Lifeline 
support--a process now completed in 12 states and expanding to other 
states in the near future. Building on those efforts, we estimate that 
the unprecedented reforms adopted in today's Order could save the Fund 
up to an estimated $2 billion over the next three years, keeping money 
in the pockets of American consumers that otherwise would have been 
wasted on duplicative benefits, subsidies for ineligible consumers, or 
fraudulent misuse of Lifeline funds.
    39. These savings will reduce growth in the Fund but at the same 
time provide telephone service to consumers who remain disconnected 
from the voice networks of the Twentieth Century. Moreover, by using a 
fraction of the savings from eliminating waste and abuse in the program 
to create a broadband pilot program, we explore how Lifeline can best 
be used to help low-income consumers access the networks of the Twenty-
First Century by closing the broadband adoption gap. This complements 
the recent USF/ICC Transformation Order and FNPRM, which reoriented 
intercarrier compensation and the high-cost fund toward increasing the 
availability of broadband networks, as well as the recently launched 
``Connect to Compete'' private-sector initiative to increase access to 
affordable broadband service for low-income consumers.
    40. To make the program more accountable, the Order establishes 
clear goals and measures and establishes national eligibility criteria 
to allow low-income consumers to qualify for Lifeline based on either 
income or participation in certain government benefit programs. The 
Order adopts rules for Lifeline enrollment, including enhanced initial 
and annual certification requirements, and confirms the program's one-
per-household requirement. The Order simplifies Lifeline reimbursement 
and makes it more transparent. The Commission adopts a number of 
reforms to eliminate waste, fraud and abuse in the program, including 
creating a National Lifeline Accountability Database to prevent 
multiple carriers from receiving support for the same subscribers; 
phasing out toll limitation service support; eliminating Link Up 
support except for recipients on Tribal lands that are served by 
eligible telecommunications carriers (``ETCs'') that participate in 
both Lifeline and the high-cost program; reducing the number of 
ineligible subscribers in the program; and imposing independent audit 
requirements on carriers receiving more than $5 million in annual 
support. These reforms are expected to save the Fund approximately $2 
billion over the next three years. Using savings from the reforms, the 
Order establishes a Broadband Adoption Pilot Program to test and 
determine how Lifeline can best be used to increase broadband adoption 
among Lifeline-eligible consumers. We also establish an interim base of 
uniform support amount of $9.25 per month for non-Tribal subscribers to 
simplify program administration.

[[Page 12957]]

E. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    41. No comments were filed in response to the IRFA attached to the 
Lifeline and Link Up NPRM. Notwithstanding the foregoing, general 
comments discussing the impact of the proposed rules on small business 
were submitted in response to the Lifeline and Link Up NPRM. With 
respect to the proposal to provide household identifying information as 
a measure to prevent duplicate enrollment, one commenter expressed 
concern that the imposition of a data transmission requirement would 
result in new training, programming, and administrative expenses which 
would be burdensome on small entities. One commenter opposed any 
limitations placed on Link Up support arguing that such limitations 
would inhibit small ETCs' ability to participate in the low income 
program. Commenters expressed concern that the proposed audit 
requirements in the NPRM would be expensive and difficult for small 
companies to comply with. One commenter opposed the proposed 
verification proposals in the NPRM asserting that such new requirements 
would be unnecessarily expensive and disproportionately burden small 
businesses. Commenters opposed the proposed sampling methodology to 
confirm eligibility as it would have the result of requiring small 
entities to sample most if not all of their Lifeline subscribers. 
Commenters asserted that outreach efforts may be unreasonably 
burdensome for small ETCs. In making the determinations reflected in 
the Order, we have considered the impact of our actions on small 
entities.

F. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    42. 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
    43. 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 Notice. 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.
    44. 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 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 
Notice.
    45. 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

[[Page 12958]]

than 1,500 employees. Consequently, the Commission estimates that the 
majority of interexchange service providers are small entities that may 
be affected by rules adopted pursuant to the Notice.
    46. 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.
    47. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2007 show that 1,523 firms provided resale 
services during that year. Of that number, 1,522 operated with fewer 
than 1000 employees and one operated with more than 1,000. Thus under 
this category and the associated small business size standard, the 
majority of these local resellers can be considered small entities. 
According to Commission data, 213 carriers have reported that they are 
engaged in the provision of local resale services. Of these, an 
estimated 211 have 1,500 or fewer employees and two have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of local resellers are small entities that may be affected by 
rules adopted pursuant to the Notice.
    48. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2007 show that 1,523 firms provided resale 
services during that year. Of that number, 1,522 operated with fewer 
than 1000 employees and one operated with more than 1,000. Thus under 
this category and the associated small business size standard, the 
majority of these resellers can be considered small entities. 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.
    49. Pre-paid Calling Card Providers. Neither the Commission nor the 
SBA has developed a small business size standard specifically for pre-
paid calling card providers. The appropriate size standard under SBA 
rules is for the category Telecommunications Resellers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census data for 2007 show that 1,523 firms provided resale services 
during that year. Of that number, 1,522 operated with fewer than 1000 
employees and one operated with more than 1,000. Thus under this 
category and the associated small business size standard, the majority 
of these pre-paid calling card providers can be considered small 
entities. According to Commission data, 193 carriers have reported that 
they are engaged in the provision of pre-paid calling cards. Of these, 
an estimated all 193 have 1,500 or fewer employees and none have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of pre-paid calling card providers are small entities that may 
be affected by rules adopted pursuant to the Notice.
    50. 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 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 resellers in this 
classification can be considered small entities. To focus specifically 
on the number of subscribers than on those firms which make 
subscription service available, the most reliable source of information 
regarding the number of these service subscribers appears to be data 
the Commission collects on the 800, 888, 877, and 866 numbers in use. 
According to our data, as of September 2009, the number of 800 numbers 
assigned was 7,860,000; the number of 888 numbers assigned was 
5,888,687; the number of 877 numbers assigned was 4,721,866; and the 
number of 866 numbers assigned was 7,867,736. The Commission does not 
have data specifying the number of these subscribers that are not 
independently owned and operated or have more than 1,500 employees, and 
thus are unable at this time to estimate with greater precision the 
number of toll free subscribers that would qualify as small businesses 
under the SBA size standard. Consequently, the Commission estimates 
that there are 7,860,000 or fewer small entity 800 subscribers; 
5,888,687 or fewer small entity 888 subscribers; 4,721,866 or fewer 
small entity 877 subscribers; and 7,867,736 or fewer small entity 866 
subscribers. We do not believe 800 and 800-Like Service Subscribers 
will be 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
    51. 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.
    52. 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

[[Page 12959]]

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 (PCS), and 
Specialized Mobile Radio (SMR) 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.
    53. 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.
    54. 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.
    55. 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.
    56. 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.
    57. 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 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.
    58. 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
    59. 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

[[Page 12960]]

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.
    60. The RFA requires an agency to describe any significant 
alternatives that it has considered in developing 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 such small 
entities; (3) the use of performance rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
small entities.''

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

    61. Support Amounts for Voice Service. In the Order, we adopt an 
interim rate of reimbursement for Lifeline in lieu of the prior tiered 
system. The tiered system was tied to the subscriber line charge (SLC), 
which we find to be an imprecise basis for Lifeline support given the 
myriad changes in the telecommunications marketplace. This interim 
monthly rate is set at $9.25 per subscriber. This interim support 
amount was determined by calculating the average level of support from 
the most recent disbursement data available. Because the interim 
support amount is an average, some ETCs will receive more monthly 
support while others receive less--regardless of size. While there may 
be a slightly negative economic impact on some small entities, such an 
impact will be felt by all entities currently receiving more than $9.25 
per month per subscriber in Lifeline support, not just small entities. 
However, as with our adoption of uniform consumer eligibility rules, 
this uniform interim support amount will simplify program 
administration by ETCs operating across different SLCs.
    62. Uniform Eligibility Criteria. As part of the Commission's 
effort to streamline the program, the Commission adopts a uniform set 
of consumer eligibility requirements throughout the nation. This rule 
alleviates some of the administrative burdens on ETCs operating in 
multiple states caused by varying consumer eligibility requirements. We 
anticipate that this new rule will significantly simplify program 
administration by ETCs, resulting in greater program efficiencies. 
Given that we permit states to adopt more permissive Lifeline 
eligibility criteria on top of the base of federal Lifeline eligibility 
criteria, no ETCs will face a smaller Lifeline subscriber base because 
of the change in eligibility criteria. We expect no economic impact on 
entities through the adoption of the federal eligibility criteria 
across all states.
    63. One-per-Household. First, the Order adopts a one-per-household 
requirement. ``Household'' is defined consistent with the Low-Income 
Home Energy Assistance Program as ``any individual or group of 
individuals who are living together at the same address as one economic 
unit,'' with an ``economic unit'' defined as ``all individuals 
contributing to and sharing in the income and expenses of a household'' 
(which would include persons with no income who benefit from another 
person's financial support). Second, the Order adopts procedures to 
enable Lifeline applicants to demonstrate when initially enrolling in 
the program that any other Lifeline recipients residing at their 
residential address are part of a separate household and directs USAC, 
within 30 days of the effective date of the Order, to develop a form 
that will allow low-income households sharing an address to indicate 
they are part of a separate household. Third, the Order also directs 
USAC, within 30 days of the effective date of the Order, to develop 
print and web materials to be posted on USAC's Web site that both USAC 
and ETCs can use to educate consumers about the one-per-household rule 
(i.e., how to determine what persons comprise a household). USAC will 
prepare materials that the ETCs can rely on to educate their 
subscribers about the one-per-household requirement.
    64. We estimate that these rules will have a minimal economic 
impact. While the rules will require eligible telecommunications 
carriers to obtain information from a limited number of consumers about 
their household arrangements, it will only impact those low-income 
consumers who reside in group living facilities or at addresses shared 
by multiple households. This information will be collected using a 
worksheet to be designed and provided to the ETCs by USAC. This 
information is necessary to assist qualifying consumers relying on 
addresses shared by multiple households to obtain Lifeline service and 
to document their compliance with the one-per-household rule. 
Additionally, USAC will develop print and web materials that ETCs can 
use to educate consumers about the one-per-household rule. We do not 
expect these requirements to have a disproportionate impact on 
carriers, including those that are small entities.
    65. Certification of Consumer Eligibility. First, the Order amends 
Sec.  54.410 of the Commission's rules to require all Lifeline 
subscribers to provide certain certifications pertaining to their 
eligibility for Lifeline upon initial program enrollment and annually 
thereafter. Depending on the state, certifications should be collected 
from consumers by carriers or the state Lifeline administrator or a 
state agency.
    66. Carriers and states (where applicable) may need to update their 
existing certification forms to comply with the requirements of Sec.  
54.410, as amended. Carriers already collect several similar 
certifications from Lifeline subscribers at enrollment; thus, we expect 
that the costs of compliance with the amended rule will be marginally 
larger. Therefore, we anticipate that the effect of this rule will have 
minimal economic impact. Carriers and states (where applicable) may 
choose to use their existing certification forms so long as those forms 
are updated to comply with the new certification rules. We also provide 
in the Order that the new certification rules will not go into effect 
until June 1, 2012, which will give carriers (both large and small) 
time to make any needed system updates. We also expect to recover cost 
savings to the program based on the reduction of ineligible consumers 
stemming from the updated certification requirements. We do not expect 
that this rule will disproportionately impact small entities.
    67. Second, the Order requires ETCs (or the state administrator, 
where applicable) to check the eligibility of new Lifeline subscribers 
at enrollment by accessing available state or federal eligibility 
databases. Where underlying eligibility data cannot be accessed through 
a database, the Order requires new Lifeline subscribers to provide 
documentation of program-based eligibility or income-based eligibility, 
which the entity enrolling the subscriber should review (but not 
retain). We acknowledge that compliance with the rule we adopt here 
will involve some administrative costs for ETCs, for example, modifying 
their internal processes and systems to comply with the new 
documentation requirement. However, we do not expect

[[Page 12961]]

these costs to have a significant economic impact especially since we 
limit this requirement to new customers rather than requiring ETCs to 
re-verify all of their subscribers by obtaining documentary proof of 
eligibility. We do not expect these costs to be disproportionately 
large for small carriers. We also conclude that those costs are 
outweighed by the significant benefits gained by protecting the Fund 
from waste, fraud, and abuse. We estimate in the Order that up to 15 
percent of current Lifeline subscribers may be ineligible for the 
program, potentially representing as much as $375 million of support 
per year. We expect that a rule requiring ETCs to obtain documentation 
of program participation from new Lifeline applicants, in conjunction 
with our efforts to implement a Lifeline database, will enable the 
Commission to recapture those funds and prevent unbridled future growth 
in the Fund. The resulting cost savings will in turn benefit those 
consumers who contribute to the Universal Service Fund, new qualifying 
low-income consumers, and our goal to modernize the program for a 
broadband future. Further, while we will require consumers to provide 
documentation of program- and income-eligibility to ETCs at enrollment, 
consumers will no longer be required to provide such documentation as 
part of the annual verification process in federal default states. 
Moreover, consumers will not need to demonstrate eligibility at 
enrollment (or annually) once that function is addressed through a 
database. Lastly, we give ETCs until June 1, 2012, to implement 
processes to document consumer eligibility for Lifeline. We expect that 
these changes will reduce the burdens on both consumers and ETCs.
    68. Third, the Order requires ETCs to make certain certifications 
annually and when submitting for reimbursement from the program. The 
Commission currently directs ETCs to make certain certifications 
relating to the Lifeline program. Section 54.410 of the Commission's 
rules, as modified, does not substantially change those requirements; 
rather, the Commission adds additional certifications that the ETC must 
make annually and when seeking reimbursement from the Fund. USAC and 
the Commission have jointly developed the certification language and 
the forms. Thus, carriers need only make the necessary internal 
inquiries (e.g., ensure that they have received a signed certification 
form from each Lifeline subscriber) and sign the forms as provided to 
them by USAC. We do not expect that this requirement will have an 
adverse financial impact on small entities.
    69. Fourth, we replace the existing process used by ETCs and states 
to verify ongoing consumer eligibility for Lifeline with a uniform rule 
requiring all ETCs (or states, where applicable) to re-certify the 
eligibility of their complete Lifeline subscriber base as of June 1, 
2012. By the end of 2012, all ETCs (or states, where applicable) must 
obtain from each Lifeline subscriber a re-certification form that 
contains each of the required certifications listed in Sec.  54.410, as 
amended, and report those results to USAC, the Commission, states 
(where the state has jurisdiction over the carrier), and Tribal 
governments (where applicable). Alternatively, in states where a state 
agency or a third party has implemented a database that carriers may 
query to re-certify the consumer's continued eligibility, the carrier 
(or state agency or third-party, where applicable) must instead query 
the database by the end of 2012 and maintain a record of what specific 
data was used to re-certify eligibility and the date of re-
certification.
    70. We have taken steps in implementing this rule to minimize the 
impact on carriers and states performing the re-certification function. 
This re-certification may be done on a rolling basis throughout the 
year, at the ETC's election. ETCs (or states, where applicable) may re-
certify the continued eligibility of an ETC's Lifeline subscribers by 
contacting them--which can be done in any of a number of ways, 
including in person, in writing, by phone, by text message, by email, 
or otherwise through the Internet--to confirm their continued 
eligibility for Lifeline. As noted above, where available, ETCs and 
states will access electronic eligibility data rather than contact each 
subscriber to obtain an individual re-certification. Lastly, after 
2012, ETCs may elect to have USAC administer the self-certification 
process on their behalf. We do not expect the costs of re-certification 
to disproportionately burden small entities, who will have a lesser 
number of subscribers to contact and may opt to use less costly means 
(such as text message or email) to contact their subscribers for re-
certification.
    71. Tribal Lifeline Eligibility. First, the Order clarifies that 
residents of Tribal lands are eligible for Lifeline (and Link Up 
support if served by a high cost recipient) based on (1) income level; 
(2) participation in any Tribal-specific federal assistance program 
identified in the Commission's rules; or (3) participation in any other 
program identified in the Commission's rules. We do not expect that 
this clarification will have any financial impact, including on small 
businesses, as it does not change existing program rules, but rather 
removes any ambiguity in the interpretation of those rules by carriers 
and consumers.
    72. Second, the Order adopts the NPRM proposal to add the Food 
Distribution Program on Indian Reservations (FDPIR) to the list of 
programs that confer eligibility. We expect this rule change to have 
only minimal financial impact. For example, carriers serving eligible 
residents of Tribal lands will need to update their certification/
enrollment forms to add FDPIR to their list of qualifying programs. 
However, the benefit that will accrue to eligible residents of Tribal 
lands participating in FDPIR will outweigh the burdens to carriers. We 
do not expect this rule to have a disproportionate impact on small 
entities, for whom the cost of compliance would be the same as for 
other carriers.
    73. Third, the Order establishes a waiver and designation process 
for those Tribal communities that are located outside of reservations, 
but can show ties to defined Tribal communities, and removes the term 
``near reservation'' from the Commission's definition of Tribal lands. 
We do not expect this rule to have any financial impact, including on 
small entities, as carriers will not have any role in the designation 
process.
    74. Fourth, the Order clarifies that we will continue to allow 
self-certification of residence on Tribal lands. We do not expect this 
rule to have any economic impact on any entities, as it clarifies, 
rather than changes, existing program rules.
    75. Electronic Signatures and Interactive Voice Response Systems. 
In the Order, the Commission clarifies that ETCs may use electronic 
signatures and interactive voice response systems to obtain Lifeline 
subscriber certifications, provided the electronic signatures are 
obtained in accordance with the requirements of the E-SIGN Act. We 
expect no negative economic impact from this clarification because this 
clarification makes obtaining subscriber signatures easier for all 
ETCs.
    76. National Accountability Database. The Order established a 
national accountability database to reduce the likelihood that a 
consumer or household will receive more than one subsidized service 
through the low-income program. The Order directs the Bureau to work 
with USAC and OMB to establish and implement the database

[[Page 12962]]

and associated processes. The Order directs ETCs to (1) populate the 
database with the necessary subscriber information to implement these 
processes and (2) query the database for each new subscriber prior to 
receiving reimbursement from the fund for that subscriber. ETCs may 
have to collect customer information which is not currently in their 
possession to populate the database.
    77. While the database imposes an economic impact on carriers to 
populate the database, and potentially interface with the database, the 
entire system will be designed to minimize burdens on small entities. 
There are a number of ways in which the database has been designed to 
limit the burden on small entities. First, the Commission does not 
impose any real-time obligations on ETCs to update the database. The 
ETCs must update the database prior to seeking reimbursement. Second, 
to the extent that ETCs have not collected the necessary data from 
existing customers to send to the duplicates database, ETCs will have a 
significant period of time before the database is operational to 
collect such information because the Commission projects that the 
database could take up to a year to build and ETCs are given an 
additional 60 days to populate the database. The Commission has 
directed USAC to provide support to ETCs regarding how they should 
populate the database, and this assistance should further reduce the 
burden on ETCs, particularly those smaller entities with fewer back-
office resources and less sophisticated systems. For similar reasons, 
the burden on small entities will be limited because the database will 
be designed to accept the subscriber information in many different 
formats, not just via a machine to machine connection. The database 
will include an ID verification function, which had heretofore been 
undertaken by some ETCs at their own expense. The database includes an 
exception management and dispute resolution process so that the burden 
on ETCs to handle disputes if a subscriber is classified as a duplicate 
by the database will be limited.
    78. Toll Limitation Service Support. In the Order, the Commission 
begins the process of eliminating toll limitation service (TLS) support 
and modifies its rules for which ETCs must offer TLS. The Commission 
finds that TLS is less relevant in a marketplace where many ETCs do not 
separately charge for ``toll'' or ``long distance'' calls. To the 
extent an ETC still distinguishes between local and long distance 
calling in its Lifeline service, it must provide at no additional cost 
to the consumer the ability to limit or block calls that would result 
in additional charge. Support for TLS will be eliminated over three 
years to mitigate the impact of this change. In the first year of 
limited TLS support, support will be capped at $3 per month per 
consumer. In the second year, support will be limited to $2 per month 
per consumer. In the third year, support will be eliminated. ETCs 
seeking TLS reimbursement will need to adjust their TLS provisioning 
methods as there will no longer be a separate TLS reimbursement outside 
of the standard Lifeline support amount. This rule will have an 
economic impact only on ETCs unable to provide TLS at an incremental 
cost above the limits set in the rule.
    79. Link Up. The Order will eliminate Link Up support to all ETCs 
on non-Tribal lands and limit Link Up on Tribal lands to high cost 
recipients deploying infrastructure. Marketplace trends indicate that 
Lifeline consumers increasingly have service options from ETCs that 
neither draw on Link Up support nor charge the consumer a service 
initiation fee. In balancing a number of universal service goals with 
finite resources, we conclude that dollars currently spent for Link Up 
can be more effectively spent to improve and modernize the Lifeline 
program. Some ETCs who had previously been receiving support from the 
Fund will no longer receive such support, however, the rule will not 
disproportionately impact small entities because the support is being 
eliminated for all ETCs serving non-Tribal areas--not just small 
entitites.
    80. Subscriber Usage of Customer Supported Service. The Order 
establishes a rule that pre-paid ETCs who do not charge a fee for the 
service (pre-paid ETCs) may not seek Lifeline reimbursement until a 
subscriber initiates service. Moreover, the rules require pre-paid ETCs 
to de-enroll subscribers who fail to use the service within a 
consecutive 60-day period and correspondingly update the duplicates 
database within one business day of any such de-enrollment. These new 
rules require pre-paid ETCs to monitor usage prior to seeking 
reimbursement from the low-income fund. In an effort to make compliance 
easier, the rules identify what actions on the part of consumers 
constitute usage. Given that carriers already have systems in place 
whereby usage is monitored so as to prevent consumers from using more 
than their allocated minutes, the burden of de-enrolling those 
consumers who do not use the service within a 60-day period is likely 
minimal. Moreover, while there may be some administrative expense 
related to updating the database, we anticipate such expense to be 
nominal. The new rules also require pre-paid ETCs to inform subscribers 
at service initiation of the usage and de-enrollment policies. This new 
requirement only applies to those ETCs choosing to provide Lifeline 
service at no charge to subscribers.
    81. Minimum Consumer Charge. The Order does not adopt a minimum 
consumer charge for Lifeline services and eliminates the current rule 
imposing a minimum local charge on Tribal subscribers. The requirements 
do not impose any obligations on carriers, large or small, therefore 
there is no associated cost of compliance.
    82. Marketing & Outreach. The Order requires ETCs to include plain, 
easy-to-understand language in all of their Lifeline marketing 
materials that the offering is a Lifeline-supported service; that 
Lifeline is a government assistance program; that only eligible 
consumers may enroll in the program; what documentation is necessary 
for enrollment; and that the program is limited to one benefit per 
household, consisting of either wireline or wireless service. 
Additionally, we require ETCs to disclose the company name under which 
it does business and the details of its Lifeline service offerings in 
its Lifeline-related marketing and advertising. We do not anticipate 
this rule to have a significant economic impact on any entities because 
the costs of including basic program information in all marketing 
materials should be minimal.
    83. Audits and Enforcement. The Order adopts a new audit 
requirement whereby newly designated ETCs will be audited by USAC 
within the first 18 months of seeking Lifeline support in any single 
state. This requirement is the same regardless of the size of the ETC. 
Moreover, because all ETCs are required to maintain records for a 
period of three years, submit annual recertification documentation, and 
be subjected to discretionary USAC audits, this first year audit 
requirement does not pose any burden or hardship on new ETCs or a 
disproportionate burden on small ETCs.The Order also requires those 
ETCs drawing more than $5 million in low-income support from the fund, 
at the holding company level, to perform a biennial independent audit. 
This requirement only pertains to large entities therefore there is no 
impact, let alone a disproportionate one, on small ETCs.
    84. In the Order, the Commission requires the submission of certain 
ownership information to USAC in order to implement our new biennial 
audit rule. ETCs are required to report

[[Page 12963]]

ownership information, including affiliates, holding companies, and any 
branding, to USAC, along with relevant universal service identifiers so 
that we may determine at the holding company level which ETCs meet the 
$5 million threshold. In addition, the Order requires newly designated 
ETCs to describe service offerings and type of service being provided. 
These reporting requirements apply to all ETCs equally and do not have 
a disproportionate impact on small providers. This reporting will help 
the Commission increase accountability in our universal service 
programs by simplifying the process of determining the total amount of 
public support received by each recipient, regardless of corporate 
structure. This new requirement will impose a burden on all ETCs, 
though not one that has a significant economic impact. While there will 
be some administrative costs associated with this requirement, the 
overall burden should be minimal and will be greater for large ETCs 
operating with complex corporate structures across multiple study 
areas.
    85. Payment of Low-Income Support. The Order adopts a three month 
transition for low-income support to be disbursed based on actual 
support in place of the current administrative process of paying low-
income support based on projected service. The Order accelerates USAC's 
payment of low-income support for carriers filing the FCC Form 497 
electronically by a monthly deadline. The window by which carriers must 
file revisions or original FCC Form 497s is reduced from fifteen months 
from the end of a calendar year, to a rolling twelve month window. In 
order to accomplish this transition, the Commission sets forth a 
procedure whereby entities determine which study area codes to 
transition in each of the transition months, thereby allowing carriers 
to proportionately distribute any potential financial burden resulting 
from the transition to payments based on actual support. The Commission 
sets the transition to payments based on actual support to begin in 
July 2012, giving small entities, and all ETCs alike, ample time to 
prepare for the transition to payments based on actual support. Any 
economic impact of this revision would be equal to all entities.
    86. In addition, the Commission expedites payment of low-income 
funds for carriers that file the FCC Form 497 electronically by the 
monthly deadline, thereby allowing ETCs to receive payments in a timely 
manner for timely electronic filings, and helping small entities reduce 
the negative financial impact of delayed payment. The Commission 
narrowed the revision window for FCC Form 497s from fifteen months to a 
rolling twelve month window. While carriers, large or small, may 
experience a minor burden by narrowing this revision window, the burden 
is minimized by the transition to payments on actual support. Carriers 
should not require as much time to scrutinize payments received because 
the calculations of projections and true-ups is being eliminated, and 
payments will be based on actual support provided by the ETC. A twelve 
month rolling window should be sufficient time for carriers to 
reconcile their books and file any required revisions, without imposing 
an unfair burden.
    87. Bundled Services. In the Order, we amend Sec. Sec.  54.401 and 
54.403 of the Commission's rules to adopt a federal policy providing 
all ETCs (whether designated by a state or this Commission) the 
flexibility to permit Lifeline subscribers to apply their Lifeline 
discount to bundled service packages or packages containing optional 
calling features available to Lifeline consumers. We do not expect this 
rule change to have a substantial financial impact, as carriers can 
elect not to offer bundled service packages or packages containing 
optional calling features to Lifeline consumers. We are not mandating 
that they do so at this time and will continue to weigh the effects of 
the flexible policy adopted in the Order. We believe that the benefits 
to consumers that could result from this rule outweigh the potential 
costs of compliance for carriers who choose to make such plans 
available to Lifeline consumers.
    88. Support for Broadband: Pilot Program. The Order will establish 
a broadband pilot program aimed at generating statistically significant 
data that will allow the Commission, ETCs, and the public to analyze 
the effectiveness of different approaches to using Lifeline funds to 
making broadband more affordable for low-income Americans while 
providing support that is sufficient but not excessive. The Commission 
directs the Bureau to solicit applications from ETCs to participate in 
the Pilot Program and to select a relatively small number of projects 
to test the impact on broadband adoption with variations in the monthly 
discount for broadband services, including variations on the discount 
amount, the duration of the discount (phased down over time or 
constant) over a 12-month period. The Bureau will also give preference 
to ETCs that partner with third parties that have already developed 
approaches to overcoming broadband adoption barriers, including digital 
literacy, equipment costs, and relevance.
    89. We do not expect these requirements to have a significant 
economic impact on ETCs because entities have a choice of 
participating. We also do not expect small entities to be 
disproportionately impacted. The Bureau will consider whether the 
projects proposed will promote entrepreneurs and other small businesses 
in the provision and ownership of telecommunications services and 
information services, consistent with section 257 of the Communications 
Act, including those that may be socially and economically 
disadvantaged businesses. All ETCs that choose to participate will be 
required to collect and submit data throughout the pilot to USAC. The 
collection of information is required to study the length and amount of 
subsidy that is necessary for low-income consumers to adopt broadband. 
The benefits of collecting information outweigh any costs.
    90. Facilities-Based Requirements. In the Order, the Commission 
forbears from applying the Act's facilities requirement of section 
214(e)(1)(A) to all telecommunications carriers that seek limited ETC 
designation to participate in the Lifeline program, subject to certain 
conditions. Specifically, each carrier must (i) comply with certain 911 
requirements; and (ii) file, subject to Bureau approval, a compliance 
plan providing specific information regarding the carrier's service 
offerings and outlining the measures the carrier will take to implement 
the obligations contained in this Order. To avoid disruption to 
subscribers served by existing Lifeline-only ETCs designated prior to 
December 29, 2011, those ETCs can continue to receive reimbursement 
pending approval of their compliance plan, provided they submit their 
plan to the Bureau by July 1, 2012. Carriers designated after December 
29, 2011 will not receive reimbursement from the Fund until the Bureau 
approves their compliance plans.
    91. We do not expect these changes to have a disproportionate 
impact on entities, including those that are small entities, because 
the Commission will no longer require carriers to seek forbearance from 
the facilities requirement of section 214(e)(1)(a). The Commission, 
however, will continue to require carriers seeking to forbear from the 
facilities requirement of section 214 to comply with certain 911 
requirements and to file and obtain approval from the Bureau of a 
compliance plan describing the ETC's

[[Page 12964]]

adherence to certain protections designed to protect consumers and the 
Fund. The Commission has historically imposed these requirements on 
carriers seeking to forbear from the facilities requirement so this 
will not unduly burden to all impacted entities.

H. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    92. The RFA requires an agency to describe any significant 
alternatives that it has considered in developing 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 such small 
entities; (3) the use of performance rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
small entities.''
    93. Support Amounts for Voice Service. The Commission considered 
the establishment of a separate rate of reimbursement for different 
types of providers. The Commission determined that such a system of 
reimbursement would create administrative difficulties for USAC and for 
ETCs. A tiered system, be it the prior structure or the one 
contemplated for the benefit of small entities, does not treat all 
subscribers equally and makes comparison of Lifeline plans difficult 
for consumers. Therefore, we determined that the benefits of such a 
structure do not outweigh the costs.
    94. One Per Household. We considered alternatives to a one-per-
household rule, including a rule permitting one Lifeline-supported 
service per adult and one Lifeline-supported service per residential 
address. We did not, however, adopt these approaches--the former 
because it would increase the size of the universal service fund, 
inconsistent with our program goals, and the latter because it could 
potentially exclude eligible consumers from the Lifeline program. Thus, 
we found that the benefits of a one-per-household rule and the 
associated processes we adopt today outweigh the potential costs.
    95. Certification of Consumer Eligibility. We considered 
alternatives that would require ETCs to verify only a portion of their 
Lifeline subscriber base, including allowing small ETCs within a state 
to perform sampling in the aggregate rather than on an individual 
basis, requiring ETCs with a minimal number of Lifeline subscribers to 
sample fewer subscribers than larger ETCs, and allowing all ETCs to 
sample a lesser percentage of their Lifeline subscriber base. The 
approach we adopt in the Order strikes an appropriate balance between 
these interests by helping to identify and de-enroll ineligible 
subscribers, while imposing fewer burdens on consumers and ETCs than a 
full census survey (i.e., requiring consumers to annually produce 
documentation to verify continued eligibility).
    96. National Accountability Database. The Commission considered 
whether ETCs would be obligated to update the database with customer 
information in real-time. The Commission found that it would be overly 
burdensome for ETCs, particularly ETCs which are also small entities, 
to implement real-time connections between the database and carriers 
given the limited benefits that real-time updates would provide. We 
therefore did not adopt a rule that the database would have to be 
updated in real-time. Furthermore, except for information regarding 
customer de-enrollment, ETCs would have ten business days to update the 
database once it has become aware that information regarding a 
subscriber has changed. The Commission adopted a rule that the first 
ETC to populate the database with a particular customer's information 
would be able to receive reimbursement for that customer. The 
Commission acknowledged that this rule would provide an advantage to 
those ETCs with real-time updating capability, but the Commission found 
that this approach would reduce the amount of duplicative support and 
encourage the prompt transmission of data without imposing burdens that 
a real-time updating requirement might impose on small entities.
    97. Toll Limitation Service Support. The new TLS support rule, as 
discussed above, may have an economic impact on entities, including an 
impact on small entities because they are used to getting TLS support. 
This rule will have an economic impact only on ETCs unable to provide 
TLS at an incremental cost above limits set in the rule. In the Order, 
we note that ILECs typically seek TLS support at a much lower rate than 
competitive LECs. Small entities that purchase TLS will no longer be 
able to seek reimbursement for the incremental costs of doing so after 
2013. Therefore, small competitive LECs may still be required to offer 
TLS to Lifeline subscribers but unable to receive sufficient support 
for the incremental costs of doing so. However, we adopt this TLS 
support rule to encourage efficiencies in the provisioning of TLS. In 
light of the concerns expressed by competitive LECs, we considered 
several other approaches to reforming TLS support, including a shorter 
timeframe for reduction of TLS support as well as an immediate 
elimination of support. We chose the approach adopted in the Order 
because it is the least burdensome method to reform TLS support.
    98. Link Up. While we considered some carriers' proposal to 
decrease the Link Up support amount, and others to define more narrowly 
appropriate and inappropriate uses of Link Up, on balance, the 
Commission concluded that the dollars spent on Link Up in its current 
form can be better spent on other uses, such as modernizing the program 
and constraining the overall size of the fund. We acknowledge that some 
ETCs will receive less support as a result of the elimination of Link 
Up funds but the Commission has concluded that Link Up support has been 
abused by some carriers and that USF dollars are better spent 
supporting other aspects of the program.
    99. Subscriber Usage of Customer Supported Services. We extend the 
consumer usage condition (whereby subscribers will be de-enrolled if 
they fail to use the service within a consecutive 60-day period) only 
to free pre-paid services, which are those services for which 
subscribers do not receive monthly bills and do not have any regular 
billing relationship with the ETC, and decline at this time to impose 
this condition on other types of Lifeline supported services. We are 
sensitive to the administrative burden that a 60-day usage requirement 
may have on post-paid services, and at this time do not extend the 
usage requirements to post-paid services, whether wireline or wireless.
    100. Audits and Enforcement. We adopt a requirement that every ETC 
providing Lifeline service and drawing $5 million or more in the 
aggregate on an annual basis from the low-income program hire an 
independent audit firm to assess the ETC's overall compliance with the 
program's requirements every two years. We considered imposing the 
biennial independent audit requirement on all ETCs but rejected that as 
too burdensome on small entities. We concluded it was appropriate to 
focus the mandatory independent audit requirement on the largest 
recipients who post the biggest risk to the program if they lack 
effective internal controls to ensure compliance with Commission 
requirements.
    101. Payment of Low-Income Support. The Commission sought comment 
on a

[[Page 12965]]

one month transition, as proposed by USAC, however the Commission found 
that the financial impact of the one month proposed transition could 
have been overly burdensome on the financial well-being of small 
entities participating in the Lifeline program. The Commission 
considered a two month transition as suggested by commenters, and went 
one step further to extend the transition to three months, thus 
allowing all carriers, especially small entities, to minimize any 
potential negative financial impact by spreading the transition out 
over the three months.
    102. Bundled Services. We considered adopting a rule mandating that 
all ETCs allow Lifeline discounts to be applied to any package 
containing a voice component; however, we determined that we did not 
have sufficient information in the record to evaluate the impact of a 
rule at this time. We also adopt a rule that ETCs must explicitly 
notify Lifeline subscribers purchasing bundled packages or packages 
containing optional calling features that partial payments will first 
be applied to pay down the allocated price of the Lifeline voice 
services, and require ETCs to provide clear language to this effect on 
the subscriber's bill. We do not expect that this rule will 
disproportionately impact small businesses, which, as above, may opt 
not to offer such plans to Lifeline subscribers. Additionally, we 
expect that some carriers may already have processes in place to apply 
partial payments to maintain the voice portion of a Lifeline calling 
plan. Moreover, this rule will help to prevent Lifeline subscribers 
from being disconnected from voice service for non-payment, thereby 
reducing potential burdens that may result to ETCs from having to re-
enroll disconnected subscribers.
    103. Report to Congress: The Commission will send a copy of the 
Order, including this FRFA, in a report to be sent to Congress pursuant 
to the Congressional Review Act. In addition, the Commission will send 
a copy of the Order, including this FRFA, to the Chief Counsel for 
Advocacy of the SVA. A copy of the Order and FRFA (or summaries 
thereof) will also be published in the Federal Register.

XII. Ordering Clauses

    104. Accordingly, it is ordered, that pursuant to the authority 
contained in sections 1, 2, 4(i), 10, 201-206, 214, 218-220, 251, 252, 
254, 256, 303(r), 332, and 403 of the Communications Act of 1934, as 
amended, and section 706 of the Telecommunications Act of 1996, 47 
U.S.C. 151, 152, 154(i), 160, 201-206, 214, 218-220, 251, 252, 254, 
256, 303(r), 332, 403, 1302, and Sec. Sec.  1.1 and 1.427 of the 
Commission's rules, 47 CFR 1.1, 1.427, this Report and Order is 
Adopted.
    105. It is further ordered that, Part 54 of the Commission's rules, 
47 CFR part 54, is Amended as set forth in this rule, and such rule 
amendments shall be effective April 2, 2012, except for those rules and 
requirements that involve Paperwork Reduction Act burdens, which shall 
become effective immediately upon announcement in the Federal Register 
of OMB approval and of effective dates of such rules, and except for 
the amendments contained herein to 47 CFR 54.411, 54.412, 54.413 and 
54.414 which shall become effective April 1, 2012; and 47 CFR 54.409 
which shall become effective June 1, 2012.
    106. It is further ordered that, pursuant to the authority 
contained in sections 4(i), 4(j), 10, 214, and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 160, 
214, 254, the petition for forbearance filed by AMERICAN BROADBAND & 
TELECOMMUNICATIONS is granted to the extent discussed herein and 
conditioned on fulfillment of the obligations set forth in this order.
    107. It is further ordered that, pursuant to the authority 
contained in sections 4(i), 4(j), 10, 214, and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 160, 
214, 254, the petition for forbearance filed by MILLENNIUM 2000, INC. 
is granted to the extent discussed herein and conditioned on 
fulfillment of the obligations set forth in this order.
    108. It Is Further Ordered that, pursuant to the authority 
contained in sections 4(i), 4(j), 10, 214, and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 160, 
214, 254, the petition for forbearance filed by NORTH AMERICAN LOCAL, 
LLC is granted to the extent discussed herein and conditioned on 
fulfillment of the obligations set forth in this order.
    109. It is further ordered that, pursuant to the authority 
contained in sections 4(i), 4(j), 10, 214, and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 160, 
214, 254, the petition for forbearance filed by TOTAL CALL MOBILE, INC. 
is granted to the extent discussed herein and conditioned on 
fulfillment of the obligations set forth in this order.
    110. It is further ordered that, pursuant to the authority 
contained in sections 4(i), 4(j), 10, 214, and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 160, 
214, 254, the petition for forbearance filed by AIRVOICE WIRELESS, LLC 
Is granted to the extent discussed herein and conditioned on 
fulfillment of the obligations set forth in this order.
    111. It is further ordered that, pursuant to the authority 
contained in sections 4(i), 4(j), 10, 214, and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 160, 
214, 254, we forbear from applying section 214(e)(1)(A) of the 
Communications Act, 47 U.S.C. 214(e)(1)(A), and Sec.  54.201(d)(1) and 
(i) of the Commission's rules, 47 CFR 54.201(d)(1), (i), to American 
Broadband & Telecommunications, Millennium 2000, Inc., North American 
Local, LLC, Total Call Mobile, Inc. and Airvoice Wireless, LLC to the 
extent discussed herein and conditioned on fulfillment of the 
obligations set forth in this order.
    112. It is further ordered that the Petition of Qwest, Inc. 
regarding self-certification of subscribers on Tribal lands, filed 
April 25, 2008, is granted.
    113. It is further ordered that the Petition of AMERICAN PUBLIC 
COMMUNICATIONS COUNCIL seeking a rulemaking regarding payphone service 
eligibility for Lifeline support, filed December 6, 2010, is denied.
    114. It is further ordered that the Petition of AMERICAN PUBLIC 
COMMUNICATIONS COUNCIL for interim relief seeking to allow ETCs to 
receive Lifeline support for services provided to payphones, filed 
December 6, 2010, is denied.
    115. It is further ordered that the Commission shall send a copy of 
this Report and Order to Congress and to the Government Accountability 
Office pursuant to the Congressional Review Act, see 5 U.S.C. 
801(a)(1)(A).
    116. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Reporting and record keeping 
requirements, Telecommunications, Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 54 as follows:

[[Page 12966]]

PART 54--UNIVERSAL SERVICE

0
1. The authority citation for part 54 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 201, 205, 214, 219, 220, 254, 
303(r), 403, and 1302 unless otherwise noted.

Subpart A--General Information

0
2. Amend Sec.  54.5 by revising the definition of ``eligible 
telecommunications carrier'' to read as follows:


Sec.  54.5  Terms and definitions.

* * * * *
    Eligible telecommunications carrier. ``Eligible telecommunications 
carrier'' means a carrier designated as such under subpart C of this 
part.
* * * * *

Subpart B--Services Designated for Support

0
3. Amend Sec.  54.101 by revising paragraph (a) to read as follows:


Sec.  54.101  Supported services for rural, insular and high cost 
areas.

    (a) Services designated for support. Voice Telephony services shall 
be supported by federal universal service support mechanisms. Eligible 
voice telephony services must provide voice grade access to the public 
switched network or its functional equivalent; minutes of use for local 
service provided at no additional charge to end users; access to the 
emergency services provided by local government or other public safety 
organizations, such as 911 and enhanced 911, to the extent the local 
government in an eligible carrier's service area has implemented 911 or 
enhanced 911 systems; and toll limitation services to qualifying low-
income consumers as provided in subpart E of this part.
* * * * *

Subpart C--Carriers Eligible for Universal Service Support

0
4. Amend Sec.  54.201 by revising paragraphs (a)(1) and (h) to read as 
follows:


Sec.  54.201  Definition of eligible telecommunications carriers 
generally.

    (a) * * *
    (1) Only eligible telecommunications carriers designated under this 
subpart shall receive universal service support distributed pursuant to 
part 36 of this chapter, and subparts D and E of this part.
* * * * *
    (h) A state commission shall not designate a common carrier as an 
eligible telecommunications carrier for purposes of receiving support 
only under subpart E of this part unless the carrier seeking such 
designation has demonstrated that it is financially and technically 
capable of providing the supported Lifeline service in compliance with 
subpart E of this part.
* * * * *

0
5. Revise Sec.  54.202 to read as follows:


Sec.  54.202  Additional requirements for Commission designation of 
eligible telecommunications carriers.

    (a) In order to be designated an eligible telecommunications 
carrier under section 214(e)(6), any common carrier in its application 
must:
    (1)(i) Certify that it will comply with the service requirements 
applicable to the support that it receives.
    (ii) Submit a five-year plan that describes with specificity 
proposed improvements or upgrades to the applicant's network throughout 
its proposed service area. Each applicant shall estimate the area and 
population that will be served as a result of the improvements. Except, 
a common carrier seeking designation as an eligible telecommunications 
carrier in order to provide supported services only under subpart E of 
this part does not need to submit such a five-year plan.
    (2) Demonstrate its ability to remain functional in emergency 
situations, including a demonstration that it has a reasonable amount 
of back-up power to ensure functionality without an external power 
source, is able to reroute traffic around damaged facilities, and is 
capable of managing traffic spikes resulting from emergency situations.
    (3) Demonstrate that it will satisfy applicable consumer protection 
and service quality standards. A commitment by wireless applicants to 
comply with the Cellular Telecommunications and Internet Association's 
Consumer Code for Wireless Service will satisfy this requirement. Other 
commitments will be considered on a case-by-case basis.
    (4) For common carriers seeking designation as an eligible 
telecommunications carrier for purposes of receiving support only under 
subpart E of this part, demonstrate that it is financially and 
technically capable of providing the Lifeline service in compliance 
with subpart E of this part.
    (5) For common carriers seeking designation as an eligible 
telecommunications carrier for purposes of receiving support only under 
subpart E of this part, submit information describing the terms and 
conditions of any voice telephony service plans offered to Lifeline 
subscribers, including details on the number of minutes provided as 
part of the plan, additional charges, if any, for toll calls, and rates 
for each such plan. To the extent the eligible telecommunications 
carrier offers plans to Lifeline subscribers that are generally 
available to the public, it may provide summary information regarding 
such plans, such as a link to a public Web site outlining the terms and 
conditions of such plans.
    (b) Public interest standard. Prior to designating an eligible 
telecommunications carrier pursuant to section 214(e)(6), the 
Commission determines that such designation is in the public interest.
    (c) A common carrier seeking designation as an eligible 
telecommunications carrier under section 214(e)(6) for any part of 
Tribal lands shall provide a copy of its petition to the affected 
tribal government and tribal regulatory authority, as applicable, at 
the time it files its petition with the Federal Communications 
Commission. In addition, the Commission shall send any public notice 
seeking comment on any petition for designation as an eligible 
telecommunications carrier on Tribal lands, at the time it is released, 
to the affected tribal government and tribal regulatory authority, as 
applicable, by the most expeditious means available.


Sec.  54.209  [Removed]

0
6. Section 54.209 is removed.

Subpart E--Universal Service Support for Low-Income Consumers

0
7. Revise Sec.  54.400 to read as follows:


54.400  Terms and definitions.

    As used in this subpart, the following terms shall be defined as 
follows:
    (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.
    (b) Toll blocking service. ``Toll blocking service'' is a service 
provided by an eligible telecommunications carrier that lets 
subscribers elect not to allow the completion of outgoing toll calls 
from their telecommunications channel.
    (c) Toll control service. ``Toll control service'' is a service 
provided by an eligible telecommunications carrier that allows 
subscribers to specify a certain amount of toll usage that may be 
incurred on their telecommunications channel per month or per billing 
cycle.
    (d) Toll limitation service. ``Toll limitation service'' denotes 
either toll blocking service or toll control service

[[Page 12967]]

for eligible telecommunications carriers that are incapable of 
providing both services. For eligible telecommunications carriers that 
are capable of providing both services, ``toll limitation service'' 
denotes both toll blocking service and toll control service.
    (e) 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 Tribal lands. For purposes of 
this subpart, ``Tribal lands'' include 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); Indian allotments; 
Hawaiian Home Lands--areas held in trust for Native Hawaiians by the 
state of Hawaii, pursuant to the Hawaiian Homes Commission Act, 1920 
July 9, 1921, 42 Stat. 108, et. seq., as amended; and any land 
designated as such by the Commission for purposes of this subpart 
pursuant to the designation process in Sec.  54.412.
    (f) Income. ``Income'' is all income actually received by all 
members of a household. This includes salary before deductions for 
taxes, public assistance benefits, social security payments, pensions, 
unemployment compensation, veteran's benefits, inheritances, alimony, 
child support payments, worker's compensation benefits, gifts, lottery 
winnings, and the like. The only exceptions are student financial aid, 
military housing and cost-of-living allowances, irregular income from 
occasional small jobs such as baby-sitting or lawn mowing, and the 
like.
    (g) Duplicative support. ``Duplicative support'' exists when a 
Lifeline subscriber is receiving two or more Lifeline services 
concurrently or two or more subscribers in a household are receiving 
Lifeline services or Tribal Link Up support concurrently.
    (h) Household. A ``household'' is any individual or group of 
individuals who are living together at the same address as one economic 
unit. A household may include related and unrelated persons. An 
``economic unit'' consists of all adult individuals contributing to and 
sharing in the income and expenses of a household. An adult is any 
person eighteen years or older. If an adult has no or minimal income, 
and lives with someone who provides financial support to him/her, both 
people shall be considered part of the same household. Children under 
the age of eighteen living with their parents or guardians are 
considered to be part of the same household as their parents or 
guardians.
    (i) National Lifeline Accountability Database or Database. The 
``National Lifeline Accountability Database'' or ``Database'' is an 
electronic system, with associated functions, processes, policies and 
procedures, to facilitate the detection and elimination of duplicative 
support, as directed by the Commission.
    (j) Qualifying assistance program. A ``qualifying assistance 
program'' means any of the federal, state, or Tribal assistance 
programs participation in which, pursuant to Sec.  54.409(a) or (b), 
qualifies a consumer for Lifeline service, including Medicaid; 
Supplemental Nutrition Assistance Program; Supplemental Security 
Income; Federal Public Housing Assistance (Section 8); Low-Income Home 
Energy Assistance Program; National School Lunch Program's free lunch 
program; Temporary Assistance for Needy Families; Bureau of Indian 
Affairs general assistance; Tribally administered Temporary Assistance 
for Needy Families (Tribal TANF); Head Start (only those households 
meeting its income qualifying standard); or the Food Distribution 
Program on Indian Reservations (FDPIR), and with respect to the 
residents of any particular state, any other program so designated by 
that state pursuant to Sec.  54.409(a).

0
8. Revise Sec.  54.401 to read as follows:


Sec.  54.401  Lifeline defined.

    (a) As used in this subpart, Lifeline means a non-transferable 
retail service offering:
    (1) For which qualifying low-income consumers pay reduced charges 
as a result of application of the Lifeline support amount described in 
Sec.  54.403; and
    (2) That provides qualifying low-income consumers with voice 
telephony service as specified in Sec.  54.101(a). Toll limitation 
service does not need to be offered for any Lifeline service that does 
not distinguish between toll and non-toll calls in the pricing of the 
service. If an eligible telecommunications carrier charges Lifeline 
subscribers a fee for toll calls that is in addition to the per month 
or per billing cycle price of the subscribers' Lifeline service, the 
carrier must offer toll limitation service at no charge to its 
subscribers as part of its Lifeline service offering.
    (b) Eligible telecommunications carriers may allow qualifying low-
income consumers to apply Lifeline discounts to any residential service 
plan that includes voice telephony service, including bundled packages 
of voice and data services; and plans that include optional calling 
features such as, but not limited to, caller identification, call 
waiting, voicemail, and three-way calling. Eligible telecommunications 
carriers may also permit qualifying low-income consumers to apply their 
Lifeline discount to family shared calling plans.
    (c) Eligible telecommunications carriers may not collect a service 
deposit in order to initiate Lifeline service for plans that:
    (1) Do not charge subscribers additional fees for toll calls; or
    (2) That charge additional fees for toll calls, but the subscriber 
voluntarily elects toll limitation service.
    (d) When an eligible telecommunications carrier is designated by a 
state commission, the state commission shall file or require the 
eligible telecommunications carrier to file information with the 
Administrator demonstrating that the carrier's Lifeline plan meets the 
criteria set forth in this subpart and describing the terms and 
conditions of any voice telephony service plans offered to Lifeline 
subscribers, including details on the number of minutes provided as 
part of the plan, additional charges, if any, for toll calls, and rates 
for each such plan. To the extent the eligible telecommunications 
carrier offers plans to Lifeline subscribers that are generally 
available to the public, it may provide summary information regarding 
such plans, such as a link to a public Web site outlining the terms and 
conditions of such plans. Lifeline assistance shall be made available 
to qualifying low-income consumers as soon as the Administrator 
certifies that the carrier's Lifeline plan satisfies the criteria set 
out in this subpart.
    (e) Consistent with Sec.  52.33(a)(1)(i)(C) of this chapter, 
eligible telecommunications carriers may not charge Lifeline customers 
a monthly number-portability charge.

0
9. Revise Sec.  54.403 to read as follows:


Sec.  54.403  Lifeline support amount.

    (a) The federal Lifeline support amount for all eligible 
telecommunications carriers shall equal:
    (1) Basic support amount. Federal Lifeline support in the amount of 
$9.25 per month will be made available to an eligible 
telecommunications carrier providing Lifeline service to a qualifying 
low-income consumer, if that carrier certifies to the Administrator 
that it will pass through the full amount of support to the qualifying 
low-income consumer and that it has received any non-federal regulatory 
approvals necessary to implement the rate reduction.
    (2) Tribal lands support amount. Additional federal Lifeline 
support of up to $25 per month will be made

[[Page 12968]]

available to an eligible telecommunications carrier providing Lifeline 
service to an eligible resident of Tribal lands, as defined in Sec.  
54.400 (e), to the extent that the eligible telecommunications carrier 
certifies to the Administrator that it will pass through the full 
Tribal lands support amount to the qualifying eligible resident of 
Tribal lands and that it has received any non-federal regulatory 
approvals necessary to implement the required rate reduction.
    (b) Application of Lifeline discount amount.
    (1) Eligible telecommunications carriers that charge federal End 
User Common Line charges or equivalent federal charges must apply 
federal Lifeline support to waive the federal End User Common Line 
charges for Lifeline subscribers. Such carriers must 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 must apply the federal Lifeline 
support amount, plus any additional support amount, to reduce the cost 
of any generally available residential service plan or package offered 
by such carriers that provides voice telephony service as described in 
Sec.  54.101, and charge Lifeline subscribers the resulting amount.
    (2) Where a subscriber makes only a partial payment to an eligible 
telecommunications carrier for a bundled service package, the eligible 
telecommunications carrier must apply the partial payment first to the 
allocated price of the voice telephony service component of the package 
and then to the cost of any additional services included in the bundled 
package.
    (c) Toll limitation service. An eligible telecommunications carrier 
providing toll limitation service voluntarily elected by Lifeline 
subscribers whose Lifeline plans would otherwise include a fee for 
placing a toll call that would be in addition to the per month or per 
billing cycle price of the subscriber's Lifeline service, shall, for 
April 2012 Lifeline disbursements through December 2013 Lifeline 
disbursements, receive support in an amount equal to the lesser of:
    (1) The eligible telecommunications carrier's incremental cost of 
providing either toll blocking services or toll control services to 
each Lifeline subscriber who has selected such service; or
    (2) The following amounts for each Lifeline subscriber who has 
selected toll blocking services or toll control services:
    (i) $3.00 per month per subscriber during 2012; and
    (ii) $2.00 per month per subscriber during 2013.

0
10. Add Sec.  54.404 to Subpart E to read as follows


Sec.  54.404  The National Lifeline Accountability Database.

    (a) State certification. An eligible telecommunications carrier 
operating in a state that provides an approved valid certification to 
the Commission in accordance with this section is not required to 
comply with the requirements set forth in paragraphs (b) and (c) of 
this section with respect to the eligible telecommunications carriers' 
subscribers in that state. A valid certification must include a 
statement that the state has a comprehensive system in place to prevent 
duplicative federal Lifeline support that is at least as robust as the 
system adopted by the Commission and that incorporates information from 
all eligible telecommunications carriers receiving low-income support 
in the state and their subscribers. A valid certification must also 
describe in detail how the state system functions and for each 
requirement adopted by the Commission to prevent duplicative support, 
how the state system performs the equivalent functions. The 
certification must be submitted to the Commission no later than six 
months from the effective date of this section of the Commission's 
rules to be valid. Such certification will be considered approved 
unless the Wireline Competition Bureau rejects the certification within 
90 days of filing.
    (b) The National Lifeline Accountability Database. In order to 
receive Lifeline support, eligible telecommunications carriers 
operating in states that have not provided the Commission with approved 
valid certification pursuant to paragraph (a) of this section must 
comply with the following requirements:
    (1) All eligible telecommunications carriers must query the 
National Lifeline Accountability Database to determine whether a 
prospective subscriber who has executed a certification pursuant to 
Sec.  54.410(d) is currently receiving a Lifeline service from another 
eligible telecommunications carrier; and whether anyone else living at 
the prospective subscriber's residential address is currently receiving 
a Lifeline service.
    (2) If the Database indicates that a prospective subscriber, who is 
not seeking to port his or her telephone number, is currently receiving 
a Lifeline service, the eligible telecommunications carrier must not 
provide and shall not seek or receive Lifeline reimbursement for that 
subscriber.
    (3) If the Database indicates that another individual at the 
prospective subscriber's residential address is currently receiving a 
Lifeline service, the eligible telecommunications carrier must not seek 
and will not receive Lifeline reimbursement for providing service to 
that prospective subscriber, unless the prospective subscriber has 
certified, pursuant to Sec.  54.410(d) that to the best of his or her 
knowledge, no one in his or her household is already receiving a 
Lifeline service.
    (4) An eligible telecommunications carrier is not required to 
comply with paragraphs (b)(1) through (3) of this section if it 
receives notice from a state Lifeline administrator or other state 
agency that the administrator or other agency has queried the Database 
about a prospective subscriber and that providing the prospective 
subscriber with a Lifeline benefit would not result in duplicative 
support.
    (5) Eligible telecommunications carriers may query the Database 
only for the purposes provided in paragraphs (b)(1) through (b)(3) of 
this section, and to determine whether information with respect to its 
subscribers already in the Database is correct and complete.
    (6) Eligible telecommunications carriers must transmit to the 
Database in a format prescribed by the Administrator each new and 
existing Lifeline subscriber's full name; full residential address; 
date of birth and the last four digits of the subscriber's Social 
Security number or Tribal Identification number, if the subscriber is a 
member of a Tribal nation and does not have a Social Security number; 
the telephone number associated with the Lifeline service; the date on 
which the Lifeline service was initiated; the date on which the 
Lifeline service was terminated, if it has been terminated; the amount 
of support being sought for that subscriber; and the means through 
which the subscriber qualified for Lifeline.
    (7) In the event that two or more eligible telecommunications 
carriers transmit the information required by this paragraph to the 
Database for the same subscriber, only the eligible telecommunications 
carrier whose information was received and processed by the Database 
first, as determined by the Administrator, will be entitled to 
reimbursement from the Fund for that subscriber.
    (8) All eligible telecommunications carriers must update an 
existing Lifeline subscriber's information in the Database

[[Page 12969]]

within ten business days of receiving any change to that information, 
except as described in paragraph (b)(10) of this section.
    (9) All eligible telecommunications carriers must obtain, from each 
new and existing subscriber, consent to transmit the subscriber's 
information. Prior to obtaining consent, the eligible 
telecommunications carrier must describe to the subscriber, using 
clear, easily understood language, the specific information being 
transmitted, that the information is being transmitted to the 
Administrator to ensure the proper administration of the Lifeline 
program, and that failure to provide consent will result in subscriber 
being denied the Lifeline service.
    (10) When an eligible telecommunications carrier de-enrolls a 
subscriber, it must transmit to the Database the date of Lifeline 
service de-enrollment within one business day of de-enrollment.
    (c) Tribal Link Up and the National Lifeline Accountability 
Database. In order to receive universal service support reimbursement 
for Tribal Link Up, eligible telecommunications carriers operating in 
states that have not provided the Commission with a valid certification 
pursuant to paragraph (a) of this section, must comply with the 
following requirements:
    (1) Such eligible telecommunications carriers must query the 
Database to determine whether a prospective Link Up recipient who has 
executed a certification pursuant to Sec.  54.410(d) has previously 
received a Link Up benefit at the residential address provided by the 
prospective subscriber.
    (2) If the Database indicates that a prospective subscriber has 
received a Link Up benefit at the residential address provided by the 
subscriber, the eligible telecommunications provider must not seek Link 
Up reimbursement for that subscriber.
    (3) An eligible telecommunications carrier is not required to 
comply with paragraphs (c)(1) through (c)(2) of this section, if it 
receives notice from a state Lifeline administrator or other state 
agency that the administrator or other agency has queried the Database 
about a prospective subscriber and that providing the prospective 
subscriber with a Link Up benefit would not result in duplicative 
support or support to a subscriber who had already received Link Up 
support at that residential address.
    (4) All eligible telecommunications carriers must transmit to the 
Database in a format prescribed by the Administrator each new and 
existing Link Up recipient's full name; residential address; date of 
birth; and the last four digits of the subscriber's Social Security 
number, or Tribal identification number if the subscriber is a member 
of a Tribal nation and does not have a Social Security number; the 
telephone number associated with the Link Up support; and the date of 
service activation. Where two or more eligible telecommunications 
carriers transmit the information required by this paragraph to the 
Database for the same subscriber, only the eligible telecommunications 
carrier whose information was received and processed by the Database 
first, as determined by the Administrator, will be entitled to 
reimbursement from the Fund for that subscriber.
    (5) All eligible telecommunications carriers must obtain, from each 
new and existing subscriber, consent to transmit the information 
required in paragraph (c) of this section. Prior to obtaining consent, 
the eligible telecommunications carrier must describe to the 
subscriber, using clear, easily understood language, the specific 
information being transmitted, that the information is being 
transmitted to the Administrator to ensure the proper administration of 
the Link Up program, and that failure to provide consent will result in 
the subscriber being denied the Link Up benefit.

0
11. Revise Sec.  54.405 to read as follows:


Sec.  54.405  Carrier obligation to offer Lifeline.

    All eligible telecommunications carriers must:
    (a) Make available Lifeline service, as defined in Sec.  54.401, to 
qualifying low-income consumers.
    (b) Publicize the availability of Lifeline service in a manner 
reasonably designed to reach those likely to qualify for the service.
    (c) Indicate on all materials describing the service, using easily 
understood language, that it is a Lifeline service, that Lifeline is a 
government assistance program, the service is non-transferable, only 
eligible consumers may enroll in the program, and the program is 
limited to one discount per household. For the purposes of this 
section, the term ``materials describing the service'' includes all 
print, audio, video, and web materials used to describe or enroll in 
the Lifeline service offering, including application and certification 
forms.
    (d) Disclose the name of the eligible telecommunications carrier on 
all materials describing the service.
    (e) De-enrollment--(1) De-enrollment generally. If an eligible 
telecommunications carrier has a reasonable basis to believe that a 
Lifeline subscriber no longer meets the criteria to be considered a 
qualifying low-income consumer under Sec.  54.409, the carrier must 
notify the subscriber of impending termination of his or her Lifeline 
service. Notification of impending termination must be sent in writing 
separate from the subscriber's monthly bill, if one is provided, and 
must be written in clear, easily understood language. A carrier 
providing Lifeline service in a state that has dispute resolution 
procedures applicable to Lifeline termination, that requires, at a 
minimum, written notification of impending termination, must comply 
with the applicable state requirements. The carrier must allow a 
subscriber 30-days following the date of the impending termination 
letter required to demonstrate continued eligibility. A subscriber 
making such a demonstration must present proof of continued eligibility 
to the carrier consistent with applicable annual re-certification 
requirements, as described in Sec.  54.410(f). An eligible 
telecommunications carrier must terminate any subscriber who fails to 
demonstrate continued eligibility within the 30-day time period. A 
carrier providing Lifeline service in a state that has dispute 
resolution procedures applicable to Lifeline termination must comply 
with the applicable state requirements.
    (2) De-enrollment for duplicative support. Notwithstanding 
paragraph (e)(1) of this section, upon notification by the 
Administrator to any eligible telecommunications carrier that a 
subscriber is receiving Lifeline service from another eligible 
telecommunications carrier or that more than one member of a 
subscriber's household is receiving Lifeline service and therefore that 
the subscriber should be de-enrolled from participation in that 
carrier's Lifeline program, the eligible telecommunications carrier 
must de-enroll the subscriber from participation in that carrier's 
Lifeline program within five business days. An eligible 
telecommunications carrier shall not be eligible for Lifeline 
reimbursement for any de-enrolled subscriber following the date of that 
subscriber's de-enrollment.
    (3) De-enrollment for non-usage. Notwithstanding paragraph (e)(1) 
of this section, if a Lifeline subscriber fails to use, as ``usage'' is 
defined in Sec.  54.407(c)(2), for 60 consecutive days a Lifeline 
service that does not require the eligible telecommunications carrier 
to assess or collect a monthly fee from its subscribers, an eligible 
telecommunications carrier must provide the subscriber 30 days' notice, 
using clear, easily understood language, that the subscriber's failure 
to use the

[[Page 12970]]

Lifeline service within the 30-day notice period will result in service 
termination for non-usage under this paragraph. If the subscriber uses 
the Lifeline service within 30 days of the carrier providing such 
notice, the eligible telecommunications carrier shall not terminate the 
subscriber's Lifeline service. Eligible telecommunications carriers 
shall report to the Commission annually the number of subscribers de-
enrolled for non-usage under this paragraph. This de-enrollment 
information must be reported by month and must be submitted to the 
Commission at the time an eligible telecommunications carrier submits 
its annual certification report pursuant to Sec.  54.416.
    (4) De-enrollment for failure to re-certify. Notwithstanding 
paragraph (e)(1) of this section, an eligible telecommunications 
carrier must de-enroll a Lifeline subscriber who does not respond to 
the carrier's attempts to obtain re-certification of the subscriber's 
continued eligibility as required by Sec.  54.410(f); who fails to 
provide the annual one-per-household re-certifications as required by 
Sec.  54.410(f); or who relies on a temporary address and fails to 
respond to the carrier's address re-certification attempts pursuant to 
Sec.  54.410(g). Prior to de-enrolling a subscriber under this 
paragraph, the eligible telecommunications carrier must notify the 
subscriber in writing separate from the subscriber's monthly bill, if 
one is provided using clear, easily understood language, that failure 
to respond to the re-certification request within 30 days of the date 
of the request will trigger de-enrollment. If a subscriber does not 
respond to the carrier's notice of impending de-enrollment, the carrier 
must de-enroll the subscriber from Lifeline within five business days 
after the expiration of the subscriber's time to respond to the re-
certification efforts.

0
12. Revise Sec.  54.407 to read as follows:


Sec.  54.407  Reimbursement for offering Lifeline.

    (a) Universal service support for providing Lifeline shall be 
provided directly to an eligible telecommunications carrier, based on 
the number of actual qualifying low-income consumers it serves.
    (b) An eligible telecommunications carrier may receive universal 
service support reimbursement for each qualifying low-income consumer 
served. For each qualifying low-income consumer receiving Lifeline 
service, the reimbursement amount shall equal the federal support 
amount, including the support amounts described in Sec.  54.403(a) and 
(c). The eligible telecommunications carrier's universal service 
support reimbursement shall not exceed the carrier's rate for that 
offering, or similar offerings, subscribed to by consumers who do not 
qualify for Lifeline.
    (c) An eligible telecommunications carrier offering a Lifeline 
service that does not require the eligible telecommunications carrier 
to assess or collect a monthly fee from its subscribers:
    (1) Shall not receive universal service support for a subscriber to 
such Lifeline service until the subscriber activates the service by 
whatever means specified by the carrier, such as completing an outbound 
call; and
    (2) After service activation, an eligible telecommunications 
carrier shall only continue to receive universal service support 
reimbursement for such Lifeline service provided to subscribers who 
have used the service within the last 60 days, or who have cured their 
non-usage as provided for in Sec.  54.405(e)(3). Any of these 
activities, if undertaken by the subscriber will establish ``usage'' of 
the Lifeline service:
    (i) Completion of an outbound call;
    (ii) Purchase of minutes from the eligible telecommunications 
carrier to add to the subscriber's service plan;
    (iii) Answering an incoming call from a party other than the 
eligible telecommunications carrier or the eligible telecommunications 
carrier's agent or representative; or
    (iv) Responding to direct contact from the eligible communications 
carrier and confirming that he or she wants to continue receiving the 
Lifeline service.
    (d) In order to receive universal service support reimbursement, an 
eligible telecommunications carrier must certify, as part of each 
request for reimbursement, that it is in compliance with all of the 
rules in this subpart, and, to the extent required under this subpart, 
has obtained valid certification and re-certification forms from each 
of the subscribers for whom it is seeking reimbursement.
    (e) In order to receive universal service support reimbursement, an 
eligible telecommunications carrier must keep accurate records of the 
revenues it forgoes in providing Lifeline services. Such records shall 
be kept in the form directed by the Administrator and provided to the 
Administrator at intervals as directed by the Administrator or as 
provided in this subpart.

0
13. Revise Sec.  54.409 to read as follows:


Sec.  54.409  Consumer qualification for Lifeline.

    (a) To constitute a qualifying low-income consumer:
    (1) A consumer's household income as defined in Sec.  54.400(f) 
must be at or below 135% of the Federal Poverty Guidelines for a 
household of that size; or
    (2) The consumer, one or more of the consumer's dependents, or the 
consumer's household must receive benefits from one of the following 
federal assistance programs: Medicaid; Supplemental Nutrition 
Assistance Program; Supplemental Security Income; Federal Public 
Housing Assistance (Section 8); Low-Income Home Energy Assistance 
Program; National School Lunch Program's free lunch program; or 
Temporary Assistance for Needy Families; or
    (3) The consumer must meet eligibility criteria established by a 
state for its residents, provided that such state-specific criteria are 
based solely on income or factors directly related to income.
    (b) A consumer who lives on Tribal lands is eligible for Lifeline 
service as a ``qualifying low-income consumer'' as defined by Sec.  
54.400(a) and as an ``eligible resident of Tribal lands'' as defined by 
Sec.  54.400(e) if that consumer meets the qualifications for Lifeline 
specified in paragraph (a) of this section or if the consumer, one or 
more of the consumer's dependents, or the consumer's household 
participates in one of the following Tribal-specific federal assistance 
programs: Bureau of Indian Affairs general assistance; Tribally 
administered Temporary Assistance for Needy Families; Head Start (only 
those households meeting its income qualifying standard); or the Food 
Distribution Program on Indian Reservations.
    (c) In addition to meeting the qualifications provided in paragraph 
(a) or (b) of this section, in order to constitute a qualifying low-
income consumer, a consumer must not already be receiving a Lifeline 
service, and there must not be anyone else in the subscriber's 
household subscribed to a Lifeline service.

0
14. Revise Sec.  54.410 to read as follows:


Sec.  54.410  Subscriber eligibility determination and certification.

    (a) All eligible telecommunications carriers must implement 
policies and procedures for ensuring that their Lifeline subscribers 
are eligible to receive Lifeline services.
    (b) Initial income-based eligibility determination.

[[Page 12971]]

    (1) Except where a state Lifeline administrator or other state 
agency is responsible for the initial determination of a subscriber's 
eligibility, when a prospective subscriber seeks to qualify for 
Lifeline or using the income-based eligibility criteria provided for in 
Sec.  54.409(a)(1) or (a)(3) an eligible telecommunications carrier:
    (i) Must not seek reimbursement for providing Lifeline to a 
subscriber, unless the carrier has received a certification of 
eligibility from the prospective subscriber that complies with the 
requirements set forth in paragraph (d) of this section and has 
confirmed the subscriber's income-based eligibility using the following 
procedures:
    (A) If an eligible telecommunications carrier can determine a 
prospective subscriber's income-based eligibility by accessing one or 
more databases containing information regarding the subscriber's income 
(``income databases''), the eligible telecommunications carrier must 
access such income databases and determine whether the prospective 
subscriber qualifies for Lifeline.
    (B) If an eligible telecommunications carrier cannot determine a 
prospective subscriber's income-based eligibility by accessing income 
databases, the eligible telecommunications carrier must review 
documentation that establishes that the prospective subscriber meets 
the income-eligibility criteria set forth in Sec.  54.409(a)(1) or 
(a)(3). Acceptable documentation of income eligibility includes the 
prior year's state, federal, or Tribal tax return; current income 
statement from an employer or paycheck stub; a Social Security 
statement of benefits; a Veterans Administration statement of benefits; 
a retirement/pension statement of benefits; an Unemployment/Workers' 
Compensation statement of benefit; federal or Tribal notice letter of 
participation in General Assistance; or a divorce decree, child support 
award, or other official document containing income information. If the 
prospective subscriber presents documentation of income that does not 
cover a full year, such as current pay stubs, the prospective 
subscriber must present the same type of documentation covering three 
consecutive months within the previous twelve months.
    (ii) Must not retain copies of the documentation of a prospective 
subscriber's income-based eligibility for Lifeline.
    (iii) Must, consistent with Sec.  54.417, keep and maintain 
accurate records detailing the data source a carrier used to determine 
a subscriber's eligibility or the documentation a subscriber provided 
to demonstrate his or her eligibility for Lifeline.
    (2) Where a state Lifeline administrator or other state agency is 
responsible for the initial determination of a subscriber's 
eligibility, an eligible telecommunications carrier must not seek 
reimbursement for providing Lifeline service to a subscriber, based on 
that subscriber's income eligibility, unless the carrier has received 
from the state Lifeline administrator or other state agency:
    (i) Notice that the prospective subscriber meets the income-
eligibility criteria set forth in Sec.  54.409(a)(1) or (a)(3); and
    (ii) A copy of the subscriber's certification that complies with 
the requirements set forth in paragraph (d) of this section.
    (c) Initial program-based eligibility determination.
    (1) Except in states where a state Lifeline administrator or other 
state agency is responsible for the initial determination of a 
subscriber's program-based eligibility, when a prospective subscriber 
seeks to qualify for Lifeline service using the program-based criteria 
set forth in Sec.  54.409(a)(2), (a)(3) or (b), an eligible 
telecommunications carrier:
    (i) Must not seek reimbursement for providing Lifeline to a 
subscriber unless the carrier has received a certification of 
eligibility from the subscriber that complies with the requirements set 
forth in paragraph (d) of this section and has confirmed the 
subscriber's program-based eligibility using the following procedures:
    (A) If the eligible telecommunications carrier can determine a 
prospective subscriber's program-based eligibility for Lifeline by 
accessing one or more databases containing information regarding 
enrollment in qualifying assistance programs (``eligibility 
databases''), the eligible telecommunications carrier must access such 
eligibility databases to determine whether the prospective subscriber 
qualifies for Lifeline based on participation in a qualifying 
assistance program; or
    (B) If an eligible telecommunications carrier cannot determine a 
prospective subscriber's program-based eligibility for Lifeline by 
accessing eligibility databases, the eligible telecommunications 
carrier must review documentation demonstrating that a prospective 
subscriber qualifies for Lifeline under the program-based eligibility 
requirements. Acceptable documentation of program eligibility includes 
the current or prior year's statement of benefits from a qualifying 
assistance program, a notice or letter of participation in a qualifying 
assistance program, program participation documents, or another 
official document demonstrating that the prospective subscriber, one or 
more of the prospective subscriber's dependents or the prospective 
subscriber's household receives benefits from a qualifying assistance 
program.
    (ii) Must not retain copies of the documentation of a subscriber's 
program-based eligibility for Lifeline services.
    (iii) Must, consistent with Sec.  54.517, keep and maintain 
accurate records detailing the data source a carrier used to determine 
a subscriber's program-based eligibility or the documentation a 
subscriber provided to demonstrate his or her eligibility for Lifeline.
    (2) Where a state Lifeline administrator or other state agency is 
responsible for the initial determination of a subscriber's 
eligibility, when a prospective subscriber seeks to qualify for 
Lifeline service using the program-based eligibility criteria provided 
in Sec.  54.409, an eligible telecommunications carrier must not seek 
reimbursement for providing Lifeline to a subscriber unless the carrier 
has received from the state Lifeline administrator or other state 
agency:
    (i) Notice that the subscriber meets the program-based eligibility 
criteria set forth in Sec. Sec.  54.409(a)(2), (a)(3) or (b); and
    (ii) a copy of the subscriber's certification that complies with 
the requirements set forth in paragraph (d) of this section.
    (d) Eligibility certifications. Eligible telecommunications 
carriers and state Lifeline administrators or other state agencies that 
are responsible for the initial determination of a subscriber's 
eligibility for Lifeline must provide prospective subscribers Lifeline 
certification forms that in clear, easily understood language:
    (1) Provide the following information:
    (i) Lifeline is a federal benefit and that willfully making false 
statements to obtain the benefit can result in fines, imprisonment, de-
enrollment or being barred from the program;
    (ii) Only one Lifeline service is available per household;
    (iii) A household is defined, for purposes of the Lifeline program, 
as any individual or group of individuals who live together at the same 
address and share income and expenses;
    (iv) A household is not permitted to receive Lifeline benefits from 
multiple providers;
    (v) Violation of the one-per-household limitation constitutes a 
violation of the

[[Page 12972]]

Commission's rules and will result in the subscriber's de-enrollment 
from the program; and
    (vi) Lifeline is a non-transferable benefit and the subscriber may 
not transfer his or her benefit to any other person.
    (2) Require each prospective subscriber to provide the following 
information:
    (i) The subscriber's full name;
    (ii) The subscriber's full residential address;
    (iii) Whether the subscriber's residential address is permanent or 
temporary;
    (iv) The subscriber's billing address, if different from the 
subscriber's residential address;
    (v) The subscriber's date of birth;
    (vi) The last four digits of the subscriber's social security 
number, or the subscriber's Tribal identification number, if the 
subscriber is a member of a Tribal nation and does not have a social 
security number;
    (vii) If the subscriber is seeking to qualify for Lifeline under 
the program-based criteria, as set forth in Sec.  54.409, the name of 
the qualifying assistance program from which the subscriber, his or her 
dependents, or his or her household receives benefits; and
    (viii) If the subscriber is seeking to qualify for Lifeline under 
the income-based criterion, as set forth in Sec.  54.409, the number of 
individuals in his or her household.
    (3) Require each prospective subscriber to certify, under penalty 
of perjury, that:
    (i) The subscriber meets the income-based or program-based 
eligibility criteria for receiving Lifeline, provided in Sec.  54.409;
    (ii) The subscriber will notify the carrier within 30 days if for 
any reason he or she no longer satisfies the criteria for receiving 
Lifeline including, as relevant, if the subscriber no longer meets the 
income-based or program-based criteria for receiving Lifeline support, 
the subscriber is receiving more than one Lifeline benefit, or another 
member of the subscriber's household is receiving a Lifeline benefit.
    (ii) If the subscriber is seeking to qualify for Lifeline as an 
eligible resident of Tribal lands, he or she lives on Tribal lands, as 
defined in 54.400(e);
    (iii) If the subscriber moves to a new address, he or she will 
provide that new address to the eligible telecommunications carrier 
within 30 days;
    (iv) If the subscriber provided a temporary residential address to 
the eligible telecommunications carrier, he or she will be required to 
verify his or her temporary residential address every 90 days;
    (v) The subscriber's household will receive only one Lifeline 
service and, to the best of his or her knowledge, the subscriber's 
household is not already receiving a Lifeline service;
    (vi) The information contained in the subscriber's certification 
form is true and correct to the best of his or her knowledge,
    (vii) The subscriber acknowledges that providing false or 
fraudulent information to receive Lifeline benefits is punishable by 
law; and
    (viii) The subscriber acknowledges that the subscriber may be 
required to re-certify his or her continued eligibility for Lifeline at 
any time, and the subscriber's failure to re-certify as to his or her 
continued eligibility will result in de-enrollment and the termination 
of the subscriber's Lifeline benefits pursuant to Sec.  54.405(e)(4).
    (e) State Lifeline administrators or other state agencies that are 
responsible for the initial determination of a subscriber's eligibility 
for Lifeline must provide each eligible telecommunications carrier with 
a copy of each of the certification forms collected by the state 
Lifeline administrator or other state agency from that carrier's 
subscribers.
    (f) Annual eligibility re-certification process.
    (1) All eligible telecommunications carriers must annually re-
certify all subscribers except for subscribers in states where a state 
Lifeline administrator or other state agency is responsible for re-
certification of subscribers' Lifeline eligibility.
    (2) In order to re-certify a subscriber's eligibility, an eligible 
telecommunications carrier must confirm a subscriber's current 
eligibility to receive Lifeline by:
    (i) Querying the appropriate eligibility databases, confirming that 
the subscriber still meets the program-based eligibility requirements 
for Lifeline, and documenting the results of that review; or
    (ii) Querying the appropriate income databases, confirming that the 
subscriber continues to meet the income-based eligibility requirements 
for Lifeline, and documenting the results of that review; or
    (iii) Obtaining a signed certification from the subscriber that 
meets the certification requirements in paragraph (d) of this section.
    (3) Where a state Lifeline administrator or other state agency is 
responsible for re-certification of a subscriber's Lifeline 
eligibility, the state Lifeline administrator or other state agency 
must confirm a subscriber's current eligibility to receive a Lifeline 
service by:
    (i) Querying the appropriate eligibility databases, confirming that 
the subscriber still meets the program-based eligibility requirements 
for Lifeline, and documenting the results of that review; or
    (ii) Querying the appropriate income databases, confirming that the 
subscriber continues to meet the income-based eligibility requirements 
for Lifeline, and documenting the results of that review; or
    (iii) Obtaining a signed certification from the subscriber that 
meets the certification requirements in paragraph (d) of this section.
    (4) Where a state Lifeline administrator or other state agency is 
responsible for re-certification of subscribers' Lifeline eligibility, 
the state Lifeline administrator or other state agency must provide to 
each eligible telecommunications carrier the results of its annual re-
certification efforts with respect to that eligible telecommunications 
carrier's subscribers.
    (5) If an eligible telecommunications carrier is unable to re-
certify a subscriber or has been notified of a state Lifeline 
administrator's or other state agency's inability to re-certify a 
subscriber, the eligible telecommunications carrier must comply with 
the de-enrollment requirements provided for in Sec.  54.405(e)(4).
    (g) Re-certification of temporary address. An eligible 
telecommunications carrier must re-certify, every 90 days, the 
residential address of each of its subscribers who have provided a 
temporary address as part of the subscriber's initial certification or 
re-certification of eligibility, pursuant to paragraphs (d), (e), or 
(f) of this section.


Sec.  54.411  [Removed]

0
15. Section 54.411 is removed.

0
16. Add Sec.  54.412 to Subpart E to read as follows:


Sec.  54.412  Off reservation Tribal lands designation process.

    (a) The Commission's Wireline Competition Bureau and the Office of 
Native Affairs and Policy may, upon receipt of a request made in 
accordance with the requirements of this section, designate as Tribal 
lands, for the purposes of the Lifeline and Tribal Link Up program, 
areas or communities that fall outside the boundaries of existing 
Tribal lands but which maintain the

[[Page 12973]]

same characteristics as lands identified as Tribal lands defined as in 
Sec.  54.400(c).
    (b) A request for designation must be made to the Commission by a 
duly authorized official of a federally recognized American Indian 
Tribe or Alaska Native Village.
    (c) A request for designation must clearly describe a defined 
geographical area for which the requesting party seeks designation as 
Tribal lands.
    (d) A request for designation must demonstrate the Tribal character 
of the area or community.
    (e) A request for designation must provide sufficient evidence of a 
nexus between the area or community and the Tribe, and describe in 
detail how program support to the area or community would aid the Tribe 
in serving the needs and interests of its citizens and further the 
Commission's goal of increasing telecommunications access on Tribal 
lands.
    (f) Upon designation by the Wireline Competition Bureau and the 
Office of Native Affairs and Policy, the area or community described in 
the designation shall be considered Tribal lands for the purposes of 
this subpart.

0
17. Revise Sec.  54.413 to read as follows:


Sec.  54.413  Link Up for Tribal lands.

    (a) Definition. For purposes of this subpart, the term ``Tribal 
Link Up'' means an assistance program for eligible residents of Tribal 
lands seeking telecommunications service from a telecommunications 
carrier that is receiving high-cost support on Tribal lands, pursuant 
to subpart D of this part, that provides:
    (1) A 100 percent reduction, up to $100, of the customary charge 
for commencing telecommunications service for a single 
telecommunications connection at a subscriber's principal place of 
residence imposed by an eligible telecommunications carrier that is 
also receiving high-cost support on Tribal lands, pursuant to subpart D 
of this part. For purposes of this subpart, a ``customary charge for 
commencing telecommunications service'' is the ordinary charge an 
eligible telecommunications carrier imposes and collects from all 
subscribers to initiate service with that eligible telecommunications 
carrier. A charge imposed only on qualifying low-income consumers to 
initiate service is not a customary charge for commencing 
telecommunications service. Activation charges routinely waived, 
reduced, or eliminated with the purchase of additional products, 
services, or minutes are not customary charges eligible for universal 
service support; and
    (2) A deferred schedule of payments of the customary charge for 
commencing telecommunications service for a single telecommunications 
connection at a subscriber's principal place of residence imposed by an 
eligible telecommunications carrier that is also receiving high-cost 
support on Tribal lands, pursuant to subpart D of this part, for which 
the eligible resident of Tribal lands does not pay interest. The 
interest charges not assessed to the eligible resident of tribal lands 
shall be for a customary charge for connecting telecommunications 
service of up to $200 and such interest charges shall be deferred for a 
period not to exceed one year.
    (b) An eligible resident of Tribal lands may receive the benefit of 
the Tribal Link Up program for a second or subsequent time only for 
otherwise qualifying commencement of telecommunications service at a 
principal place of residence with an address different from the address 
for which Tribal Link Up assistance was provided previously.
0
18. Add Sec.  54.414 to Subpart E to read as follows:


Sec.  54.414  Reimbursement for Tribal Link Up.

    (a) Eligible telecommunications carriers that are receiving high-
cost support, pursuant to subpart D of this part, may receive universal 
service support reimbursement for the reduction in their customary 
charge for commencing telecommunications service and for providing a 
deferred schedule for payment of the customary charge for commencing 
telecommunications services for which the subscriber does not pay 
interest, in conformity with Sec.  54.413.
    (b) In order to receive universal support reimbursement for 
providing Tribal Link Up, eligible telecommunications carriers must 
follow the procedures set forth in Sec.  54.410 to determine an 
eligible resident of Tribal lands' initial eligibility for Tribal Link 
Up. Eligible telecommunications carriers must obtain a certification 
form from each eligible resident of Tribal lands that complies with 
Sec.  54.410 prior to enrolling him or her in Tribal Link Up.
    (c) In order to receive universal service support reimbursement for 
providing Tribal Link Up, eligible telecommunications carriers must 
keep accurate records of the reductions in their customary charge for 
commencing telecommunications service and for providing a deferred 
schedule for payment of the charges assessed for commencing service for 
which the subscriber does not pay interest, in conformity with Sec.  
54.413. Such records shall be kept in the form directed by the 
Administrator and provided to the Administrator at intervals as 
directed by the Administrator or as provided in this subpart. The 
reductions in the customary charge for which the eligible 
telecommunications carrier may receive reimbursement shall include only 
the difference between the carrier's customary connection or interest 
charges and the charges actually assessed to the subscriber receiving 
Lifeline services.


Sec.  54.415  [Removed]

0
19. Section 54.415 is removed.

0
20. Revise Sec.  54.416 to read as follows:


Sec.  54.416  Annual certifications by eligible telecommunications 
carriers.

    (a) Eligible telecommunications carrier certifications. Eligible 
telecommunications carriers are required to make and submit to the 
Administrator the following annual certifications, under penalty of 
perjury, relating to the Lifeline program:
    (1) An officer of each eligible telecommunications carrier must 
certify that the carrier has policies and procedures in place to ensure 
that its Lifeline subscribers are eligible to receive Lifeline 
services. Each eligible telecommunications carrier must make this 
certification annually to the Administrator as part of the carrier's 
submission of annual re-certification data pursuant to this section. In 
instances where an eligible telecommunications carrier confirms 
consumer eligibility by relying on income or eligibility databases, as 
defined in Sec.  54.410(b)(1)(i)(A) or (c)(1)(i)(A), the representative 
must attest annually as to what specific data sources the eligible 
telecommunications carrier used to confirm eligibility.
    (2) An officer of the eligible telecommunications carrier must 
certify that the carrier is in compliance with all federal Lifeline 
certification procedures. Eligible telecommunications carriers must 
make this certification annually to the Administrator as part of the 
carrier's submission of re-certification data pursuant to this section.
    (3) An officer of the eligible telecommunications carrier must 
certify annually that the carrier has obtained a valid certification 
form for each subscriber for whom the carrier seeks Lifeline 
reimbursement.
    (b) All eligible telecommunications carriers must annually provide 
the results of their re-certification efforts, performed pursuant to 
Sec.  54.410(f), to the Commission and the Administrator.

[[Page 12974]]

Eligible telecommunications carriers designated as such by one or more 
states pursuant to Sec.  54.201 must also provide, on an annual basis, 
the results of their re-certification efforts to state commissions for 
subscribers residing in those states where the state designated the 
eligible telecommunications carrier. Eligible telecommunications 
carriers must also provide their annual re-certification results for 
subscribers residing on Tribal lands to the relevant Tribal 
governments.
    (c) States that mandate Lifeline support may impose additional 
standards on eligible telecommunications carriers operating in their 
states to ensure compliance with state Lifeline programs.

0
21. Revise Sec.  54.417 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 and Tribal Link Up program 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.  54.410(d) and (f) for as long as the 
subscriber receives Lifeline service from that eligible 
telecommunications carrier.
    (b) 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 and Tribal Link Up 
program.
    (c) Non-eligible-telecommunications-carrier resellers that purchase 
Lifeline discounted wholesale services to offer discounted services to 
low-income consumers must maintain records to document compliance with 
all Commission requirements governing the Lifeline and Tribal Link Up 
program for the three full preceding calendar years and provide that 
documentation to the Commission or Administrator upon request. To the 
extent such a reseller provides discounted services to low-income 
consumers, it must fulfill the obligations of an eligible 
telecommunications carrier in Sec. Sec.  54.405(e), 54.405(f), and 
54.410.

0
22. Add Sec.  54.419 to Subpart E to read as follows:


Sec.  54.419  Validity of electronic signatures.

    (a) For the purposes of this subpart, an electronic signature, 
defined by the Electronic Signatures in Global and National Commerce 
Act, as an electronic sound, symbol, or process, attached to or 
logically associated with a contract or other record and executed or 
adopted by a person with the intent to sign the record, has the same 
legal effect as a written signature.
    (b) For the purposes of this subpart, an electronic record, defined 
by the Electronic Signatures in Global and National Commerce Act as a 
contract or other record created, generated, sent, communicated, 
received, or stored by electronic means, constitutes a record.
0
23. Add Sec.  54.420 to Subpart E to read as follows:


Sec.  54.420  Low income program audits.

    (a) Independent audit requirements for eligible telecommunications 
carriers. Companies that receive $5 million or more annually in the 
aggregate, on a holding company basis, in Lifeline reimbursements must 
obtain a third party biennial audit of their compliance with the rules 
in this subpart. Such engagements shall be agreed upon performance 
attestations to assess the company's overall compliance with rules and 
the company's internal controls regarding these regulatory 
requirements.
    (1) For purposes of the $5 million threshold, a holding company 
consists of operating companies and affiliates, as that term is defined 
in section 3(2) of the Communications Act of 1934, as amended, that are 
eligible telecommunications carriers.
    (2) The initial audit must be completed one year after the 
Commission issues a standardized audit plan outlining the scope of the 
engagement and the extent of compliance testing to be performed by 
third-party auditors and shall be conducted every two years thereafter, 
unless directed otherwise by the Commission. The following minimum 
requirements shall apply:
    (i) The audit must be conducted by a licensed certified public 
accounting firm that is independent of the carrier.
    (ii) The engagement shall be conducted consistent with government 
accounting standards (GAGAS).
    (3) The certified public accounting firm shall submit to the 
Commission any rule interpretations necessary to complete the biennial 
audit, and the Administrator shall notify all firms subject to the 
biennial audit requirement of such requests. The audit issue will be 
noted, but not held as a negative finding, in future audit reports for 
all carriers subject to this requirement unless and until guidance has 
been provided by the Commission.
    (4) Within 60 days after completion of the audit work, but prior to 
finalization of the report, the third party auditor shall submit a 
draft of the audit report to the Commission and the Administrator, who 
shall be deemed authorized users of such reports. Finalized audit 
reports must be provided to the Commission, the Administrator, and 
relevant states and Tribal governments within 30 days of the issuance 
of the final audit report. The reports will not be considered or deemed 
confidential.
    (5) Delegated authority. The Wireline Competition Bureau and the 
Office of Managing Director have delegated authority to perform the 
functions specified in paragraphs (a)(2) and (a)(3) of this section.
    (b) Audit requirements for new eligible telecommunications 
carriers. After a company is designated for the first time in any state 
or territory the Administrator will audit that new eligible 
telecommunications carrier to assess its overall compliance with the 
rules in this subpart and the company's internal controls regarding 
these regulatory requirements. This audit should be conducted within 
the carrier's first twelve months of seeking federal low-income 
Universal Service Fund support.

0
24. Add Sec.  54.422 to Subpart E to read as follows:


Sec.  54.422  Annual reporting for eligible telecommunications carriers 
that receive low-income support.

    (a) In order to receive support under this subpart, an eligible 
telecommunications carrier must annually report the company name, names 
of the company's holding company, operating companies and affiliates, 
and any branding (a ``dba,'' or ``doing-business-as company'' or brand 
designation) as well as relevant universal service identifiers for each 
such entity by Study Area Code. For purposes of this paragraph, 
``affiliates'' has the meaning set forth in section 3(2) of the 
Communications Act of 1934, as amended.
    (b) In order to receive support under this subpart, a common 
carrier designated as an eligible telecommunications carrier under 
section 214(e)(6) of the Act must annually provide:
    (1) Detailed information on any outage in the prior calendar year, 
as that term is defined in 47 CFR 4.5, of at least 30 minutes in 
duration for each service area in which the eligible telecommunications 
carrier is designated for any facilities it owns,

[[Page 12975]]

operates, leases, or otherwise utilizes that potentially affect:
    (i) At least ten percent of the end users served in a designated 
service area; or
    (ii) A 911 special facility, as defined in 47 CFR 4.5(e).
    (iii) Specifically, the eligible telecommunications carrier's 
annual report must include information detailing:
    (A) The date and time of onset of the outage;
    (B) A brief description of the outage and its resolution;
    (C) The particular services affected;
    (D) The geographic areas affected by the outage;
    (E) Steps taken to prevent a similar situation in the future; and
    (F) The number of customers affected.
    (2) The number of complaints per 1,000 connections (fixed or 
mobile) in the prior calendar year;
    (3) Certification of compliance with applicable service quality 
standards and consumer protection rules;
    (4) Certification that the carrier is able to function in emergency 
situations as set forth in Sec.  54.202(a)(2);
    (5) Information describing the terms and conditions of any voice 
telephony service plans offered to Lifeline subscribers, including 
details on the number of minutes provided as part of the plan, 
additional charges, if any, for toll calls, and rates for each such 
plan. To the extent the eligible telecommunications carrier offers 
plans to Lifeline subscribers that are generally available to the 
public, it may provide summary information regarding such plans, such 
as a link to a public Web site outlining the terms and conditions of 
such plans.
    (c) All reports required by this section must be filed with the 
Office of the Secretary of the Commission, and with the Administrator. 
Such reports must also be filed with the relevant state commissions and 
the relevant authority in a U.S. territory or Tribal governments, as 
appropriate.

    Note: The following appendixes will not appear in the Code of 
Federal Regulations.

Appendix A

Certification Requirements for Lifeline Subscribers

    Pursuant to the Universal Service Low-Income Order, all ETCs (or 
the state Lifeline program administrator, where applicable) must 
provide the following information in clear, easily understandable 
language on their initial and annual Lifeline certification forms:

Household Information for Initial and Annual Certification Forms

     Contact Information: All certification forms must ask 
for the Lifeline subscriber's name and address information.
     Residential Address: Prior to providing service to a 
consumer, ETCs must collect a residential address from each 
subscriber, which the subscriber must indicate is his/her permanent 
address, and a billing address, if different than the subscriber's 
residential address. ETCs should inform subscribers that, if the 
subscriber moves, they must provide their new address to the ETC 
within 30 days of moving.
     A consumer who lacks a permanent residential address 
(e.g., address not recognized by the Post Office, temporary living 
situation) must provide a temporary residential service address or 
other address identifying information that could be used to perform 
a check for duplicative support.
     Consumers using Post Office Box Addresses: Lifeline 
subscribers may not use a post office box as their residential 
address. An ETC may accept a P.O. Box or General Delivery address as 
a billing address, but not a residential address.
     Consumers with Temporary Addresses: ETCs must collect 
permanent addresses from subscribers. If a subscriber does not have 
a permanent address, ETCs must:
     Inform applicants that, if they use a temporary 
address, the ETC will attempt to verify every 90 days that the 
subscriber continues to rely on that address, and (as noted above) 
the subscriber must notify the ETC within 30 days of their new 
address after moving.
     Inform the subscriber that if he or she does not 
respond to the ETC's address verification attempts within 30 days, 
the subscriber may be de-enrolled from the ETC's Lifeline service.
     Multiple Households Sharing an Address: Upon receiving 
an application for Lifeline support, all ETCs must check the 
duplicates database to determine whether an individual at the 
applicant's residential address is currently receiving Lifeline-
supported service. The ETC must also search its own internal records 
to ensure that it does not already provide Lifeline-supported 
service to someone at that residential address.
     If nobody at the residential address is currently 
receiving Lifeline-supported service, the ETC may initiate Lifeline 
service after determining that the household is otherwise eligible 
to receive Lifeline and obtaining all required certifications from 
the household.
     If the ETC determines that an individual at the 
applicant's residential address is currently receiving Lifeline-
supported service, the ETC must collect from the applicant upon 
initial enrollment and annually thereafter a worksheet that: (1) 
Explains the Commission's one-per-household rule; (2) contains a 
check box that an applicant can mark to indicate that he or she 
lives at an address occupied by multiple households; (3) provides a 
space for the applicant to initial or certify that he or she shares 
an address with other adults who do not contribute income to the 
applicant's household and/or share in the household's expenses; and 
(4) notifies applicants of the one-per-household certification 
requirement adopted below and the penalty for a consumer's failure 
to make the required one-per-household certification (i.e., de-
enrollment).
     One-per-Household Certification: All consumers must 
certify that they receive Lifeline support for a single subscription 
per household.
     All ETCs (or state agencies or third-parties, where 
they are responsible for Lifeline enrollment in a state) must obtain 
a certification from the subscriber at sign up and annually 
thereafter attesting under penalty of perjury that the subscriber's 
household is receiving no more than one Lifeline-supported service. 
In addition, the certification form must include a place for the 
subscriber to separately acknowledge that, to the best of his or her 
knowledge, no one at the consumer's household is receiving a 
Lifeline-supported service from any other provider.
     The certification form must explain in clear, easily 
understandable language that: (1) Lifeline is a federal benefit; (2) 
Lifeline service is available for only one line per household; (3) a 
household is defined, for purposes of the Lifeline program, as any 
individual or group of individuals who live together at the same 
address and share income and expenses; and (4) households are not 
permitted to receive benefits from multiple providers.
     The certification form must also contain clear, easily 
understandable language stating that violation of the one-per-
household requirement would constitute a violation of the 
Commission's rules and would result in the consumer's de-enrollment 
from the program, and potentially, prosecution by the United States 
government.

Eligibility Information for Initial and Annual Certification Forms

     Identity Information: All certification forms must ask 
for the Lifeline subscriber's date of birth and the last 4 digits of 
the subscriber's social security number.
     Establishing eligibility for Lifeline:
     The certification form should be written in clear, 
easily understandable language and should include a place for the 
customer to sign under penalty of perjury attesting to his/her 
eligibility for Lifeline. All ETCs (or the state Lifeline program 
administrator, where applicable) should obtain the consumer's 
signature certifying under penalty of perjury that:
     The consumer either participates in a qualifying 
federal program or meets the income qualifications to establish 
eligibility for Lifeline;
     The consumer has provided documentation of eligibility, 
if required to do so;
     The consumer attests that the information contained in 
his or her application is true and correct to the best of his or her 
knowledge and acknowledging that providing false or fraudulent 
information to receive Lifeline benefits is punishable by law. The 
certification form should explain that Lifeline is a government 
benefit program

[[Page 12976]]

and consumers who willfully make false statements in order to obtain 
the benefit can be punished by fine or imprisonment or can be barred 
from the program.
     The certification form must include space for consumers 
qualifying for Lifeline under an income-based criterion to certify 
the number of individuals in their household.
     ETCs (or the state administrator, where applicable) 
should also obtain the consumer's initials or signature on the 
certification form acknowledging that the consumer may be required 
to re-certify his or her continued eligibility for Lifeline at any 
time, and that failure to do so will result in the termination of 
the consumer's Lifeline benefits.
     Consumer no longer eligible for Lifeline: The 
certification form must notify the consumer using clear, easily 
understandable language that he or she must inform the ETC within 30 
days if (1) The consumer ceases to participate in a federal 
qualifying program or programs or the consumer's annual household 
income exceeds 135% of the Federal Poverty Guidelines; (2) the 
consumer is receiving more than one Lifeline-supported service; or 
(3) the consumer, for any other reason, no longer satisfies the 
criteria for receiving Lifeline support. Additionally, prior to 
enrolling in Lifeline, consumers must certify attest under penalty 
of perjury that they understand the notification requirement, and 
that they may be subject to penalties if they fail to follow this 
requirement.
     Tribal eligibility: Consumers seeking Tribal lands 
Lifeline support must certify that they reside on Federally-
recognized Tribal lands.
     Non-transferability of Lifeline benefit: The 
certification form should inform consumers that Lifeline service is 
a non-transferable benefit, and that a Lifeline subscriber may not 
transfer his or her service to any other individual, including 
another eligible low-income consumer.

Annual Re-Certification of Consumer Eligibility for Lifeline

     By the end of 2012, each Lifeline subscriber enrolled 
in the program as of June 1, 2012 must provide a signed re-
certification form to the ETC (or the state Lifeline administrator, 
where applicable) attesting to their continued eligibility for 
Lifeline. This signed certification should collect all of the 
subscriber information noted above, including an updated address. 
Consumers may provide the re-certification in writing, by phone, by 
text message, by email, or otherwise through the Internet.
     Alternatively, where a database containing consumer 
eligibility data is available, the carrier (or state Lifeline 
administrator, where applicable) must query the database by the end 
of 2012 and maintain a record of what specific data was used to re-
certify the consumer's eligibility and the date that the consumer 
was re-certified.
     The ETC or the state administrator, where applicable, 
must report the results of their re-certification efforts to USAC, 
the Commission, and the relevant state commission (where the state 
has jurisdiction over the carrier) by January 31, 2013. ETCs or the 
state administrator, where applicable, should also provide their re-
certification results to the relevant Tribal government, for 
subscribers residing on reservations or Tribal lands.
     ETCs must remind consumers about the annual re-
certification requirement on the ETC's certification form that is 
completed upon program enrollment and annually thereafter.

Database

     Consent to provide information to the database: An ETC 
must obtain acknowledgement and consent from each of its subscribers 
that is written in clear, easily understandable language that the 
subscriber's name, telephone number, and address will be divulged to 
the Universal Service Administrative Company (USAC) (the 
administrator of the program) and/or its agents for the purpose of 
verifying that the subscriber does not receive more than one 
Lifeline benefit. In the event that USAC identifies a consumer as 
receiving more than one Lifeline subsidy per household, all carriers 
involved may be notified so that the consumer may select one service 
and be de-enrolled from the other.

Appendix B

Lifeline Verification Survey Results for 2011 and 2007

                                 Table 1--Lifeline Verification Results for 2011
----------------------------------------------------------------------------------------------------------------
                                                                                    Percentage
         State/territory            Subscribers        Found      No response to      deemed      Percentage non-
                                     surveyed       ineligible        survey        ineligible       responders
----------------------------------------------------------------------------------------------------------------
                                             Federal Default States
----------------------------------------------------------------------------------------------------------------
American Samoa..................              62               0              16               0              26
Delaware........................             534              56             217              10              41
Hawaii..........................             499              61             116              12              23
Indiana.........................           2,066             340             647              16              31
Iowa............................          12,015             711           4,936               6              41
Louisiana.......................           3,656             331             926               9              25
New Hampshire...................             629             115             156              18              25
North Dakota....................           2,240             419             706              19              32
Northern Mariana Islands........           1,857               0               0               0               0
South Dakota....................           2,411             243             802              10              33
----------------------------------------------------------------------------------------------------------------
              Non-Federal-Default States Mandating That ETCs Follow Federal Verification Procedures
----------------------------------------------------------------------------------------------------------------
Arkansas........................           6,114             384             653               6              11
New York........................           6,276             401           1,755               6              28
North Carolina..................           4,288             171             689               4              16
----------------------------------------------------------------------------------------------------------------
                Non-Federal-Default States Requiring ETCs To Submit Verification Results to USAC
----------------------------------------------------------------------------------------------------------------
Alabama.........................           4,594             858           1,193              19              26
Arizona.........................           1,982             180             674               9              34
Pennsylvania....................           2,519             226             395               9              16
West Virginia...................           1,123             198             338              18              30
Average.........................          52,865           4,694          14,219               9              27
----------------------------------------------------------------------------------------------------------------


[[Page 12977]]


                                 Table 2--Lifeline Verification Results for 2007
----------------------------------------------------------------------------------------------------------------
                                                                                    Percentage
         State/territory            Subscribers        Found      No response to      deemed      Percentage non-
                                     surveyed       ineligible        survey        ineligible       responders
----------------------------------------------------------------------------------------------------------------
                                             Federal Default States
----------------------------------------------------------------------------------------------------------------
American Samoa..................             154               3               0               2               0
Delaware........................             250               4             162               2              65
Hawaii..........................             296              54              11              18               4
Iowa............................           9,492           1,646           1,219              17              13
Indiana.........................           2,669             991           1,065              37              40
Louisiana.......................           2,141             673             175              31               8
New Hampshire...................             483             108             212              22              44
North Dakota....................           2,795             342             574              12              21
Northern Mariana Islands........             947               0               0               0               0
South Dakota....................           1,823             472             447              26              25
----------------------------------------------------------------------------------------------------------------
              Non-Federal-Default States Mandating That ETCs Follow Federal Verification Procedures
----------------------------------------------------------------------------------------------------------------
Arkansas........................           5,650           1,608             296              28               5
New York........................           4,208             624             585              15              14
North Carolina..................          10,534             940             600               9               6
----------------------------------------------------------------------------------------------------------------
                Non-Federal-Default States Requiring ETCs To Submit Verification Results to USAC
----------------------------------------------------------------------------------------------------------------
Alabama.........................           4,618           1,393             454              30              10
Arizona.........................           1,313             619             525              47              40
Kentucky........................          11,482           1,253           1,788              11              16
Pennsylvania....................         138,453          10,956           9,866               8               7
Puerto Rico.....................               4               3               0              75               0
Tennessee.......................           4,907           1,562             891              32              18
West Virginia...................             838             109             702              13              84
Average.........................         203,057          23,360          19,572              12              10
----------------------------------------------------------------------------------------------------------------

Appendix C

                           Initial Commenters
------------------------------------------------------------------------
            Commenter                           Abbreviation
------------------------------------------------------------------------
AARP.............................  AARP
Advocates for Basic Legal          Consumer Groups
 Equality, Inc., Community
 Counseling Bristol County,
 Community Voice Mail, Crossroads
 Urban Center, Disability Right
 Advocates, Legal Services
 Advocacy Project, Low Income
 Utility Advocacy Project,
 National Center for Medical-
 Legal Partnership, National
 Consumer Law Center, On Behalf
 of Our, Low-Income Clients, New
 Jersey Shares, Ohio Poverty Law
 Center, Open Access Connections,
 Pennsylvania Utility Law
 Project, Pro Seniors, Inc., Salt
 Lake Community Action Program,
 Texas Legal Services Center,
 Virginia Citizens Consumer
 Council.
Alaska Telephone Association.....  ATA
American Library Association.....  ALA
American Public Communications     APCC
 Council, Inc..
Amvensys Telecom Holdings, LLC...  Amvensys
Area Agency on Aging of West       Area Agency on Aging WCA
 Central Arkansas.
Arkansas Advocates for Nursing     AANHR
 Home Residents.
Association of Programs for Rural  APRIL
 Independent Living.
AT&T.............................  AT&T
Benton Foundation and Center for   Benton/PK/UCC
 Rural Strategies Public
 Knowledge and United Church of
 Christ, OC Inc..
Box Top Solutions, Inc...........  Box Top
Budget Prepay, Inc., GreatCall,    Budget/GreatCall/PR
 Inc. and PR Wireless Inc. d/b/a
 Open Mobile.
CenturyLink......................  CenturyLink
CGM, LLC.........................  CGM
Cincinnati Bell Inc..............  Cincinnati Bell
City Councilor Sean Paulhus (ME)
City of New York.................  City of NY
City of North Las Vegas..........  North Las Vegas
Comcast Corporation..............  Comcast
Commissioner Brenda Howerton (NC)
Commissioner Joe Bowser (NC)
Commissioner Lawrence Weekly (NV)
Commissioner Michael Page (NC)
Ogden-Weber Community Action       OWCAP
 Partnership.
COMPTEL..........................  COMPTEL

[[Page 12978]]

 
Conexions LLC d/b/a Conexion       Conexions
 Wireless.
Consumer Cellular, Inc...........  CCI
Connecticut Department of Public   CT DPUC
 Utility Control.
Councilman Christopher A. Hilbert
 (VA)
Councilman Howard Clement (NC)
Councilman Jamie Benoit (MD)
Councilman Kelvin E. Washington,
 Sr. (SC)
Councilman Ricki Y. Barlow (NV)
Councilwoman Cora Cole-McFadden
 (NC)
Cox Communication Inc............  Cox
CTIA-The Wireless Association....  CTIA
Daniel Reyes, III
Delegate Benjamin S. Barnes
Delegate Eileen Filler-Corn
Delegate Joe Morrissey (VA)
Delegate Paula J. Miller (VA)
Public Service Commission of the   DC PSC
 District of Columbia.
Educational Services Network,      EDNet
 Corp..
Executive Councilor Daniel St.
 Hilaire (NH)
Florida Public Service Commission  FL PSC
General Communication, Inc.......  GCI
Gila River Telecommunications,     GRTI
 Inc..
House Democratic Caucus (GA)
Indiana Family and Social          Indiana FSSA
 Services Administration.
Indiana Utility Regulatory         IN URC
 Commission.
Institute for Health, Law &        IHLE
 Ethics.
Iridium Satellite LLC............  Iridium
Keep USF Fair Coalition..........  Keep USF Fair
Kevan Lee Deckelmann
Las Vegas Urban League...........  Las Vegas Urban League
The Leadership Conference on       LCCHR
 Civil and Human Rights.
Leap Wireless International, Inc.  Cricket
 and Cricket Communications, Inc..
Massachusetts Department of        MA DTC
 Telecommunications and Cable.
Mayor Jim Bouley (NH)
Media Action Grassroots Network..  MAG-Net
Michigan Public Service            MI PSC
 Commission.
Minority Media and                 MMTC
 Telecommunications Council.
Mississippi Public Service         MS PSC
 Commission.
Public Service Commission of the   MO PSC
 State of Missouri.
National ALEC Association/Prepaid  NALA/PCA
 Communications Association.
National Association for the       NAACP Reno Sparks
 Advancement of Colored People
 Reno/Sparks Branch 1112.
National Association of State      NASUCA
 Utility Consumer Advocates.
National Association of            NATOA
 Telecommunications Officers and
 Advisors.
National Cable &                   NCTA
 Telecommunications Association.
National Consumer Law Center.....  NCLC
National Telecommunications        NTCA
 Cooperative Association.
Nebraska Public Service            NE PSC
 Commission.
New America Foundation...........  NAF
New Hampshire Coalition of Aging   NH Coalition of Aging
 Services.
New Hampshire Coalition Against    NHCADSV
 Domestic and Sexual Violence.
New Jersey Division of Rate        NJ DRC
 Counsel.
New York State Public Service      NY PSC
 Commission.
Nexus Communications, Inc........  Nexus
Ohio Association of Second         OASHF
 Harvest Food Banks.
Open Access Connections (formerly  Open Access
 Twin Cities Community Voice
 Mail), Energy Cents Coalition,
 Main Street Project, Minnesota
 Center for Neighborhood,
 Organizing Voices for Change.
One Economy Corp.................  One Economy
Partnership for a Connected        PCI
 Illinois.
Public Utilities Commission of     OH PUC
 Ohio.
Public Utilities Commission of     OR PUC
 Oregon.
Rainbow PUSH Coalition...........  Rainbow PUSH
Reunion Communications, Inc......  Reunion
San Juan Cable LLC d/b/a OneLink   OneLink
 Communications.
Several Members of the Texas
 House Democratic Caucus
Smith Bagley, Inc................  SBI
Solix, Inc.......................  Solix
Southern Nevada Children First...  SNCF
Sprint Nextel Corp...............  Sprint
State Representative Barbara B.
 Boyd, Ed. D. (OH)
State Representative Bob Turner
 (WI)
State Representative Christopher
 J. England (AL)
State Representative Cory Mason
 (WI)

[[Page 12979]]

 
State Representative Demetrius C.
 Newton (AL)
State Representative Denise
 Driehaus (OH)
State Representative Denise
 Harlow (ME)
State Representative Diane
 Russell (ME)
State Representative Dennis
 Murray (OH)
State Representative J.M. Lozano
 (TX)
State Representative John F.
 Knight (AL)
State Representative John
 Robinson (AL)
State Representative John W.
 Rogers (AL)
State Representative Leslie Milam
 Post (AR)
State Representative Mark Eves
 (ME)
State Representative Peter
 Stuckey (ME)
State Representative Ralph Howard
 (AL)
State Representative Richard
 Laird (AL)
State Representative Sheila
 Lampkin (AR)
State Representative Stacy Adams
 (GA)
State Representative Tony Payton
 (PA)
State Senator Jason Wilson (OH)
State Senator John C. Astle (MD)
State Senator Thomas Mac
 Middleton (MD)
Suzanne Burke
TCA..............................  TCA
TracFone Wireless, Inc...........  TracFone
United States Telecom Association  USTelecom
Verizon and Verizon Wireless.....  Verizon
ViaSat, Inc......................  ViaSat
Virginia Interfaith Center for     Virginia Interfaith Center
 Public Policy.
YourTel America, Inc.............  YourTel
------------------------------------------------------------------------

Appendix D

                            Reply Commenters
------------------------------------------------------------------------
            Commenter                           Abbreviation
------------------------------------------------------------------------
Advocates for Basic Legal          Consumer Groups
 Equality, Inc., Community Voice
 Mail National, Disability Rights
 Advocates, Low Income Utility
 Advocacy Project, The National
 Consumer Law Center, on Behalf
 of our Low-Income Clients, Ohio
 Poverty Law Center, Open Access
 Connections, Pennsylvania
 Utility Law Project, Pro
 Seniors, Inc., Texas Legal
 Services Center, Virginia
 Citizens Consumer Council.
American Public Communications     APCC
 Council, Inc.
Amvensys Telecom Holdings, LLC...  Amvensys
AT&T.............................  AT&T
California Public Utilities        CA PUC
 Commission.
COMPTEL..........................  COMPTEL
CTIA--The Wireless Association...  CTIA
Emerios..........................  Emerios
Fletcher School (Tufts             Fletcher School
 University).
General Communication, Inc.......  GCI
Leap Wireless International, Inc.  Cricket
 and Cricket Communications, Inc.
Media Action Grassroots Network..  MAG-Net
MFY Legal Services, Inc..........  MFY Legal Services
Michigan Public Service            MI PSC
 Commission.
Montana Independent                MITS
 Telecommunications Systems, LLC.
National ALEC Association/Prepaid  NALA/PCA
 Communications Association.
National Association of State      NASUCA
 Utility Consumer Advocates.
National Hispanic Media Coalition  NHMC
New Jersey Division of Rate        NJ DRC
 Counsel.
Nexus Communications, Inc........  Nexus
One Economy Corp., League of       One Economy
 United Latin America Citizens,
 Minority Media and
 Telecommunications Council.
Open Access Connections..........  Open Access Connections
PR Wireless, Inc. d/b/a Open       PR Wireless
 Mobile.
Regulatory Commission of Alaska..  Alaska Commission
Reunion Communications, Inc......  Reunion
Sprint Nextel Corporation........  Sprint
State of Alaska..................  Alaska
Texas Statewide Telephone          TX Telephone Cooperative
 Cooperative, Inc.
TracFone Wireless, Inc...........  TracFone
Verizon and Verizon Wireless.....  Verizon
YourTel America, Inc.............
------------------------------------------------------------------------


[[Page 12980]]

Appendix E

               USAC Disbursement Public Notice Commenters
------------------------------------------------------------------------
            Commenter                           Abbreviation
------------------------------------------------------------------------
Alexicon Telecommunications        Alexicon
 Consulting.
CenturyLink......................  CenturyLink
COMPTEL..........................  Comptel
Michigan Public Service            MI PSC
 Commission.
PR Wireless, Inc. d/b/a Open       PR Wireless
 Mobile.
Smith Bagley, Inc................  Smith Bagley
South Carolina Office of           South Carolina Office of Regulatory
 Regulatory Staff.                  Staff
Sprint Nextel Corporation........  Sprint
United States Telecom Association  USTelecom
Verizon and Verizon Wireless.....  Verizon and Verizon Wireless
------------------------------------------------------------------------
 
         Reply Commenter
------------------------------------------------------------------------
Massachusetts Department of        MDTC
 Telecommunications and Cable.
National Tribal                    NTTA
 Telecommunications Association.
Nexus Communications, Inc........  Nexus
------------------------------------------------------------------------

[FR Doc. 2012-4978 Filed 3-1-12; 8:45 am]
BILLING CODE 6712-01-P