[Federal Register Volume 81, Number 100 (Tuesday, May 24, 2016)]
[Rules and Regulations]
[Pages 33026-33095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11284]



[[Page 33025]]

Vol. 81

Tuesday,

No. 100

May 24, 2016

Part IV





Federal Communications Commission





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47 CFR Part 54





Lifeline and Link Up Reform and Modernization, Telecommunications 
Carriers Eligible for Universal Service Support, Connect America Fund; 
Final Rule

  Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Rules 
and Regulations  

[[Page 33026]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 11-42, 09-197, 10-90; FCC 16-38]


Lifeline and Link Up Reform and Modernization, Telecommunications 
Carriers Eligible for Universal Service Support, Connect America Fund

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission (the 
Commission) fully modernizes the Lifeline program so it supports 
broadband services and obtains high value from the expenditure of 
Universal Service funds. This Order will increase consumer choice and 
encourage competition among Lifeline providers to deliver supported 
broadband services.

DATES: Effective June 23, 2016 except for Sec. Sec.  54.101, 
54.202(a)(6), (d), and (e), 54.205(c), 54.401(a)(2), (b), (c), and (f), 
54.403(a), 54.405(e)(1) and (e)(3) through (5), 54.407(a), (c)(2), and 
(d), 54.408, 54.409(a)(2), 54.410(b) through (h), 54.411, 54.416(a)(3), 
54.420(b), and 54.422(b)(3) 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 separate document announcing such approval and the relevant 
effective date(s).

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third 
Report and Order, Further Report and Order, and Order on 
Reconsideration (2016 Lifeline Order) in WC Docket Nos. 11-42, 09-197, 
10-90; FCC 16-38, adopted on March 31, 2016 and released on April 27, 
2016. 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: https://apps.fcc.gov/edocs_public/attachmatch/FCC-16-38A1.docx.

I. Introduction

    1. The time has come to modernize Lifeline for the 21st Century to 
help low-income Americans afford access to today's vital communications 
network--the Internet, the most powerful and pervasive platform in our 
Nation's history. Accessing the Internet has become a prerequisite to 
full and meaningful participation in society. For those Americans with 
access, the Internet has the power to transform almost every aspect of 
their lives, including their ability to stay in contact with work, 
friends, and family; to stay abreast of news, to monitor important 
civic initiatives, to look for a new home, or to make essential 
financial decisions. Households with schoolchildren access the Internet 
to research issues, check assignments, and complete homework, while 
people with critical or even routine health needs use the Internet to 
access information about their condition and stay in touch with health 
care providers.
    2. But not all Americans are able to enjoy the benefits of 
broadband in today's society, even as the importance of broadband 
grows. There are still 64.5 million people without a connection to the 
Internet and that figure hits hardest on those with the lowest incomes. 
The biggest reason these Americans don't sign up for broadband today is 
cost. Only half of all households in the lowest income tier subscribe 
to a broadband service and 43 percent say the biggest reason for not 
subscribing is the cost of the service. Of the low-income consumers who 
have subscribed to mobile broadband, over 40 percent have to cancel or 
suspend their service due to financial constraints. Affordability 
remains the primary barrier to broadband adoption.
    3. In this Order, we adopt reforms to make the Commission's 
Lifeline program a key driver of the solution to our Nation's broadband 
affordability challenge. Intended initially as a mechanism to reduce 
the cost of phone service for low-income customers, the Lifeline 
program has worked in lockstep with telephone providers and consumers 
to increase the uptake in phone service throughout the country and has 
kept pace with changes in technology as the Nation moved from a 
wireline world to one where the number of mobile devices and services 
now exceeds the population of the United States. But at a time when our 
economy and lives are increasingly moving online and millions of 
Americans remain offline, the Lifeline program must keep pace with this 
technological evolution to fulfill its core mission.
    4. Our actions here are also compelled by the Congressional 
directives that guide our approach to all of universal service. 
Congress expressed its intent in the Communications Act of 1934 to make 
available communications service to ``all the people of the United 
States'' and, more recently, in the Telecommunications Act of 1996, 
Congress asserted the principle that rates should be ``affordable,'' 
and that access should be provided to low-income consumers in all 
regions of the nation. Congress also recognized at the same time that 
new technologies, in addition to landline telephone service, could 
provide telecommunication services to consumers and that ``[u]niversal 
service is an evolving level of telecommunications services.'' Given 
the evolution of communications technologies and the great strides the 
Commission has made in improving the performance of the Lifeline 
program, we must modernize the Lifeline program so it can play an 
essential and important role in helping those low-income Americans that 
most need access to valuable broadband services.
    5. The Order we adopt today focuses the Lifeline program on 
broadband by encouraging broadband providers to offer supported 
broadband services that meet standards we set to ensure ratepayers 
supporting the program are obtaining value for their contributions and 
Lifeline subscribers can participate fully in today's society. We also 
take important steps to improve the management and design of the 
program by streamlining program rules and eliminating outdated program 
obligations with the goal of providing incentives for broadband 
providers to participate and increasing competition and meaningful 
broadband offerings to Lifeline subscribers. Finally, we follow through 
on the important and highly effective reforms the Commission initiated 
in 2012 by making several additional changes to combat waste, fraud, 
and abuse, including establishing a National Lifeline Eligibility 
Verifier (National Verifier) that will remove the responsibility of 
determining Lifeline subscriber eligibility from providers.

II. Executive Summary

    6. To create a competitive Lifeline broadband program, this Order 
takes a variety of actions that work together to encourage more 
Lifeline providers to deliver supported broadband services as we 
transition from primarily supporting voice services to targeting 
support at modern broadband services. We first allow support for 
robust, standalone fixed and mobile broadband services to ensure 
meaningful levels of connectivity and we continue to support bundled 
voice and broadband services. We also establish minimum service 
standards for broadband and mobile voice services to ensure those 
services meet the needs of the consumers, and we recognize and allow an 
exception in areas where fixed

[[Page 33027]]

broadband providers do not meet the minimum standards. Finally, in 
recognition of the important operational needs of Lifeline providers we 
implement a five and one-half year transition, during which we will 
gradually increase mobile voice and data requirements and gradually 
decrease voice support levels. After completion of this multi-year 
transition, Lifeline funding will be focused on supporting modern 
services.
    7. We next take a step that will curb abuse in the program and 
encourage provider participation by creating the National Verifier, 
which will transfer the responsibility of eligibility determination 
away from Lifeline providers. By lowering Lifeline providers' costs of 
conducting verification and reducing the risks of facing a 
verification-related enforcement action, the National Verifier will 
make the Lifeline program more attractive to providers. The National 
Verifier will also remove many opportunities for Lifeline providers to 
inappropriately enroll subscribers. This step--taking determination of 
eligibility out of the hands of the same parties that stand to benefit 
financially from a finding of eligibility--is critical to preventing 
waste, fraud, and abuse. At the same time, we streamline the criteria 
for Lifeline program qualification in recognition of the way the vast 
majority of Lifeline subscribers gain entry to the program as well as 
through a new program for veterans. We will allow entry based on 
participation in SNAP, Medicaid, SSI, Federal Public Housing 
Assistance, and the Veterans Pension benefit program, as well as all 
current Tribal qualifying programs. We will continue to allow low-
income consumers to qualify by demonstrating income of less than 135 
percent of the federal poverty guidelines.
    8. The Order also encourages entry of new Lifeline providers to 
supply broadband by creating a streamlined federal Lifeline Broadband 
Provider (LBP) designation process. (Since Lifeline Broadband Providers 
will be a subset of eligible telecommunications carriers (ETCs) but 
ETCs that are not LBPs may also be eligible to receive reimbursement 
for offering Lifeline-supported broadband Internet access service, some 
of our rules will apply specifically to LBPs while others will apply 
more broadly to all ETCs participating in the Lifeline program. In this 
Order we refer to LBPs specifically when the rule being discussed 
applies only to LBPs.) Working within the statutory construct in 
Sections 214 and 254 limiting support to eligible telecommunications 
carriers (ETCs), we establish a process by which broadband providers 
may receive a designation from FCC staff to provide broadband Lifeline 
to qualifying low-income consumers. This new LBP designation process 
provides an additional alternative to the current ETC designation 
processes, which remain in place. At the same time, we modernize the 
obligations of broadband Lifeline providers by interpreting and 
forbearing from parts of the statute that are not needed in the modern 
broadband marketplace to ensure just and reasonable rates and the 
protection of consumers. In particular, we allow for broadband-only 
provision of service, flexibility in service areas, and streamlining of 
the relinquishment process. We also interpret Section 214(e)(1)(B) to 
minimize advertising burdens on providers. We establish a pathway for 
certain existing Lifeline providers currently obligated to provide 
voice services to obtain relief from such obligations as clear, 
measurable benchmarks are met. The benchmarks are designed in such a 
way that providers have strong incentives to encourage uptake of 
broadband services.
    9. We also recognize that increasing digital inclusion means more 
than addressing the affordability of broadband service. To that end, we 
require that Lifeline providers make available Wi-Fi enabled devices 
when providing such devices for use with the Lifeline-supported 
service. We also require Lifeline providers of mobile broadband service 
to make available hotspot-enabled devices. We believe these measures 
will help to extend the connectivity of the service Lifeline supports. 
We also direct the Consumer and Governmental Affairs Bureau (CGB) to 
develop and execute a digital inclusion plan that will bring together a 
variety of stakeholders to determine how Lifeline can best be 
leveraged.
    10. This Order next recognizes the importance of fiscal 
responsibility in the program, establishes an annual budget of $2.25 
billion, and directs the Bureau to submit a report to the Commission if 
Lifeline disbursements in a year exceed 90 percent of this level, with 
an expectation that the Commission will act within six months of this 
report. It is essential that we ensure the program is designed to 
operate in an efficient, highly accountable manner that obtains great 
value from the expenditure of ratepayer dollars. In establishing a 
budget mechanism, we bring the Lifeline program into alignment with the 
other three programs of the Universal Service Fund, each of which 
operates within a budget.
    11. We also make a number of changes to further improve the 
efficient administration and accountability of the Lifeline program. We 
implement measures to evaluate the Lifeline program to determine 
whether it is achieving its objectives, we reform the non-usage rules, 
we make recertification a rolling process, we establish a 12-month 
benefit port freeze for broadband offerings, we take steps to increase 
transparency in the program, and we modify program forms to reduce 
administrative burdens on providers.

III. Third Report and Order

A. Modernizing Lifeline To Support Broadband

1. Broadband as a Supported Service
    12. There is widespread consensus among commenters that the time 
has come for the Commission to modernize the Lifeline program to 
support broadband consistent with the national policy of promoting 
universal service. Based on the record before us, we take the important 
step toward achieving one of the express goals of the program by 
amending the definition of Lifeline to include broadband Internet 
access service (BIAS) as a supported service in the Lifeline program. 
Through our actions today, we hereby amend Sec.  54.101 to include BIAS 
as a supported service. More specifically, our definition of BIAS 
mirrors that under section 8.2(a) of the Commission rules, which 
defines BIAS as a mass-market retail service by wire or radio that 
provides the capability to transmit data to and receive data from all 
or substantially all Internet endpoints, including any capabilities 
that are incidental to and enable the operation of the communications 
service, but excluding dial-up Internet access service. Finally, 
consistent with our change to Section 54.101, we also amend Section 
54.401 in our Lifeline rules to include BIAS as eligible for Lifeline 
support. (These amendments to the Commission rules will take effect on 
the same date as the minimum service standards set forth in Section 
54.408 of the Commission rules. See infra Section III.B.2. (Minimum 
Service Standards). By adopting these amendments as well as our 
forbearance in Section III.E.2 (Lifeline Obligations for Eligible 
Telecommunications Carriers), we allow service providers to provide 
BIAS as a standalone offering to qualifying low-income consumers. The 
obligations for receiving Lifeline support for both BIAS and voice 
telephony service are further defined below.
    13. Our actions today are consistent with the universal service 
goals

[[Page 33028]]

promulgated by Congress. Congress articulated national goals in Section 
254 of the Act that services should be available at ``affordable'' 
rates and that ``consumers in all regions of the nation, including low-
income consumers . . . should have access to telecommunications and 
information services.'' Congress also made clear in Section 254(c) that 
``[u]niversal service is an evolving level of telecommunications 
services that the Commission shall establish periodically under this 
section, taking into account advances in telecommunications and 
information technologies and services.'' As recently as 2009, Congress, 
in directing the Commission to develop a National Broadband Plan, 
specifically dictated that such a plan must provide a detailed strategy 
for achieving affordability of broadband services.
    14. Within the record before us, there is ample evidence to find 
that BIAS meets the standard set forth in Section 254(c) given the many 
ways that individuals rely on broadband in their daily lives, the 
significant percentage of the population with means subscribing to such 
services, and the deployment and investment spent on infrastructure. 
Taking these factors into account, we conclude it is imperative for us 
to include BIAS as a supported service.
    15. More than 200 commenters responded to the Commission's 2015 
Lifeline FNPRM with nearly all of them urging the Commission to include 
broadband in the Lifeline program. There is widespread consensus from a 
range of commenters including service providers, state public utilities 
commissions, academics, software companies, and consumer advocates.
    16. Moreover, objections to modernizing the Lifeline program to 
include support for broadband principally concern collateral effects 
that can be addressed without sacrificing program modernization. We do 
so elsewhere in this Order. For example, both AT&T and Verizon have 
expressed concern over amendments to Section 54.101 to include BIAS as 
a supported service on the theory that all ETCs receiving high-cost 
support would be obligated to offer BIAS throughout their designated 
service areas, even in those areas where they do not receive high-cost 
support or have not deployed broadband networks with the minimum speed 
standards. We recognize that, subsequent to the 1996 Act, state public 
utilities commissions designated ILECs as ETCs wherever they offered 
voice telephony service in a state and defined their designated service 
areas for purposes of receiving federal universal service support as 
such, including Census blocks where the provider does not currently 
receive high-cost support or is not obligated to build-out broadband at 
10 megabits per second (Mbps) download/1 Mbps upload (10/1 Mbps) speeds 
pursuant to Commission rules. As a result, ILECs have had the Lifeline 
obligation to provide discounted voice service throughout their 
designated service area. (Existing ETCs currently continue to have a 
Lifeline voice obligation throughout their designated service areas, 
regardless of their receipt of high-cost support. In this Order, 
however, we provide conditional forbearance from this obligation). We 
are sympathetic to ILECs' concerns about requiring them to offer 
broadband in Census blocks within their ETC designated service areas 
where the provider is not obligated to build-out broadband services 
pursuant to our high-cost rules, where broadband services are not 
commercially available, and in those Census blocks where the provider 
does not receive high-cost support. To address these concerns, we 
forbear from Section 214(e)(1) such that ETCs are not required to offer 
Lifeline-supported broadband service in Census blocks throughout their 
designated service areas, but instead only where the provider receives 
high-cost support and is commercially providing broadband consistent 
with the provider's obligations set forth in the Commission's high-cost 
rules and requirements.
    17. In addition, for recipients of high-cost support, in those 
areas where the provider receives high-cost support but has not yet 
deployed a broadband network consistent with the provider's high-cost 
public interest obligation to offer broadband, the obligation to 
provide Lifeline broadband services does not begin until such time as 
the provider has deployed a broadband network and is commercially 
offering service to that area. We also recognize some carriers' 
arguments that the Commission should not impose a Lifeline broadband 
obligation on ETCs in areas where those carriers receive frozen high-
cost support, because the frozen support program is an interim program 
that will be eliminated after the Commission conducts the Connect 
America Fund Phase II competitive bidding process and frozen support 
recipients are not required to meet the Lifeline program's minimum 
speed standards for BIAS offerings. We agree that carriers' receipt of 
frozen high-cost support should not carry with it a Lifeline broadband 
obligation, and we therefore clarify that those ETCs receiving frozen 
high-cost support--whether incumbent providers or competitive ETCs--are 
not required to offer Lifeline-supported broadband services in their 
designated service areas where they receive frozen support. (See 47 CFR 
54.312(a); 54.313(c)(4) (requirements for incumbent LECs receiving 
Phase I frozen support); 47 CFR 54.307 (frozen support for competitive 
ETCs). However, those carriers serving non-contiguous areas that 
elected to continue receiving their existing high-cost support amounts 
in lieu of model-based support for Connect America Phase II will be 
subject to Lifeline broadband obligations once the Commission adopts 
their carrier-specific Phase II obligations.) Finally, we also clarify 
in that ETCs receiving high-cost support are not required to offer 
broadband services in Census blocks where the ETC does not receive 
high-cost support. We adopt these requirements to ensure that all 
consumers living in high-cost areas, including low-income consumers, 
have the option of subscribing to broadband once it is commercially 
available.
    18. Some parties, such as ITTA, suggest that the Lifeline program 
should be overhauled before providing support for broadband. (Given the 
significant changes we adopt within the Lifeline program, we adopt a 
budget to continue to reduce the contribution burden on consumers). 
This argument, however, overlooks the significant measures already put 
in place over the last five years to root out waste, fraud, and abuse 
and, just as importantly, underestimates the critical importance 
broadband plays for individuals on a daily basis. Since 2012, when the 
Universal Service Administrative Company (USAC), the Administrator of 
the Fund, disbursed more than $2.1 billion in Lifeline support 
payments, reforms to improve program integrity have reduced 
disbursements by nearly a third, with Lifeline support payments 
dropping below $1.5 billion in 2015.
    19. In modernizing the Lifeline program to include broadband, we 
also clarify that the current rule that prohibits the collection of 
service deposits ``for plans that . . . [d]o not charge subscribers 
additional fees for toll calls,'' applies only to standalone voice 
services. Lifeline service providers are not precluded from collecting 
service deposits for eligible broadband services. That rule plainly was 
written with standalone voice service in mind, and it does not have an 
analog in the context of broadband offerings. For these reasons, 
Section 54.401(c) is amended to clarify that the prohibition on 
collecting service deposits is limited to voice-only service plans.

[[Page 33029]]

2. Legal Authority
    20. The principles listed in Section 254 of the Act make clear that 
deployment of, and access to, telecommunications and information 
services are important components of a robust and successful federal 
universal service program, including the directive to address low-
income needs. In Section 254, Congress expressly recognized the 
importance of ensuring that low-income consumers ``have access to 
telecommunications and information services, including . . . advanced 
telecommunications and information services'' and that universal 
service is an ``evolving level of telecommunications service.'' Section 
254 of the Act also sets forth the principles that ``[q]uality services 
should be available at just, reasonable, and affordable rates'' and 
that ``access to advanced telecommunications and information services 
should be provided in all regions of the Nation.''
    21. Consistent with those statutory objectives, we conclude that 
Section 254 authorizes us to support bundled voice and BIAS as well as 
standalone BIAS by defining BIAS as a supported service for purposes of 
a Lifeline broadband program. For purposes of a given universal service 
program, Section 254(c)(1) authorizes the Commission to define 
universal service as an evolving level of telecommunications services 
that the Commission establishes periodically based on an analysis of 
several factors. The BIAS that we define as a supported service for the 
Lifeline broadband program is a telecommunications service that 
warrants inclusion in the definition of universal service in this 
context. (In the Open Internet Order, the Commission concluded that 
BIAS is a telecommunications service subject to our regulatory 
authority under Title II of the Act regardless of the technological 
platform over which the service is offered. Even before that, however, 
during the time the Commission had classified BIAS as generally an 
information service, it recognized the possibility of broadband 
Internet access transmission being offered on a common carrier basis as 
a telecommunications service. Thus, even beyond the classification of 
BIAS generally, we make clear that BIAS as the supported service for 
the Lifeline broadband program is a telecommunications service.).
    22. Based on the record before us, we find there is ample evidence 
for us to conclude that circumstances have ``evolved'' where BIAS can 
and should be included as an element of universal service pursuant to 
Section 254(c) and made available to Lifeline participants. The 
criteria set forth in Section 254(c) fully justify our finding. BIAS 
has, indeed, become ``essential to education, public health and public 
safety. . . . '' (Low-income consumers should have access to the same 
public safety features as all Americans. Lifeline providers offering a 
supported service must meet any obligations generally applicable to 
that service, including, for example, with respect to Next Generation 
911 Services. See generally 47 CFR 20.18. We also make clear that 
Lifeline providers offering texting services must provide text-to-911 
capability to subscribers in accordance with Commission rules. See 47 
CFR 20.18(q). Lifeline providers should not assess a fee for texts or 
calls to 911.). As detailed above, the Commission has a legal and 
factual basis to include BIAS as a supported service. The Commission 
also previously has concluded that directly applying Section 254 to 
BIAS will help enable us to promote adoption of broadband services and 
more flexibility going forward. We thus conclude that defining BIAS as 
the supported service for purposes of the Lifeline broadband program 
strongly advances the public interest, convenience, and necessity under 
Section 254(c)(1)(D).
    23. Our approach is also supported by Section 254(c)(1)(A). Under 
that provision, the Commission considers whether a given supported 
service is ``essential to education, public health, or public safety.'' 
We explain above the importance of BIAS to education and healthcare, 
among other things, along with the need for discounts in order to 
enable low-income consumers to realize those benefits. We therefore 
conclude that BIAS is essential for education and public health for 
low-income Americans.
    24. Section 254(c)(1)(B) directs the Commission to consider whether 
the service at issue has ``through the operation of market choices by 
customers, been subscribed to by a substantial majority of residential 
customers.'' As noted above, it is reported that 84 percent of American 
adults use the Internet and surveys have shown that when households 
have the means, they connect to the Internet at home at rates upward of 
95 percent with approximately two-thirds of Americans subscribing to 
broadband at home. Based on this data, we find that a substantial 
majority of residential customers subscribe to broadband services. 
Likewise, we find that BIAS is widely ``being deployed in public 
telecommunications networks by telecommunications carriers'' under 
Section 254(c)(1)(C) given the billions of dollars in capital 
investment that broadband service providers have spent on broadband 
networks over the last few years.
    25. We also conclude that our action to include BIAS as a supported 
service is consistent with and advances the Congressional direction and 
goals set forth under Section 706 of the 1996 Act. Section 706(a) 
directs the Commission to ``encourage the deployment on a reasonable 
and timely basis of advanced telecommunications capability to all 
Americans.'' Section 706(b) requires the Commission to determine 
whether ``advanced telecommunications capability is being deployed to 
all Americans in a reasonable and timely fashion. . . .,'' and, if the 
Commission concludes that it is not, to ``take immediate action to 
accelerate deployment of such capability by removing barriers to 
infrastructure investment and by promoting competition in the 
telecommunications market.'' The Commission has determined that 
broadband deployment is not proceeding in a reasonable and timely 
manner, most recently in the 2016 Broadband Progress Report. Providing 
support to service providers to subsidize low-income consumers' 
purchase of BIAS helps achieve our 706 objective of ``removing barriers 
to infrastructure investment.'' The Commission has recognized that a 
key barrier to infrastructure investment is lack of affordable 
broadband Internet access service. The Commission has previously 
recognized that providing federal support for low-income consumers' 
purchase of BIAS will broaden the base of consumers able to purchase 
such services, thereby increasing consumer demand and incentives to 
deploy broadband in areas where broadband is not yet available. Given 
the Commission's objective of ensuring availability and affordability 
of broadband services, and the importance of broadband to consumers in 
the 21st Century, providing support to Lifeline providers to subsidize 
low-income consumers' purchase of broadband services helps achieve our 
Section 706 objectives.

B. Characteristics of Lifeline Support

    26. In Section III.A, Modernizing Lifeline to Support Broadband, we 
take the important step of amending our rules to include BIAS as a 
supported service. In this Section, we now act on several proposals in 
the 2015 Lifeline FNPRM directed at improving the Lifeline program so 
that it better supports robust service and strategically targets 
valuable universal service funds

[[Page 33030]]

in a way that is faithful to our mandate to make services affordable to 
low-income consumers. We are persuaded that giving qualifying consumers 
the choice of receiving support for either fixed or mobile offerings 
will better serve consumers as competitive forces help to encourage all 
Lifeline providers to make attractive offerings within the Lifeline 
market. In particular, we modify our Lifeline rules to direct support 
over time to broadband services. We also adopt minimum service 
standards designed to ensure robust service levels for Lifeline 
subscribers and which can be updated on a regular basis so that the 
support provided by the Lifeline program continues to meet our 
statutory mandate to ensure ``reasonable comparability'' of services. 
We also establish permanent monthly support levels.
1. Supported Modes of Service
    27. Discussion. In this Section, we adopt several reforms to 
empower low-income consumers with competitive choices for robust, 
affordable Lifeline services necessary for full participation in 
today's economy. First, to keep pace with the marketplace and our goals 
of ensuring the availability of broadband and voice services, we hereby 
amend our rules to permit Lifeline providers to receive Lifeline 
support for standalone mobile or fixed broadband service offerings. 
Second, for both fixed and mobile voice services, to ensure the 
Lifeline program continues to focus its funding on modern, future-
facing services for which affordability is an issue, we phase in a 
requirement that to be eligible for Lifeline support, a voice service 
must include broadband service, thereby phasing-out support for voice 
service as a standalone option. In doing this, we carve out an 
exception for the phase-out of standalone voice service provided by 
ETCs in those Census blocks where the ETC is the only Lifeline service 
provider in that given Census block. To prevent undue disruption and 
allow the marketplace to adjust, we adopt a multi-year transition and 
also direct the Bureau, near the end of the transition, to review the 
Lifeline market and submit a report to the Commission recommending 
whether action should be taken to revise the approach to supported 
services that we adopt today (State of the Lifeline Marketplace 
Report). We expect the full Commission will take appropriate action if 
necessary to make changes to the program within six months of receiving 
the report, for example adjusting support levels or minimum service 
standards, so that the Lifeline program continues to achieve its 
objectives. Barring further Commission action, once this transition is 
complete, we will require voice service to be bundled with an eligible 
broadband service in order for it to be supported. Finally, we retain 
our approach to permit support for bundled offerings and our limit of 
one Lifeline subscription per household.
    28. Fixed and Mobile Broadband Offerings. Given the importance of 
broadband to consumers in our society and how it is has become 
essential to education, public health, and public safety, we believe it 
is necessary to provide Lifeline consumers the option of applying the 
Lifeline benefit to a standalone broadband offering. Standalone 
broadband services are increasingly popular as consumers transition 
from bundled services to broadband-only plans. In many areas, as the 
communications market evolves, broadband is replacing traditional 
telephone service and providing subscribers with voice and texting 
options in addition to Internet access. To close the digital divide and 
ramp up digital readiness for all consumers in the United States, we 
amend our rules to give Lifeline providers the option of offering 
standalone broadband services as a Lifeline supported service. By 
allowing support for standalone broadband services with Lifeline, we 
add an additional measure of consumer choice as well as the opportunity 
for innovative providers to serve low-income consumers in new ways. 
Supporting standalone broadband offerings will not only allow consumers 
to subscribe to offerings that work best for their needs, but Lifeline 
providers will also seek to find solutions that work best for their 
customers. (We make clear that ETCs receiving high-cost support are 
required to offer a Lifeline-supported standalone broadband offering 
where the ETC is required to offer Lifeline-supported BIAS to ensure 
that all low-income consumers, including those living in high-cost 
areas, have the option to subscribe to standalone broadband offerings).
    29. We allow Lifeline subscribers to apply the discount to fixed or 
mobile standalone broadband offerings. (In the USF/ICC Transformation 
Order, the Commission made clear that carriers may not charge any 
Lifeline customers an Access Recovery Charge (ARC). By extension, as we 
include broadband as a Lifeline-supported service, we make clear that 
rate-of-return carriers are not required to impute an amount equal to 
their ARC rate for consumer broadband-only loops provided to Lifeline 
broadband customers.). We empower consumers to make this choice. While 
fixed and mobile broadband services both provide access to online 
services, there are some key tradeoffs consumers must consider 
regarding the utility of each service. We recognize these tradeoffs 
both in terms of technological constraints and how each mode is offered 
in the market. We also recognize different households will have 
different preferences for certain product characteristics, such as 
mobility or data usage allowance. Therefore, we find it important to 
give qualifying consumers the choice of receiving support for either 
fixed or mobile broadband service. This allows households a choice as 
to which service to apply the discount towards. Permitting a Lifeline 
provider to offer standalone broadband offerings will also ensure that 
Lifeline consumers are not forced to purchase services they may not 
want within a bundle. We agree with many commenters who argue that it 
is important to enable low-income consumers to choose the services that 
best meet their needs, but at the same time put measures in place to 
ensure such Lifeline offerings are affordable and comparable to what is 
currently available in the market. For many people, this includes the 
option of subscribing to a standalone broadband offering.
    30. We are persuaded that giving qualifying consumers the option of 
receiving support for either fixed or mobile standalone broadband will 
better serve consumers as competitive forces encourage Lifeline 
providers to make valuable broadband offerings supported by the 
Lifeline program. More attractive offers which result in higher 
consumer benefits will mean that the funds provided by contributors 
will be used to provide greater value. For example, we envision a 
Lifeline provider seeking to address various ``digitally divided'' 
consumers with attractive offers of service unique to families with 
children or the elderly.
    31. Voice-only Offerings. As part of our modernization efforts, and 
with a keen view toward directing Lifeline funds toward services in a 
way that reflects the technological and marketplace evolution toward 
data services, we find that Lifeline services must include a broadband 
offering after the transition period set forth below. To be sustainable 
and achieve our goals of providing low-income consumers with robust, 
affordable, and modern service offerings, a forward-looking Lifeline 
program must focus on broadband services. Therefore, based on the 
record before us, we conclude that it is necessary that going forward 
the Lifeline discount will no longer apply to

[[Page 33031]]

a voice-only offering following an extended transition period, except 
as provided below in Census blocks with only one Lifeline provider. We 
are persuaded that it is necessary to use a multi-year transition 
ending in 2021. After this transition, we will continue to support 
voice service when bundled with a broadband service which meets the 
minimum service standards set forth below.
    32. As a general matter, we adopt a technologically neutral 
approach and the schedule with respect to support for standalone voice 
service will apply equally to mobile and fixed providers of voice 
services. We recognize, however, that in some limited circumstances an 
ETC that is providing voice service may be the only Lifeline provider 
in a given area when Lifeline support for standalone voice service 
otherwise would have been phased out. With respect to any area where a 
provider is the only Lifeline provider, consistent with the transition 
described in detail below, the provider will retain its ETC obligations 
as a Lifeline provider and may receive Lifeline support up to $5.25 per 
month for standalone voice service provided to eligible subscribers. 
(See infra Section III.B.3 (Support Levels). This assumes that the ETC 
has not qualified for the conditional forbearance described in Section 
III.E.2 (Forbearance Regarding the Lifeline Voice Service Obligations) 
or relinquished its ETC status in relevant part.
    33. The animating principle of the Lifeline program has always been 
affordability. For years, Lifeline support focused on making affordable 
fixed residential voice services, providing a discount that combined 
with a customer contribution to help low-income Americans connect to 
the telephone network. In 2005, we expanded the program to allow 
participation by non-facilities-based providers, including prepaid 
wireless resellers. Since then, the marketplace for both Lifeline and 
non-Lifeline voice offerings has evolved dramatically. Indeed, non-
Lifeline voice rates have fallen drastically since the 2012 Lifeline 
Reform Order. (By the end of 2011, an offering of 450 voice minutes and 
unlimited text, would cost $49.99. Today, one can subscribe to an 
unlimited voice and text plan for $25 per month). Some observers have 
pointed out that even though millions of households are eligible for--
but do not participate in--the Lifeline program, the vast majority of 
these non-participating households still manage to obtain access to 
voice communications. (USAC reports that there are at least 39.7 
million eligible Lifeline households in the states and District of 
Columbia with a participation rate of 32 percent). In contrast, 
broadband adoption among low-income households remains well below that 
of other groups, and affordability is widely cited as one of the 
primary reasons.
    34. Our review of the record reveals that voice service is 
declining in price within the marketplace. This is particularly true of 
mobile voice services. Some voice-only plans run as low as $10 per 
month. As we recognized in the 2015 Lifeline FNPRM, the cost of 
provisioning wireless voice service has decreased significantly since 
the 2012 Lifeline Reform Order, and there are no indications such cost 
decreases will cease. Even outside the Lifeline program, cost decreases 
have led to a large variety of reasonably priced voice options provided 
by providers. One indication that voice service is declining in price 
is that, as of January 2014, mobile voice adoption rates exceeded 90 
percent overall and 84 percent for low-income adults. In the Eighteenth 
Mobile Competition Report, the Wireless Telecommunications Bureau 
reported that the nationwide penetration for mobile connections now 
exceeds 100 percent, meaning that the number of connected devices 
exceeds the total population of the United States. As of September 
2015, CTIA has reported over 355.4 million mobile phone subscribers. 
The Eighteenth Mobile Competition Report also noted that, according to 
CTIA, reported annual minutes of use in 2014 reached over 2.45 
trillion. In contrast, the record reveals that data is not as 
ubiquitous as voice and certainly not as affordable. Pew Research 
Center recently reported that home broadband adoption appears to have 
plateaued with 67 percent subscribing to such service, down slightly 
from 70 percent in 2013. Smartphone adoption is also only 64 percent 
overall and 13 percent of low-income Americans rely solely on a 
smartphone for their Internet access. (In the Eighteenth Mobile 
Competition Report, the Wireless Telecommunications Bureau noted that, 
according to ComScore, approximately 77 percent of all mobile 
subscribers had a smartphone in the third quarter of 2015, compared to 
approximately 51 percent in the third quarter of 2012). Furthermore, as 
demonstrated by the Pew Research Center, many Americans experience 
difficulties in affording and retaining service on smartphones. In 
fact, those who rely the most on only their smartphone for Internet 
access have the most difficulty retaining service given that such 
consumers frequently reached their data caps as part of their monthly 
plan.
    35. Technological evolution and market dynamics have also resulted 
in more choices and decreasing prices for fixed voice service. The 
record reflects that customers are increasingly opting for voice 
services made possible through fixed broadband connections, including 
VoIP as well as over-the-top voice applications. While some differences 
between VoIP and traditional fixed voice service remain, we agree with 
commenters that note that such VoIP services will likely improve and 
introduce more competition into the marketplace over time. Meanwhile, 
the Consumer Price Index, maintained by the Bureau of Labor Statistics, 
has found that telephone services, including both mobile and fixed 
offerings, have only increased in price during one year from 2010 to 
2014, while the price of all goods and services generally increased 
each year during the same time period. We also recognize the nationwide 
trend that consumers are increasingly migrating away from fixed 
residential voice service to mobile voice services, which, as discussed 
above, have decreased in price. This information further supports our 
technologically neutral conclusion that, while recent trends in fixed 
and mobile voice service offerings are not identical, both modes of 
voice service are undergoing significant change in response to 
technological developments and new competitive service offerings 
enabled by those developments.
    36. Affordability must remain a central touchstone within the 
Lifeline program. Mindful of Congress's Section 254 mandate that 
``[q]uality services should be available at just, reasonable and 
affordable rates,'' we believe that the Lifeline program should 
directly support those services that are otherwise unaffordable to 
consumers, but for a Lifeline discount. We also find that continuing to 
support a voice-only product that is reasonably priced will result in a 
Lifeline program that fails to deliver the ``evolving level'' of 
services that ``are being deployed'' (emphasis added). While much of 
the Lifeline market is competitive, we are concerned that continuing to 
support a voice-only service would artificially perpetuate a market 
with decreasing demand and incent Lifeline providers to avoid adjusting 
their business practices. Instead, these Lifeline providers may have an 
incentive to maintain the status quo and avoid providing low-income 
customers with modern services as Congress intended. For these reasons, 
we do not believe it is consistent with Congress' directive to continue 
providing support to voice-only service

[[Page 33032]]

within the Lifeline program outside of the transition period discussed 
below.
    37. Several commenters have argued that the Commission should 
continue to permit Lifeline providers to offer standalone voice 
service. These parties contend that the Commission should retain 
support for standalone voice service given that many low-income and 
unemployed Americans rely on such means of communication within their 
daily lives. We agree with such commenters that voice continues to be 
an important resource for consumers to utilize in communicating with 
others. But we are not persuaded that such service will no longer be 
available or affordable if it is part of a bundle with broadband 
services. We make this judgment based on evidence of the power of 
market forces in the marketplace to compete and innovate to meet 
consumer demand. We take it as given that many consumers have demanded 
and will continue to demand voice communications. We predict that 
Lifeline providers will be responsive to this consumer demand by 
bundling voice with data offerings and otherwise ensuring consumers are 
able to easily use a voice service with their data plan. We believe 
that the innovative Lifeline providers currently in the program will be 
just as innovative in packaging competitive voice offerings with the 
supported broadband service. Indeed, wireless Lifeline providers have 
already recognized the increased demand for broadband and as a result 
are starting to include broadband options within their Lifeline 
offerings.
    38. We further recognize that, in the existing Lifeline 
marketplace, Lifeline providers have met consumers' demands for 
texting, although it is not a Lifeline-supported service. Many Lifeline 
providers under their own volition have offered unlimited texting with 
the Lifeline voice service. Mobile plans offered to non-Lifeline 
subscribers are priced as low as $20 for unlimited talk and text when 
bundled with data, whereas some Lifeline plans offer as much as 
approximately 500 voice minutes and text. In the same way, we would 
expect Lifeline providers would be incentivized by competitive forces 
to meet the demand for voice service and make voice services available 
to customers.
    39. We emphasize that nothing in our rule change will prevent a 
Lifeline provider from offering a bundle of voice and broadband service 
that delivers the voice component over either non-IP or IP 
technologies. In this way, we allow for Lifeline providers to choose 
how, whether, and when to transition to the use of newer technologies 
for delivering voice service. As part of the overall Lifeline 
modernization, this change sets the stage for a full program 
modernization where Lifeline providers are delivering voice services to 
customers over modern technologies in a much more efficient way that 
benefits consumers and provides more value to the Fund.
    40. In summary, to ensure that future Lifeline offerings are 
sufficient for consumers to participate in the 21st Century economy at 
affordable rates, and to obtain the most value possible from the 
Lifeline benefit, we modify the Lifeline rules to support voice 
services only through a bundle that includes broadband services 
pursuant to the transition period detailed below. This phase-out of 
support will not apply to ETCs providing voice service in census blocks 
where they are the only Lifeline service provider. We are persuaded 
that Lifeline must provide a robust, affordable service and be forward-
looking so that as newer technologies become more widely available, the 
program can continue to deliver value to the low-income subscriber and 
to the ratepayers supporting the program. Encouraging use of such 
voice-only service indefinitely is inconsistent with the Act's guidance 
that ``[u]niversal service is an evolving level of telecommunications 
services'' that ``are being deployed in public telecommunications 
networks.''
    41. Transition. We recognize, however, that a transition is 
necessary to avoid undue consumer disruption and to allow Lifeline 
providers sufficient time to adjust operations as the Commission moves 
from a primarily voice-only Lifeline program to a Lifeline program 
embracing broadband services. We believe the best way to conduct this 
transition is by gradually reducing the monthly support level for 
voice-only service. At the same time, we will phase-in higher mobile 
broadband minimum service standards. As detailed in Sections III.B.3 
(Support Levels) and III.B.2.b (Minimum Service Standards for Lifeline 
Services), the support level for voice-only service will decline over a 
multi-year period while the minimum service standard for mobile voice-
only service will be set at an initial level, and will be increased 
until the minimum standard will be 1,000 minutes per month. Such a path 
to robust offerings is in line with the fact that a ``substantial 
majority'' of non-Lifeline subscribers already purchase plans with 
1,000 or more minutes using either fixed or mobile services. Given that 
fixed voice service often already includes unlimited minutes, we will 
not impose minimum service standards on fixed voice service offerings.
    42. This initial voice-only minimum service standard will become 
effective the later of December 1, 2016 or 60 days after the date when 
the Commission receives approval from the Office of Management and 
Budget (OMB) for the new information collection requirements in this 
Order subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 
104-13. At the same time, beginning on the same date, a phase-in of 
mobile broadband will begin. As described below, this transition is 
scheduled to continue until December 1, 2021. During the initial phase-
in period, from December 1, 2016 through November 30, 2019, a voice and 
broadband Lifeline bundle must include at least one supported service 
meeting the minimum service standards applicable at that time. From 
December 1, 2019 to November 30, 2021, a voice and broadband Lifeline 
bundle must include a BIAS offering that meets the broadband minimum 
service standards applicable at that time in order to receive the full 
$9.25 benefit. From December 1, 2019 to November 30, 2021, a voice and 
broadband Lifeline bundle with a broadband offering that does not meet 
the applicable mobile broadband minimum service standards but does meet 
the mobile voice minimum service standard may receive the applicable 
support level for standalone mobile voice.
    43. Prior to December 1, 2019, voice-only support will be set at 
$9.25 per month. Beginning December 1, 2019 the support amount will 
decline to $7.25 per month; beginning December 1, 2020, it will decline 
further to $5.25 per month. During that time period, we will also 
phase-in increasing minimum service standards for mobile voice service. 
Beginning the later of December 1, 2016 or 60 days after PRA approval, 
supported mobile voice offerings must include at least 500 minutes per 
month; beginning December 1, 2017, supported mobile voice offerings 
must include at least 750 minutes per month; and beginning December 1, 
2018, supported mobile voice offerings must include 1000 minutes per 
month. Beginning December 1, 2021, there will no longer be support for 
voice-only service, or voice service bundled with a broadband offering 
that does not meet the applicable minimum service standard for BIAS, 
unless the Commission has acted upon recommendations to do otherwise 
presented in the State of the Lifeline Marketplace Report. However, 
voice service will continue to be supported as long as it is offered 
with

[[Page 33033]]

a broadband service meeting the minimum service standards.
    44. Over the same period for which the voice-only support level 
declines for fixed and mobile voice services, fixed and mobile 
broadband will receive $9.25 in monthly support and the minimum service 
standard for mobile broadband service will gradually increase. 
Specifically, on the later of December 1, 2016 or 60 days after the 
Commission receives PRA approval of the information collection 
requirements in this Order, the mobile broadband minimum service 
standards for data usage allowance will be set at 500 megabytes (MB) 
monthly at 3G speeds. The minimum data usage allowance will increase to 
1 gigabyte (GB) on December 1, 2017 and to 2 GB on December 1, 2018. On 
December 1, 2019, the minimum standard for mobile data usage will be 
set based on a forward-facing updating mechanism using objective data 
as described below. From December 1, 2016 to November 30, 2019, a voice 
and broadband Lifeline bundle must include at least one supported 
service meeting the minimum service standard applicable at that time 
for such supported service. (See infra Section III.B.2.)
    45. Minimum Service Standards. After December 1, 2021, in order to 
receive the full support amount of $9.25 for mobile services, ETCs must 
provide the minimum service standards for BIAS as a Lifeline supported 
service to qualifying low-income consumers. See infra paras. 97-22). As 
discussed above, from December 1, 2019 to November 30, 2021 a voice and 
broadband Lifeline bundle must include a broadband offering that meets 
the applicable minimum service standard to be eligible for the full 
$9.25 benefit.
    46. However, given the inherent uncertainty in the future Lifeline 
marketplace, we also direct the Bureau by June 30, 2021, to submit to 
the Commission a State of the Lifeline Marketplace Report. This report 
should review the Lifeline marketplace for the purpose of recommending 
to the Commission whether the transition set out in this Order should 
be completed or whether the Commission should act to continue delaying 
Lifeline's transition to chiefly supporting broadband services. This 
report should in particular consider the prevalence of subscriptions to 
various service offerings in the Lifeline program, the affordability of 
both voice and broadband services, the pace since adoption of this 
Order at which voice and data usage has changed, and the associated net 
benefits of continuing to support voice service as a standalone option. 
(The Bureau in the State of the Lifeline Marketplace Report should in 
particular follow the principles presented in Part E of OMB Circular A-
4 for the purpose of determining whether to continue support for voice-
only service. See OMB Circular A-4 https://www.whitehouse.gov/omb/circulars_a004_a-4/). We expect the full Commission will take 
appropriate action if necessary to make changes to the program within 
six months of receiving the report, for example, adjusting support 
levels or minimum service standards, so that the Lifeline program 
continues to achieve its objectives. If the Commission does not act 
following the recommendation(s) in the State of the Lifeline 
Marketplace Report then the transition will be completed on December 1, 
2021.
    47. Bundled Service Offerings. We continue to allow low-income 
consumers to apply the Lifeline discount to support fixed and mobile 
bundles that include one or more of the supported services so long as 
one of the supported services offered satisfies the minimum service 
standard requirements. In other words, the discount may be applied to a 
mobile bundle of voice and data services so long as either the voice 
service or the data service meets the applicable minimum service 
standard. Other non-supported services (e.g., texting) may be bundled 
with supported services and the Lifeline discount may be applied to the 
bundle. This does not represent a change in policy as many Lifeline 
providers have voluntarily offered non-supported services to consumers 
bundled with Lifeline-supported services. We agree with commenters and 
view such offerings as enhancing consumer benefits. We recognize this 
as an illustrative case whereby Lifeline providers identify consumer 
demand for a non-supported service such as texting and voluntarily 
provide the service consumers demand apart from any regulation from the 
Commission.
    48. One-Per-Household Rule. Through our reforms today, we continue 
to believe it is necessary to apply the one-per-household requirement 
within the Lifeline program. Just as the Commission concluded in the 
2012 Lifeline Reform Order, we believe a one-per-person rule or one-
per-service rule--providing an individual household an opportunity to 
receive one supported service for both voice and broadband--could 
increase the size of the Lifeline program by a significant percentage 
above the projected Fund size. By limiting support to one Lifeline 
offering and one household, we find that continued implementation of 
the one-per-household rule strikes an appropriate balance between 
ensuring that support is available for eligible low-income households 
against disbursing universal service funds in a fiscally prudent and 
sustainable way. By continuing to enforce the one-per-household rule, 
we also decline to adopt some commenters' suggestions that a household 
be able to receive more than one discount to support multiple services. 
Instead we take an alternate path suggested by commenters, providing 
consumers a choice as to which service (or set of bundled services) 
their Lifeline discount is used to support.
2. Minimum Service Standards
a. Introduction
    49. In the 2015 Lifeline FNPRM, we proposed establishing minimum 
service standards for all Lifeline service offerings ``to ensure the 
availability of robust services for low-income consumers,'' and we 
proposed updating the minimum service standards. We now adopt detailed 
rules in line with these proposals, and revise Section 54.408 of the 
rules. In order for Lifeline customers to obtain the type of robust 
service which is essential to participate in today's society, we 
conclude that forward-looking minimum service standards are required, 
and that those standards must be updated on a regular basis.
    50. The minimum service standards we adopt are rooted in the 
statutory directives to ensure that quality services are available at 
``just, reasonable, and affordable rates,'' and that advanced 
telecommunications services, the services which have ``been subscribed 
to by a substantial majority of residential customers,'' are available 
throughout the nation. We interpret these directives as requiring the 
Commission to ensure that low-income consumers can both afford and 
physically access services that are available throughout the Nation. 
The standards adopted below ensure that Lifeline supports the type of 
service the Act specifically requires, and the updating mechanisms will 
give Lifeline subscribers confidence that their supported service will 
remain robust as technology improves through a predictable mechanism.
    51. The minimum standards we establish will also account for the 
need for Lifeline service offerings to be affordable. As we noted, 
``the Lifeline program is specifically targeted at affordability,'' and 
it is necessary to establish minimum service levels that are both 
affordable and reasonably comparable. Commenters also

[[Page 33034]]

emphasized the importance of affordability to facilitate broadband 
adoption. The minimum standards that we establish strike a balance 
between the demands of affordability and reasonable comparability by 
providing consumers with services that allow them to experience many of 
the Internet's offerings, but not mandating the purchase of 
prohibitively expensive offerings.
    52. We first explain which services will have minimum service 
standards. We also set initial minimum service standards and provide 
updating mechanisms. Finally, we describe exceptions made for providers 
who do not offer services meeting our minimum standards.
b. Minimum Service Standards for Lifeline Services
    53. Discussion. We now modify our rules to establish minimum 
service standards for all Lifeline supported services based on services 
to which a ``substantial majority'' of consumers have already 
subscribed. We also set forth the data sources that will be used to set 
and update minimum service standards. We establish separate standards 
covering speed and data usage allowances for both fixed and mobile 
services in recognition of each service's distinct characteristics, and 
we establish minimum standards for mobile voice service, until 
standalone mobile voice is no longer a supported service.
    54. Numerous commenters support establishing minimum service 
standards for broadband; they emphasize that Lifeline customers should 
not need to accept ``second-tier'' service, and that functional 
Internet access is essential to allow consumers to fully participate in 
society. Broadband access can help households meet their ``basic needs 
for education, health care, disabilities access, and public safety.'' 
While other commenters argue that minimum service standards are 
unnecessary, or unduly burdensome, we generally believe that, at a 
minimum, services that are subscribed to by a substantial majority of 
the nation's consumers should receive Lifeline funding. We are 
unpersuaded by the argument that minimum service standards are unduly 
burdensome. As discussed in greater detail, infra, we grant exemptions 
in certain situations where a fixed broadband provider does not 
currently offer service meeting the minimum standards.
    55. In the 2015 Lifeline FNPRM, we also sought comment on ``whether 
and how service levels would vary between fixed and mobile broadband 
service.'' While some commenters argued that the same standards should 
apply to fixed and mobile broadband, we believe that different 
standards are appropriate because of the technological differences 
between fixed and mobile broadband, the two services' different 
capacity patterns, and the different constraints on service. For 
example, mobile broadband providers face spectrum constraints that 
fixed providers do not, and the speed mobile broadband providers can 
deliver to consumers is far more dependent on the consumer's location. 
For similar reasons, the Commission has established different minimum 
service standards for fixed and mobile broadband when setting carrier 
obligations in the Connect America Fund (CAF). Based on all of these 
factors, we conclude that different minimum service standards for fixed 
and mobile broadband are appropriate.
    56. Finally, while setting initial minimum service standards is 
necessary to guarantee access to services that a ``substantial 
majority'' of residential consumers have already subscribed to, it is 
equally important to regularly update those standards to make sure that 
Lifeline continues to support an evolving level of telecommunications 
service. Because technology develops at a rapid pace, any minimum 
standards we set would quickly become outdated without a timely 
updating mechanism. Commenters also agree that any minimum service 
level must be updated regularly. Accordingly, we conclude that minimum 
standards must be updated on a regular basis to ensure that consumers 
are able to continue to receive sufficiently robust service similar to 
what a substantial majority of American consumers subscribe to. We also 
conclude that the updating mechanism will rely on an ``objective, data-
based methodology,'' as we proposed in the 2015 Lifeline FNPRM. 
Finally, we update Section 54.408 of our rules in accordance with this 
conclusion.
(i) Fixed Broadband
    57. We first discuss the minimum standards for fixed broadband 
service. In the 2015 Lifeline FNPRM, we sought comment on 
``establish[ing] an objective standard that could be updated on a 
regular basis simply by examining new data about fixed broadband 
service.'' Although we recognized that ``the prevailing benchmark for 
fixed broadband is the speed of the service,'' we also sought comment 
on data caps and whether to set a minimum data usage allowance for 
fixed broadband service. While some commenters opposed minimum service 
standards for fixed broadband, many other commenters suggested that 
minimum standards were necessary for both speed and data usage 
allowance. We believe that for consumers to fully benefit from the same 
type of Internet service that has ``been subscribed to by a substantial 
majority'' of Americans, those consumers must have access to services 
of both sufficient speed and data usage allowance. Accordingly, we 
establish minimum service standards for both speed and data usage 
allowance which both must be met for providers to receive Lifeline 
funds.
    58. Data Sources. In response to the 2015 Lifeline FNPRM commenters 
proposed various methods to set initial minimum service standards for 
fixed broadband: Some commenters proposed using specific numerical 
thresholds; others supported using existing Commission testing 
mechanisms to determine initial minimum service standards; and a third 
group of commenters supported ``functional'' minimum service standards 
with a focus on making sure that consumers could ``perform a full range 
of online activities.''
    59. In the 2015 Lifeline FNPRM we asked if we should ``consider 
setting any minimum standards based on the FCC Form 477 (Form 477) 
data,'' and several commenters supported the idea. We also sought 
comment on using CAF standards in the Lifeline program. While a few 
commenters opposed using CAF standards because meeting the CAF 
standards would be too expensive for providers, or because the CAF 
standards would not provide sufficient flexibility for providers who do 
not currently meet the standards, other commenters supported using CAF 
standards to determine the initial minimum standards for fixed 
broadband.
    60. We conclude that the minimum service standards for fixed 
broadband speed should be based on the service to which a ``substantial 
majority'' of consumers subscribe as determined using available 
subscriber data reported on the Form 477. As we discuss in greater 
detail below, while we do not formally define the term ``substantial 
majority'' for all supported services, we believe that 70 percent of 
consumers constitutes a ``substantial majority'' in the context of 
fixed broadband speeds. (While we conclude that 70 percent of consumers 
constitutes a ``substantial majority'' as it relates to fixed broadband 
speeds, we lack the data to precisely determine what percent of 
consumers subscribe to other modes of services at particular service 
levels. Despite this, we still set minimum standards for other 
supported services at levels that in our judgement constitute

[[Page 33035]]

a substantial majority of consumers based on the information 
available.).
    61. We also conclude that focusing solely on the ``functionality'' 
of a consumer's Internet service would not provide a workable standard 
for the Commission to use when updating annual service standards 
because it would require the Commission to determine the numerical 
threshold of ``functionality'' on a regular basis. By using numerical 
thresholds indexed to what consumers actually subscribe to, the 
Commission will allow consumer usage to determine what speeds are 
``reasonably comparable.''
    62. Because providers already ``report extensively on their 
offerings'' on Form 477 twice a year, it is an appropriate repository 
for data to set and regularly update the minimum service standard for 
fixed broadband speeds. Additionally, the Commission previously 
emphasized that it uses Form 477 to ``update our universal service 
policies and monitor whether our statutory universal service goals are 
being achieved.'' Because Form 477 provides an accurate picture of what 
services American consumers actually subscribe to, and because it is 
collected on a regular basis, we conclude that Form 477 provides the 
best data with which to set and update the minimum service standard for 
fixed broadband speeds.
    63. In addition, for the fixed broadband data usage allowance 
minimum service standard, we conclude that the data usage allowance 
standards currently used in the Connect America Fund for rate of return 
carriers electing A-CAM support are appropriate. We base the initial 
data usage allowance standard on this CAF standard because we do not 
currently have a source of available data that could be used to 
determine what percentage of subscribers purchase offerings with 
certain data usage allowance limits. We therefore set the initial data 
usage allowance standard for fixed broadband at the CAF rate-of-return 
standard for carriers electing A-CAM support, which is 150 GB per month 
for fixed broadband. We further conclude that the minimum service 
standards for data usage shall be updated based on data in the 
Commission's Urban Rate Survey and other appropriate and relevant data 
sources. The Urban Rate Survey was originally created as part of the 
Commission's Connect America Fund initiative in part to allow the 
Bureau ``to specify an appropriate minimum for data usage allowance 
allowances'' in CAF, and we believe it can serve a similar purpose 
here. While we set the initial data usage allowance standard for fixed 
broadband based on the CAF rate-of-return standard for carriers 
electing A-CAM support, we also believe the Urban Rate Survey in the 
future will help guide the Bureau to determine the usage allowance most 
commonly offered in the fixed broadband marketplace. (We also encourage 
providers to explore options for increasing usage allowances for 
Lifeline consumers who are deaf, hard of hearing, deaf-blind, or have a 
speech disability and rely on video connection for Video Relay Services 
and point-to-point calls and other bandwidth-intensive accessibility 
functionalities.).
    64. Initial Minimum Service Standards. While we conclude that Form 
477 data will be used to set and update the minimum standards for 
download and upload speeds, we also conclude that the Connect America 
Fund rate-of-return standard is the best starting point for setting 
minimum service standards for data usage allowance. Finally, we 
recognize that for the purpose of updating the minimum standard for 
capacity, the Urban Rate Survey and potentially other data will be 
useful sources for the Bureau to consider.
    65. Speed. We conclude that in order to determine what fixed 
broadband speeds a ``substantial majority'' of Americans subscribe to, 
we will use the 30th percentile of subscribed speeds based on Form 477 
data. By using the 30th percentile, we arrive at a speed to which 70 
percent of Americans already subscribe, and we conclude that 70 percent 
constitutes a substantial majority. Although the Commission has not 
previously defined what constitutes a ``substantial majority,'' it has 
concluded that it is more than a simple majority. Based on the most 
recent Form 477 data, the 30th percentile of subscribed fixed broadband 
speeds is 10/1 Mbps. Put differently, this means that 70 percent of 
residential broadband subscriptions already meet or exceed 10/1 Mbps 
speeds. (To order the subscription data in Form 477 for the purposes of 
determining percentiles, residential subscriptions were ordered 
lexicographically by download speed and then upload speed.). Based on 
Form 477 data on what consumers actually subscribe to, we set the 
initial minimum service speed standards for fixed broadband at 10 Mbps 
for download and 1 Mbps for upload. An offering must meet both download 
and upload speed minimums to be considered to meet the minimum service 
standards.
    66. Usage Allowance. As stated supra we set the initial usage 
allowance standard for fixed broadband at the CAF rate-of-return 
standard, which is 150 GB per month for fixed broadband.
    67. Updating Minimum Service Standards. We conclude that Form 477 
will be used to update the minimum service standard for fixed broadband 
speed. When updating the minimum service standards in the future, the 
Bureau will use data from the most recently available and usable Form 
477. Using Form 477, the 30th percentile level of residential broadband 
service speeds reported nationally will be used as the speed component 
of the minimum service standard. We find that this benchmark represents 
a service standard that is consistent with our statutory directive in 
Section 254 of the Act. Accordingly, we conclude that using the 30th 
percentile of residential broadband speed is appropriate, because this 
level indicates that seventy percent of Americans subscribe to it, or 
something more robust.
    68. For the fixed broadband minimum service standards, the Bureau 
will, on delegated authority, on an annual basis, release a Public 
Notice on or before July 31 notifying the public of the updated 
standard levels for speed and data usage allowance to be effective on 
December 1 for the next twelve months. The updated speed standard will 
be calculated using the above specified values from the most recent 
available Form 477. In the event the Bureau does not issue the Public 
Notice by July 31, or if any of the data required by the calculation 
are older than 18 months, the minimum service level for fixed broadband 
speed will be set at the greater of either (1) its current level; or 
(2) the fixed broadband speed standard used in the Connect America Fund 
for rate-of-return carriers. Because the Connect America Fund is also 
designed to provide advanced telecommunications services to America's 
consumers, we conclude that its fixed broadband speed standards provide 
an acceptable alternative in the event the Bureau does not complete its 
update in a timely manner.
    69. For the fixed broadband minimum service data allowance usage 
standard, the Bureau will, on delegated authority, on an annual basis, 
release a Public Notice on or before July 31 notifying the public of 
the updated standard level to be effective on December 1 for the next 
twelve months. The updated fixed broadband minimum service standard for 
data allowance usage will be the greater of (1) an amount the Bureau 
concludes a ``substantial majority'' of American consumers already 
subscribe to; or (2) the Connect America Fund data usage allowance 
standard set for rate-of-return carriers.

[[Page 33036]]

(ii) Mobile Broadband
    70. We next discuss the minimum service levels for mobile broadband 
services in the Lifeline program and revise Section 54.408 of the 
rules. In the 2015 Lifeline FNPRM, we sought comment on whether minimum 
standards were appropriate for mobile broadband, and what criteria 
should be used to set those standards. Multiple commenters supported 
minimum standards for mobile broadband, while others were opposed. We 
agree with commenters who argue that some consumers only have access to 
mobile broadband, and that low-income consumers are particularly likely 
to only have access to mobile broadband. For these low-income 
consumers, it is vital that the offered service provides sufficient 
speed and capacity to allow the user to utilize all that the Internet 
has to offer. Accordingly, we conclude that minimum standards for both 
speed and data usage allowance are appropriate.
    71. Data Sources. In the 2015 Lifeline FNPRM, we sought comment on 
setting minimum service standards for mobile broadband. We specifically 
sought comment on setting a minimum standard for capacity at 1.8 GB per 
person per month, which is what the average American consumer used in 
2014. Some commenters believed that requiring 1.8 GB would be too 
expensive for providers, or would require a significant charge for 
consumers, while others argued that 1.8 GB per month per subscriber 
would be insufficient for consumers without access to fixed broadband. 
While most commenters did not propose specific numerical thresholds, 
one commenter proposed requiring 1 GB of 4G data and unlimited 3G data. 
We are mindful that Lifeline is meant to support a household, as 
opposed to an individual, and we must take this into consideration when 
setting the proper minimum service standard for mobile broadband. 
Accordingly, as we discuss in more detail below, we conclude that after 
an initial schedule of minimum service standards, updated minimum 
service standards for mobile broadband data usage allowance will be 
based on calculation of a mobile data usage level by using data set 
forth in the Commission's annual Mobile Competition Report and other 
available data sources For the mobile broadband minimum service 
standard for speed, we rely on Form 477 data while also incorporating 
industry mobile technology generation (i.e. 3G, 4G).
    72. Initial Schedule of Data Usage Allowance. We conclude that, in 
order to allow the Lifeline market an appropriate period to adjust to 
the introduction of mobile broadband into the program, we should adopt 
a phased-in schedule of minimum service standards for mobile data usage 
allowances. After the period of time addressed in the schedule, the 
regular updating mechanism for mobile broadband service will apply 
unless the Commission acts otherwise based on recommendations in the 
State of the Lifeline Marketplace Report. Beginning on the later of 
December 1, 2016 or 60 days after PRA approval, the minimum data usage 
allowance standard for mobile broadband will be 500 MB per month. 
Beginning December 1, 2017, the minimum data usage allowance standard 
for mobile broadband will increase to 1 GB per month. Beginning 
December 1, 2018, the minimum data usage allowance standard for mobile 
broadband will increase to 2 GB per month. Beginning December 1, 2019, 
the minimum data usage allowance standard for mobile broadband will be 
determined, and updated thereafter, based on the procedures below.
    73. Data Usage Allowance. We conclude that after the phase-in of 
mobile data usage allowance standards, in order to update mobile 
broadband standards for data usage allowance in line with the principle 
of supporting services that a ``substantial majority'' of American 
consumers subscribe to, and given the types of data that are publically 
and regularly available, the minimum service standard for mobile 
broadband data usage allowance will be 70 percent of the calculated 
average mobile data usage per household. These values will be 
calculated as follows:
     First, the average number of mobile subscriptions per 
household will be determined by dividing the total number of mobile-
cellular subscriptions in the United States, as reported in the Mobile 
Competition Report or by CTIA, by the total number of American 
households, as determined by the U.S. Census Bureau. This number will 
be rounded to the hundredths place. (Based on the most recent data, 
there are 3.03 mobile subscriptions per American household. 
[355,400,000/117,259,427]).
     Second, the number of mobile subscriptions per American 
household will be multiplied by the percentage of mobile subscribers 
who own a smart phone, as reported by the Commission in its annual 
Mobile Competition Report, or other publicly available data sources if 
necessary, in order to determine the number of mobile smartphone 
subscriptions per American household. Because this value should not 
include mobile subscriptions that are not data-capable, phones that are 
not data-capable will not be used when calculating the mobile broadband 
minimum service standards. Additionally, phones that are not data-
capable have no impact on the average household's mobile data capacity. 
This product will be rounded to the hundredths place. (Based on the 
most recent data, there are 2.33 smartphone subscriptions per 
household. [3.03 * .77]).
     Third, the calculated average number of mobile smartphone 
subscriptions per household will be multiplied by the average data used 
per mobile smartphone subscriber, as reported by the Commission in its 
annual Mobile Competition Report, (Eighteenth Mobile Competition Report 
30 FCC Rcd at 14609, Chart VII.B.2 (stating that the average smartphone 
user uses 1.361 GB per month of data) to determine the average mobile 
broadband data usage per household. This number will be rounded to the 
hundredths place and then multiplied by 0.7 (Based on the most recent 
data, this currently amounts to 2.22 GB per month per household [2.33 * 
1.361 * 0.7]) to adjust for the fact that in these circumstances a 
``substantial majority'' of subscribers will use less than the average.
     Fourth, to provide more simplicity for providers, the per-
household capacity will be rounded down to the nearest 250 MB. (Based 
on current data, the 2.22 GB household capacity leads to a minimum 
capacity standard of 2 GB per month).
    74. If applied today, the minimum service standards for mobile data 
usage allowance would be set at 2 GB per month, however, as discussed 
supra, we choose to adopt a more gradual phase-in of this standard. 
After the phase-in, in order to update the minimum standard for mobile 
broadband capacity, the Bureau will perform the same calculations 
listed above with the updated data from the Mobile Competition Report 
and other specified sources.
    75. Speed. We now set the initial value for the minimum speed 
standard for mobile broadband. As stated above, our initial mobile 
broadband speed standard is based on technology generation, while the 
updated standard will incorporate Form 477 data. A coalition of 
Lifeline providers indicated that the Commission should require mobile 
broadband providers to offer speeds of 3G or better, and we agree. We 
conclude that, to claim Lifeline support for a mobile broadband 
service, a provider must provide to the Lifeline subscriber a service 
advertising at least

[[Page 33037]]

3G mobile technology for at least the amount of data usage allowance 
specified by the minimum service standards. (Many mobile offerings will 
provide a certain amount of data at a certain speed and then provide 
data service beyond that amount at lower speeds. The minimum service 
standard requires the usage allowance standard be met at the speed 
standard). We believe this is an appropriate starting point given the 
Commission's actions in the Mobility Fund, where funding was limited to 
those who deployed networks at 3G or higher. The initial mobile speed 
minimum service standard will be effective beginning on the later of 
December 1, 2016 or 60 days after PRA approval.
    76. Updating Minimum Service Standards. For the mobile broadband 
minimum service standards, the Bureau will on delegated authority, on 
an annual basis, release a Public Notice on or before July 31 notifying 
the public of the updated standard to be effective on December 1 of the 
same year for the next 12 months. After the phase-in of the data usage 
allowance minimum standards, the updated data usage allowance standard 
will be calculated using the above specified values from the most 
recent versions available of each required data source. In the event 
the Bureau does not issue the Public Notice by July 31, or if any of 
the data sources required by the calculations are older than 18 months, 
the minimum service level for mobile broadband capacity will 
automatically increase or decrease on December 1 of the same year from 
its previous level by the most recent year-over-year percentage change 
in smartphone data usage per household, as reported in the two most 
recent Mobile Competition Reports. The value of the previous minimum 
service level adjusted by the most recent year-over-year percentage 
change in smartphone data usage per subscriber will then be rounded up 
to the nearest 250 MB level. As an example, in 2013, the average 
smartphone user used 1.152 GB per month. In 2014, the average 
smartphone user used 1.361 GB per month. This indicates an 18.1 percent 
increase. If the Bureau did not issue the required Public Notice 
performing the calculations detailed above, the most recent minimum 
standard would be increased by 18.1 percent and rounded up to the 
nearest 250 MB level.
    77. We recognize that the minimum service standards for mobile 
broadband speeds may not need to be updated as frequently as the mobile 
data usage allowance standard given the pace at which new mobile 
technology generations are deployed. We therefore direct the Bureau to 
consider updating the mobile broadband speed standard at the same time 
it updates the minimum service standard for mobile broadband data usage 
allowance. The Bureau should consider mobile Form 477 data and other 
relevant sources to determine whether the mobile speed standard should 
be updated. Because we recognize that the minimum standard for mobile 
broadband speeds may not need to be updated on an annual basis, it will 
not be subject to an automatic increase; instead, it will only be 
adjusted if the Bureau determines that it ought to be adjusted after 
determining that, based on Form 477 data or other relevant sources, the 
``substantial majority'' principle is best satisfied by an adjusted 
speed standard. In any case, the same Public Notice updating the mobile 
broadband data usage allowance standard should also establish the 
mobile broadband speed standard in effect beginning December 1, 
regardless of whether it is adjusted from its previous level.
(iii) Fixed Voice
    78. In the 2015 Lifeline FNPRM, we sought comment on how to ensure 
fixed voice service is ``reasonably comparable'' and affordable to low-
income consumers. After consideration of the record, we decline to set 
minimum service standards for fixed voice service and instead maintain 
the status quo in this portion of the Lifeline market. It is not 
apparent that in this segment of the market Lifeline consumers are 
likely to be offered a less robust service than non-Lifeline consumers. 
In the fixed voice segment, providers typically apply the Lifeline 
discount to the price of the generally available residential voice 
service. In this way, the same services available to non-Lifeline 
customers are made more affordable to Lifeline customers. Additionally, 
while numerous commenters emphasize the need to retain fixed voice as a 
supported service, no commenters stated that specific minimum service 
standards for fixed voice service are necessary. Accordingly, we see no 
need at this time to intervene in such a situation.
(iv) Mobile Voice
    79. In the 2015 Lifeline FNPRM, we proposed establishing minimum 
service levels for voice-only service, and we sought comment on 
requiring providers to offer unlimited talk and text to consumers. 
Commenters emphasized that voice-only service remained an essential 
part of the program, at least until the IP-enabled transition is 
complete, and many other commenters supported requiring providers to 
offer unlimited talk and text. While some providers argued that minimum 
standards for mobile voice are unnecessary or ``uneconomical,'' we 
believe that requiring mobile voice providers to offer 1,000 minutes to 
consumers is consistent with our statutory directive to ensure that 
Lifeline consumers have access to the same services to which a 
substantial majority of American consumers subscribe. While we conclude 
that requiring providers to offer 1,000 minutes is appropriate, we are 
also mindful of providers' concerns about the affordability and 
feasibility of immediately requiring providers to offer 1,000 minutes 
and the resulting disruption to current Lifeline subscribers. 
Accordingly, we adopt a transition period beginning with an initial 
minimum standard of 500 voice minutes per month increasing over time to 
1,000 minutes on December 1, 2018. We also at this time decline to 
include texting as a supported service, and thus we also decline to 
follow some commenters' suggestion that we set a minimum service 
standard for texting.
    80. Based on recently available data, it is clear that a 
``substantial majority'' of American consumers already subscribe to 
plans that offer 1,000 or more minutes, because ``none of the 
smartphone plans for the United States have limited minutes,'' and 77 
percent of cell phones in the United States are smartphones. 
Accordingly, we conclude that Lifeline providers that seek support for 
mobile voice-only service, after the transition set out here, must 
provide 1,000 voice minutes in order to satisfy the minimum service 
standards until mobile voice is no longer a supported standalone 
service. Because we will require mobile voice providers to offer at 
least 1,000 minutes beginning on December 1, 2018, the mobile voice 
minimum service standard will not be updated annually after that date.
    81. We therefore adopt the following transition for mobile voice 
minimum service requirements. The minimum service standards for mobile 
voice are as follows. Beginning the later of December 1, 2016 or 60 
days after PRA approval, providers will be required to offer at least 
500 minutes per month to mobile voice consumers. Multiple providers 
have indicated that they will be able to offer consumers 500 minutes a 
month, (To the extent that some of these providers suggest we should 
not at this time schedule any increase above 500 minutes, we disagree. 
Under the schedule we have adopted, providers will have well over 18 
months to prepare for a phase-in of the 750-minute

[[Page 33038]]

minimum standard and another year to prepare for the phase-in of the 
1,000 minutes requirement); and we accordingly conclude that this 
requirement is not unduly burdensome. Beginning December 1, 2017, 
providers will be required to offer at least 750 minutes per month to 
mobile voice consumers. Beginning December 1, 2018, and until voice 
telephony is no longer a supported service, providers will be required 
to offer at least 1000 minutes per month to mobile voice consumers. We 
believe this provides a gradual transition period that will allow 
Lifeline providers and consumers to adjust to the new mobile voice 
minimum standards reflective of the mobile voice plans offered to the 
substantial majority of American consumers.
(v) Bundled Offerings
    82. In the 2012 Lifeline Reform Order, we amended our rules to 
allow providers to offer bundled packages of voice and data service. In 
the 2015 Lifeline FNPRM we sought comment on how bundles should affect 
the Lifeline support level. We now clarify that providers remain free 
to offer bundled offerings as a way to improve their service offerings 
and attract consumers. However, beginning December 1, 2019, when 
support for voice-only service is phased down, in order for Lifeline 
providers to receive the full $9.25 reimbursement from the program for 
services offered as part of a bundle, the broadband component of the 
bundle must meet the applicable minimum service standards. (If the 
broadband component does not meet the applicable minimum service 
standard but the voice offering does meet the applicable minimum 
service standard, then the provider may still receive the then-
applicable benefit provided for voice-only service). We believe this 
requirement is necessary to ensure that Lifeline subscribers continue 
to receive robust broadband service while affording reasonable 
flexibility to the provider and choice to the consumer.
c. Application of the Minimum Service Standard
    83. While numerous commenters supported minimum service standards, 
many commenters worried about reduced consumer choice, or providers 
being forced from the Lifeline market if they could not offer services 
that meet the minimum standard. We are mindful of these issues, but we 
conclude that allowing the Lifeline benefit to be used on services that 
do not meet our minimum service standards would lead to the type of 
``second class'' service that the minimum service standards are meant 
to eliminate. One of the reasons behind adopting minimum service 
standards was our belief that such standards would ``remove the 
incentive for providers to offer minimal, un-innovative services.'' If 
providers were able to collect support for services that did not meet 
our standards, this would lead providers to continue to offer low-
quality services. For this reason, we require, for fixed broadband, 
that any Lifeline supported service meet both the speed and data usage 
allowance minimum standards.
    84. We also decline to allow mobile broadband services to be 
supported if the service does not meet the minimum service standards 
for both speed and data usage allowance. We do not believe that mobile 
broadband speeds of less than 3G are sufficiently advanced to warrant 
Lifeline funding. Further, we believe the current wireless and Lifeline 
marketplaces would allow mobile service providers to structure their 
offerings in such a way that the minimum service standards would not 
promote robust service. For this reason, we require that any Lifeline 
mobile broadband service meet both the speed and data usage allowance 
minimum service standards. For mobile voice-only service, as long as it 
is supported as a standalone service and subject to the transition 
detailed above, the service provided must meet the minimum service 
standard.
    85. In order to ensure that Lifeline service meets the minimum 
service standards, we require service providers to annually certify 
compliance with the applicable minimum service level rules. 
Accordingly, we amend Section 54.422(b) to require carriers to certify 
their compliance with these requirements on our Form 481.
d. Exceptions Where Providers Do Not Meet Minimum Service Standards
    86. We next provide an exception to our minimum standard 
requirements targeted towards fixed providers who have yet to deploy 
broadband capable networks in specific geographic areas that meet the 
minimum service standards. While we are mindful of our statutory 
directive to ensure that residents of underserved areas have access to 
services that are ``reasonably comparable to those services provided in 
urban areas and that are available at rates that are reasonably 
comparable to rates charged for similar services in urban areas,'' we 
have also recognized that many people, especially those living in rural 
areas, might not yet have access to broadband services that meet our 
minimum service requirements. Many commenters have similarly emphasized 
the different levels of infrastructure present in rural areas. In the 
2016 Broadband Progress Report, the Commission noted that 25 percent of 
residents of rural areas did not have access to download speeds of at 
least 10 Mbps.
    87. We recognize that the necessary infrastructure is not present 
in all areas, and that there are providers which are not currently 
capable of offering services which meet or exceed the minimum service 
standards. Accordingly, we address commenters' concerns with a limited 
exception to our minimum service standards. This approach maintains our 
objective of providing robust service where available while also not 
precluding a subscriber from obtaining a Lifeline benefit in situations 
where the infrastructure does not yet support the minimum service 
standard. Additionally, our conclusion is consistent with Commission 
precedent, as the Commission has previously granted certain recipients 
of Universal Service funding waivers from our minimum service standards 
because of infrastructure constraints. As we explain in more detail 
below, the exception applies in the following circumstances.
    88. First, we apply the exception only to fixed broadband 
providers. (47 CFR 8.2(d) (defining a fixed broadband service as a 
broadband Internet access service that serves end users primarily at 
fixed endpoints using stationary equipment. Fixed broadband Internet 
access service includes fixed wireless services (including fixed 
unlicensed wireless services, and fixed satellite services.). We find 
the exception is only appropriate for fixed broadband because fixed 
broadband is the mode for which there are still significant areas of 
the country in which locations do not have access to the minimum fixed 
broadband standards. While we acknowledge that some areas also do not 
have mobile broadband coverage meeting the minimum standards, there are 
far fewer of these areas. Further, we are concerned, given inherent 
differences in mobile and fixed technologies and the attendant business 
models of each, that an exception for mobile service could more easily 
be used to undercut our objective of supporting robust service in the 
Lifeline program. (More specifically, for mobile services we find that 
the business economics of the marketplace mean a mobile broadband 
provider could much more easily than a fixed broadband provider craft a 
business model with a set of very low usage allowance offerings for the 
purpose of triggering this exception to meeting the

[[Page 33039]]

minimum service standards. We find that allowing such behavior would 
undercut this Order's commitment to funding meaningful levels of robust 
service.).
    89. Second, the exception applies only where the provider does not 
offer any generally available residential fixed broadband packages 
which meet the minimum service standards at a prospective subscriber's 
residence. Because we do not believe Lifeline funding should support 
``second-tier'' service, we find that providers who meet the minimum 
service standards with a generally available residential offering to a 
location should not be eligible for the exception at the location where 
they meet the minimum service standards.
    90. Third, the exception only applies if the provider offers a 
generally available residential fixed broadband service to the 
prospective subscriber with speeds meeting or exceeding 4 Mbps download 
and 1 Mbps upload. We believe this requirement is necessary to ensure 
that providers who offer ``second-tier'' service are not rewarded for 
failing to upgrade their networks. We delegate to the Bureau the 
rulemaking authority to increase, but not decrease, this speed floor as 
it determines is appropriate.
    91. A provider qualifying for this exception may claim Lifeline 
support for a household even when providing service that does not meet 
the minimum standards for fixed broadband as long as the Lifeline 
discount is applied only to the purchase of its highest performing 
generally available residential offering that meets or exceeds 4Mbps/
1Mbps. A provider will certify that it is providing the service in 
accordance with Commission rules, including that this exception has 
been appropriately applied. However, as always, the Commission will 
retain its audit authority and may use it to periodically evaluate 
whether a provider is complying with the rule.
    92. Finally, while we do not at this time provide an exception to 
the minimum service standards for mobile broadband, our longstanding 
waiver rule permits the Commission to waive any rule ``in whole or in 
part, for good cause shown.'' We accordingly will consider waivers on a 
case-by-case basis for providers who do not meet our minimum speed 
standard for mobile broadband in particular areas. Pursuant to our 
general waiver rule, waiver of the mobile minimum service standards for 
broadband would be appropriate only if special circumstances warrant a 
deviation from those standards, and such a deviation will serve the 
public interest. We could envision that such special circumstances and 
public interest benefits would most likely be present in cases in which 
a provider seeks a waiver to apply the Lifeline benefit to the fastest 
mobile broadband product it offers, but that product does not meet the 
minimum service standards for mobile broadband due to lack of a 
deployed network able to achieve that standard.
3. Support Levels
    93. Baseline Level of Support. In the 2015 Lifeline FNPRM, we 
tentatively concluded that we should make permanent the non-Tribal 
support amount of $9.25 per month. We now conclude that the non-Tribal 
support amount will be up to $9.25 per month. We believe that 
establishing a permanent support amount provides an additional amount 
of certainty for interested parties, and it allows for continued 
administrative simplicity by enabling more accurate funding need 
projections. While $9.25 will be the permanent support level which will 
apply to all modes of service other than voice-only service, the non-
Tribal support level for voice-only service will be adjusted as 
specified below.
    94. Many commenters argue that the current $9.25 support level may 
be insufficient to cover the total cost of the supported service. Other 
commenters support the adoption of ``tiered'' service levels, with the 
amount of Lifeline support varying with the service provided, and the 
provision of a greater benefit for broadband service and a smaller 
benefit for voice-only service. We partially adopt such proposals, 
because we conclude that a greater benefit amount should be offered for 
broadband providers to facilitate the program's transition to 
broadband.
    95. Although we take no position on whether $9.25 will be 
sufficient to support the entire cost of supported service, we 
emphasize that Lifeline was created to provide affordable, rather than 
free service, and past Commission decisions have emphasized this point. 
Additionally, we believe that other changes made in today's Order, such 
as the creation of a National Verifier and the streamlined eligibility 
determination process, will lower Lifeline providers' costs, and those 
savings can be passed on to consumers.
    96. Support for Voice-only Service. For voice-only service, we 
adopt a schedule indicating the level of Lifeline support provided for 
voice-only service. As discussed above, prior to December 1, 2019, 
voice-only service meeting the minimum service standards shall be 
supported by $9.25 per month. From December 1, 2019 through November 
30, 2020, voice-only service meeting the minimum service standards 
shall be supported by $7.25 per month. From December 1, 2020 through 
November 30, 2021, voice-only service meeting the minimum service 
standards shall be supported by $5.25 per month. On December 1, 2021, 
no support generally shall be provided for voice-only service except in 
certain circumstances identified below, or unless the Commission, 
having considered the recommendations of State of the Lifeline 
Marketplace Report, orders otherwise. In all events, voice service may 
still be provided in the context of an offering receiving Lifeline 
support if bundled with BIAS meeting the applicable minimum service 
standards.
    97. Although we decide generally to phase-out Lifeline support for 
voice-only service as of December 1, 2021, we create an exception where 
particular circumstances are met. Specifically, we preserve the final 
phase-down level of Lifeline support ($5.25) even after December 1, 
2021, for the provision of voice-only service to eligible subscribers 
by a provider that is the only Lifeline provider in a Census block. In 
particular, in any such Census block, such a provider will continue to 
receive $5.25 per month in federal Lifeline support for providing voice 
telephony service meeting the minimum standards to eligible 
subscribers, and thus will discount such voice service in the amount of 
the support received in accordance with our Lifeline rules.
    98. Although we conclude that Lifeline should transition to focus 
more on broadband Internet access service given the increasingly 
important role that service plays in the marketplace, we remain mindful 
of the importance historically placed on voice service. We also 
recognize that although we provide a transition during which support is 
phased down, consumer migration to new technologies is not always 
uniform, and certain measures to continue addressing the affordability 
of voice service may be appropriate consistent with the objectives of 
Sections 254(b)(1), (b)(3) and (i). At the same time, in implementing 
Section 254 the Commission has a ``responsibility to be a prudent 
guardian of the public's resources.'' Collectively, this persuades us 
that although it remains appropriate to use some universal service 
resources for Lifeline voice even after such support otherwise 
generally has been phased out, we should prioritize supporting, in an 
administrable way, those areas where we anticipate there to be the 
greatest likely need for doing so.

[[Page 33040]]

    99. Balancing those objectives, we conclude that the pre-December 
1, 2021, level of Lifeline support--$5.25--will remain available even 
after December 1, 2021, for a provider to provide voice-only service to 
eligible subscribers in any Census block where it is the only Lifeline 
provider. Although one theoretically could imagine targeting this 
continued Lifeline support for voice-only service in other ways--e.g., 
to other geographies, on the basis of certain demographic criteria, or 
otherwise--we are not persuaded that such other approaches would be as 
readily administrable, either in terms of identifying the area(s) or 
consumer(s) to be served with discounted service in implementing the 
Lifeline mechanism and/or in terms of our ability to estimate and 
predict Lifeline demand for purposes of budget evaluations. (As 
described below, data sufficient to initiate the analysis required 
under our approach will already be available to the Commission as part 
of its implementation of universal service support.).
    100. Further, having focused on these areas, we conclude that it 
makes more sense to provide any continued Lifeline support for voice-
only service to the existing, single ETC serving the relevant Census 
block, rather than necessitating the designation of an entirely new ETC 
simply to serve this post-phase out role, particularly given that the 
Commission is phasing out Lifeline support for voice-only service more 
generally. With respect to any such Census block, Lifeline support for 
voice-only service provided by the sole Lifeline provider shall remain 
in place--together with the ETC's obligations as a Lifeline provider 
(This assumes that the ETC has not qualified for the conditional 
forbearance described in Section III.E.2.c (Forbearance Regarding the 
Lifeline Voice Service Obligations) or relinquished its ETC status in 
relevant part)--until the first year after the Commission (or the 
Bureau, acting on delegated authority) announces that a second Lifeline 
provider has begun providing service in the Census block.
    101. For purposes of identifying the providers and Census blocks 
initially subject to this rule, we direct the Bureau to conduct a 
process to identify the Census blocks where there only is one Lifeline 
provider. The results of that initial process should be announced at 
least six months prior to the date on which support for standalone 
voice is scheduled to phase down to $0, i.e., by June 1, 2021. The 
Bureau will have substantial data available to it by the time this 
process would need to occur in order to identify proposed Census 
blocks, and providers, that would (or would not) be encompassed by this 
continued Lifeline support for voice-only service. In particular, data 
will be available from the NLAD, from states that previously opted-out 
of the NLAD, and from the National Verifier, among others. This list 
shall be updated on an annual basis, such that support for standalone 
voice service provided by the relevant provider--and thus any 
accompanying obligation to offer service discounted by passing through 
the Lifeline support--shall end in a census block as of December 1 of 
the year that the Bureau identifies the census block as being served by 
more than one Lifeline provider.
    102. Support for Bundled Service. For a bundled voice and broadband 
service, the support level will depend on whether the voice and 
broadband components meet the minimum service standard effective at the 
time. If the broadband component meets the broadband minimum service 
standards (both speed and data usage allowance) then $9.25 per month of 
support shall be provided. If the broadband component does not meet the 
minimum service standards but the voice component meets the minimum 
service standard, then support shall be provided at the level in effect 
for voice-only service as explained supra.
    103. Other Issues. We also address concerns raised by several 
providers claiming that they are unable to process any form of payment. 
While some Lifeline providers currently operate as prepaid wireless 
carriers, and therefore do not have dedicated billing departments, 
these providers nevertheless collect revenue from both Lifeline and 
non-Lifeline customers, such as through the purchase of reload cards, 
and they appear to be able to receive funds either via online payment 
or by mail. Many of these providers partner with physical retailers who 
provide locations for Lifeline providers to sell such cards or even 
process payments. In addition, we also highlight the flexibility 
provided for providers under the rules we adopt. Since the $9.25 of 
monthly support must only be applied to an eligible service provided 
for a month's time, and since we do not mandate pricing or any terms of 
payment for the Lifeline-supported service, a provider has a wide range 
of options for collecting additional revenue from the consumer if it so 
desires. For example, a provider may choose to have the consumer make a 
one-time payment upon enrollment, monthly payments, or payments on a 
more flexible schedule. A wide variety of approaches are possible, thus 
allowing providers the ability to find approaches to their business 
which work best for their customers. In sum, we are confident that a 
dynamic and competitive Lifeline marketplace will adapt to the changes 
we make.
    104. Finally, we address the issue of whether the Lifeline program 
should support the cost of handsets or customer premise equipment. In 
the 2015 Lifeline FNPRM, we sought comment on whether to include the 
cost of Consumer Premise Equipment (CPE) when determining a service's 
affordability. While many commenters stated that the cost of CPE must 
be considered, and that the Commission should provide a subsidy to 
facilitate the purchase of the equipment, we do not believe that such a 
subsidy is warranted at this time. Past Commission precedent makes it 
clear that Lifeline, with the exception of a brief period after 
Hurricane Katrina, has been used to fund services, and not equipment. 
At this time we see no reason to deviate from that approach. While we 
do not separately fund the purchase of equipment, we encourage the 
private sector to work collaboratively with the Lifeline program and 
Lifeline providers to help make devices more available. We further 
encourage Lifeline providers to explore options for offering accessible 
devices for consumers with disabilities.

C. National Lifeline Eligibility Verifier

    105. In this Section, we establish a National Lifeline Eligibility 
Verifier (National Verifier) to make eligibility determinations and 
perform a variety of other functions necessary to enroll eligible 
subscribers into the Lifeline Program. The National Verifier is more 
than simply a piece of technology; it is a system relying on both human 
resources and technological elements to increase the integrity and 
improve the performance of the Lifeline program for the benefit of a 
variety of Lifeline participants, including Lifeline providers, 
subscribers, states, community-based organizations, USAC, and the 
Commission. As described below, the National Verifier will have both 
electronic and manual methods to process eligibility determinations and 
will have at its center a Lifeline Eligibility Database (LED), which 
will contain records of all subscribers deemed eligible by the National 
Verifier. The National Verifier will also engage in a variety of other 
functions, such as, but not limited to, enabling access by authorized 
users, providing support payments to providers, and conducting 
recertification of subscribers, to add to the efficient administration 
of the Lifeline program. This Order directs

[[Page 33041]]

USAC, with the oversight and approval of the Bureau and OMD, to procure 
the necessary parts to the National Verifier. As described below, 
certain aspects of the implementation will be overseen mainly by the 
Bureau with additional oversight by OMD, as necessary and appropriate. 
We delegate to the Bureau and OMD all aspects of the development, 
implementation, and performance management of the National Verifier. We 
delegate to the Bureau authority to provide any rule clarifications or 
guidance with respect to the National Verifier. Along with the other 
important changes we make to the program today, the National Verifier 
is an integral part of our vision for the future of this program. We 
revise Sections 54.400 and 54.410 of the Lifeline rules to incorporate 
the National Verifier.
1. Objectives for the National Verifier
    106. The Commission's key objectives for the National Verifier are 
to protect against and reduce waste, fraud, and abuse; to lower costs 
to the Fund and Lifeline providers through administrative efficiencies; 
and to better serve eligible beneficiaries by facilitating choice and 
improving the enrollment experience.
    107. Reducing Waste, Fraud, and Abuse. As recognized by commenters, 
the National Verifier will close one of the main avenues historically 
leading to fraud and abuse in the Lifeline program: Lifeline providers 
determining subscriber eligibility. Before 2008 when the first non-
facilities-based wireless providers started to enter the program, 
Lifeline was a traditional wireline voice service program and consumer 
eligibility determinations were necessarily made by the providers. 
Today, the Lifeline program is a modern, dynamic, multi-provider 
program with wireline, wireless, and broadband service. Modern Lifeline 
providers have varied business models and some have a greater financial 
interest in the eligibility determination, as the more subscribers they 
enroll, the higher the disbursement they will receive from the Fund. 
Therefore, commenters have noted that the program should remove the 
responsibility of determining eligibility from an entity who is 
providing service to the subscriber. Commenters agree that given 
today's modernization, adopting the National Verifier eligibility 
process to help enforce program rules and address concerns with 
eligibility determinations will greatly increase Lifeline 
accountability.
    108. Reducing Costs to Lifeline Providers. As noted in the 
comments, by removing the responsibility of determining eligibility 
from providers, the Lifeline program will also be a more attractive 
business opportunity as providers recognize significant reductions in 
administrative and compliance costs. Commenters argue that variation 
across states has made the program more costly for multi-state 
providers who have had to use and comply with multiple eligibility 
systems and that the overall costs most likely exceed $600 million per 
year. By providing a central point of verification, Lifeline providers 
can avoid the patchwork of systems currently required to enroll 
subscribers in various states. By reducing compliance costs and burdens 
and attracting more Lifeline providers, the program will benefit from 
greater competition and, as a result, deliver more value to 
subscribers. Once implemented, the National Verifier functionality will 
further reduce administrative burdens for Lifeline providers by 
streamlining the flow of payments from USAC to providers. Further, 
commenters note that the risk of enforcement liability caused by the 
actions of third parties prevents providers from participating in the 
Program. By adopting the National Verifier, the risk of enforcement 
actions against providers for eligibility related issues will decline 
as the National Verifier takes on the risk of determining eligibility 
for subscribers. Overall, transferring the eligibility certification 
process away from providers will make it easier on providers to comply 
with the Lifeline rules.
    109. Facilitating Consumer Choice and Improving the Enrollment 
Process. The National Verifier will also facilitate subscriber choice, 
and serve as a single, unified platform for administering the new 
modernized Lifeline program. Commenters note that Lifeline's current 
model of primarily determining eligibility through ETCs places 
significant limitations on the choices of eligible subscribers. The 
existing model leaves little room for participation by third-party 
organizations, such as schools, community-based organizations, or 
digital literacy groups, to assist eligible subscribers in 
understanding the value of the Lifeline benefit as well as navigating 
the process of seeking an eligibility determination. As we move to a 
broadband-supporting Lifeline program, we agree with commenters that it 
is critical to provide maximum subscriber choice as well as enlist the 
assistance of third-party organizations to help subscribers get and 
stay connected with broadband. These comments note that organizations 
who do not have a financial interest in the provision of Lifeline 
benefits and have social motivations to help low-income subscribers 
will improve the integrity of and participation in the program. A 
subscriber-focused National Verifier will facilitate third-party 
participation by allowing them to help subscribers with eligibility 
questions and in applying the benefit to a Lifeline-supported service.
2. Functions of the National Verifier
    110. As supported by the record, we establish the National Verifier 
and explain how its core functions will achieve each objective 
described above. The National Verifier is a comprehensive integrator of 
processes and systems. The National Verifier will, first and foremost, 
determine subscriber eligibility for the Lifeline program. It will also 
perform other necessary functions, such as enabling Lifeline providers 
to verify eligibility of a subscriber, providing access to authorized 
users, and providing support payments to providers. At the core of the 
National Verifier will be the Lifeline Eligibility Database (LED), 
which will contain a list of Lifeline eligible, non-duplicative 
potential subscribers. (As described below, USAC may propose to the 
Bureau how and whether the information in the NLAD can or should be 
used to populate the LED). While we set forth the basic functions and 
structure below, we direct USAC to work with the Bureau, and OMD as 
appropriate, to implement the National Verifier and to make 
administrative and efficiency improvements consistent with the core 
elements described below.
    111. Determination of Subscriber Eligibility. A primary function of 
the National Verifier will be to determine eligibility for potential 
Lifeline subscribers in a manner that is cost-effective and 
administratively efficient. As revised by this Order, subscribers will 
demonstrate eligibility for the Lifeline program by showing proof of 
enrollment in specific Federal and Tribal programs. These programs, 
such as the Supplemental Nutrition Assistance Program (SNAP) and 
Medicaid, have extremely robust program integrity and enrollment 
procedures. By using these programs as determinants of eligibility 
here, the Lifeline program can draw upon their vast fraud prevention 
and program integrity capabilities. As recommended by commenters, the 
eligibility certification process will have both manual and electronic 
components to accommodate the needs of subscribers. Manual 
certification will use human review of documents and other

[[Page 33042]]

information to assess eligibility, while electronic certification will 
rely on communications between the National Verifier and other systems 
and databases. (We direct USAC to propose acceptable documentation for 
the manual review to the Bureau. In particular, USAC shall consider how 
the National Verifier can address possible misuse of eligibility 
documentation (e.g. SNAP cards lacking identifying information)). We 
agree with the commenters that the program databases checked should, to 
the extent possible, include those owned by states, (For example, the 
SNAP program uses databases that are owned by the states), those owned 
by Federal entities, or those owned by other entities. (For example, 
the Supplemental Security Income program uses databases that are owned 
by the Social Security Administration). We expect that the National 
Verifier will be able to accommodate and utilize many of the varying 
state databases available. We also envision that the electronic 
certification process will produce at least near real-time results.
    112. Both the manual and electronic approaches will apply program 
rules, including identity verification, as necessary, to determine a 
subscriber's eligibility. (For example, if a state administrator 
verifies identity in the same robust manner as the federal 
identification verification check, USAC may propose to the Bureau to 
rely on the state's check). The National Verifier will also check to 
ensure that the subscriber is not a duplicate of any existing 
subscriber already receiving a Lifeline benefit. By checking this, the 
National Verifier will reinforce and build on the NLAD to enforce 
Lifeline's one-per-household rule, and prevent duplicates. Subscribers 
will be able to submit information about themselves (e.g. such as 
verifying identity and documenting the basis for eligibility) to the 
National Verifier through a variety of methods, such as via mail and an 
online portal, and certify their eligibility. (USAC currently maintains 
a list of documents that can be used to establish identity. Commenters 
have suggested that improvements be made to the documents used to 
establish identity. Thus, we direct USAC to review the Web site list 
and propose to the Bureau changes to the list.). The National Verifier 
will also have a dispute resolution process whereby subscribers found 
to be ineligible may have an opportunity to dispute the finding. (We 
direct USAC to propose a process for dispute resolution to the Bureau 
for approval for the National Verifier).
    113. The National Verifier will have both a manual and electronic 
certification process. We agree with commenters that our long-term goal 
should be to determine the eligibility of most subscribers through the 
more efficient means of electronic certification. We recognize that 
electronic certification of eligibility will generally have lower long-
run costs relative to labor-intensive manual certification. We have 
streamlined the programs used to determine eligibility for Lifeline to 
those that have substantial automation and electronic process in place 
already. We direct USAC to seek the most cost effective and efficient 
means to incorporate electronic eligibility certification into the 
National Verifier wherever feasible. We expect USAC and the Bureau to 
work closely with the states, other federal agencies, and Tribal 
Nations to foster partnerships that will help the National Verifier 
develop the most efficient pathways to determining subscriber 
eligibility. For example, USAC should consider co-enrollment with 
states, other federal entities, or Tribal Nations or coordination with 
other entities that have enrollment responsibilities to more 
efficiently determine eligibility. We believe such actions based on 
electronic certification will better support our objectives to reduce 
the costs to the Fund and to better serve subscribers with an improved 
certification process.
    114. The National Verifier will implement a complete eligibility 
review prior to providing a Lifeline benefit. We believe that it is 
vital to deploy the National Verifier with the expectation that it will 
conduct comprehensive and timely reviews. In the 2015 Lifeline FNPRM, 
we sought comment on whether we should implement a pre-approval process 
to mitigate delays in the review period. Commenters argued that 
completing full reviews of eligibility will reduce waste, fraud, and 
abuse. We agree with the comments filed and, at this time, do not adopt 
a pre-approval process that would allow Lifeline providers to claim 
Lifeline support for a subscriber prior to a full review. Only after a 
full review is complete may the Lifeline provider claim and receive 
support for the subscriber. Lifeline supported service must begin on 
the day that the Lifeline provider certifies it will begin claiming 
support for serving the subscriber. (Note that a provider could 
``claim'' a subscriber in the Lifeline Eligibility Database (LED) but 
not claim support until a later time when service begins. The claiming 
process in the National Verifier will make it clear when the provider 
is certifying to providing service and therefore eligible to collect 
support for a subscriber.). If the subscriber is not listed and claimed 
in the Lifeline Eligibility Database (LED), the Lifeline provider has 
no claim on support.
    115. Population of the Lifeline Eligibility Database. The LED will 
contain records of Lifeline-eligible subscribers. As such, another 
important function of the National Verifier will be to allow for cost 
effective and administratively efficient ways to populate the LED. (For 
the purposes of defining a framework for the National Verifier, 
``database'' is not intended to have any technological meaning 
requiring the National Verifier to follow a specific path toward 
technically implementing these requirements. ``Database'' is meant as a 
general term denoting a collection of data organized for rapid search 
and retrieval. The Commission directs USAC to implement the National 
Verifier in accordance with this Section using the most appropriate 
technological means.). The National Verifier will populate the LED with 
all necessary subscriber records after determining the subscriber is 
eligible. However, this need not be the only method of populating the 
LED with eligible subscribers. We envision multiple other methods, 
including utilizing state databases, which are already being used today 
by current Lifeline providers in a number of states, and building on 
existing processes used by states and/or community organizations which 
interact regularly with low-income subscribers. Our objective is to 
provide multiple pathways to populate the LED with records associated 
with Lifeline-eligible subscribers in order to simplify the enrollment 
process for subscribers and Lifeline providers. We therefore direct 
USAC to work with the Bureau to develop other efficient and reliable 
methods of listing eligible subscribers in the LED. Additionally, USAC 
must develop processes regardless of the pathway used, to obtain 
subscriber consent to the collection, retention, use, and sharing of a 
subscriber's personally identifiable information, including information 
about their use of Lifeline services with USAC, the National Verifier, 
and other appropriate users. As described further below, the LED will 
also maintain information about the supported services of the Lifeline 
subscribers.
    116. Access by Different Users. The National Verifier will also 
function as an interface for authorized users for

[[Page 33043]]

many different activities. We agree with commenters and anticipate that 
eligible subscribers, Lifeline providers, states, and Tribal Nations 
will require access to establish or verify eligibility. We also expect 
the National Verifier to have varying interface methods to accommodate 
these different groups of users. (For example, the National Verifier 
may have an interface that is consumer-friendly and geared towards 
subscribers. It may have another interface that is geared toward 
providers that may allow application programming interfaces (machine-
to-machine interaction). We direct USAC to work with the Bureau to 
develop interfaces that promote the objectives of the National Verifier 
and serve the needs of users in a cost-effective and efficient manner.
    117. Access by Lifeline Providers. For Lifeline providers, the 
National Verifier will support many functions, such as allowing 
permissible queries to the LED to verify if a subscriber is eligible, 
(The National Verifier will only permit queries which facilitate the 
purposes of the Lifeline program. After obtaining approval of the 
Bureau, USAC may implement useful administrative queries to facilitate 
the needs of the modernized the program) allowing the claiming of a 
subscriber as a Lifeline customer, and allowing reimbursement based 
upon subscribers served. For example, the National Verifier will allow 
Lifeline providers to easily confirm a subscriber's eligibility status 
in the LED by using an appropriate set of personal information provided 
by the subscriber. After obtaining authorization from the subscriber, 
Lifeline providers intending to initiate a supported service will use 
the LED to claim that subscriber as a Lifeline customer. By claiming 
the subscriber, the Lifeline provider will certify that it will be 
providing a Lifeline-supported service to the subscriber in accordance 
with Commission rules. Providers will be able to enter into the LED the 
correct support amount (non-Tribal or Tribal) for the claimed 
subscriber. We also agree with commenters who argue that the National 
Verifier should also allow Lifeline providers to relinquish subscribers 
in the LED, thus discontinuing support, in accordance with Commission 
rules. We expect that the technology used for the National Verifier 
will allow claiming and relinquishing either a single subscriber record 
or batches of records. However, irrespective of the technical abilities 
of the National Verifier, service providers must follow the 
Commission's rules on enrollment and de-enrollment.
    118. Access by Subscribers. The National Verifier will also allow 
potential subscribers (we use the term potential subscribers here 
generally to refer to both successful and unsuccessful applicants to 
the Lifeline program), to contact it directly to initiate and complete 
eligibility determinations and applications for Lifeline service, to 
obtain information about Lifeline providers and services, and to 
resolve any issues through dispute resolution as recommended by 
commenters. The National Verifier may use standardized forms and easy-
to-use processes to assist subscribers in completing applications. It 
will have internal controls and utilize document management processes 
to aid the submission of complete applications, regardless of the 
submission method used. (For example, applications submitted via a 
secure Web site should have standardized, mandatory fields that require 
input and provide error messages before advancing to the next screen.). 
During the application and certification process, the National Verifier 
will communicate with subscribers to notify them of application status 
at relevant milestones in the process. Subscribers will be notified of 
either an affirmative or negative eligibility determinations by the 
National Verifier. Once a subscriber is listed in the LED, he or she 
will be notified, and be given information such as, but not limited to, 
the manner in which the Lifeline benefit may be used, as well as 
information on services and Lifeline providers in their area. 
Subscribers must consent to providing the information to the National 
Verifier, should be made aware of what information is being stored and 
used by the National Verifier, and should also be allowed to view and 
modify their records in the National Verifier as appropriate. The 
National Verifier may also communicate with subscribers for other 
purposes related to the efficient administration of the program as 
determined to be necessary by USAC, with the approval of the Bureau.
    119. We also expect the National Verifier to use a variety of 
methods to communicate with subscribers who have limited means of 
connection, both in terms of the mode used (such as mail, telephone, 
text messages, email, etc.) and in terms of form used (such as various 
languages and access for disabled individuals). The mode of 
communication from the National Verifier to the subscriber at a minimum 
must be appropriate and commensurate with the mode through which the 
subscriber initiated contact with the National Verifier or requested to 
be contacted. We also expect the National Verifier to provide access to 
subscribers with disabilities in accordance with all applicable laws 
and to provide service in multiple languages as directed by the Bureau.
    120. Access by States, Tribal Governments and State/Tribal 
Administrators. As recommended by commenters, the National Verifier 
will also support access by states, Tribal governments, and state/
Tribal administrators and will also support communications between it 
and the states. Commenters note that some states have already 
implemented processes for determining Lifeline eligibility for 
individuals in their states, and we seek to cooperate with such state 
efforts as we jointly continue to protect the integrity of the program 
and the subscriber experience with the Lifeline eligibility 
certification process. Recognizing that existing state efforts will 
provide a way to more efficiently and cost-effectively determine 
eligibility, we direct USAC, as part of its development and operation 
of the National Verifier to consider opportunities to coordinate and 
partner with states. USAC should ensure any partnership promotes the 
objectives of the National Verifier to improve administrative 
efficiency, better the subscriber experience, and prevent waste, fraud, 
and abuse in the program. (One commenter suggested that connection to a 
state database should only be mandatory if the provider has more than 
5,000 subscribers in the state. While we do not impose such a policy 
here, we direct USAC to consider the most efficient ways to partner 
with the states). It is also imperative that a Tribal or state 
eligibility determination is congruent with the Commission's rules. 
Prior to initiating these Tribal or state partnerships, USAC must 
submit a proposed partnership plan to the Bureau indicating how it is 
congruent with the National Verifier and the Bureau must approve of 
establishing such a partnership as proposed by USAC.
    121. Support Payments Based on the National Verifier. The National 
Verifier will also function as the default basis for determining 
support payments to providers. (After obtaining approval from the 
Bureau, we also direct USAC to implement administrative solutions to 
resolving concerns with the accuracy of the number of active 
subscribers in the database. For example, subscribers remain actively 
enrolled during the 30 day cure period following an initial 60 days of 
non-usage. Providers will be paid based upon the records of claimed 
subscribers in the LED absent some

[[Page 33044]]

other basis for suspending, delaying or declining to provide such 
support. (For a provider to receive Lifeline support for serving a 
claimed subscriber, not only must there be a record of the claimed 
subscriber in the LED, but the service provider must be acting in 
compliance with relevant applicable statutory requirements and Lifeline 
program rules. Moreover, Section 54.707 of the rules authorizes USAC to 
suspend or delay universal service support amounts if a carrier fails 
to provide adequate verification of its entitlement to such support 
upon reasonable request or if USAC is directed by the Commission to 
suspend or delay universal service support amounts. 47 CFR 54.707. In 
the 2012 Lifeline Reform Order, the Commission provided guidance to 
USAC regarding the procedures it should follow in the Lifeline context 
regarding the suspension or delay of universal service support amounts 
if a carrier fails to provide adequate verification of its entitlement 
to such support upon reasonable request under Section 54.707 of the 
rules. As also observed in the 2012 Lifeline Reform Order, the 
Commission has responsibilities to maintain the integrity of the 
universal service fund and will pursue recapture of funds and/or seek 
to impose penalties where warranted. Thus, in addition to the role of 
USAC audits under Section 54.707 of the rules and the associated 
guidance in the 2012 Lifeline Reform Order, the Commission itself can 
direct USAC to suspend or delay universal service support amounts under 
Section 54.707 of the rules, as noted above. In this context, we 
anticipate that the Commission could direct USAC to suspend or delay 
universal service support amounts, either wholly or in part, when the 
Commission has proof, or credible information, that leads it to 
reasonably believe, based on the totality of the information available, 
that all or part of a payment would be in violation of the statutes and 
regulations applicable to the Lifeline program. Furthermore, in 
extraordinary cases where advance notice would likely cause significant 
harm to the universal service fund, for instance, by hindering the 
possibility of recovering funds, the Commission reserves the right to 
direct USAC to initiate the suspension or delay of Lifeline support 
amounts even in advance of notice to the relevant service provider.) 
This approach will serve to enforce Commission rules and significantly 
reduce duplicates, ineligible subscribers, and improper payments. We 
direct USAC to provide the Bureau and OMD with a transition plan for 
phasing out the FCC Form 497, currently used to seek Lifeline support. 
With approval of the Bureau and OMD, USAC will begin executing this 
plan and moving to a system where support payments are based on the 
records in the LED. We also direct USAC to propose to the Bureau and 
OMD improved methods of providing payment to the Lifeline providers 
that will reduce costs and burdens to the Fund and to Lifeline 
providers. For example, we received comments from AT&T suggesting that 
payments could be received by providers as electronic funds transfers. 
USAC should consider comments such as these and provide recommendations 
to the Bureau as to whether the model of payment currently in place is 
the most efficient method of serving Lifeline subscribers.
    122. Additionally, we direct USAC to consider how the National 
Verifier might facilitate initiatives that aggregate eligible 
subscribers' Lifeline benefits so as to streamline the payment of 
benefits and therefore encourage provider participation. The Bureau 
will work with USAC to establish procedures and guidance USAC can use 
to coordinate ``aggregation projects'' in the Lifeline program 
consistent with the objective of preventing waste, fraud, and abuse. At 
a minimum, to create an aggregation project, the Lifeline provider must 
certify that the aggregation project will provide Lifeline eligible 
service directly to the eligible low-income subscribers' residences, 
describe the technologies the Lifeline provider plans to utilize for 
that specific project, and certify that the service provided through 
the project will otherwise comply with all other Lifeline rules. We 
note here that aggregated benefit programs must meet the minimum 
standards set out in the Lifeline rules, as measured by the service 
provided to each individual subscriber. We therefore amend Sec.  54.401 
to enable payment for providers' servicing aggregation projects. 
Further, we direct the Bureau to work with USAC, as part of 
implementing the National Verifier, to provide Lifeline providers with 
guidance and procedures for creating aggregation projects and for 
enrolling subscribers in aggregation projects. (USAC's role will be to 
develop processes to ease and streamline the administration of 
aggregation projects by implementing special systems, technical 
support, and coordination efforts. USAC will not fund consumer outreach 
efforts but may provide administration and expertise to community-based 
organizations, housing associations, and institutions seeking to 
coordinate the aggregation of benefits). Finally, total reimbursement 
distributed to the Lifeline provider will be tied directly to the 
number of subscribers affiliated with an aggregation project who have 
been determined eligible for a Lifeline benefit.
3. Performance Management of the National Verifier
    123. In this Section, we direct USAC to develop a robust 
performance management system to advance the objectives and to analyze, 
on an ongoing-basis, the effectiveness of the National Verifier. We 
recognize that our success with the National Verifier is integral to 
the Lifeline program. We provide below a range of components to be 
utilized in evaluating the performance of the National Verifier. Our 
list is not exhaustive, and we expect USAC, in consultation with the 
Bureau and OMD, to continue to update the performance of the National 
Verifier and its performance management system.
    124. Time of Review. We first discuss the time it will take for the 
National Verifier to review a subscriber's eligibility. We expect that 
both the manual and electronic certification processes will be 
completed in a reasonable amount of time from the time of application 
receipt by the National Verifier to final eligibility determination and 
population of the LED. We expect that the National Verifier will 
develop review processes that balance the needs of subscribers to 
receive a decision quickly with our responsibility to conduct accurate 
eligibility reviews. To the extent it would improve the subscriber's 
experience and improve program efficiency, the National Verifier may 
implement any solutions, such as queuing, to manage demand. We also 
require the National Verifier to forecast and provide innovative 
solutions to enrollment fluctuations that may affect review times. At a 
minimum, the National Verifier should use project management processes, 
maximum automation, and flexible staffing to facilitate the rapid 
response time required to best serve the stakeholder community.
    125. Performance of the LED. The LED will, at a minimum, maintain a 
list of subscribers for whom eligibility has been confirmed for 
Lifeline-supported services and a list of claimed subscribers. 
Recognizing that some providers and subscribers may have concerns about 
the frequency with which the LED is updated, we direct USAC to have the 
National Verifier modify and make available listings, de-listings, and 
other record changes in the

[[Page 33045]]

LED quickly, taking into account the need for reliable information and 
cost considerations of varying levels of service.
    126. Development Environment. The National Verifier must include a 
development environment that can be used by interested parties to test 
the components of the National Verifier prior to the live date. The 
development environment should allow the National Verifier and 
stakeholders to test new functionalities before the National Verifier 
launches and as new functions are added.
    127. Use of the NLAD. In order to build the National Verifier in an 
efficient and timely manner, we permit USAC to integrate or repurpose 
the NLAD in whole or in part as necessary. If the National Verifier has 
integrated into it all the responsibilities and functions of the NLAD, 
including but not limited to subscriber duplicate prevention and 
detection and identify verification, then USAC may propose to the 
Bureau to discontinue the NLAD. Further, records currently contained in 
the NLAD may be incorporated into the National Verifier if such 
incorporation promotes the operation of the National Verifier. We 
delegate to the Bureau the ability to revise the rules regarding the 
NLAD, including but not limited to Section 54.404, as necessary to 
allow for the transition and implementation of the National Verifier.
    128. Use of Acceptable Documents for Eligibility and Identity 
Certification. The National Verifier will require subscribers to submit 
documentation for determination of eligibility. Given the great 
diversity in types of documentation available for establishing identity 
and eligibility across the states, territories, Tribal Nations, and 
eligibility portals, the National Verifier will maintain information on 
acceptable documentation types and will provide guidance about the 
types of documentation that are acceptable for establishing identity 
and eligibility for the Lifeline program. We also delegate to the 
Bureau to work with USAC to develop new forms, update or revise current 
forms, and/or retire forms if the Bureau believes it appropriate and 
necessary to aid program administration and to facilitate the 
implementation of the National Verifier.
    129. Document and Data Retention by the National Verifier. The 
National Verifier will retain eligibility information collected as a 
result of the eligibility determination process. Lifeline providers 
will not be required to retain eligibility documentation for 
subscribers who have been determined eligible by the National Verifier. 
However, current Lifeline program rules regarding record retention of 
eligibility documentation will remain in effect for Lifeline providers 
who have determined the eligibility of a current subscriber when 
enrolling that subscriber, as this is necessary for Lifeline program 
evaluations and audits.
    130. Comprehensive Help Desk. The National Verifier will have a 
help desk equipped to handle inquiries from all stakeholders, including 
subscribers, Lifeline providers, states, and aggregators. At a minimum, 
the help desk will have the ability to interact with stakeholders in 
multiple languages and for specified time periods.
    131. Training and User Support. We direct USAC to develop and 
implement a training plan and ongoing National Verifier user support 
strategy. The training should include, but not be limited to, training 
for USAC and National Verifier personnel, training for Lifeline 
providers and states, and outreach packets for state PUCs and PSCs for 
subscribers and aggregators. We direct USAC to develop on-going 
training and user plans for all the stakeholders as needed.
    132. Security and Privacy of the National Verifier. We direct USAC, 
working with OMD and its Office of the Chief Information Officer 
(OCIO), to ensure that the National Verifier will incorporate robust 
privacy and data security best practices in its creation and operation 
of the National Verifier. USAC must ensure that the National Verifier 
complies with all applicable laws and Federal government guidance on 
privacy and security and other applicable technology requirements such 
as those enacted by the Federal Information Security Management Act 
(FISMA), National Institute of Standards and Technology (NIST) 
publications, and the Privacy Act. As USAC seeks vendors to build the 
National Verifier, it should require that potential vendors demonstrate 
and incorporate in their proposals principles, including but not 
limited to, privacy-by-design and security-by-design principles for the 
National Verifier. Potential vendors must also include statements that 
allow sharing their proposals with USAC and the Commission for review 
and discussion prior to beginning the work. Any vendor selected must 
commit to abiding by the principles described here and must build and 
operate the National Verifier using agile development methodologies. We 
recognize that privacy and data security best practices change over 
time, so we direct USAC to ensure that the National Verifier's privacy 
and data security practices remain consistent with Federal government 
guidance, legal requirements and best practices, and to hire a third-
party firm to independently audit and verify the National Verifier's 
compliance with these policies annually and provide recommendations 
based on any audit findings. USAC should report to the Commission 
annually the results of this third-party audit and verification, as 
well as its efforts to ensure compliance with regards to its privacy 
and data security practices. (USAC may incorporate this annual 
reporting requirement on privacy and data security practices in the 
National Verifier Annual Report).
    133. The National Verifier must follow the NIST guidance for 
secure, encrypted methods for obtaining, transmitting, storing, and 
disposal of consumer and provider information. The National Verifier 
should also follow NIST guidance for firewalls, boundary protections, 
protective naming conventions, and adoption of strong user 
authentication requirements and usage restrictions to protect the 
confidentiality of consumer and provider information. (In discussing 
the privacy of consumer information, we do not limit it to active 
subscribers. The Verifier must also protect information gathered from 
applicants to the Lifeline program, whether unsuccessful or successful, 
and past subscribers.) We further direct USAC to ensure that, per NIST 
guidance, access to consumer and provider data is limited and subject 
to secure authentication systems for Verifier personnel, (The personnel 
for the Verifier, include but are not limited to, personnel at USAC, 
personnel at an entity procured by USAC to execute the functions of the 
Verifier, or personnel procured by USAC to support any of the functions 
of the National Verifier) for service providers and for other users who 
will have access to consumer or provider data in the possession or 
control of the National Verifier. We also direct USAC, per NIST 
guidance, to ensure that Verifier personnel working with consumer or 
provider data held by the National Verifier receive USAC's yearly rules 
of behavior, regular privacy and data security training. (We expect 
that USAC annually will update its rules of behavior as needed.) USAC 
must maintain records of the trainings and attendees. We further direct 
USAC, per NIST guidance, to ensure that the National Verifier limit its 
data collection to information it needs to perform its functions as 
National Verifier, and to promptly and securely dispose of data that it 
no longer needs. We direct USAC, in accordance with NIST 800-53 (The 
NIST 800-53 is a security publication

[[Page 33046]]

issued by NIST) to ensure that the National Verifier program has all of 
the necessary documentation and verification of authority to operate, 
yearly updates, continuous monitoring, plans of actions and milestones 
(POAMS) (These are required by NIST) and proper continuity and disaster 
recovery plans. The National Verifier must have subscriber notification 
procedures in the event of breach that are compliant with Department of 
Homeland Security (DHS) and OMB guidance. All these efforts and other 
guidance on privacy and security as FISMA NIST Publications, and the 
Privacy Act should be independently audited and verified by a third 
party, hired by USAC to assess its annual compliance with these 
policies annually as well as provide recommendations based on any audit 
findings. USAC must also provide the Commission with assistance and 
documentation should any of the above items or aspects of the National 
Verifier relate to audits or investigations of the Commission's 
compliance with federal laws and regulations.
    134. Reporting and Internal Controls Component. The National 
Verifier will include a component responsible for coordinating with 
USAC on audits of internal controls to ensure consistency with the 
Lifeline program rules, for conducting surveys to ensure satisfaction 
in the performance of National Verifier personnel, and for producing 
reports to Lifeline providers, USAC, and the Commission. With respect 
to the reports to the Commission, the National Verifier must also 
produce reports necessary to ensure the Commission's compliance with 
federal rules and regulations pursuant to direction from the Bureau and 
OMD. The reporting capabilities will include the use of data analytics 
and fraud prevention software to help detect fraud before improper 
payments are made to Lifeline providers. In the event of data and 
security breaches, it will inform USAC and the Commission, and carry 
out the process of subscriber notification. We direct the Bureau to 
work with USAC and determine the appropriate reports to be incorporated 
into the National Verifier.
    135. Internal Controls and Procedures Manual. We also direct USAC 
to create written procedures for the National Verifier, including but 
not limited to, procedures for all functions, processes, quality 
control standards, and internal controls. Subject to Bureau and OMD 
approval, USAC should use Government Accountability Office's (GAO) 
Green Book to serve as a guide to developing internal controls for the 
National Verifier.
    136. Unforeseen Circumstances and Clarifications. Given the complex 
nature of the National Verifier and the importance of developing it in 
an efficient and timely manner, as stated above, the Commission 
delegates to the Bureau the role of providing USAC with any needed 
clarifications or interpretations of the Commission's orders for all 
aspects of the National Verifier, including but not limited to 
development, design, and maintenance of the National Verifier. Further, 
the Bureau may provide guidance to USAC concerning the National 
Verifier in the event of unforeseen circumstances. Any such guidance 
must be in line with the intentions of the Commission's orders for the 
National Verifier.
    137. National Verifier Procurement and Funding. We direct USAC, 
working with the Bureau and OMD, to use efficient and cost effective 
means to manage the funding and procurement of the National Verifier. 
USAC will be primarily responsible for the procurement of both the 
human resources and the technological components of the National 
Verifier with oversight from the Bureau and OMD. (USAC has already 
obtained information from entities via its RFI issued in 2015). USAC 
may also propose to the Bureau and OMD to manage certain activities in-
house, if most cost effective. We direct USAC to prepare a procurement 
plan for the National Verifier for review by the Bureau and OMD. We 
direct USAC to incorporate, as feasible, into the National Verifier 
contract requirements, payment terms and conditions that reasonably 
reduce the risks inherent in the ambitious task of developing the 
National Verifier and that incent timely completion of tasks while also 
considering cost considerations. USAC may also as part of developing 
and maintaining the National Verifier, procure from other entities 
(including other government entities), access to or connection with 
databases and systems if USAC determines this is the most reasonable 
approach, taking into consideration cost and other factors, to achieve 
the objectives of the National Verifier. In the event of disagreement, 
the Bureau and OMD will provide USAC with a final determination. The 
USF will fund the development and ongoing maintenance of the National 
Verifier, including all procurement of the various components, testing 
environment, and its ongoing activities.
    138. Stakeholder Engagement. We direct USAC, working with the 
Bureau, to develop a plan to allow for meaningful collaboration from 
potential users on the administrative aspects of implementation of the 
National Verifier. We expect that potential users, such as service 
providers, states, Tribal Nations, and others, who may have valuable 
recommendations on a variety of implementation areas, including but not 
limited to, best practices for IT requirements, efficient interface for 
electronic and manual eligibility pathways, effective payment pathways, 
and effective communication strategies for consumer beneficiaries. We 
therefore encourage USAC to create a stakeholder committee to advise 
USAC on the ``Draft National Verifier Plan'' (described below). After 
such collaborative efforts conclude, USAC shall incorporate stakeholder 
input and recommendations into its ``Draft National Verifier Plan'', 
which it submits to the Bureau. The Bureau shall determine the 
appropriate path forward after balancing factors, such as but not 
limited to, cost, administrative efficiency, and ease of use. Overall, 
we believe that the National Verifier system that is developed with a 
high degree of collaborative input from users will best advance our 
goals.
    139. Implementation Timeline and Transition. Implementation of the 
National Verifier is a considerable undertaking and will require 
significant resources from both the Commission and USAC. We here 
establish milestones to chart the implementation of the National 
Verifier. If USAC determines that additional time is necessary, it will 
inform the Bureau and OMD and request a reasonable extension.
    140. Before December 1, 2016, USAC shall submit to the Bureau and 
OMD the ``Draft National Verifier Plan'' as the first implementation 
milestone. This plan will comprehensively describe the National 
Verifier to be developed and implemented. The plan will also set out a 
proposed strategy, estimated timeline, and estimated budget for 
progressively deploying each part of the National Verifier. As part of 
the strategy, this plan will explain in detail how USAC expects to 
procure services for the National Verifier, to partner with states, and 
to incorporate other federal databases and systems into the National 
Verifier. The Bureau and OMD will work with USAC to make any necessary 
revisions, and will approve the revised ``National Verifier Plan.'' 
(While the National Verifier Plan is the official vehicle for approving 
the planned details of the National Verifier, USAC from the effective 
date of this order may begin taking actions in preparation for

[[Page 33047]]

developing and implementing the National Verifier).
    141. After approval of the National Verifier Plan, on or before 
July 31 and January 31 of each year until the National Verifier 
implementation is complete, USAC will submit to the Bureau and OMD a 
National Verifier Implementation Update. This document will provide 
regular information to the Bureau and OMD on progress toward the 
approved National Verifier Plan.
    142. Given the complexity of the National Verifier and wide variety 
of databases and systems to which the National Verifier may connect, we 
provide flexibility in how and when USAC chooses to incorporate such 
systems. We require the NLAD opt-out states to provide existing 
subscriber information to USAC by December 1, 2016, and ongoing 
thereafter, including any information regarding services that Lifeline 
subscribers subscribe to as described further below. (These states 
include California, Texas, Oregon, and Vermont. See Section III. 
E.2.c.ii. (Increasing Competition for Lifeline Consumers, ETCs that are 
not Lifeline-Only)). We set as an expectation that USAC will deploy the 
National Verifier in at least 5 states by December 31, 2017. We further 
expect that between January 1, 2018 and December 31, 2018 the National 
Verifier will be deployed in an additional 20 states. By December 31, 
2019, we expect Lifeline eligibility will be determined in all states 
and territories using the National Verifier. We also expect that USAC 
may require testing and trials of the National Verifier prior to 
deployment and we allow this with the approval of the Bureau.
    143. National Verifier Deployment and Notification 
Responsibilities. Because deploying the National Verifier in a state 
means the Lifeline eligibility responsibilities will be transitioned 
from ETCs or state administrators to the National Verifier, the 
deployment must be carefully managed and progressively achieved. When 
USAC is ready to deploy the National Verifier in a particular state, 
USAC must inform the Bureau of its deployment and transition plans in 
that state, in addition to providing sufficient advance notice to the 
Lifeline providers, state administrators and all other participants. 
This process will allow for a transparent, progressive and staggered 
roll-out of the National Verifier across the nation while retaining the 
Commission's oversight. Our rules requiring National Verifier 
eligibility certification will become effective in a state when USAC 
deploys the National Verifier in that state and we direct the Bureau to 
issue a notification to all interested participants providing 
information about effective dates and any other relevant obligations. 
Such notification will make clear which Commission rules will no longer 
be applicable in the state(s) where the National Verifier is deployed.
    144. National Verifier Annual Report and Data. In addition to the 
specific reports required of USAC as part of the development and 
implementation of the National Verifier, once the National Verifier is 
fully operational in the first states, USAC will submit to the Bureau 
in January of each year a report on the operations of the National 
Verifier. This report will, at a minimum, provide a current overview of 
the National Verifier, including details and data about National 
Verifier operations consistent with our objective of making 
transparent, to the greatest extent possible, information about the 
Lifeline program. The report should also recommend improvements to the 
National Verifier and should particularly focus on ways to lower costs, 
increase efficiency, and improve the consumer and Lifeline provider 
experiences. In its annual reports on the National Verifier, we direct 
USAC to assess whether the National Verifier is effectuating the 
objectives described in this Section and whether there are ways to 
improve the performance of the National Verifier for all of its users, 
USAC and the Commission. Overall, we require the National Verifier to 
have the capability to report comprehensive program data information to 
promote transparency in the Lifeline program and allow for effective 
program evaluation.

D. Streamlining Eligibility for Lifeline Support

    145. We next take steps to streamline eligibility for Lifeline 
support to increase efficiency and improve the program for consumers, 
Lifeline providers, and other participants. Beginning on the later of 
December 1, 2016 or 60 days following PRA approval, low-income 
households who qualify for and receive SNAP, Medicaid, Supplemental 
Security Income (``SSI''), Federal Public Housing Assistance 
(``FPHA''), or the Veterans Pension benefit will be eligible for 
enrollment in the Lifeline program. (Consistent with the new annual 
eligibility rules, subscribers already enrolled prior to December 1, 
2016 under any of the retired eligibility criteria will be eligible 
until their next re-certification. We direct USAC to communicate with 
carriers and consumers as necessary to provide information where a 
retired eligibility program is being used.). We amend our rules to 
remove Low-Income Home Energy Assistance Program (``LIHEAP''); National 
School Lunch Program's free lunch program (``NSLP''); and Temporary 
Assistance for Needy Families (``TANF'') from the default federal 
assistance eligibility for Lifeline. Finally, we do not modify the 
income-based eligibility nor the Tribal eligibility criteria.
1. Criteria for Streamlining Lifeline Eligibility
    146. We make these reforms as part of our modernization of the 
Lifeline program to increase efficiency and reduce burdens on 
participants. In the 2015 Lifeline FNPRM, we asked about various 
changes to the way consumers qualify for Lifeline in order to improve 
the eligibility determination process. In considering improvements, we 
first look to the federal assistance programs most used by low-income 
consumers who enroll in the Lifeline program. In choosing to focus on 
the programs most utilized by Lifeline subscribers, we will ensure 
continued access to Lifeline through well-established and often-used 
avenues. Moreover, in choosing programs that currently represent the 
highest enrollment rates in Lifeline, Lifeline will be more 
administratively efficient.
    147. In evaluating the eligibility criteria, we next focus on the 
ability to develop long-term technological efficiencies by easily 
accessing systems and databases from other assistance programs. An 
efficient eligibility database to be used in the administration of 
Lifeline will streamline the program for consumers and providers alike. 
The ability to access eligibility databases for federal assistance 
programs is key to the success of the National Verifier. (For example, 
the Commission and SNAP have an existing data sharing agreement that 
allows current ETCs to verify if a low-income consumer is receiving 
SNAP benefits after coordinating with the state snap administrator.). 
In streamlining eligibility programs, we selected programs where a 
database or data sharing agreement could likely be achieved.
    148. Finally, we remain committed to preventing waste, fraud and 
abuse within the Lifeline program. By relying on highly accountable 
programs that demonstrate limited eligibility fraud, Lifeline will 
greatly reduce the potential of waste, fraud, and abuse occurring due 
to eligibility errors. Federal assistance programs that have 
demonstrated limited eligibility errors offer the ability to leverage 
prevention efforts within Lifeline. We recognize that fraud is a

[[Page 33048]]

continuing concern within many federal programs and tying eligibility 
to other assistance programs that have limited eligibility error rates 
reduces the potential for problems within Lifeline.
a. Establishing Eligibility for Low-Income Veterans and Survivors
    149. Today, we modify our rules to grant eligibility for Lifeline 
to low-income consumers receiving Veterans Pension benefit or Survivors 
Pension benefit. (Any reference to the Veterans Pension benefit as a 
default federal assistance program is meant to include the Survivors 
Pension benefit as well). The Veterans Pension benefit program is a 
means-based program that supports veterans and their spouses by 
providing up to $13,855 annually minus any countable family income.
    150. Discussion. We add Veterans Pension benefit or Survivors 
Pension benefit to Lifeline's eligibility program. Providing assistance 
to America's veterans furthers the Commission's mission by specifically 
targeting a low-income group lacking broadband and voice access. To 
qualify for the Veterans Pension benefit program, veterans must have at 
least 90 days of active duty, including one day during a wartime 
period, and meet other means-tested criteria such as low-income limits 
and net worth limitations established by Congress. (The other means-
tested criteria to qualify for pension benefits include that a veteran 
must be: (1) Age 65 or older with limited or no income, or; (2) totally 
and permanently disabled, or; (3) a patient in a nursing home receiving 
skilled nursing care, or; (4) receiving Social Security Disability 
Insurance, or (5) receiving Supplemental Security Income). 
Additionally, any surviving spouse or dependent of a deceased eligible 
veteran can qualify for the Survivors Pensions benefit. The program 
includes income and net wealth limitations to ensure the funding is 
sufficiently targeted to individuals in need. Further, many commenters 
support this change and have demonstrated an established need for armed 
forces veterans to access affordable phone service.
    151. The Veterans Pension benefit also allows the Commission to 
foster a long-term technological solution to verifying eligibility. By 
collaborating with Veterans Affairs, the Commission will be able to 
foster a similar database access agreement as we have with the USDA 
FNS. (Note also that the Veterans Pension benefit can be used as an 
eligibility pathway even prior to incorporation of the VA's database as 
benefit recipients will already have or are able to obtain 
documentation from the VA). The National Personnel Records Center has 
digitized armed service personnel records, which will provide an 
efficient, streamlined solution to verifying eligibility. The Veterans 
Pension benefit also provides a highly accountable program to further 
help combat waste, fraud, and abuse within the Lifeline program. (The 
VA states that approximately 2.17 percent of pension outlays are 
improper. It is important to note that the improper payment percentage 
includes both under and overpayments. It is likely that the true 
eligibility error rate is marginally higher or lower than improper 
payment rate attributable to eligibility errors since payments may not 
be proportionally related to participation.). Further, Veterans Affairs 
is currently implementing the Veterans Benefits Management System 
(``VBMS'') with the goal of improving processing accuracy of all 
benefit claims to 98 percent. VBMS, once fully implemented, will 
provide a completely electronic solution to incrementally validate 
application requirements, processes, and administrative functions. We 
find Lifeline will reduce waste, fraud, and abuse by leveraging the 
Veterans Pension benefits' accountability rather than duplicating 
eligibility determinations.
b. Relying on High-Participation Federal Assistance Programs
    152. In our evaluation of the existing ways households may qualify 
for the Lifeline program, we first consider whether Lifeline 
eligibility programs are being utilized by subscribers for 
qualification and how many current subscribers enroll in Lifeline using 
the eligibility programs. The overwhelming majority of current Lifeline 
consumers enroll based on participation in SNAP, Medicaid, and SSI, and 
we maintain these programs in the Lifeline eligibility criteria. As of 
November 2015, nearly 80 percent of all consumers participating in 
Lifeline demonstrate eligibility by participation in SNAP, Medicaid, or 
SSI. Additionally, these programs capture 80 percent of the eligible 
low-income population under the existing Lifeline eligibility rules. In 
streamlining Lifeline to rely on the federal assistance programs that 
are most frequently used to provide access to Lifeline, we will 
leverage eligibility efficiencies provided by these programs. In sum, 
we conclude that continuing to use SNAP, Medicaid, and SSI as 
qualifying programs recognizes the attractiveness of Lifeline to SNAP, 
Medicaid, and SSI participants, as well as the administrative 
efficiencies. (While a small percentage of subscribers currently enroll 
in Lifeline by demonstrating participation in FPHA, Lifeline's goal is 
to provide meaningful access to needed telecommunication technology for 
low-income individuals The balance of factors discussed below 
demonstrate that FPHA provides highly accountable and broad assistance 
to low-income individuals with an advanced, centralized database to 
enable a long-term technological solution to Lifeline eligibility 
verification and recertification.).
    153. We are persuaded that SNAP, Medicaid, SSI, and FPHA will 
maintain access to Lifeline support for those most in need of the 
Lifeline service. Specifically, SNAP assists 46 million low-income 
Americans with the majority of the households including children, 
senior citizens, individuals with disabilities, and working adults. 
Two-thirds of SNAP benefits go to households with children and three-
quarters of recipient households have a child, an elderly member, or a 
disabled individual. Medicaid provides assistance to 40 million low-
income seniors and other adults. Of these individuals, 11 million are 
non-elderly adults with incomes below 133% of the federal poverty 
guideline, and 8.8 million are individuals with disabilities. SSI 
provides assistance to 8.2 million low-income aged, blind, or disabled 
individuals. 7.2 million are disabled individuals under age 65, and 1.6 
million individuals are either elderly-disabled or over 65 with an 
income less than $733 per month. FPHA provides assistance to 4.8 
million low-income households comprising 9.8 million individuals. Of 
the 4.8 million assisted households, one-half are headed by elderly or 
disabled individuals. These programs target a broad audience of low-
income households in need of improved access to voice and broadband 
services.
c. Fostering a Long-Term Technological Solution for Lifeline 
Eligibility
    154. It is also vitally important that any qualifying federal 
assistance program enables Lifeline to access systems and databases in 
order to develop a National Verifier. Through the use of data sharing 
agreements and database access, the National Verifier must be able to 
effectively verify eligibility of potential low-income consumers 
without relying solely on self-certification or documentation. The 
existing databases for SNAP, Medicaid, SSI, FPHA, and the Veterans 
Pension benefit enable a long-term technological solution to 
eligibility determination.
    155. Moving to a technological solution for Lifeline eligibility

[[Page 33049]]

verification will reduce the burden for low-income consumers in having 
to provide additional documentation and will reduce the potential risk 
to consumers' personal identifying information. The incorporation of 
existing database solutions will also reduce waste, fraud, and abuse of 
the program. While the transition to a National Verifier will not be 
immediate, our selection of qualifying assistance programs that permit 
easy technological solutions lays the groundwork for a successful 
National Verifier.
    156. SNAP, Medicaid, SSI, FPHA, and the Veterans Pension benefit 
program all provide the potential for streamlined interactions between 
those programs' systems and the National Verifier. The current data 
sharing agreement with SNAP, for example, demonstrates an effective 
technological solution to Lifeline eligibility determinations. SNAP is 
administrated on the state level with Federal monitoring and oversight 
by the United States Department of Agriculture, Food and Nutrition 
Service (``USDA FNS''). The data sharing agreement allows current ETCs 
to verify if a low-income consumer is receiving SNAP benefits after 
coordinating with the state SNAP administrator and has enabled a 
technological solution for the verification of SNAP participation, for 
Lifeline enrollment purposes, in many states.
    157. Medicaid, SSI, FPHA, and the Veterans Pension benefit program 
also have accessible systems and databases the National Verifier will 
be able to use. SNAP and Medicaid are often administered by the same 
state agencies, allowing for more efficient database access solutions. 
By reaching agreements with the state administrators, the National 
Verifier will be able to develop an electronic verification system that 
will reduce the administrative burden of the Lifeline program. SSI is 
federally administered by the Social Security Administration and the 
Veterans Pension benefit is administered by the Department of Veterans 
Affairs. Both have sophisticated computer matching and communication 
capabilities that can be utilized by the National Verifier to benefit 
the Lifeline program. FPHA is administered by the United States 
Department of Housing and Urban Development (``HUD''). HUD maintains a 
federal database containing participation information for all 
individuals receiving FPHA that can also be utilized by the National 
Verifier for eligibility verification and recertification.
d. Protecting Against Waste, Fraud, and Abuse by Utilizing Highly 
Accountable Programs
    158. By relying on highly accountable programs that demonstrate 
limited eligibility fraud, Lifeline will greatly reduce the potential 
of waste, fraud, and abuse occurring due to eligibility errors. The 
Commission and stakeholders have made substantial strides to create a 
more efficient and effective Lifeline program and that has transformed 
Lifeline into a more accountable program that provides vital 
telecommunications services to low-income consumers. Lifeline's 
streamlined eligibility programs will continue to guard against waste, 
fraud, and abuse by allowing Lifeline to leverage efficiencies from 
federal programs with limited eligibility and enrollment error rates.
    159. Discussion. SNAP is a meaningful assistance program for 
Lifeline because it maintains one of the lowest eligibility error rates 
of any federal assistance program. SNAP has a 99 percent accuracy rate 
in its eligibility determinations. (We distinguish between eligibility 
problems, which involve ineligible individuals enrolling in SNAP and 
are minimal, and SNAP trafficking problems, which occur when 
individuals sell or purchase SNAP benefits in exchange for cash or 
equivalents and, while prevalent in the last 15 years, have been 
greatly reduced in large part due to aggressive enforcement and 
prevention measures. Trafficking fraud, however, is not directly 
relevant to Lifeline's use of SNAP as an eligibility program because 
Lifeline only relies on the eligibility determination made by SNAP to 
determine eligibility in Lifeline). SNAP eligibility problems occur 
when an individual receives benefits, but does not meet the eligibility 
criteria for the program. To combat this concern, SNAP employs one of 
the most sophisticated quality control systems of any federal 
assistance program, ensuring that 99 percent of all recipients are 
eligible for the program. We find that SNAP's low eligibility error 
rate provides a high level of accountability that the Commission should 
leverage.
    160. Medicaid provides similar efficiencies in eligibility 
determinations for the Lifeline program. Like SNAP, Medicaid has a low 
incidence of eligibility fraud (Medicaid's payment error rate due to 
eligibility errors is only 2.3 percent), and the United States 
Department of Health and Human Services, Office of Inspector General 
(``HHS OIG'') has instituted new tools to combat waste, fraud, and 
abuse within Medicaid. By using data analysis, predictive analytics, 
trend evaluation, and modeling approaches to analyze and target 
fraudulent behavior, HHS OIG has substantially affected payment errors 
based on eligibility. Accordingly, we find that conferring eligibility 
based on Medicaid participation will support the prevention of waste, 
fraud, and abuse in Lifeline.
    161. SSI demonstrates similar accountability. The Social Security 
Administration conducts routine audits between its own systems and 
those of other federal and state agencies to verify eligibility and 
determine if an SSI recipient's information is accurate. SSI has a 
limited overpayment rate resulting from eligibility errors. (This 
figure represents an estimate based on publically available data as SSA 
only reports overpayment (7.2%) and underpayment rates (1.9%). SSA 
additionally reports the major causes of payment errors of which 89% 
are attributable to eligibility errors. Therefore, the effective 
overpayment rate due to eligibility errors is approximately 6.3%. It 
should be noted that these error rates are based on payment and not 
participation; therefore, it is possible the eligibility error rate is 
marginally higher or lower as payments may not be directly proportional 
to participation). SSI has demonstrated continued accountability and 
commitment to combating waste, fraud, and abuse. For the same reasons 
SNAP and Medicaid provide eligibility and verification efficiencies, 
the utilization of the SSI program's robust eligibility verification 
process will benefit the Lifeline program.
    162. Finally, HUD has undertaken many steps to ensure that FPHA is 
highly accountable. HUD actively employs an Enterprise Income 
Verification (EIV) system that matches data from the Social Security 
Administration and the National Directory of New Hires to provide 
income data. The EIV system is used to verify annual income and benefit 
information for FPHA participants, and further enables measures to 
prevent waste, fraud, and abuse within the program by providing 
auditable information to collect improper payments. FPHA has limited 
improper payments. (HUD reports an improper payment percentage of 4.01% 
due to eligibility errors.). HUD has demonstrated continued 
accountability and commitment to combating waste, fraud, and abuse. 
FPHA's accountable eligibility determinations will benefit Lifeline's 
efforts to combat waste, fraud, and abuse.

[[Page 33050]]

2. Removing Eligibility Based on Certain Federal Assistance Programs
    163. We amend our rules to remove LIHEAP, NSLP, and TANF from the 
default federal assistance eligibility for Lifeline. In streamlining 
the eligibility criteria, we choose to remove these programs in part 
due to low enrollment in Lifeline. Further weighing our criteria for 
selecting eligibility programs, these programs do not offer the same 
advantages in developing a federal eligibility database, preventing 
waste, fraud, and abuse, nor better targeting of the neediest low-
income households as SNAP, Medicaid, SSI, FPHA, and the Veterans 
Pension benefit.
    164. Discussion. We amend our rules to remove LIHEAP, NSLP, and 
TANF from the default federal assistance eligibility for Lifeline. In 
doing so, we retain the programs used by the overwhelming majority of 
current Lifeline subscribers while retaining eligibility for millions 
of low-income consumers. (States will still be able to condition 
eligibility for state-specific lifeline payments, but will no longer be 
able to broaden federal Lifeline eligibility. This will allow states, 
like California, to continue to provide additional payments beyond 
current Lifeline benefits and develop the necessary state-specific 
eligibility criteria). By streamlining eligibility criteria, we will 
improve the administrative efficiency of the program and reduce the 
burden on consumers, providers, and the Fund. Only 2.74 percent of 
current Lifeline consumers enroll through LIHEAP, TANF, and NSLP 
combined.
    165. Commenters argue that the elimination of these federal 
eligibility programs will create ``eligibility gaps'' where a low-
income consumer would be eligible based on income, but other 
restrictions prevent access. Many commenters argue that limiting 
Lifeline eligibility will prevent access to the program by low-income 
consumers in need of support and that Lifeline's low participation rate 
suggests that we need to increase the number of eligibility programs to 
capture more consumers. However, we find that focusing on federal 
assistance programs that serve a broader range of the low-income 
households will leverage the reach of those programs. SNAP, Medicaid, 
SSI, and FPHA have high adoption rates among eligible households and 
currently account for 80 percent of program participation. 
Additionally, the programs target a wide variety of low-income 
consumers in different age and life situations, thereby alleviating 
commenters' concerns of ``eligibility gaps'' resulting from limiting 
Lifeline eligibility.
    166. We disagree with those commenters who caution against removing 
NSLP and who argue that providing community-based eligibility or 
retaining federal assistance programs that allow for such eligibility, 
such as NSLP, increases administrative efficiency or appropriately 
protects the use of funds. First, eliminating NSLP as a qualifying 
program will affect very few participants since NSLP only accounts for 
0.31 percent of the total participation in the Lifeline program. In 
addition, because there is substantial overlap between SNAP 
participation and NSLP participation, with 87 percent of NSLP students 
qualifying directly through SNAP participation of the household, we are 
confident there will be minimal disruption to qualifying households.
    167. Also, NSLP cannot be effectively verified by a federal 
eligibility database. The federal administration of NSLP cannot 
authorize any access to the databases that maintain participation 
information. This would require duplicative efforts of the Commission 
to coordinate with state administrators to verify eligibility, as it 
currently must with SNAP and Medicaid. However, this access is 
complicated by federal regulations that would require written consent 
from all students' parents or guardians in order to disclose any 
information. The experience of state commissions demonstrates that this 
process is untenable and works against streamlining the administration 
of Lifeline.
    168. Further, NSLP is currently undergoing program overhauls and 
transitioning to a community-based approach that will complicate the 
ability to determine individual household eligibility. The Community 
Eligibility Provision (``CEP'') allows for participation in free or 
reduced meals for an entire school district, group of schools, or 
individual school if 40 percent of its students are ``identified 
students.'' (``Identified students'' are students that qualify without 
application due to participation in low-income assistance programs like 
SNAP, or students that are considered at risk of hunger due to a 
codified list of factors that includes being homeless, or in foster 
care). USDA adopted this change to eliminate the burden of collecting 
household applications to determine eligibility for school meals, 
relying instead on information from other means-tested programs such as 
the SNAP. This undoubtedly includes households that are not low-income, 
but still qualify for NSLP. Allowing Lifeline eligibility based on 
NSLP's CEP method could result in large numbers of non-low-income 
households qualifying for the Lifeline program and would greatly 
undermine the targeting of support to the low-income households. Given 
the extremely low number of Lifeline participants that use NSLP to 
establish Lifeline eligibility, coupled with the high overlap between 
NSLP and SNAP, the balance of factors supports removing NSLP as a 
qualifying Lifeline program.
    169. We also have administrative concerns with using LIHEAP and 
TANF in the Lifeline program. Providers and state commissions have 
experienced difficulty in developing long-term, technology-based 
solutions for these federal eligibility programs. The majority of 
providers and state commissions choose only to provide database 
eligibility verification for a select group of programs, often SNAP, 
Medicaid, and SSI, due to the lack of centralized administration of 
many federal assistance programs, the wide varieties of documentation, 
differing technologies, and complications presented by controlling 
regulations. We intend to foster a centralized, technology-driven 
solution to eligibility determination, certification, and verification 
and the federal eligibility programs need to enable a database 
eligibility solution.
    170. By using SNAP, Medicaid, SSI, FPHA, and the VA Pension benefit 
as eligibility avenues for Lifeline, the Commission will modernize the 
program while remaining committed to providing support to low-income 
consumers. Millions of low-income households remain eligible under the 
streamlined eligibility criteria while allowing the Commission to 
reduce the administrative burden to consumers, providers, and itself. 
Currently, LIHEAP eligibility accounts for only 1.23 percent of 
Lifeline participants. TANF accounts for only 1.20 percent. The 
retained programs account for 80 percent of all participants and enable 
80 percent of all eligible low-income consumers to qualify with SNAP, 
Medicaid, SSI, or FPHA. The retained programs will allow the Commission 
to develop a long-term technological solution to determining and 
verifying Lifeline eligibility.
3. Independent Income-Based Eligibility
    171. We next maintain our rules regarding income-based eligibility 
as an avenue to access Lifeline support. In doing so, we acknowledge 
that maintaining independent income verification allows low-income 
households to qualify for the program without being required to receive 
assistance from another program. However, we amend the Lifeline

[[Page 33051]]

definition of income to align with the Internal Revenue Service's 
(``IRS'') definition of gross income to provide a clearer standard for 
eligibility determinations. By focusing independent income verification 
efforts by carriers and the National Verifier on checking readily 
available income verification sources and requiring consumer 
certification, we will reduce the potential for waste, fraud, and abuse 
of the program resulting from underreporting income.
    172. In the 2015 Lifeline FNPRM, the Commission sought comment on 
whether low-income consumers should be able to continue to qualify for 
Lifeline support based on household income. We recognized that, under 
the current program, less than four percent of Lifeline subscribers 
demonstrate eligibility based on income level and we questioned whether 
we could better target the neediest consumers given the relatively low 
number of consumers using income as their qualifying method.
    173. Discussion. While a limited number of participants demonstrate 
eligibility through verifying their income, the eligibility avenue 
remains an important and independent access route into the program. 
Currently, three percent of Lifeline subscribers qualify by 
demonstrating household income. However, independent income-eligibility 
remains the only stand-alone avenue for access into the program. By 
ensuring low-income consumers can independently qualify for the 
Lifeline program, qualifying subscribers will not be denied access into 
the Lifeline program simply for not seeking other forms of assistance.
    174. Maintaining income-eligibility requires a focused approach to 
verifying the low-income consumer's complete household income. Income 
verification has typically been more onerous for both the consumer and 
Lifeline provider than establishing eligibility through another 
program. Under the current definition of income, verifying income 
requires a provider to review documentation that demonstrates the 
household's income. Income includes all forms derived by all members of 
a household, including payments normally deductible from taxable 
income, like child support. While verifying income with the IRS can 
give a baseline, (for example, the IRS provides a system normally used 
by mortgage lenders to verify income of individuals with the 
individual's signed consent), the Lifeline provider must look to all 
sources of income within the household and sources that would be 
excluded from taxable income to ensure compliance with Commission 
rules. Thus, income verification is highly susceptible to intentional 
or unintentional underreporting of income. Commenters agree with this 
concern, noting the difficulty in ensuring that a produced tax return 
accurately represents income and that ``virtually no Lifeline 
applicants present their tax returns to demonstrate eligibility'' 
especially given the ease of demonstrating program eligibility. The 
consumer must present the household's income including ``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 for student financial aid, military housing and cost-of-living 
allowances, and irregular income from occasional small jobs. 
Additionally, the consumer must certify they have presented all income 
for themselves and their household.
    175. We also amend the definition of income in Section 54.400(f) of 
our Lifeline rules to align with the Internal Revenue Service's (IRS) 
definition of gross income. This revised definition of income 
simplifies what a subscriber must demonstrate for income-based 
eligibility. Gross income, as defined by the tax code, includes all 
income for whatever source derived unless specifically excluded. By 
relying on a definition of income that subscribers use every year, we 
will greatly reduce instances of intentional or unintentional 
underreporting of income and will reduce the burden on the qualifying 
low-income consumer by eliminating the need for them to make additional 
income calculations. Further, tax information and employment 
information can readily be determined electronically through the IRS or 
third-party services. Aligning the Lifeline definition of income to 
mirror the tax definition of gross income, enables electronic 
verification by utilizing already reported information to a single 
source where previously this was not possible due to the expansive 
definition of income. (The Commission stresses the importance of 
verifying a complete household income picture when income eligibility 
is used. The Commission's rules have and continue to require that a 
consumer establish income for both themselves and for the rest of the 
household. This may require a low-income consumer to provide additional 
documentation or information for other individuals in the consumer's 
household to verify household income. These documents often contain 
additional sensitive and personally identifying information, and 
carriers must continue to protect this information in compliance with 
current Lifeline document retention and protection policies).
    176. Continuing to allow income-based eligibility is also essential 
for Lifeline households in United States Territories. Due to the unique 
combination of high poverty rates (For the United States Territories 
currently receiving Lifeline support, the average poverty rate of the 
population is: Puerto Rico--45.4%; U.S. Virgin Islands--23.3%; American 
Samoa--57.8%; Guam--22.9%; Northern Mariana Islands--31.4%), and non-
uniform federal assistance programs in the United States Territories, 
the United States Territories rely on income-based eligibility. 
Lifeline serves low-income consumers in all states as well as the 
Territories (United States Territories include all areas currently 
controlled by the United States and specifically the territories of the 
Commonwealth of Puerto Rico, American Samoa, the Commonwealth of 
Northern Mariana Islands, the United States Virgin Islands, and Guam), 
of the United States. However, the Territories do not have full access 
to the default federal eligibility programs for several reasons. For 
the United States Territories, the USDA offers Nutrition Assistance 
Block Grants (NABG) in lieu of operating SNAP in these areas. The same 
is true for Medicaid, which is operated similarly to block grants with 
an annual funding cap. Moreover, besides the Northern Mariana Islands, 
SSI is not available for individuals in the United States Territories.
    177. Puerto Rico's Telecommunications Regulatory Board (``TRBPR'') 
cautions against limiting program eligibility to only federal 
assistance programs. The differing administration and eligibility 
criteria for SNAP, Medicaid, and SSI requires income-verification 
remain in Puerto Rico and other United States Territories. For example, 
the income levels for the Nutrition Assistance Program for Puerto Rico 
(``PAN'') range between 23.9 percent and 35.3 percent of FPG, which is 
substantially lower than SNAP. As a result, participation in PAN is 30 
percent lower than if the default federal eligibility existed. Given 
the unequal treatment of Puerto Rico in federal assistance programs, 
TRBPR recommends retaining income verification. Retaining income-based 
eligibility prevents ``qualification gaps'' between low-income 
consumers in

[[Page 33052]]

states and those in the Territories. We continue to allow income-based 
eligibility for households with annual incomes of less than 135 percent 
of the FPG.
4. Tribal-Specific Eligibility Criteria
    178. After careful consideration, we maintain the current set of 
Tribal-specific eligibility programs. The Commission embraced these 
Tribal assistance programs to encourage adoption among low-income 
residents on Tribal lands. We agree with commenters and find that the 
disproportionately low adoption of telecommunication services on Tribal 
lands, especially those in remote and underserved areas, makes clear 
that there is much more progress to be made in increasing penetration 
and adoption of Lifeline services.
    179. In the Lifeline Reform Order, the Commission took specific 
steps to make Lifeline more inclusive for consumers living on Tribal 
lands. The Commission noted that consumers on Tribal lands did not 
qualify for Lifeline support because many Tribal members chose to 
participate in the Food Distribution Program on Indian Reservations 
(``FDPIR'') rather than SNAP. The Commission added FDPIR as a 
qualifying program because both SNAP and FDPIR have similar income-
based eligibility criteria and that members of more than 200 Tribes, 
especially Tribal elders, currently receive benefits under FDPIR.
    180. In the 2015 Lifeline FNPRM, in the context of exploring the 
idea of streamlining eligibility for the program, we also sought 
comment on whether to remove eligibility based on federal Tribal 
assistance programs and the effect removing those programs would have 
on low-income subscribers and the Lifeline program. Specifically, we 
asked about continuing to use FDPIR and, more broadly, about overlap 
between Tribal-specific assistance programs and the other federal 
assistance programs used in the Lifeline program.
    181. Discussion. Low-income consumers living on Tribal lands and 
receiving Bureau of Indian Affairs general assistance (``BIA general 
assistance''), Tribally administered Temporary Assistance for Needy 
Families (``TTANF''), Head Start (only those households meeting its 
income qualifying standard), or FDPIR remain eligible for Lifeline. BIA 
general assistance, TTANF, and Head Start were added in 2000 to 
encourage enrollment of low-income Tribal households because the 
programs were specifically targeted to Tribal members, and the addition 
of these programs helped remedy the barrier to Tribal participation in 
Lifeline caused by the other federal assistance program criteria. 
Additionally, the programs are means-tested and target household 
incomes similar to the other federal assistance programs.
    182. The retention of these Tribal programs as Lifeline qualifying 
programs allows continued access to a specifically underserved group of 
potential subscribers. The Commission has noted previously that 
consumers living on Tribal lands have limited access to advanced 
telecommunications technologies. We recognize that retaining the 
programs may add additional complications to developing a uniform set 
of eligibility criteria to enable a long-term technological solution to 
eligibility determinations. However, we find that continuing to support 
low-income consumers living on Tribal lands through these Tribal-
specific eligibility programs outweighs the limited administrative 
difficulties.
    183. We make clear that our determination here to retain Tribal-
specific eligibility programs does not prejudge a decision on any of 
the other Tribal-related or other outstanding issues for which the 
Commission sought comment in the 2015 Lifeline FNPRM and prior 
Commission-level notices in these proceedings. For example, we are not 
at this time modifying the enhanced support amount or deciding whether 
to restrict Lifeline and/or Link Up support to certain carriers 
operating on Tribal lands or carriers serving certain portions of 
Tribal lands. These and other issues for which the Commission has 
sought comment and which are not addressed in this order, remain open 
for consideration in a future proceeding more comprehensively focused 
on advancing broadband deployment Tribal lands. (We note that the 
Commission recently sought comment on adopting rules to increase 
support to rate-of-return carriers in areas that include Tribal lands. 
The Commission will address related issues in both proceedings to the 
extent that it deems appropriate).
5. State-Specific Eligibility Criteria
    184. We amend our rules to remove state-specified eligibility 
criteria for Lifeline support. While the Commission has traditionally 
allowed states to establish eligibility for the federal program, we 
ultimately conclude that Lifeline eligibility needs to be updated to 
allow for more efficient administration that enables comprehensive 
eligibility verification to continue to prevent waste, fraud, and 
abuse.
    185. Discussion. We find that the benefits to the federal Lifeline 
program of removing state-specific eligibility criteria outweigh 
concerns presented by the states that object to this action. It is 
important to note that the changes to eligibility only apply to the 
federal Lifeline program. Thus, a state maintaining its own Lifeline 
fund will still be free to adopt any eligibility requirements it deems 
necessary. We make this change to simplify the administration of the 
Lifeline program. Lifeline currently allows for unique eligibility 
criteria depending on the state in which the consumer resides. (The 
Commission received comments from multiple State Commissions detailing 
that state's Lifeline program and the administration differences from 
the default federal program). This approach complicates administration 
at a federal level. Allowing the states to continue to develop tailored 
rules for federal Lifeline assistance would eliminate many of the 
efficiencies the Commission gains by modernizing the eligibility 
criteria. Streamlining the default federal eligibility criteria allows 
the Commission to transition the program to modern approaches for 
eligibility determinations, verification, and annual recertification. 
The selected list of federal assistance programs allows for a 
technology-based system by leveraging existing databases. Further, the 
programs are tailored to allow the Commission to reach needed data 
sharing agreements with the stakeholders in an efficient manner and 
state-specific eligibility criteria would minimize or eliminate the 
efficiencies the Commission is working to achieve.
    186. The size, scope, and technology of the Lifeline program has 
changed drastically from 1997 when the Commission allowed state 
Lifeline eligibility to grant eligibility in federal Lifeline. The 
program has grown from 5.1 million households in 1997 to 13.1 million 
currently. Disbursements have grown from $422 million in 1997 to $1.5 
billion in 2015. In this Order, we have instituted sweeping changes to 
the Lifeline program regarding verification of federal Lifeline 
eligibility on a national level. These require us to revisit the 
initial decision in 1997 to allow states to determine if eligibility 
verification was needed. Instituting a National Verifier requires 
specifically targeted federal assistance programs that have 
demonstrated use by current low-income consumers within the federal 
Lifeline program. State eligibility often relies on federal Lifeline 
eligibility programs, proving the criteria redundant in the majority of 
cases. In

[[Page 33053]]

fact, the state-specific assistance programs only account for 2.52% of 
total Lifeline participation. The administrative burden to verify each 
individual program for a National Verifier is not supported by the 
limited adoption of state-specific eligibility programs.

E. Increasing Competition for Lifeline Consumers

    187. We recognize that in order to truly modernize the Lifeline 
marketplace, it is incumbent on the Commission to examine and reform 
three key aspects of providers' participation in the Lifeline program. 
Specifically, we must update providers' processes for entering the 
Lifeline program, providers' obligations as Lifeline providers, and 
providers' responsibilities when they may seek to exit the program. 
These three aspects of being a Lifeline provider--entry, service 
obligations, and exit--are crucial to providers' decisions about 
whether to participate in the program at all, and they are accordingly 
fundamental pieces of a revitalized Lifeline program. We expect that 
our actions today will encourage market entry and increase competition 
among Lifeline providers, which will result in better services for 
eligible consumers to choose from and more efficient usage of universal 
service funds.
    188. In this Section, we continue to require Lifeline providers to 
be designated as ETCs, but we take several steps to modernize the 
processes and obligations necessary to obtain and maintain ETC status. 
We first establish our authority to designate Lifeline Broadband 
Provider (LBP) ETCs and create a designation process for such Lifeline 
Broadband Providers. This action preserves states' authority to 
designate ETCs to receive Lifeline reimbursement for qualifying voice 
and/or broadband services, while adding to that structure the option 
for carriers to seek designation as Lifeline Broadband Providers 
through the FCC.
    189. We next establish reformed service and relinquishment 
obligations for different categories of ETCs. For Lifeline Broadband 
Providers, we establish a streamlined relinquishment process that gives 
providers greater certainty while retaining the Commission's ability to 
protect consumers. For Lifeline-only ETCs, those carriers that have 
received limited designations to participate only in the Lifeline 
program, we establish that such ETCs are eligible to receive support 
for broadband service but may choose to only offer supported voice 
service instead. For ETCs that are designated to receive high-cost 
support (High-Cost/Lifeline ETCs), we establish that such ETCs are also 
eligible to receive support for broadband service and forbear from 
requiring such High-Cost/Lifeline ETCs to offer Lifeline-supported 
broadband service, except in areas where the ETC commercially offers 
broadband pursuant to its high-cost obligations. We also establish 
conditional forbearance from existing ETCs' Lifeline voice obligations 
where certain objective competitive criteria are met.
    190. These reforms balance low-income consumers' reliance on 
existing service providers while encouraging new market entry in the 
Lifeline program and creating a level playing field for existing and 
new providers. We expect that these reforms will unleash increased 
competition in the Lifeline marketplace, providing more choice and 
better service for the consumers benefitting from the program.
1. Creating a Lifeline Broadband Provider Designation
    191. As part of our comprehensive modernization and reform of the 
Lifeline program, we must address the barriers potential Lifeline 
providers face when attempting to enter the program and the burdens 
existing providers shoulder while participating in the program. Through 
a number of actions, in this Section we modernize carriers' process for 
entering the Lifeline program to become LBPs, their obligations within 
the program, and the process for relinquishing their participation in 
the program. We also take certain steps to streamline the LBP 
designation process to encourage broader provider participation in the 
Lifeline program with the expectation that increased participation will 
create competition in the Lifeline market that will ultimately redound 
to the benefit of Lifeline-eligible consumers.
    192. First, we decide that the Lifeline program will continue to be 
limited to providers that are ETCs. However, to ease the burden of 
becoming an LBP providing BIAS to eligible consumers, we improve the 
designation process, clarify LBP obligations, and modernize the 
relinquishment process to better reflect the modern competitive 
Lifeline market. We establish our authority to designate such ETCs 
pursuant to our responsibility under Section 214(e)(6) and take steps 
to streamline the LBP designation process to encourage greater 
nationwide participation in the program.
a. Lifeline Participation Limited to ETCs
    193. We first maintain the existing, statutorily compelled paradigm 
for providing Lifeline service and continue to require Lifeline 
providers be designated as ETCs. At this time, we decline to extend 
Lifeline participation to non-ETCs. We find that continuing to require 
providers to be ETCs to receive reimbursement through the Lifeline 
program will protect consumers and facilitate continuing efforts to 
prevent waste, fraud, and abuse. As discussed below, however, we also 
take steps later in this Section to streamline the ETC designation 
process and ETC service obligations to increase provider participation 
in the Lifeline program.
    194. In the 2015 Lifeline FNPRM, the Commission sought comment on 
various means to increase competition among carriers serving Lifeline-
eligible households. Among other potential ways to increase 
competition, the Commission asked for comment on a process for 
providers to participate in Lifeline that is separate from the ETC 
designation process required to receive high cost universal service 
support to encourage broader participation. The Commission also sought 
comment on re-visiting the Commission's 1997 decision not to provide 
Lifeline support to non-ETCs to encourage broader participation in the 
market, and its authority to provide Lifeline support to non-ETCs.
    195. In response to the 2015 Lifeline FNPRM, several commenters 
urged the Commission to eliminate the requirement that recipients of 
Lifeline support be ETCs through statutory interpretation or 
forbearance under Section 10 of the Act, arguing that such a change 
would increase provider participation in the Lifeline program. Some 
commenters reasoned that eliminating the ETC requirement would enable 
more community-based organizations to participate in the Lifeline 
program. Other commenters urged the Commission to retain the ETC 
requirement, arguing that the ETC requirement is necessary to prevent 
waste, fraud, and abuse in the program. Commenters opposing the 
elimination of the ETC requirement also argued that the Communications 
Act requires providers participating in the Lifeline program to be 
ETCs.
    196. Regarding the Commission's authority to permit non-ETC 
providers to receive Lifeline funds, AT&T argues that Section 254(j) 
and Section 254(e) of the Act permit the Commission to expand Lifeline 
participation to non-ETCs. Public Knowledge argues that the 
Commission's decisions in the 2004 Report and Order and TracFone 
Forbearance Order are inconsistent with the Universal Service First 
Report and Order on the issue of the Commission's authority to permit 
non-ETCs to

[[Page 33054]]

participate in the Lifeline program. Public Knowledge also argues that 
the Commission's prior orders failed to state that the Commission was 
departing from its prior interpretation of Section 254, so the 
Commission's controlling interpretation of Section 254 continues to be 
that expressed in the Universal Service First Report and Order. Some 
commenters also argue that the Commission may permit non-ETCs to 
participate in the Lifeline program by amending its rules or by 
forbearing from rules that currently prevent non-ETCs from 
participating in the Lifeline program.
    197. We agree with the commenters who assert that the Commission 
should continue to limit reimbursement through the Lifeline program to 
ETCs, but we take significant action to address the concerns that 
animate suggestions that we provide support to non-ETCs. Requiring 
participating Lifeline providers to be ETCs facilitates Commission and 
state-level efforts to prevent waste, fraud, and abuse in the program, 
and serves the public interest by helping the Commission and state 
commissions ensure that consumers are protected as providers enter and 
leave the program. For federally-designated ETCs, in implementing 
Section 214(e)(6) of the Act, the Commission's rules state that common 
carriers must meet certain requirements to obtain an ETC designation, 
including certification to the relevant service requirements for its 
support, demonstrating the ability to function in emergency situations, 
satisfying consumer protection and service quality standards, and 
demonstrating financial and technical capability to provide Lifeline 
service (for Lifeline-only ETCs). For state designations, states that 
retain the relevant designating authority also ensure that carriers 
have the financial and technical means to offer service, including 911 
and E911, and have committed to consumer protection and service quality 
standards. These structures that protect consumers and ensure carriers 
meet service quality standards ensure that the services supported by 
the Lifeline program serve the Commission's goals of achieving 
``[q]uality services'' offered at ``just, reasonable, and affordable 
rates.'' Considering the protections and standards already built into 
the ETC designation framework, we find that working within an updated 
ETC framework is a more sound approach to modernizing how carriers 
enter and exit the Lifeline program than creating entirely new 
registration processes and requirements for Lifeline providers.
    198. We share commenters' concerns that requiring providers to 
obtain ETC designation could limit provider participation in the 
Lifeline program, but we address this concern by the targeted steps we 
take in this Order to streamline the ETC designation process, reduce 
compliance burdens, and implement a National Verifier. (For example, if 
a non-traditional provider like a school, library, or other anchor 
institution wishes to provide Lifeline-supported BIAS and can meet the 
streamlined requirements to enter the program and offer service as a 
Lifeline Broadband Provider, such a provider could seek designation to 
participate in Lifeline just as any other qualifying provider may). We 
are confident that these changes will encourage provider participation 
through reduced administrative burdens. Finally, because we decide not 
to permit non-ETCs to receive reimbursement through the Lifeline 
program at this time, we need not decide the Commission's authority to 
do otherwise. We next revisit the Commission's authority to designate 
ETCs offering BIAS in the Lifeline program under Section 214(e).
b. Jurisdiction To Designate Under Section 214(e)(6)
    199. Having established that providers must become ETCs to receive 
reimbursement through the Lifeline program, we now turn to the issue of 
when the Commission retains authority to designate ETCs for the purpose 
of offering BIAS in the Lifeline program. In addition to including BIAS 
as a supported service in the Lifeline program, we must also determine 
who may provide that service. We establish the Commission's 
jurisdiction to designate broadband Internet access service providers 
as ETCs solely for the purpose of receiving reimbursement through the 
Lifeline program for providing BIAS to eligible low-income subscribers. 
We interpret Section 214(e) to permit carriers to obtain ETC 
designations specific to particular mechanisms of the overall universal 
service fund. We also find that state designations for this new LBP ETC 
designation would thwart federal universal service goals and broadband 
competition, and accordingly preempt such designations.
    200. To provide guidance regarding our authority to designate LBPs 
under Section 214(e)(6), we clarify that a carrier need only provide 
some service or services--not necessarily the supported service--that 
constitute ``telephone exchange service and exchange access'' to 
qualify for designation by the Commission. Even though we anticipate 
that many providers will be able to meet the requirement of ``providing 
telephone exchange service and exchange access,'' we also grant 
forbearance from the provisions of Section 214(e)(6) that require 
carriers to provide telephone exchange service and exchange access in 
order to seek designation as an ETC by the Commission under that 
Section.
    201. Accordingly, LBPs will be designated by the Commission under 
the authority granted to it in Section 214(e)(6) of the Act. (We note 
that, in certain circumstances, we also have authority under Section 
214(e)(3)). We find that these measures enable the Commission to 
efficiently designate LBPs and unlock the Lifeline program to new 
innovative service providers and robust broadband offerings for the 
benefit of our Nation's low-income consumers.
(i) Carriers Not Subject to the Jurisdiction of a State Commission
    202. To facilitate the Lifeline program's goal of promoting 
competition and facilitating new services for eligible low-income 
consumers, we preempt states from exercising authority to designate 
Lifeline-only broadband ETCs for the purpose of receiving Lifeline 
reimbursement for providing BIAS to low-income consumers. (Some 
commenters assert that although the Commission has concluded that 
broadband Internet access service is interstate for regulatory 
purposes, at least some states still could have sufficient jurisdiction 
to perform an ETC designation. This question is moot insofar as we 
preempt any state jurisdiction to perform ETC designations specifically 
for Lifeline broadband purposes, and thus we need not, and do not, 
address the scope or contours of any state authority regarding 
broadband Internet access service.). Accordingly, Section 214(e)(6) 
grants to the Commission the responsibility to resolve carriers' 
requests for designation as an ETC for the purposes of receiving such 
Lifeline broadband support. (Further, we need not establish the 
Commission's jurisdiction to designate Tribally-owned and operated ETCs 
seeking to serve within the external boundaries of their Reservation, 
as that jurisdiction has already been established).
    203. Discussion. Taking into consideration the comments we have 
received in the record on this issue, we now create a unified, 
streamlined FCC ETC designation process for providers seeking to 
receive reimbursement for providing BIAS. First, we find that it is

[[Page 33055]]

reasonable to interpret Section 214(e) as permitting the Commission to 
tailor the ETC designation process and ETC obligations to the 
particular element of the USF from which the provider is receiving 
funds. Next, we find that the Commission has authority to preempt 
states from designating LBPs and, in this limited circumstance, we 
preempt states from exercising any authority to designate providers as 
LBPs.
    204. Commission authority to designate where states lack 
jurisdiction. Section 214(e)(6) establishes the Commission's authority 
to designate a common carrier ``that is not subject to the jurisdiction 
of a State commission'' as an ETC. The circumstances in which a carrier 
is ``not subject to the jurisdiction of a State commission'' under 
Section 214(e)(6) is ambiguous regarding whether the carrier must be 
entirely outside the state commission's jurisdiction or only outside 
the state commission's jurisdiction with respect to a particular 
service supported by universal service mechanisms, even if subject to 
state commission jurisdiction in other respects. As previously 
interpreted by the FCC, the jurisdictional inquiry under Section 
214(e)(6) ``should include, but not be limited to, whether a state 
commission lacks jurisdiction over the particular service or geographic 
area.''
    205. We interpret the inquiry as to whether a carrier is ``subject 
to the jurisdiction of a State commission'' under Section 214(e)(6) in 
light of the merits analysis required for designating a carrier as an 
ETC under either Section 214(e)(2) or (e)(6). In particular, the state 
(under Section 214(e)(2)) or the Commission (under Section 214(e)(6)) 
must find that the carrier seeking designation as an ETC will comply 
with the service obligations in Section 214(e)(1). In relevant part, 
Section 214(e)(1) requires ETCs to ``offer the services that are 
supported by Federal universal service support mechanisms under Section 
254(c)'' at least in part using their own facilities ``throughout the 
service area for which the designation is received.''
    206. To the extent that the Commission previously interpreted 
Section 214(e)(6) to only apply if the relevant state commission had no 
authority over any of the services offered by the carrier--or any of 
the services supported by the federal universal service support 
mechanisms (As originally implemented, ETC designations were not 
specific to a particular supported service or a particular universal 
service support mechanism, and thus, as interpreted and implemented by 
the Commission, ETCs' service obligations under Section 214(e)(1) 
encompassed the duty to offer all the supported services designated 
under Section 254(c)(1). Congress initially provided only for state ETC 
designations under Section 214(e) while simultaneously recognizing in 
Section 214(e)(3) that universal services could include interstate 
services.)--we now revise that interpretation to more closely match the 
services supported by federal universal service support mechanisms. In 
a 2014 Order, the Commission adopted an interpretation of Section 
254(c)(1) that enables it to define universal service(s) under Section 
254(c)(1) that differs among different rules (e.g., among different 
universal service mechanisms). The Commission also has granted carriers 
forbearance from the `own facilities' requirement in Section 214(e)(1) 
to enable pure resellers to be designated as ETCs, conditioned on them 
only obtaining Lifeline universal service support. Building on this, we 
conclude that regardless of the scope of ETC designations granted 
historically, Section 214(e) permits carriers to seek, and obtain, ETC 
designations specific to particular elements of the overall universal 
service fund. When they do so, we further conclude that the ETC's 
service obligations under Section 214(e)(1) mirror the scope of 
universal service(s) defined under Section 254(c)(1) for specific 
purposes of that element of the overall universal service fund (if 
there is a definition specific to that element). In other words, the 
Commission interprets ``the services that are supported by Federal 
universal service support mechanisms under Section 254(c)'' to mean 
only those services within the definition of universal service--as 
stated in the Commission's rules and orders implementing Section 
254(c)--for purposes of the specific mechanism or mechanisms for which 
the relevant carrier is designated an ETC.
    207. Further, interpreting the relevant scope of state jurisdiction 
under Section 214(e)(6) against the backdrop of the above 
interpretation and implementation of Sections 254(c)(1) and 214(e)(1), 
the relevant state jurisdiction would be jurisdiction specific to that 
scope of services defined as universal service for purposes of the 
specific mechanism or mechanisms for which the carrier is seeking 
designation as an ETC. Insofar as there is a specific mechanism or 
program within the overall universal service fund that, for instance, 
only has broadband Internet access as the supported service, a carrier 
that has obtained designation as an ETC just in that narrow context 
would bear service obligations that mirror that program's supported 
services, absent any other forbearance, waiver, or clarification by the 
Commission. Alternatively, carriers would remain free to seek broader 
ETC designations that would involve designation by the state 
commission.
    208. We interpret Section 214(e)(1)'s service obligation, which 
applies to ``the services that are supported by Federal universal 
service support mechanisms under Section 254(c),'' to be limited to the 
services that are supported by the relevant Federal universal service 
support mechanisms under Section 254(c). Such an interpretation makes 
sense against the backdrop of the Commission's 2014 interpretation of 
Section 254(c)(1) in the E-rate Modernization Order. Insofar as the 
defined universal service(s) can differ among different elements of the 
overall universal service program, it makes logical sense for ETC 
designations and the associated service obligations to be able to be 
tailored to match--i.e., to be able to designate carriers as ETCs for 
purposes of specific elements of the overall universal service fund and 
for their service obligations to match the supported services as 
defined for that purpose.
    209. Section 214(e)(1)(A)'s reference to ``mechanisms,'' rather 
than a ``mechanism,'' does not prevent this interpretation because we 
interpret Section 214(e)(1)(A) to be drafted broadly enough to 
encompass the obligations of an ETC participating in multiple universal 
service mechanisms without demanding that the ETC provide services that 
are supported by universal service mechanisms in which that ETC does 
not participate. To interpret Section 214(e)(1)(A) otherwise would 
point to the conclusion that whenever the Commission exercised its 
authority to designate additional services for support in programs for 
schools, libraries, and health care providers, Section 214(e)(1)(A) 
would require ETCs participating in the Lifeline or High-Cost programs 
to also offer those additional services as services ``supported by 
Federal universal service support mechanisms under 254(c).'' Section 
254(c)(3)'s specific reference to particular mechanisms within the 
overall universal service fund counsel against such a conclusion, and 
so we interpret Section 214(e)(1)(A) inclusion of ``mechanisms'' to 
simply mean that, to the extent that an ETC participates in multiple 
universal service mechanisms, its service obligations include the

[[Page 33056]]

services supported by all of the relevant mechanisms.
    210. Section 254(e) bolsters this interpretation by both requiring 
that, in general, recipients of federal universal service support must 
be ETCs designated under Section 214(e) and simultaneously limiting 
ETCs to using the support they receive ``only for the provision, 
maintenance, and upgrading of facilities and services for which the 
support is intended.'' At a high level, then, Section 254(e) supports 
the view that ETC designations (which generally are required for 
support)--and the associated service obligations under Section 
214(e)(1)--should be tailored to the particular services ``for which 
the support is intended.''
    211. We find further support for this interpretation in Section 
214(e)(3). That provision expressly recognizes the possibility of 
carriers being designated ETCs with respect to either interstate or 
intrastate services, rather than more generally. In addition to 
supporting the general concept that ETC designations need not encompass 
all possible supported services, it also lends support to the view that 
Section 214(e)(1) service obligations can be specific to particular 
services. Section 214(e)(1) applies, by its terms, to ETCs designated 
under Section 214(e)(3), as well as those designated under (e)(2) or 
(e)(6). Interpreting Section 214(e)(1) only to impose service 
obligations associated with the particular mechanism or mechanisms for 
which a carrier is designated an ETC seems most consistent with the 
dual FCC and state roles established under Section 214(e)(3). Where 
both interstate and intrastate services are supported services, the FCC 
identifies the carrier best positioned to provide the interstate 
services and the relevant state commission identifies the carrier best 
positioned to provide the intrastate services. It is consistent with 
this framework for the carrier designated for interstate services by 
the FCC only to be obligated to provide those services under Section 
214(e)(1). By the same token, it is consistent with this framework for 
the carrier designated for intrastate services by the state commission 
only to be obligated to provide those services under Section 214(e)(1). 
A contrary reading of Section 214(e)(1) would mean that the carrier 
designated an ETC by the FCC for interstate services also would have to 
provide the intrastate services even where the state commission 
identified a different carrier as best positioned to provide those 
services (and vice versa). Section 214(e)(3) appears designed to ensure 
that there is one ETC providing each supported service in areas that 
otherwise would have none, however. But if any single ETC designated 
under Section 214(e)(3) would have to provide all the supported 
services--both interstate and intrastate--the requirement for separate 
designations by the FCC (for interstate services) and the state 
commission (for intrastate services) would make little sense, since 
either one of those carriers individually would have to provide all the 
supported services.
    212. Finally, as an implementation matter, we find that this 
interpretation counsels in favor of creating a separate element of the 
overall universal service fund to support BIAS for eligible low-income 
households in the Lifeline program. As a separate subset of the 
Lifeline mechanism in the overall universal service fund, supporting 
BIAS for low-income consumers, this separate element of the Lifeline 
program will help the Commission designate carriers seeking to become 
ETCs only in the specific context of Lifeline-supported BIAS. (This 
could be seen as roughly analogous to the current Rural Health Care 
mechanism, which includes a separate Telecommunications Program and 
Healthcare Connect Fund program).
    213. Preempting state designations for Lifeline Broadband Provider 
ETCs. We next find that state designations for LBPs thwart federal 
universal service goals and broadband competition, and accordingly we 
preempt such designations.(In accordance with this preemption, we also 
amend Section 54.201 of the Commission's rules to clarify that a state 
commission shall not designate a common carrier as a Lifeline Broadband 
Provider. See 47 CFR 54.201(j)). In the absence of state jurisdiction 
to designate providers as LBPs providing BIAS through the Lifeline 
program, the Commission has authority to designate such ETCs under 
Section 214(e)(6).
    214. A robust and successful Lifeline broadband program will serve 
the purposes of Section 254(b) by enabling the Commission to utilize 
universal service funds to give eligible low-income households 
affordable access to advanced telecommunications services. The success 
of that modernized program, however, depends on participation from 
providers to give eligible low-income households a choice between 
quality services. Many providers that may be interested in competing 
for Lifeline broadband funds are not currently designated as ETCs, and 
in particular larger providers with infrastructure and market offerings 
that span multiple states must be afforded a reasonable, clear pathway 
into the Lifeline broadband program.
    215. Preempting the states from designating Lifeline Broadband 
Providers and permitting carriers to seek designation from the 
Commission for multiple states at once would serve the universal 
service principles of Section 254(b) by increasing low-income 
consumers' access to advanced telecommunications and information 
services at affordable rates. (In TOPUC v. FCC, the Fifth Circuit found 
that Section 254 was not such an unambiguous grant of FCC authority 
over intrastate matters to overcome the restriction on Commission 
authority in Section 2(b) of the Act. See also 47 U.S.C. 152(b) (expect 
as provided in specified provisions, ``nothing in this chapter shall be 
construed to apply or to give the Commission jurisdiction with respect 
to (1) charges, classifications, practices, services, facilities, or 
regulations for or in connection with intrastate communication service 
by wire or radio of any carrier, . . .''). However, since here the 
preempted state actions have detrimental effects on the FCC's 
implementation of Section 254 as it relates to interstate services, we 
find this situation is distinguishable from the facts the court faced 
in TOPUC. Similarly, although Section 601(c)(1) of the 1996 Act 
provides that ``[t]his Act and the amendments made by this Act shall 
not be construed to modify, impair, or supersede Federal, State, or 
local law unless expressly so provided in such Act or amendments,'' 
Pub. L. 104-104, 601(c)(1), 110 Stat. 56 (1996), that does not alter 
the normal application of conflict preemption.). With respect to 
carriers seeking ETC designation in order to participate in a reformed 
Lifeline program as LBPs, we find that participation by such ETCs will 
advance the objectives of Section 254, but potential Lifeline providers 
would be deterred by a requirement to undergo ETC designation 
proceedings before dozens of state commissions and the Commission in 
order to launch a nationwide Lifeline broadband offering. As commenters 
have explained, a provider currently seeking ETC designation from 
multiple state commissions will likely face designation procedures and 
time frames that vary widely, lasting anywhere from a few months to 
several years. The state designation process may involve simply 
responding to staff's information requests or may include formal 
evidentiary hearings. Additionally, even if the state and federal ETC 
designation processes were entirely uniform, we are

[[Page 33057]]

persuaded that even just the burden of seeking designation from 
multiple states and the Commission is sufficient to discourage 
broadband service providers from entering the Lifeline program to 
introduce nationwide or similarly large-scale broadband offerings, 
because such a requirement means that a provider that has calculated 
that it needs to achieve a nationwide scale to justify introducing a 
Lifeline offering will be faced with potentially years of uncertainty 
while it pursues the necessary designations. We therefore find that 
state designation of LBPs conflicts with our implementation of the 
universal service goals of Section 254(b) in the Lifeline broadband 
rules adopted in this Order. (Under the Supremacy Clause, U.S. Const. 
art. VI, cl. 2, federal law preempts any conflicting state laws or 
regulatory actions that would prohibit a private party from complying 
with federal law or that ``stand[] as an obstacle to the accomplishment 
and execution'' of federal objectives. Freightliner Corp. v. Myrick, 
514 U.S. 280, 287 (1995) (internal quotation marks omitted); 
Hillsborough County, Fla. v. Automated Med. Labs., Inc., 471 U.S. 707, 
713 (1985) (noting that ``state laws can be pre-empted by federal 
regulations''). Because state ETC designations specifically for LBPs 
would conflict with our rules implementing Section 254, such authority 
also is not preserved by Section 254(f). See 47 U.S.C. 254(f)).
    216. We find that the Commission should not similarly preempt state 
ETC designations for providers seeking Lifeline-only ETC designations 
to provide voice service, nor for providers seeking broader ETC 
designations that are not Lifeline-only and include high-cost funding. 
Today, multiple providers already serve the Lifeline voice market, and 
the states' traditional role in designating voice ETCs argues in favor 
of preserving the existing de-centralized structure for designating 
ETCs other than LBPs. We also note that Section 706 of the 
Telecommunications Act directs us to focus our efforts on removing 
barriers to investment in ``advanced telecommunications services.'' We 
therefore focus our streamlining efforts on broadband services within 
the Lifeline program.
    217. Additionally, the Commission has previously found that Section 
706 of the 1996 Act authorizes preemption, and that conclusion is 
applicable to our current efforts to modernize the Lifeline program to 
support BIAS. ``In light of Congress's delegation of authority to the 
Commission to `encourage' and `accelerate' the deployment of broadband 
to all Americans, we interpret Sections 706(a) and (b) to give us 
authority to preempt state laws that stand as barriers to broadband 
infrastructure investment or as barriers to competition.'' Section 
706(a) grants the Commission authority to ``encourage the deployment on 
a reasonable and timely basis of advanced telecommunications capability 
to all Americans.'' Indeed, Section 706(a) specifically states that the 
Commission ``shall'' encourage such deployment, using a variety of 
tools including ``measures that promote competition in the local 
telecommunications market'' and ``other regulating methods that remove 
barriers to infrastructure investment.'' We find that our preemption 
authority falls within these categories listed by Section 706(a), and 
the Commission therefore has authority to preempt state laws that 
conflict with Section 706(a) by preventing market entry and competition 
in the Lifeline program.
    218. Additionally, the Commission's 2016 Broadband Progress Report 
found that ``advanced telecommunications capability is not being 
deployed to all Americans in a reasonable and timely fashion.'' 
Accordingly, under Section 706(b), we are mandated by Congress to 
``take immediate action to accelerate deployment of such capability by 
removing barriers to infrastructure investment and by promoting 
competition in the telecommunications market.'' Here, we find that 
requiring prospective Lifeline Broadband Providers to seek separate 
designations before many states and the Commission constitutes a 
barrier to investment and competition in the Lifeline market. The 
greater carrier participation in Lifeline that would be fostered by 
preemption of state conditions unrelated to compliance with the 
Lifeline rules on relevant ETC designations would encourage the 
deployment of advanced telecommunications capability, such as BIAS. We 
also find that preempting these state conditions on ETC designations 
would ``promot[e] competition in the telecommunications market'' 
insofar as such state conditions otherwise would deter participation in 
the marketplace for Lifeline-supported broadband Internet access 
service.
    219. More broadly, as the Commission has previously found, 
broadband Internet access service is jurisdictionally interstate for 
regulatory purposes. Although Section 214(e)(2) authorizes states to 
perform ETC designations and, under the TOPUC decision, does not itself 
preclude state conditions on such designations, there are indications 
in the Fifth Circuit's decision that it anticipated that those 
conditions would involve intrastate services subject to states' 
historical state law authority. Further, although the Commission has 
recognized state jurisdiction to collect data regarding BIAS, that is 
materially different from the imposition of substantive obligations on 
broadband Internet access service.
    220. In addition to declaring that states are preempted from 
exercising authority to designate Lifeline Broadband Providers, we 
adopt a legislative rule consistent with that outcome. As described 
above, the ETC designation process is an important tool to protect 
consumers and prevent waste, fraud, and abuse in the Lifeline program, 
but should not become a barrier that discourages legitimate carrier 
participation and inhibits universal access to advanced communications 
services. Accordingly, for the reasons discussed above, the Commission 
revises Section 54.201 of its rules to prohibit state commissions from 
designating Lifeline Broadband Providers.
    221. Some commenters have argued that the Commission should not 
preempt or limit states' roles in ETC designations. To that end, we 
note that in this Order we do not preempt states' authority to 
designate ETCs for Lifeline voice service, nor to grant broader ETC 
designations that are not Lifeline-only and include support from the 
USF High-Cost Program. (We also note that, to the extent that state 
commissions have declined to designate carriers as ETCs over concerns 
about those carriers' 911 services, this Order does not prevent states 
from inquiring into such issues for carriers offering voice service 
seeking a non-Lifeline Broadband Provider ETC designation). For those 
areas in which states have traditionally held a role and which more 
often involve jurisdictionally intrastate services, our preemption here 
does not change states' responsibility to designate ETCs. (States will 
therefore continue to be in a position to evaluate issues like a non-
LBP ETC's ability to meet ETC service and facilities requirements. We 
find that the Commission is capable of determining whether common 
carriers seeking designation as an LBP will be able to fulfill those 
requirements, as detailed below. We recognize that Section 254(i) 
contemplates that ``the Commission and the States should ensure that 
universal service is available at rates that are just, reasonable, and 
affordable.'' 47 U.S.C. 254(i). We do not here preempt any otherwise 
permissible efforts, consistent with state law, to provide state 
support). Additionally, although some commenters argue that Section 
214(e)

[[Page 33058]]

implicitly preserves any state authority relevant to ETC designations, 
the interrelationship between Section 214(e) and Section 254--i.e., the 
purpose of a Section 214(e) ETC designation is to implement universal 
service support mechanisms under Section 254--supports our present 
preemption of state designations of LBPs as conflicting with the goals 
of Section 254.
    222. Some commenters suggest the FCC is ill-equipped to assume the 
responsibility of designating broadband providers for the Lifeline 
program. In response, we expect our reforms to the federal ETC 
designation process for Lifeline Broadband Providers to prevent 
petitions from pending longer than is necessary to ensure the continued 
integrity of the program and protection of consumers. Other commenters 
argued that the current ETC designation process is not generally 
lengthy or onerous, and is an important tool in combatting waste, 
fraud, and abuse in the Lifeline program. We find, however, that a 
centralized LBP designation process can further streamline the burdens 
of seeking designation while continuing to prevent waste, fraud, and 
abuse in the program. Similar to the state measures to prevent fraud 
that NARUC discusses, Commission rules require annual reporting, annual 
certifications, and audits for Lifeline providers, the Commission may 
deny an ETC designation petition if the provider does not meet the 
relevant requirements, and the Commission's Enforcement Bureau is 
equipped to investigate and take action against providers that violate 
the Lifeline program's rules. Some commenters cautioned the Commission 
to limit the extent to which it streamlines or centralizes the 
designation process, because of the unique characteristics of the 
Lifeline market. We note that our preemption and forbearance actions in 
this Order are tailored to ensure a more competitive, effective program 
without sacrificing the integrity of the program or the Commission's 
authority to act in cases of waste, fraud, or abuse.
(ii) Carriers Providing Telephone Exchange Service and Exchange Access
    223. Having established our authority to designate where state 
commissions lack jurisdiction under Section 214(e)(6), we next turn to 
the question of what types of carriers are eligible for designation by 
the Commission under 214(e)(6).
    224. Guidance regarding Section 214(e)(6). Under Section 214(e)(6) 
of the Act, in order to seek designation as an ETC by the Commission, a 
provider must be ``a common carrier providing telephone exchange 
service and exchange access that is not subject to the jurisdiction of 
a State commission.'' We explain above why carriers seeking ETC 
designation specifically as LBPs are ``not subject to the jurisdiction 
of a State commission'' within the meaning of that Section. We further 
clarify that a carrier need only provide some service or services--not 
necessarily the supported service--that qualify as telephone exchange 
service and exchange access in order to seek a designation from the 
Commission under Section 214(e)(6). (We note that the Commission 
recently declined to address whether broadband Internet access service 
could constitute telephone exchange service and/or exchange access, nor 
do we address that issue here).
    225. The text of Section 214(e)(6) does not require that the 
relevant supported service or services for which the carrier is being 
designated an ETC must constitute telephone exchange service and 
exchange access. Nor is there any requirement in Section 254(c)(1) that 
services must be telephone exchange service or exchange access--let 
alone both--in order to be included in the definition of universal 
service. Insofar as supported services need not be telephone exchange 
service and/or exchange access, we decline to interpret Section 
214(e)(6) to impose such a requirement on carriers seeking Commission 
designation under that Section where the text does not itself require 
it. (Interpreting Section 214(e)(6) to mean that the telephone exchange 
service and exchange access requirement be met by the supported service 
would lead to anomalous results. As an illustrative example, if the 
Commission were to establish a universal service program with telephone 
toll service as the supported service under Section 254(c), it would be 
impossible for a provider seeking designation as an ETC to provide 
telephone exchange service and exchange access as the supported service 
if that were needed to meet the criteria of Section 214(e)(6). See 47 
U.S.C. 153(20) (defining ``exchange access'' and making clear that 
``telephone exchange service,'' ``exchange access,'' and ``telephone 
toll service'' are distinct categories). If such a carrier also were 
not subject to the designation authority of a state commission, it 
would be left with no entity--state commission or this Commission--that 
could designate it as an ETC, which is at odds with the intent of 
Section 214(e)(6)). Thus, a carrier providing any service or services 
that constitute telephone exchange service and exchange access in the 
area for which it is seeking designation as an ETC may seek designation 
from the Commission where, as here, such carriers are not subject to 
state ETC designation jurisdiction within the meaning of Section 
214(e)(6).
    226. We make clear that in considering whether a carrier is 
providing telephone exchange service and exchange access for purposes 
of Section 214(e)(6), we look beyond the corporate entity that itself 
is seeking designation as a Lifeline Broadband ETC, and also consider 
affiliates of that entity. This approach is consistent with the 
Commission's interpretation of Section 214(e)(1), under which the 
``requirement that an ETC offer the supported services through `its own 
facilities or a combination of its own facilities and resale of another 
carrier's service' would be satisfied when service is provided by any 
affiliate within the holding company structure.'' If the duties of an 
ETC can be satisfied through an affiliate, we find no reason why the 
Commission, to find Section 214(e)(6) triggered, should have to adopt a 
stricter interpretation of what entity must provide telephone exchange 
service and exchange access. This is particularly true because, as 
explained below, the telephone exchange service and exchange access 
criteria in Section 214(e)(6) does not bear directly on the carrier's 
qualifications or responsibilities as an ETC in providing supported 
services. Further, Section 214(e) was codified as part of Section 214, 
and prior to the 1996 Act, certain references to ``carriers'' in 
Section 214 were interpreted to extend beyond just the relevant 
corporate entity itself. (Thus, although the 1996 Act codified a 
definition of ``affiliate'' in Section 3 of the Act distinct from the 
definition of ``common carrier'' there, that does not, by implication, 
undercut our interpretation of Section 214 because the 1996 ``Act and 
the amendments made by [the 1996] Act shall not be construed to modify, 
impair, or supersede Federal . . . law unless expressly so provided in 
such Act or amendments.'' 1996 Act, 601(c). Indeed, Commission rules 
implementing Section 214(a) make clear that their use of the term 
``carrier'' includes affiliates within the meaning of Section 3(1) of 
the Act.). This further bolsters our interpretation of Section 
214(e)(6). Thus, we expect that many carriers likely already provide 
some telephone exchange and exchange access services, whether through 
the entity providing broadband Internet access service or an affiliate. 
For example, such services

[[Page 33059]]

have included traditional telephone service and commercial mobile radio 
services (CMRS), which many carriers already provide today. (We 
recognize that we have not generally classified VoIP as a 
telecommunications service or information service, but we nonetheless 
have recognized that providers might elect to offer interconnected VoIP 
as a telecommunications service. Insofar as a carrier elected to offer 
VoIP on a common carrier basis, we do not see a reason based on the 
record here why such service would not also be classified as telephone 
exchange service and exchange access to the same extent as traditional 
voice telephone service. We further note that in highlighting the 
seemingly more straightforward case where VoIP is offered as a 
telecommunications service, we are not prejudging the question of 
whether, even if not a telecommunications service, particular VoIP 
services could constitute telephone exchange service and exchange 
access, which remains open regarding those scenarios, as well.
    227. Furthermore, we interpret the requirement that a carrier 
seeking designation under Section 214(e)(6) be ``providing'' telephone 
exchange service and exchange access in a broad and flexible manner. 
The Commission in other contexts has interpreted the term ``providing'' 
as more inclusive than the offering of the relevant service. Thus, we 
conclude that it is sufficient for purposes of Section 214(e)(6) that a 
carrier is making available telephone exchange service and exchange 
access, whether or not it actually has customers for those services at 
the time of the ETC designation.
    228. In addition, in contrast to Section 214(e)(1)(A), which 
requires ETCs to provide supported services at least in part over their 
own facilities, there is no analogous ``facilities'' requirement in 
Section 214(e)(6) as to any non-supported services relied on by the 
carrier for its provision of telephone exchange service and exchange 
access to trigger that Section. Thus, we interpret Section 214(e)(6) as 
enabling a carrier to satisfy the ``telephone exchange service and 
exchange access'' criteria through pure resale of services that satisfy 
those definitions.
    229. The text of Section 214(e)(6) also does not require the 
carrier to be providing telephone exchange service and exchange access 
for any particular period of time before or after the Commission 
invokes its Section 214(e)(6) designation authority. So we further 
conclude that the relevant requirement of Section 214(e)(6) can be met 
by a service or services introduced by the carrier in order to meet the 
Section 214(e)(6) criteria. We note as well that carriers subject to 
dominant carrier regulation likely otherwise already are providing 
services that constitute telephone exchange service and exchange access 
(and, indeed, likely already are designated as ETCs in relevant 
respects), so any carriers needing to introduce a new service to 
satisfy the telephone exchange service and exchange access criteria of 
Section 214(e)(6) are likely to be nondominant. Thus, they generally 
are subject to comparatively fewer, if any, ex ante constraints on the 
rates and terms of their offerings.
    230. `Telephone exchange service and exchange access' forbearance. 
Even though we anticipate that many providers readily will be able to 
meet the requirement of ``providing telephone exchange service and 
exchange access'' and can seek Commission ETC designation as LBPs under 
Section 214(e)(6), some providers could be deterred from seeking such 
designation--and thereby participating in the Lifeline broadband 
program--because of uncertainty whether they satisfy that criteria. 
Although we also have authority to designate ETCs under Section 
214(e)(3)--which does not require providers to be providing telephone 
exchange service and exchange access--that authority does not enable us 
to designate additional LBPs in an area where a carrier already present 
will provide the supported Lifeline broadband Internet access service. 
Thus, while an important backstop, that Section 214(e)(3) designation 
authority does not necessarily enable us to have the type of 
competitive environment for Lifeline broadband Internet access service 
that we conclude will most effectively advance our statutory 
objectives.
    231. As a result, pursuant to our authority under Section 10 of the 
Act, we grant certain forbearance from applying the provision of 
Section 214(e)(6) requiring carriers to be providing telephone exchange 
service and exchange access. In particular, we forbear from applying 
that provision to carriers seeking designation from the Commission as 
an LBP that do not otherwise provide a service or services already 
classified by the Commission as telephone exchange service and exchange 
access. We conclude that doing so will help maximize the potential for 
the widest possible participation by broadband Internet access service 
providers in a manner targeted to our policy objectives in this 
proceeding.
    232. In pertinent part, Section 10 directs the Commission to 
``forbear from applying . . . any provision of [the Act] to a 
telecommunications carrier or . . . class of telecommunications 
carriers . . ., in any or some of its or their geographic markets, if 
the Commission determines that'' three criteria are met. Namely, such 
forbearance is authorized if ``the Commission determines that--(1) 
enforcement of such regulation or provision is not necessary to ensure 
that the charges, practices, classifications, or regulations by, for, 
or in connection with that telecommunications carrier or 
telecommunications service are just and reasonable and are not unjustly 
or unreasonably discriminatory; (2) enforcement of such regulation or 
provision is not necessary for the protection of consumers; and (3) 
forbearance from applying such provision or regulation is consistent 
with the public interest.'' The basic forbearance framework is 
discussed in greater detail below.
    233. We find that our forbearance from applying the requirement 
that carriers be ``providing telephone exchange service and exchange 
access'' in the Section 214(e)(6) designation process is a reasonable 
exercise of our Section 10 authority for several reasons. First, 
although not unambiguous, the practical impact of that provision in 
Section 214(e)(6) persuades us that it imposes an obligation on 
carriers--namely, carriers must provide telephone exchange service and 
exchange access in order to obtain an ETC designation from the 
Commission under that Section. The Commission in the past has 
recognized that Congress intended Section 10 to sweep broadly, (Cf. 
Petition For Declaratory Ruling To Clarify 47 U.S.C. 572 In The Context 
of Transactions Between Competitive Local Exchange Carriers and Cable 
Operators; Conditional Petition For Forbearance From Section 652 of the 
Communications Act For Transactions Between Competitive Local Exchange 
Carriers and Cable Operators, Memorandum Opinion and Order, 27 FCC Rcd 
11532, 11543, para. 22 (2012) (Section 652 Forbearance Order) 
(interpreting the use of ``any'' in referring to regulations and 
provisions of the Act that the Commission can forbear from applying to 
telecommunications carriers or telecommunications services as revealing 
Congress' broad intent that the forbearance authority). Although the 
focus in that proceeding was on whether a provision in Title VI could 
be subject to forbearance under Section 10, the reasoning likewise 
persuades us more generally to adopt a broad--though not unlimited--
view of the Commission's

[[Page 33060]]

forbearance under Section 10), and has looked to the real-world 
consequences of a provision to inform its interpretation and 
application of Section 10 to that provision. We do the same here, and 
conclude under Section 10 that the Commission has authority to forbear 
from applying that provision to carriers that want an LBP designation 
from the Commission but do not provide a service or services that 
clearly meet the ``telephone exchange service and exchange access'' 
requirement and thus can designate those carriers as LBPs if the 
remaining Section 214(e)(6) criteria are met. (We explained above why a 
carrier seeking designation specifically as an LBP is not subject to 
the jurisdiction of a state commission for purposes of Section 
214(e)(6), and beyond the requirement of providing ``telephone exchange 
service and exchange access'' from which we forbear here, the carrier 
still must ``meet[] the requirements of'' Section 214(e)(1) and be 
designated as an ETC ``for a service area designated by the Commission 
consistent with applicable Federal and State law,'' so long as the 
designation is in the public interest).
    234. Second, we conclude that this grant of forbearance readily 
satisfies the Section 10(a)(1)-(3) criteria. In particular, we find 
that applying that provision is not necessary to ensure just, 
reasonable, and not unjustly or unreasonably discriminatory rates and 
practices under Section 10(a)(1) nor to protect consumers under Section 
10(a)(2). The text of Section 214(e)(6) does not illuminate the purpose 
served by the requirement that carriers seeking ETC designations from 
the Commission under Section 214(e)(6) be providing telephone exchange 
service and exchange access. As explained above, because supported 
services need not be telephone exchange service or exchange access 
service (let alone both), there is no inherent nexus between a 
carrier's provision of telephone exchange service and exchange access 
and its ability to satisfy the requirements for ETC designation under 
Section 214(e)(1). Nor is there any inherent nexus between a carrier's 
provision of those services and the public interest analysis under 
Section 214(e)(6). Thus, nothing in the text of Section 214(e)(6) 
demonstrates that the ``providing telephone exchange service and 
exchange access'' provision is intended to, or is likely to, have any 
practical effect on carriers' rates and practices for purposes of 
Section 10(a)(1) or on the protection of consumers under Section 
10(a)(2).
    235. Nor do we find in the context specifically at issue here that 
our application of the ``providing telephone exchange service and 
exchange access'' provision is necessary under the Section 10(a)(1) and 
(a)(2) criteria. To the contrary, we conclude that forbearance from 
applying that provision better advances the objective of just and 
reasonable rates and practices and protection of consumers, by 
promoting competition among Lifeline broadband Internet access service 
providers. If we continued to apply that provision in full, given the 
concerns expressed about the deterrent effect of the historical ETC 
designation process in other respects, we expect that carriers 
otherwise willing to participate in the Lifeline broadband program will 
be deterred at least incrementally from seeking an LBP designation from 
the Commission under Section 214(e)(6) if they do not otherwise provide 
a service or services already clearly classified by the Commission as 
telephone exchange service and exchange access. (Section 10 permits the 
Commission to evaluate forbearance assuming arguendo that it applies). 
Providers might be less willing to undertake the effort of seeking an 
LBP designation in the face of uncertainty regarding whether they meet 
the threshold obligation of providing telephone exchange service and 
exchange access.
    236. Granting forbearance from the specified provision of Section 
214(e)(6) for carriers seeking designation as an LBP that do not 
otherwise provide a service or services already classified by the 
Commission as telephone exchange service and exchange access eliminates 
uncertainty that otherwise risk deterring those providers' 
participation. This is likely to promote competition for Lifeline 
broadband Internet access services, and the Commission previously has 
found that competition helps ensure just and reasonable rates. 
Moreover, we anticipate that the availability of competing LBPs will 
better protect consumers receiving the benefits of that increased 
competition. We further observe that our evaluation of what is 
necessary to ensure just and reasonable and not unjustly or 
unreasonably discriminatory rates under Section 10(a)(1) and what is 
necessary to protect consumers under Section 10(a)(2) is guided by the 
Commission's responsibilities under Section 254 of the Act and Section 
706 of the 1996 Act. As we explain elsewhere, we are modernizing our 
Lifeline efforts to support broadband Internet access service given its 
importance to consumers, and ensuring the widest possible participation 
in the Lifeline broadband program is an important element of those 
reforms.
    237. These same considerations likewise persuade us that 
forbearance is in the public interest under Section 10(a)(3). Indeed, 
Section 10(b) directs the Commission, as part of the Section 10(a)(3) 
analysis, to consider whether forbearance will promote competitive 
market conditions and, if ``forbearance will promote competition among 
providers of telecommunications services, that determination may be the 
basis for a Commission finding that forbearance is in the public 
interest.'' As explained above, we anticipate that the specified 
forbearance from applying the ``providing telephone exchange service 
and exchange access'' provision in Section 214(e)(6) will promote 
competition among providers of Lifeline broadband Internet access 
services. Based on that, coupled with the forgoing analysis, we 
conclude that forbearance is in the public interest under Section 
10(a)(3).
c. Lifeline Broadband Provider ETC Designation Process
    238. We next turn from the Commission's authority to designate 
Lifeline Broadband Provider ETCs and take steps to modernize the 
process by which carriers can obtain such designation. We take 
additional steps to decrease the burdens of obtaining and maintaining 
Lifeline Broadband Provider ETC status, while still protecting 
consumers. We therefore take action to streamline the process by which 
we will designate Lifeline Broadband Providers to encourage broader 
participation in the program.
(i) Streamlined Lifeline Broadband Provider Designation Process
    239. In this Section, we create a streamlined ETC designation 
process for carriers seeking designation as Lifeline Broadband 
Providers, solely for the purpose of receiving Lifeline support for 
broadband service. We expect that this streamlined process will 
facilitate market entry and allow new competition to enter the Lifeline 
market while continuing to protect consumers and the Fund. (Contrary to 
some commenters' claims, we expect that increasing provider 
participation will increase competition among providers in the Lifeline 
program and incentivize providers to offer better quality services).
    240. A broadband provider's petition for ETC designation as a 
Lifeline Broadband Provider for the limited purpose of receiving 
Lifeline support for BIAS will be subject to expedited review and will 
be deemed granted within 60 days of the submission of a completed 
filing provided that the

[[Page 33061]]

provider meets certain criteria demonstrating that it is financially 
stable and experienced in providing broadband services, unless the 
Commission notifies the applicant that the grant will not be 
automatically effective. First, as of the date of the filing, the 
carrier must serve at least 1,000 non-Lifeline customers with voice 
telephone and/or BIAS service. Second, the carrier must have offered 
broadband services to the public for at least the 2 years preceding the 
filing, without interruption. For purposes of this rule, emergency 
service outages do not constitute an ``interruption'' because the 
purpose of this rule is to gauge whether a provider has maintained a 
substantial presence in the broadband services market. Service quality 
concerns, if any, will be duly considered by the Commission in 
evaluating the provider's petition but do not determine whether the 
provider qualifies the above-described streamlined treatment. We 
delegate to the Bureau the responsibility for implementing this process 
and the authority to clarify how carriers may establish that they meet 
the criteria set out in this framework.
    241. Additionally, as part of our efforts to encourage broadband 
service on Tribal lands, we will apply the above-described expedited 
review process to petitions for designation as a Lifeline Broadband 
Provider submitted by Tribally-owned and -controlled facilities-based 
providers that provide service on Tribal lands, regardless of whether 
they meet the above-discussed prior service or existing customer 
criteria. To qualify as a Tribally-owned and -controlled, facilities-
based provider, the provider must be greater than 50 percent owned and 
actually controlled by one or more federally-recognized Tribal 
Nation(s) or Tribal consortia.
    242. Once a provider has obtained designation as an LBP, that 
provider may expand their LBP service area designation by submitting a 
letter to the Commission identifying the service areas in which the LBP 
plans to offer Lifeline-supported service and a certification that 
there has been no material change to the information submitted in the 
petition for which the LBP received designation as an LBP. Such a 
request shall be deemed granted five business days after it is 
submitted to the Commission, unless the Bureau notifies the applicant 
that the grant will not be automatically effective. We therefore amend 
Section 54.202 of the Commission's rules to reflect these changes. We 
expect that this process will empower LBPs to rapidly expand Lifeline-
supported broadband service offerings to new areas, while retaining the 
Commission's ability to protect consumers and the Fund.
    243. We want to facilitate a robust competitive marketplace for 
Lifeline customers and therefore encourage providers, including 
nontraditional providers, that do not meet the streamlined criteria to 
submit a request to be an LBP. All such petitions will be reviewed 
thoroughly and not automatically deemed granted after a set time, but 
the Bureau shall act on such petitions within six months of the 
submission of a completed filing. Accordingly, we update Section 54.202 
of the Commission's rules to reflect these targeted changes to the 
Commission's designation process for the purpose of designating 
Lifeline Broadband Provider ETCs. (Providers seeking designation as an 
LBP that are not facilities-based are not required to obtain Commission 
approval of a compliance plan prior to receiving designation as an LBP. 
We find that the designation process for LBPs is distinct from the 
process set out for Lifeline-only ETCs in the 2012 Lifeline Reform 
Order, and LBP designation criteria are sufficient to prevent waste, 
fraud, and abuse in the program, so a separate obligation to obtain 
approval for a compliance plan is not necessary). Our revisions to 
Section 54.202 of the Commission's rules, as discussed in this Section, 
will become effective upon announcement of OMB approval under the PRA, 
at which point providers may begin submitting petitions for ETC 
designation as a Lifeline Broadband Provider.
    244. A provider seeking designation as an LBP should submit the 
following information in its filing. First, the provider must certify 
that it will comply with the service requirements applicable to the 
support that it receives, including any applicable minimum service 
standards. Second, the provider must 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. Third, the provider must 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). Fourth, the 
carrier must demonstrate that it is financially and technically capable 
of providing the Lifeline service, which could be satisfied in a number 
of ways, including showing compliance with subpart E of part 54 of the 
Commission's rules.
    245. Section 54.202(a) of the Commission's rules currently requires 
common carriers seeking designation as an ETC solely for the purpose of 
receiving Lifeline support to ``submit information describing the terms 
and conditions of any voice telephony service plans offered to Lifeline 
subscribers.'' We now revise this rule to also require such ETCs, 
including LBPs, to submit information describing the terms and 
conditions of any broadband Internet access service plans offered to 
Lifeline subscribers at the time of designation. Such information 
should include details regarding the speeds offered, data usage 
allotments, additional charges for particular uses, if any, and rates 
for each such plan. While this information should be filed at the time 
of LBP designation, providers need not refile or notify the Commission 
of changes to their plans so long as they certify compliance with the 
applicable minimum standards. Providing this snapshot of Lifeline 
offerings will allow the Commission to better understand and evaluate 
whether prospective ETCs, including prospective LBPs, are seeking to 
launch service offerings that comply with the Lifeline program's rules.
    246. We find that this process for prospective LBPs protects the 
integrity of the Lifeline program and guards against waste, fraud, and 
abuse, while facilitating market entry and encouraging competition. All 
LBPs, regardless of whether they qualify for streamlined treatment, 
must meet the requirements for designation as a Lifeline-only ETC 
established in Section 214(e) of the Act and Sec. Sec.  54.201 and 
54.202 of the Commission's rules. (We note that the requirement to 
submit a five-year plan describing proposed improvements or upgrades to 
the provider's network does not apply to providers seeking designation 
solely for the purpose of receiving support through the Lifeline 
program, including LBPs). The Commission will examine all petitions for 
designation as an LBP to ensure that petitioning carriers meet the 
requirements in the Act and the Commission's implementing rules. The 
Commission will use its authority to deny petitions, remove petitions 
from streamlined treatment, or both, if the circumstances so require. 
Additionally, LBPs must comply with the Lifeline program rules and will 
be subject to auditing and enforcement in accordance with the 
Commission's rules.

[[Page 33062]]

    247. We are also mindful of the many existing Lifeline providers 
designated by states and the FCC that intend to offer standalone 
broadband to Lifeline consumers. We note that, as set out below, 
Lifeline-only ETCs may receive Lifeline support for BIAS provided to 
eligible low-income consumers but existing ETCs also retain the option 
to avail themselves of forbearance from the obligation to offer 
broadband. Lifeline-only ETCs will thus be able to receive support for 
BIAS through Lifeline without re-submitting a petition for ETC 
designation as a Lifeline Broadband Provider.
d. Preserving a State Role in Lifeline
    248. Nothing in this Order preempts states' ability to develop and 
manage their own state Lifeline programs. Nor does the creation of the 
LBP designation disturb states' current processes for designating non-
LBP ETCs, where they retain jurisdiction. In these ways, states will 
continue to play an important role in the administration of state 
Lifeline programs and traditional non-LBP ETC designations, where state 
law grants them authority to do so.
    249. We recognize that a number of states have put in place state 
Lifeline programs that provide state-funded subsidies to low-income 
consumers for communications services. We applaud these state programs 
for devoting resources designed to help close the affordability gap for 
communications services. Nothing in this Order preempts states' ability 
to create or administer such state-based Lifeline programs that include 
state funding for Lifeline support to support voice service, BIAS, or 
both. States that do maintain state Lifeline programs may therefore 
enact their own rules for the administration of those programs. For 
example, a state may deem consumers eligible to participate in that 
state's Lifeline program based on the consumer's participation in 
another state-based program, even if that eligibility program does not 
make the consumer eligible for federal Lifeline support.
    250. Additionally, we make clear that states retain the ability to 
designate Lifeline-only ETCs and ETCs that are not Lifeline-only, to 
the extent that state law grants them authority to do so. For the 
reasons discussed above, our preemption in this Order with regard to 
LBPs does not impact states' authority to designate other categories of 
ETCs, even if those ETCs receive designations from states that are 
broad enough to encompass Lifeline support for BIAS. As a result, to 
the extent a provider wants to receive state Lifeline funds in addition 
to federal Lifeline support, the provider must seek approval and (to 
the extent required by a state for receipt of state funding) ETC 
designation from the relevant state commission and comply with any 
applicable state laws. To the extent a provider only seeks the federal 
LBP, however, providers are not required to seek approval or 
designation from the states.
    251. We anticipate that preserving the roles that states have 
traditionally played in Lifeline will benefit low-income consumers by 
enabling states to offer their own support for services provided to 
low-income households and encouraging competition from non-LBP ETCs 
that have traditionally been designated by states.
2. Lifeline Obligations for Eligible Telecommunications Carriers
    252. In this Section, we turn to the issue of what ETC service 
obligations are appropriate and best suited for a successful modernized 
Lifeline program. We consider the substantive obligations placed on 
ETCs through the Act and the Commission's rules, and streamline certain 
of those obligations through targeted forbearance and other regulatory 
tools to encourage broader participation and more robust competition 
among providers in the Lifeline market. We find that such actions will 
further modernize the Lifeline program to encourage market entry by 
providers offering BIAS while still protecting consumers and ensuring 
the services Lifeline subscribers receive are of high quality.
    253. In the 2015 Lifeline FNPRM, we sought comment on ways to 
increase competition and encourage market entry in the Lifeline 
program. Within that inquiry, we sought comment on whether certain 
requirements related to ETC designation were ``overly burdensome'' and 
could be simplified or eliminated while protecting consumers and the 
Fund. We also inquired about permitting ETCs to opt-out of providing 
Lifeline supported service in certain circumstances, and we sought 
comment on the many other requirements new Lifeline providers must meet 
to participate in the program. We asked whether there are specific 
state or federal regulatory barriers that make it difficult for 
carriers to enter or remain in the Lifeline program, and how the 
Commission can address them.
a. Forbearance Standard
    254. Section 10 of the Act provides that the Commission ``shall'' 
forbear from applying any regulation or provision of the Communications 
Act to telecommunications carriers or telecommunications services if 
the Commission determines that: (1) Enforcement of such regulation or 
provision is not necessary to ensure that the charges, practices, 
classifications, or regulations by, for, or in connection with that 
telecommunications carrier or telecommunications service are just and 
reasonable and are not unjustly or unreasonably discriminatory; (2) 
enforcement of such regulation or provision is not necessary for the 
protection of consumers; and (3) forbearance from applying such 
provision or regulation is consistent with the public interest.
    255. In evaluating whether a rule is ``necessary'' under the first 
two prongs of the three-part Section 10 forbearance test, the 
Commission considers whether a current need exists for a rule. In 
particular, the current need analysis assists in interpreting the word 
``necessary'' in Sections 10(a)(1) and 10(a)(2). For those portions of 
our forbearance analysis that require us to assess whether a rule is 
necessary, the D.C. Circuit concluded that ``it is reasonable to 
construe `necessary' as referring to the existence of a strong 
connection between what the agency has done by way of regulation and 
what the agency permissibly sought to achieve with the disputed 
regulation.'' Section 10(a)(3) requires the Commission to consider 
whether forbearance is consistent with the public interest, an inquiry 
that also may include other considerations. Forbearance is warranted 
under Section 10(a) only if all three of the forbearance criteria are 
satisfied. The Commission has found that nothing in the language of 
Section 10 precludes the Commission from proceeding on a basis other 
than the competitiveness of a market where warranted.
    256. Also relevant to our analysis, Section 706 of the 1996 Act 
``explicitly directs the FCC to `utiliz[e]' forbearance to `encourage 
the deployment on a reasonable and timely basis of advanced 
telecommunications capability to all Americans.' '' In its most recent 
Broadband Progress Report, the Commission found ``that advanced 
telecommunications capability is not being deployed to all Americans in 
a reasonable and timely fashion.'' This finding, in turn, triggers a 
duty under Section 706 for the Commission to ``take immediate action to 
accelerate deployment of such capability by removing barriers to 
infrastructure investment and by promoting competition in the 
telecommunications market.'' Within the statutory framework that 
Congress established, the Commission ``possesses significant, albeit 
not unfettered, authority and

[[Page 33063]]

discretion to settle on the best regulatory or deregulatory approach to 
broadband.''
    257. Section 10(b) directs the Commission to consider whether 
forbearance will promote competitive market conditions as part of its 
public interest analysis under Section 10(a)(3). However, we recognize 
that Section 10 does not compel us to treat a competitive analysis as 
determinative when we reasonably find, based on the record, that other 
considerations are more relevant to our statutory analysis. We make our 
decision as to each category of ETC requirements as they relate to the 
provision of Lifeline-supported services based on the information we 
deem most relevant to the analysis prescribed from Section 10(a).
b. Forbearance Regarding the Lifeline Broadband Service Obligation
    258. In streamlining Lifeline ETC obligations for participating 
carriers, we first turn to the broadband service obligations of various 
categories of ETCs. In this Section we use targeted forbearance from 
certain ETC obligations to encourage market entry and competition while 
continuing to protect consumers and the Fund.
    259. For Lifeline-only ETCs, we establish that such ETCs are 
eligible to receive Lifeline support for broadband service but may 
choose to only offer a supported voice service instead. For other ETCs 
that are not Lifeline-only, we establish that such ETCs are also 
eligible to receive Lifeline support for broadband service and forbear 
from requiring such ETCs to offer Lifeline-supported broadband service, 
except in areas where the ETC commercially offers broadband pursuant to 
its high-cost obligations. For Lifeline Broadband Providers, we 
establish a streamlined relinquishment process that gives providers 
greater certainty while retaining the Commission's ability to protect 
consumers.
(i) Lifeline-Only ETCs
    260. For Lifeline-only ETCs, we interpret such carriers' ETC 
designations as broad enough to make them eligible for Lifeline 
broadband support. Lifeline-only ETCs may therefore receive support for 
Lifeline-discounted BIAS provided to eligible low-income subscribers 
within their designated service areas without receiving federal 
designation as Lifeline Broadband Providers. However, we forbear from 
Lifeline-only ETCs' obligations to offer BIAS to permit such ETCs to 
solely offer voice if they so choose. (We note that when the Lifeline 
discount no longer applies to voice-only offerings, a Lifeline-only ETC 
that does not choose to offer Lifeline-discounted fixed voice service 
will have the option of seeking relinquishment of its statutory 
obligation to offer supported voice telephony service under Section 
214(e)(4) of the Act and continuing to receive Lifeline support for its 
BIAS offerings. Alternatively, a Lifeline-only ETC may obtain an ETC 
designation as a Lifeline Broadband Provider, seek relinquishment of 
its existing Lifeline-only ETC designation, and operate solely as a 
federally-designated LBP). To the extent that Lifeline-only ETCs elect 
to also offer BIAS to eligible subscribers, they may receive 
reimbursement for such service through the Lifeline program.
    261. Eligibility to receive Lifeline broadband support. We find 
that Lifeline-only ETC designations, such as exist today, are broad 
enough to make Lifeline-only ETCs eligible to receive reimbursement 
through the Lifeline program for offering discounted BIAS to eligible 
low-income subscribers. This is consistent with past Commission 
precedent. For example, when the Commission simplified the core 
functionalities of the supported services for universal service support 
mechanisms in the overarching concept of ``voice telephony service,'' 
it clarified that such a change was intended to promote technological 
neutrality and that many of the previously-enumerated supported 
services would still be offered as a function of voice telephony. 
Accordingly, providers that obtained ETC designation for the limited 
purpose of receiving Lifeline support, even after the USF/ICC 
Transformation Order, received designation for a number of different 
functionalities encompassed within ``voice telephony.'' Now, as we add 
BIAS as a supported service in this Order, we find that Lifeline-only 
ETCs' designations, which were broad enough to encompass the nine 
supported services before the USF/ICC Transformation Order and broad 
enough to encompass multiple functionalities within the concept of 
``voice telephony,'' are similarly broad enough to include the addition 
of a supported service for purposes of offering Lifeline-supported 
BIAS.
    262. Obligation to offer all supported services. Based on our 
consideration of the relevant statutory framework and the record before 
us, we now conclude that it is in the public interest to forbear, 
pursuant to Section 10 of the Act, from requiring existing Lifeline-
only ETCs to offer Lifeline-supported broadband Internet access 
service. As a result of this forbearance, existing Lifeline-only ETCs 
will be able to continue to offer voice service, consistent with the 
Lifeline program's rules. At the same time, Lifeline-only ETCs remain 
eligible for Lifeline broadband support to the extent that they elect 
to provide that service. ETCs that seek to avail themselves of this 
forbearance and therefore offer only voice service must file a 
notification with the Commission that they are availing themselves of 
this relief.
    263. To facilitate program administration, we require any ETC that 
plans to not offer a Lifeline-discounted BIAS offering under the 
reforms in this Order to notify the Commission that it is availing 
itself of the forbearance relief granted in this Section. Such 
notification must be filed by the later of 60 days after announcement 
of OMB approval of this Order under the PRA or 30 days after receiving 
designation as a Lifeline-only ETC. This notification requirement, as a 
condition to our grant of forbearance, is a critical element of our 
actions today. To ensure that the Commission is well informed about the 
state of the marketplace of Lifeline providers offering voice-only 
versus Lifeline BIAS, we must impose this notification requirement 
prior to ETCs availing themselves of this forbearance.
    264. We find that enforcement of this requirement is not necessary 
to ensure that the charges, practices, classifications, or regulations 
by, for, or in connection with this class of telecommunications carrier 
and telecommunications service are just and reasonable and are not 
unjustly or unreasonably discriminatory. We also find that enforcement 
of this requirement is not necessary for the protection of consumers 
and that the above-described forbearance is consistent with the public 
interest.
    265. We find that it is not necessary to impose an obligation to 
offer Lifeline-supported BIAS within the Lifeline marketplace for 
Lifeline-only ETCs and that they should be permitted, but not required, 
to offer Lifeline-discounted BIAS when such ETCs give notice to the 
Commission of their intent to limit offerings to voice service. This 
forbearance will not alter the Commission's authority over Lifeline-
only ETCs' charges, practices, and classifications in providing 
Lifeline-supported voice service, nor will it allow such ETCs to 
unjustly or unreasonably discriminate in their voice offerings. 
Lifeline-only ETCs will continue to comply with all existing 
regulations to protect consumers and will, in many instances, face more 
competition within the marketplace from other Lifeline providers 
offering

[[Page 33064]]

either or both voice and Lifeline-supported BIAS service offerings. 
Existing regulations and competition will also help keep Lifeline-only 
ETCs' rates and other terms and conditions of service just and 
reasonable and not unjustly or unreasonably discriminatory. As a 
result, the obligation to offer BIAS for Lifeline-only ETCs is not 
necessary to protect consumers. The Commission has recognized that 
granting forbearance relief in light of other still-applicable 
regulatory requirements is reasonable and appropriate while both 
retaining necessary safeguards and reducing costs.
    266. Preserving this option for Lifeline-only ETCs is also 
consistent with concerns raised by commenters. In response to the 
Commission's inquiries about including broadband as a supported service 
in the Lifeline program and setting minimum service levels for voice 
and broadband services, several providers responded that the Commission 
should preserve providers' ability to offer a voice-only service 
option. For example, Sprint argued that ``the provision of Lifeline 
broadband service should be voluntary, not mandatory,'' noting that 
some existing Lifeline carriers may not be able to offer broadband 
service because of the nature of their existing resale agreements with 
their underlying providers.
    267. We also agree with commenters that permitting Lifeline-only 
ETCs offering voice service to participate in Lifeline even if they do 
not offer BIAS will give eligible low-income customers more Lifeline-
discounted options in the market. (This decision is consistent with the 
Commission's decision to transition Lifeline funding away from voice 
service as a standalone option. While Lifeline-only ETCs are able to 
receive reimbursement for voice service they may choose to focus on 
that service, but when voice service as a standalone option is no 
longer eligible for reimbursement through the Lifeline program those 
ETCs must choose another supported service to offer or seek to 
relinquish their ETC status under Section 214(e)(4)). We expect that 
permitting Lifeline-only ETCs offering voice service to participate in 
Lifeline even if they do not offer BIAS will give eligible low-income 
customers more Lifeline-discounted options in the market. Accordingly, 
this forbearance, while not preventing existing or future Lifeline-only 
ETCs from offering discounted BIAS, will permit those ETCs to continue 
to offer a discounted standalone voice option if they so choose, which 
will preserve additional options for consumers in addition to new BIAS 
options that we expect will enter the Lifeline market. This increase in 
competition will, in turn, lead to higher quality service offerings at 
lower prices for eligible low-income subscribers.
    268. We find this forbearance is not necessary for the protection 
of consumers so long as Lifeline-only ETCs are required to notify the 
Commission of their intent to avail themselves of this forbearance. To 
ensure that the Commission stays informed of the Lifeline marketplace 
and knows the number of providers offering voice versus Lifeline-
supported BIAS, it is critical that the Commission is able to stay 
informed of the Lifeline market and consumer options. This notification 
requirement will give the Commission critical information in 
understanding and evaluating the Lifeline market to determine how well 
its regulatory structure provides incentives for participation in the 
Lifeline program.
    269. Forbearance from this requirement is consistent with the 
public interest. Forbearance from the requirement that a Lifeline-only 
ETC offer Lifeline-supported BIAS allows service providers to continue 
serving the existing voice market while permitting those ETCs (to the 
extent they have not elected to avail themselves of forbearance) to 
also easily introduce new Lifeline-discounted BIAS offerings. (As 
discussed above, this forbearance also provides ETCs with greater 
options to continue serving eligible low-income consumers during the 
transition to the point where voice will no longer be supported by the 
Lifeline program). These additional options will promote competitive 
market conditions by providing low-income consumers with more Lifeline-
discounted offerings and a diversity of providers to serve them. With 
more providers in the Lifeline marketplace, this will open the Lifeline 
program to innovative new service offerings that will better meet the 
needs of eligible subscribers and further modernize the program by 
encouraging BIAS offerings for Lifeline subscribers.
    270. As an additional benefit, this forbearance will serve the 
Lifeline program's purpose of ensuring affordable access to high-
quality telecommunications services to eligible low-income households. 
As detailed above, we recognize that many consumers rely on voice 
service as their primary form of communication. This forbearance will 
allow service providers that do not intend to offer BIAS, to continue 
to serving consumers this supported service. As noted by commenters, 
certain providers might be required to exit the market given their 
limitations in offering BIAS. Those providers that avail themselves of 
this forbearance will have the option of continuing to offer voice 
service.
(ii) ETCs That Are Not Lifeline-Only
    271. For ETCs offering voice service that are not Lifeline-only, we 
interpret such carriers' ETC designations as broad enough to make them 
eligible for Lifeline broadband support. Such ETCs may therefore 
receive support for Lifeline-discounted BIAS provided to eligible low-
income subscribers within their designated service areas. However, we 
forbear from these ETCs' obligation to offer Lifeline BIAS to permit 
such ETCs to solely offer voice in the Lifeline program, provided such 
ETCs file a notification with the Commission that they are availing 
themselves of this relief. This forbearance, however, does not apply to 
areas where ETCs commercially offer broadband that meets the Lifeline 
minimum service standards pursuant to their high-cost USF obligations, 
in which case they remain subject to the Lifeline broadband service 
obligation. (As detailed above, we also require carriers receiving 
high-cost support to provide Lifeline-supported broadband services in 
areas where they receive high-cost support and are already offering 
broadband services at the minimum service levels). To the extent that 
these ETCs elect to also offer BIAS to eligible subscribers even when 
not required, they may receive reimbursement for such service through 
the Lifeline program.
    272. Eligibility to receive Lifeline broadband support. We find 
that the ETC designations of ETCs that are not Lifeline-only are broad 
enough to make those ETCs eligible to receive reimbursement through the 
Lifeline program for offering discounted BIAS to eligible low-income 
subscribers. As discussed above, this is consistent with past 
Commission precedent of including multiple functionalities even as it 
updated the definition of services supported by universal service 
support mechanisms.
    273. Obligation to offer all supported services. Based on our 
consideration of the relevant statutory framework and the record before 
us, we now conclude that it is in the public interest to forbear, 
pursuant to Section 10 of the Act, from requiring existing ETCs that 
are not Lifeline-only to offer Lifeline-supported BIAS in areas where 
they do not commercially offer such service or do not receive high-cost 
support. Accordingly, ETCs that are not Lifeline-only will be able to 
continue to offer voice-only service, consistent with the

[[Page 33065]]

Lifeline program's rules. At the same time, such ETCs remain eligible 
for Lifeline broadband support to the extent that they elect to provide 
that service. This forbearance does not extend to areas where existing 
ETCs commercially offer BIAS pursuant to their high-cost USF 
obligations and such service meets the Lifeline program's minimum 
service requirements, in which case ETCs remain subject to the Lifeline 
broadband service obligation. Those ETCs receiving frozen high-cost 
support--whether incumbent providers or competitive ETCs--are not 
required to offer Lifeline-supported broadband services in their 
designated service areas. Given that the frozen support program is an 
interim program that is due to be eliminated, we agree with commenters 
that frozen support recipients should not be required to implement new 
processes to offer BIAS as a supported service.
    274. In the areas subject to forbearance, existing ETCs remain 
eligible for Lifeline broadband support to the extent that they elect 
to provide that service. As a result of this forbearance, ETCs that are 
not Lifeline-only will only be required to offer Lifeline BIAS in those 
areas where the ETC commercially offers qualifying BIAS pursuant to the 
ETC's obligations under the high-cost rules. ETCs that seek to avail 
themselves of this forbearance must file a notification with the FCC 
that they are availing themselves of this relief and to identify those 
areas by Census block where they intend to avail themselves of this 
forbearance relief.
    275. To facilitate program administration, we require any ETC that 
plans to not offer a Lifeline-discounted BIAS offering under the 
reforms in this Order to notify the Commission that it is availing 
itself of the forbearance relief granted in this Section and to 
identify those areas by Census block where they intend to avail 
themselves of this forbearance relief. Such notification must be filed 
by the later of 60 days after announcement of OMB approval of this 
Order under the PRA or 30 days after receiving designation as an ETC. 
This notification requirement, as a condition to our grant of 
forbearance, is a critical element of this grant of forbearance. To 
ensure that the Commission is well informed about the state of the 
marketplace of Lifeline providers offering voice-only service versus 
Lifeline BIAS, we must impose this notification requirement prior to 
ETCs availing themselves of this forbearance.
    276. We find that enforcement of this requirement is not necessary 
to ensure that the charges, practices, classifications, or regulations 
by, for, or in connection with this class of telecommunications carrier 
and telecommunications service are just and reasonable and are not 
unjustly or unreasonably discriminatory. We also find that enforcement 
of this requirement is not necessary for the protection of consumers 
and that the above-described forbearance is consistent with the public 
interest.
    277. With the exception discussed below, we find that this 
forbearance meets the criteria set out in Section 10(a) of the Act for 
much the same reasons that led us to grant forbearance to Lifeline-only 
ETCs in the prior Section. This forbearance will not alter the 
Commission's authority over the charges and practices of ETCs, nor will 
it allow ETCs to unjustly or unreasonably discriminate in offering 
their Lifeline-supported services. The Commission has recognized that 
granting forbearance relief in light of other still-applicable 
regulatory requirements is reasonable and appropriate while both 
retaining necessary safeguards and reducing costs.
    278. Forbearance from this requirement is consistent with the 
public interest. We find that such forbearance will create a level 
playing field as between Lifeline-only ETCs and ETCs that are not 
Lifeline-only where the latter are not commercially offering qualifying 
broadband service pursuant to their high-cost obligations. Similar to 
our analysis with Lifeline-only ETCs, this forbearance serves the 
public interest because it permits ETCs to focus their Lifeline 
offerings on the voice market where they are not able to offer 
qualifying Lifeline-discounted BIAS, while still permitting such ETCs 
to easily introduce Lifeline-discounted BIAS offerings if they so 
choose. We find that this forbearance will give eligible low-income 
consumers more Lifeline-discounted choices in the market, and will lead 
to higher quality service offerings at lower prices.
    279. Areas where ETCs commercially offers BIAS pursuant to high-
cost obligations. As discussed above, after the enactment of the 1996 
Act, incumbent LECs' designated service areas as ETCs were defined as 
wherever they offered voice telephony service in a state, including 
Census blocks where the incumbent LECs do not currently receive high-
cost support or are not obligated to offer broadband at 10/1 Mbps or 
greater speeds pursuant to Commission rules. Some ETCs are concerned 
that program changes would require them to provide Lifeline-supported 
broadband in Census blocks where the provider is not obligated to offer 
broadband services or does not receive high-cost support. To address 
these concerns, we first clarify, here and in Section III.A, 
Modernizing Lifeline to Support Broadband, that ETCs receiving high-
cost support are not required to offer Lifeline-supported BIAS in 
Census blocks where the ETC does not commercially offer a broadband 
service that meets the minimum service standards of the Lifeline 
program pursuant to its high-cost obligations. Accordingly, we retain 
the obligation to offer the Lifeline discount on all qualifying 
services in areas where an ETC receives high-cost support, has deployed 
a network capable of delivering service that meets the Lifeline 
program's minimum service standards, and commercially offers such 
service pursuant to its high-cost obligations. (This obligation does 
not apply to ETCs receiving frozen high-cost support).
    280. In areas where the provider receives high-cost support but has 
not yet deployed a broadband network consistent with the provider's 
high-cost service obligations, the obligation to provide Lifeline-
supported BIAS begins only when the provider has deployed a high-cost 
supported broadband network to that area and makes its BIAS 
commercially available. (For example, we recognize that many high-cost 
recipients receiving CAF Phase II support have not deployed broadband 
capable networks in all of the Census blocks where they receive high-
cost support, but are required to do so pursuant to deadlines set forth 
in the Commission's high-cost rules). For example, a rate-of-return 
carrier must provide Lifeline-supported BIAS if it deploys a network 
providing a minimum of 10/1 Mbps upon reasonable request from a 
qualified low-income consumer in satisfaction of its high-cost 
obligations. (In the event speeds of 10/1 Mbps are not available, such 
providers are required to offer Lifeline-supported BIAS if speeds at 4 
Mbps/1 or above are commercially available). Or, as another example, a 
price cap carrier that accepted Connect America Phase II model-based 
support, must provide Lifeline-supported BIAS in an area where that 
price cap carrier has already deployed broadband facilities capable of 
providing the minimum service levels set forth above and is 
commercially offering service. However, an authorized rural broadband 
experiment bidder is not required to provide Lifeline-supported BIAS 
until it has deployed broadband-capable facilities to the location of a 
qualified

[[Page 33066]]

low-income consumer in satisfaction of its high-cost deployment 
obligations. We adopt these requirements to ensure that all consumers 
living in high-cost areas, including low-income consumers, have the 
meaningful option of subscribing to BIAS once it is commercially 
available.
(iii) New Lifeline Broadband Providers
    281. For providers that receive ETC designation as Lifeline 
Broadband Providers, such a designation makes them eligible for 
Lifeline broadband support, with the accompanying obligation to offer 
Lifeline broadband service. In this Section, we establish a streamlined 
LBP relinquishment process to further reduce the perceived risk of 
entering the Lifeline broadband market.
    282. In implementing the ETC relinquishment process for LBPs, we 
establish the streamlined relinquishment procedures described below, 
except for relinquishments by LBPs also receiving high-cost universal 
service support. (We note that this relinquishment process will only 
apply to LBPs designated under Section 214(e)(6) of the Act). We find 
that a streamlined relinquishment process will encourage new providers 
to enter the Lifeline market by giving them clarity as to how they may 
responsibly exit that market, while fulfilling the Commission's 
responsibility to protect consumers, ensure that subscribers will 
continue to be served, and ensure that subscribers are given sufficient 
notice. We therefore revise Section 54.205 of the Commission's rules to 
create a streamlined relinquishment process for LBPs. Under this 
process, an LBP's advance notice of its intent to relinquish its 
designation pursuant to Section 214(e)(4) shall be deemed granted by 
the Commission 60 days after the notice is filed, unless the Bureau 
notifies the LBP that the relinquishment will not be automatically 
effective. Consistent with Congressional directives, the Commission 
will issue such a notification that the relinquishment will not be 
automatically effective if an automatic grant would violate any of the 
criteria listed in Section 214(e)(4).
    283. We expect that a streamlined ETC relinquishment process for 
LBPs will reduce the perceived risk for broadband providers to enter 
the Lifeline market. This will encourage providers to offer Lifeline-
supported broadband services and increase competition, which will, in 
turn, lead to greater choices among affordable, higher quality service 
offerings for eligible low-income subscribers. Pursuant to the new LBP 
relinquishment procedures, the Commission will notify the relevant LBP 
if its relinquishment will not be automatically effective in cases 
where, for example, customers may need more time to transition to a new 
carrier. As a result, the Commission will still have the authority and 
responsibility to at least temporarily prevent a relinquishment that 
would harm consumers until an appropriate solution can be found.
    284. We find that a streamlined relinquishment process for LBPs 
will serve the Lifeline program's purpose of ensuring affordable access 
to high-quality advanced telecommunications services to eligible low-
income households. By giving providers greater flexibility and 
encouraging investment in the Lifeline market, this streamlined process 
will open the Lifeline program to innovative new service offerings that 
will better meet the needs of eligible subscribers and further 
modernize the program by encouraging BIAS offerings for Lifeline 
subscribers.
c. Forbearance Regarding the Lifeline Voice Service Obligation
    285. Having described the tailored broadband service obligations of 
various categories of ETCs in the previous Section, we next turn to the 
Lifeline voice service obligations. As to Lifeline-only ETCs, which 
historically participated specifically in order to provide Lifeline 
voice service, we do not alter the preexisting voice service 
obligation. Regarding existing ETCs that are not Lifeline-only, we deny 
the broadest requests for unconditional forbearance from the Lifeline 
voice obligation, but find it justified to grant certain conditional 
forbearance designed to promote broadband policy goals while protecting 
Lifeline consumers. We further make clear that entities newly 
designated as ETCs specifically for Lifeline broadband purposes do not 
have any Lifeline voice obligation under our interpretation of Section 
214(e).
(i) Lifeline-Only ETCs
    286. We decline to forbear from existing Lifeline-only ETCs' 
obligations to offer Lifeline-discounted voice service. Lifeline-only 
ETCs were designated as ETCs for the specific purpose of providing 
Lifeline voice service. (At the time existing Lifeline-only ETCs were 
designated, the only service for which they could receive support was 
voice service supported by the Lifeline mechanism, including the 
multiple functionalities that are encompassed within voice telephony 
service). The proposals for forbearance or other relief from Lifeline 
voice service obligations also have focused on ETCs that are not 
Lifeline-only, as we discuss below. We thus find no basis in the record 
here to conclude that existing Lifeline-only ETCs are similarly 
situated to the ETCs for which we grant some relief from otherwise-
applicable Lifeline voice service obligations in the Section below. As 
a result, existing Lifeline-only ETCs remain subject to Lifeline voice 
service obligations unless or until they relinquish their designations 
or otherwise seek--and justify--relief. Of course, consistent with the 
Lifeline reforms adopted in this Order, Lifeline-only ETCs not only can 
receive support for providing voice telephony to qualifying low-income 
subscribers, but alternatively when they provide Lifeline broadband 
Internet access service (with or without voice). Given our phase-out of 
Lifeline support for voice-only service for many providers, we 
recognize that such ETCs might well take steps in response, such as 
relinquishing their Lifeline voice ETC designations, thereby 
eliminating any obligation under Section 214(e)(1) and our implementing 
rules to provide the supported Lifeline voice telephony service. 
Consistent with our interpretation and implementation of Sections 
214(e) and 254, however, we emphasize that ETCs have the option to seek 
relinquishment of only their Lifeline voice ETC designation, leaving 
them still eligible to receive Lifeline broadband support.
(ii) ETCs That Are Not Lifeline-Only
    287. Conditional forbearance for existing ETCs' Lifeline voice 
obligation. On several occasions, including in the 2015 Lifeline FNPRM, 
the Commission has sought comment on the question of whether, or under 
what circumstances, carriers that currently are designated as ETCs for 
purposes of receiving both high-cost and Lifeline voice support should 
get relief from Lifeline voice service obligations (referred to here 
for convenience as High-Cost/Lifeline ETCs). Primarily, such requests 
for relief have come from, or focused most extensively on, incumbent 
LECs that obtained ETC designations following the 1996 Act. (Existing 
High-Cost/Lifeline ETCs can include carriers other than price cap 
carriers or incumbent LECs, and we do not find evidence or arguments in 
the record here warranting a materially different analysis in the 
context of competitive ETCs that are not Lifeline-only ETCs. 
Consequently, our analysis below does not differentiate among such 
High-Cost/Lifeline ETCs). In the 2015 USTelecom Forbearance Order, the 
Commission declined to grant forbearance from such obligations on the 
record there, observing among

[[Page 33067]]

other things that the record in this Lifeline rulemaking proceeding 
might persuade the Commission to reach a different result. We likewise 
decline to grant the broadest forbearance from Lifeline voice 
obligations under the record here. In connection with the reforms 
otherwise being adopted, however, we are persuaded to grant forbearance 
from Lifeline voice service obligations targeted to areas where certain 
conditions are met.
    288. Although the Commission stated in the 2015 USTelecom 
Forbearance Order that the record in this Lifeline rulemaking 
proceeding might persuade the Commission to reach a different result 
regarding forbearance from Lifeline voice service obligations, the 
record here does not convince us to grant the broadest requests for 
forbearance. In particular, we find persuasive here the Commission's 
reasoning in the 2015 USTelecom Forbearance Order regarding the 
possibility of broadly forbearing from Lifeline voice service 
obligations for High-Cost/Lifeline ETCs. (The 2015 USTelecom 
Forbearance Order also involved requests for other forbearance from ETC 
designations and obligations beyond the scope of this Lifeline 
rulemaking proceeding. We thus focus here on the analysis in the 2015 
USTelecom Forbearance Order insofar as it was relevant to the 
evaluation of possible forbearance from ETCs' Lifeline service 
obligations).
    289. With respect to the Section 10(a)(2) consumer protection 
inquiry, the Commission, informed by the consumer protection goals in 
Section 214(e)(4), found insufficient evidence to persuade it that the 
Lifeline voice service obligation for High-Cost/Lifeline ETCs was 
unnecessary to protect consumers. As a threshold matter, the Commission 
was not persuaded that the geographic areas subject to potential 
forbearance were subject to the sort of marketplace conditions that 
would give it comfort with a less detailed analysis of the sort 
previously used when granting certain relief from high-cost service 
obligations in the Dec. 2014 CAF Order. Nor was the Commission 
persuaded that other consumer protection interests, such as broadband 
policy interests, ``would be controlling or even instructive in the 
Commission's analysis.'' As a result, the Commission concluded that it 
needed to consider detailed evidence of the ability of consumers to be 
served in the absence of the relevant ETC service obligation--evidence 
that it found lacking on the record there.
    290. In this proceeding, we likewise find it necessary to evaluate 
forbearance based on detailed marketplace evidence as to forbearance 
from Lifeline voice service obligations other than the conditional 
forbearance we grant below. For one, we cannot take sufficient comfort 
in the marketplace conditions to justify evaluating unconditional 
forbearance from Lifeline voice service obligations via the less 
detailed analysis used in the Dec. 2014 CAF Order. As to the geographic 
areas not within the scope of the high-cost voice forbearance in the 
Dec. 2014 CAF Order, we reach that conclusion, like we did in the 2015 
USTelecom Forbearance Order, because these areas are not low-cost or 
served by an unsubsidized provider. As to the geographic areas that 
were subject to high-cost voice forbearance in the Dec. 2014 CAF Order, 
we conclude that a different approach is warranted for low-income 
consumers. As the Commission explained in the 2015 USTelecom 
Forbearance Order, ``[l]ow-income consumers may lack the resources to 
take advantage of alternative service options from non-Lifeline 
providers,'' and thus ``we find it appropriate to evaluate marketplace 
conditions for low-income customers in a more focused manner, even in 
areas where we might naturally expect at least some level of 
competitive provision of service generally.''
    291. Likewise, outside the context of the conditional forbearance 
we grant below, we do not find other consumer protection interests 
sufficient to counsel in favor of a less detailed marketplace analysis 
in granting forbearance. Absent a condition like that imposed on the 
forbearance we adopt below, we do not find a basis to expect that 
forbearance from Lifeline voice service obligations necessarily will 
advance our broadband policy goals. We thus reject speculative 
assertions that unconditioned forbearance will promote broadband policy 
sufficient to warrant forbearance in-and-of themselves or justify a 
less detailed marketplace analysis to evaluate forbearance.
    292. Having concluded that a detailed evaluation of the sort 
described in the 2015 USTelecom Forbearance Order is needed to evaluate 
unconditional forbearance from the Lifeline voice obligation for High-
Cost/Lifeline ETCs, we likewise find the record insufficient to justify 
forbearance on that basis. (Given our identified need for detailed 
marketplace information to evaluate possible broad, unconditional 
forbearance from the Lifeline voice service obligation, we likewise 
reject high-level claims that Lifeline reforms are likely to increase 
competition and obviate the need for Lifeline voice service 
obligations. Although we design our reforms in a manner intended to 
advance that objective, particularly in the case of the Lifeline 
broadband program, that does not constitute the sort of detailed market 
place evidence we have concluded is needed). In particular, the 
Commission found the evidence insufficient to grant forbearance from 
Lifeline voice obligations (among other ETC obligations) in the 2015 
USTelecom Forbearance Order. Although the Commission observed that 
additional evidence adduced in the record here might warrant a 
different conclusion, the record does not reveal any additional 
marketplace evidence that would warrant a grant of forbearance under 
such a detailed marketplace analysis. Nor does the record include 
evidence regarding particular bright-line triggers or thresholds 
regarding numbers or types of providers that the Commission might rely 
on to grant forbearance where that number and type of provider is 
present.
    293. Our conclusions regarding unconditional forbearance from 
Lifeline voice obligations in this proceeding under Section 10(a)(1) 
likewise are in accord with the Commission's Section 10(a)(1) analysis 
in the 2015 USTelecom Forbearance Order. Particularly against the 
backdrop of our conclusions above that a detailed marketplace 
evaluation is needed to assess the effects of unconditional forbearance 
from Lifeline voice obligations, we agree that neither the limited 
evidence regarding the marketplace conditions nor the regulatory 
protections cited in granting certain high-cost voice forbearance in 
the Dec. 2014 CAF Order would be sufficient to justify forbearance 
under Section 10(a)(1) here. Indeed, as the Commission emphasized in 
the 2015 USTelecom Forbearance Order, ``in all census blocks, low-
income consumers could be at particular risk if there are gaps in 
coverage within the area where the price cap carrier previously offered 
Lifeline service.'' We thus likewise find that unconditional 
forbearance from Lifeline voice service obligations is not warranted 
for High-Cost/Lifeline ETCs under Section 10(a)(1).
    294. We likewise find on the record here that unconditional 
forbearance from the Lifeline voice obligation for High-Cost/Lifeline 
ETCs would not be in the public interest under Section 10(a)(3). In 
large part, this conclusion flows from the same considerations 
underlying our findings above that Sections 10(a)(2) and 10(a)(1) are 
not satisfied as to such forbearance. Further, insofar as commenters 
premise arguments for forbearance on the costs of complying with 
Lifeline rules, we

[[Page 33068]]

note that we streamline those requirements in various ways here (in 
addition to certain conditional forbearance from Lifeline voice service 
obligations that we do grant below). We also find applicable here the 
Commission's analysis rejecting forbearance from, among other things, 
Lifeline voice service obligations under Section 10(a)(3) in the 2015 
USTelecom Forbearance Order. We note in particular, as explained above, 
that we are unpersuaded by speculative arguments that unconditional 
forbearance will promote broadband policy goals. We thus conclude that 
unconditional forbearance from the Lifeline voice service obligation 
for High-Cost/Lifeline ETCs is not in the public interest under Section 
10(a)(3).
    295. Some commenters argue that for competitive neutrality or other 
reasons, existing ETCs with broad designations should be allowed to 
choose whether or not to provide Lifeline voice service, or that 
participation in Lifeline should be de-linked from participation in 
high-cost. We are not persuaded that such arguments are sufficient to 
justify forbearance from Lifeline voice service obligations. In 
particular, we are not persuaded that such concerns are sufficient to 
overcome our identified need for detailed marketplace information to 
evaluate unconditional forbearance from the Lifeline voice service 
obligation. Further, as the Commission observed in the 2015 USTelecom 
Forbearance Order, the Section 214(e)(4) relinquishment process remains 
available to ETCs. Indeed, as we explain above, we interpret Section 
214(e) to accommodate ETC designations specific to particular universal 
service mechanisms or programs. Insofar as ETC designations can be 
obtained on a mechanism- or program-specific basis, we likewise find it 
reasonable to interpret Section 214(e)(4) as allowing ETC designations 
to be relinquished on a mechanism- or program-specific basis. (Given 
the Commission's authority to interpret the Act, our interpretation of 
Section 214(e) governs all application of that provision, whether by 
the Commission or by a state). Thus, a High-Cost/Lifeline ETC would, 
for instance, be free to seek to relinquish just its ETC designation 
for Lifeline purposes without relinquishing its designation for high-
cost purposes. We thus find no basis to depart from our conclusion 
above that unconditional forbearance is not warranted on the record 
here.
    296. Conditional forbearance. Although we reject arguments for 
broader or different forbearance from Lifeline voice service 
obligations under the theories described above, we do find the Section 
10(a) criteria met to grant conditional forbearance from the Lifeline 
voice obligation under a different theory for existing ETCs with 
designations enabling receipt of both high-cost support and Lifeline 
voice support. (By its terms, Section 214(e)(1), in pertinent part, 
imposes service obligations on telecommunications carriers--namely, 
ETCs. See generally 47 U.S.C. 214(e)(1). Failure to meet any applicable 
service obligations subjects carriers to potential enforcement by the 
Commission. See, e.g., 47 U.S.C. 208, 503. Thus, we conclude that the 
Section 214(e)(1) service obligations represent provisions of the Act 
that the FCC can forbear from applying to a telecommunications carrier 
or class of telecommunications carriers where it finds the Section 
10(a) criteria met, as we do in various respects in this Order, and as 
we have done in the past. We thus reject arguments suggesting that the 
Commission cannot grant ETCs relief from those obligations. We also 
note that an additional consequence of such forbearance is that states 
are precluded from applying the forborne-from provisions. 47 U.S.C. 
160(e)). In particular, for such ETCs we grant forbearance from the 
obligation to offer and advertise Lifeline voice service where the 
following conditions are met: (a) 51% of Lifeline subscribers in a 
county are obtaining BIAS; (b) there are at least 3 other providers of 
Lifeline BIAS that each serve at least 5% of the Lifeline broadband 
subscribers in that county; and (c) the ETC does not actually receive 
federal high-cost universal service support. Notably, this condition 
allows us to reach a different conclusion than we do above regarding 
the impact of forbearance on our broadband policy goals. Because we 
conclude that this condition is likely to result in forbearance that 
promotes our broadband policy goals, our decision is resolved based on 
higher-level weighing and balancing of facts and policy considerations, 
rather than following a detailed marketplace evaluation as described in 
the 2015 USTelecom Forbearance Order and in our analysis of 
unconditional forbearance above. This forbearance from the obligation 
to offer Lifeline voice service under Section 214(e)(1)(A) and our 
implementing rules also does not encompass the High-Cost/Lifeline ETC's 
existing Lifeline voice service subscribers served at the time the 
condition is met, further ensuring that consumers are adequately 
protected.
    297. We conclude that such conditional forbearance is, on net, in 
the public interest under Section 10(a)(3) because it strikes the right 
balance between creating additional incentives for providers to promote 
the deployment and availability of broadband networks and services 
while adequately protecting the interests of low-income voice service 
users. In particular, it is clear from the record that a number of 
carriers that historically have provided Lifeline voice telephony 
service--particularly incumbent LECs--no longer wish to do so, at least 
not to the full extent they did so in the past. When existing High-
Cost/Lifeline ETCs were designated, the designations broadly 
encompassed both high-cost and Lifeline voice mechanisms by default, 
consistent with the Commission's policy intent at the time--which we 
now depart from in certain respects, as described in this Order--and 
without the type of more nuanced designations that are feasible under 
our current interpretation and implementation of Sections 214(e) and 
254. These ETCs also commonly provide both voice telephony service and 
BIAS (among other services), (Indeed, the provision of broadband 
Internet access service now is a public interest obligation associated 
with the receipt of high-cost universal service support), and it is our 
predictive judgment that providing relief from Lifeline voice service 
requirements based on an area reaching a defined level of Lifeline 
broadband subscribership and competition will give these providers 
strengthened incentives to take steps to promote subscribership, 
whether for their own broadband Internet access service offerings in 
particular or for broadband Internet access service offerings more 
generally.
    298. Creating additional incentives for providers to promote 
broadband subscribership advances Section 254's goals of access to, and 
affordability of, advanced telecommunications services. The increased 
demand for, and usage of, broadband Internet access service that will 
be fostered by the broadband providers' efforts also will further 
Section 706 of the 1996 Act. (The Commission, for example, conducts its 
Section 706(b) inquiry regarding deployment and availability of 
advanced telecommunications capability under Section 706 by considering 
factors such as such as price, quality, and adoption by consumers, as 
well as physical network). We also are persuaded that forbearance from 
Lifeline voice service obligations also at least incrementally is 
likely to free up service provider funds

[[Page 33069]]

for broadband investment, while conditioning such forbearance on an 
area reaching a defined level of broadband penetration helps better 
ensure--in a way that unconditional forbearance does not--that such 
service provider funds are, in fact, used to promote broadband 
deployment and subscribership.
    299. We recognize that the Commission has in the past identified 
the public interest benefits of promoting affordable voice service for 
low-income consumers, but we expect that any effect on such consumers 
from the conditional forbearance is likely to be limited, and 
outweighed by the anticipated broadband policy benefits. For one, we 
conclude elsewhere in this item that the need for such Lifeline-
subsidized voice service is substantially reduced, leading us to phase 
out support for standalone voice service more generally. (Although we 
provide a multi-year phase-out for Lifeline support for stand-alone 
mobile voice generally, the potential for this Lifeline voice 
forbearance to grant relief from Lifeline voice service obligations on 
a more rapid timeframe is offset as to these consumers by the benefits 
in promoting our broadband policy goals). Moreover, as we explain 
there, we fully expect increasingly lower-priced voice service to 
continue to be available even absent a Lifeline benefit for standalone 
voice service, for example as part of packages or bundles of services 
including broadband Internet access service, which will remain subject 
to Lifeline support, and which this Lifeline voice forbearance does not 
affect. We thus conclude that the conditional forbearance we grant is 
unlikely to harm that set of consumers, nor, as to that group of 
consumers, is conditional forbearance likely to be in any tension with 
the principle in Section 254(b) to preserve and promote affordable 
service.
    300. At the same time, we also recognize that our policy judgment 
about how best to transition the Lifeline program to become more 
broadband-focused envisions a continuing role for some Lifeline voice 
support, more so in the near term, but potentially even to some degree 
over the longer term. Based on the record, we cannot readily quantify 
the anticipated broadband policy benefits from this conditional 
forbearance, nor can we readily quantify any countervailing effects of 
forbearance on any low-income consumers who would prefer the Lifeline 
voice service offerings that otherwise would be available under our 
Lifeline rules if the Lifeline voice service obligation remained. (In 
particular, although we cannot precisely quantify the anticipated 
benefits of conditional forbearance in terms of broadband deployment 
and availability, the record also does not enable a price 
quantification of any costs of conditional forbearance. We thus weigh 
these considerations in the best manner feasible given the record and 
our associated policy judgment as described in the text. We note that 
the context of our forbearance decision here is different from that of 
a Section 10(c) petition, where the petitioner bears the burden of 
proof. Rather, our forbearance decision is conducted under the general 
reasoned decision making requirements of the APA. Nonetheless, we are 
persuaded that the public interest, on net, counsels in favor of 
forbearance for several reasons.
    301. First, our conditional forbearance does not grant relief from 
the Lifeline voice service obligation as to those Lifeline subscribers 
that the High-Cost/Lifeline ETC serves at the time the forbearance 
condition is met. Those subscribers effectively are grandfathered to 
avoid possible disruption that otherwise might occur when forbearance 
newly applies in the area they live. We anticipate that this, in and of 
itself, is likely to protect the interests of many, if not most, 
Lifeline subscribers who prefer the legacy Lifeline voice service 
offerings, and whose interests we recognize in our broader Lifeline 
policy decisions. At the same time, the High-Cost/Lifeline ETCs have a 
discrete, well-defined remaining Lifeline voice service obligation, and 
can provide such subscribers incentives to transition to new service 
offerings to enable the ETCs to take full advantage of the Lifeline 
voice service forbearance.
    302. Second, if the Commission were to deny conditional forbearance 
from Lifeline voice service obligations as to the remaining consumers--
those who are not subject to the grandfathering described above--we 
expect that providers would need to retain much, if not all, of their 
infrastructure used to serve Lifeline voice subscribers just to 
potentially serve that narrower segment of overall Lifeline 
subscribers, not knowing if or when such subscribers might seek 
service. The High-Cost/Lifeline ETCs thus would continue incurring 
costs that they otherwise could direct to broadband investment. (By 
this we mean not only physical network infrastructure, but also other 
infrastructure like that required for billing and other administrative 
functions associated with providing Lifeline voice service). Insofar as 
the benefit of forbearance to providers thus would be substantially 
reduced, we conclude that this likewise would materially dampen--and in 
some cases, entirely eliminate--what otherwise would be increased 
incentives by those providers to spur greater broadband penetration.
    303. Third, conditional forbearance from the Lifeline voice service 
obligation for High-Cost/Lifeline ETCs does not preclude carriers from 
electing to provide the supported Lifeline voice service and from 
receiving universal service support for doing so. Rather, it simply 
eliminates that mandatory obligation for them to do so under Section 
214(e)(1) and our implementing rules. Further, as the Commission 
observed in the Dec. 2014 CAF Order, additional protections come from 
the service discontinuance process under Section 214(a) and the 
authority under Section 214(e)(3) to require a carrier to provide the 
supported service in a community or portion thereof requesting that 
service if no carrier will do so. (At the same time, we do not expect 
these regulatory backstops to materially diminish the incentives for 
existing High-Cost/Lifeline ETCs to promote deployment and availability 
of broadband Internet access in order to obtain the conditional 
forbearance. The Commission has considerable discretion in how it makes 
a Section 214(a) public interest finding, and as that process enables 
us to guard against unreasonable levels of customer hardship, we also 
recognize our interest in creating incentives for promoting broadband 
policy goals. In particular, the Commission traditionally considers a 
number of factors in assessing Section 214(a) discontinuance 
applications, including (1) the financial impact on the common carrier 
of continuing to provide the service; (2) the need for the service in 
general; (3) the need for the particular facilities in question; (4) 
the existence, availability, and adequacy of alternatives; and (5) 
increased charges for alternative services, although this factor may be 
outweighed by other considerations. As observed in the prior paragraph, 
for instance, we recognize that a financial impact on the carrier of 
continuing to provide service could arise from the need to retain much, 
if not all, of their infrastructure used to serve Lifeline voice 
subscribers to serve what might be a relatively small segment of 
potential subscribers. Likewise, under Section 214(e)(3) the relevant 
regulatory authorities identify the carrier or carriers are best able 
to provide service to the relevant community or portion thereof, which 
need not be the carrier or carriers that availed themselves of this 
conditional forbearance. Insofar as our analysis is informed in part by 
the Section

[[Page 33070]]

214(e)(4) relinquishment mechanism (while not formally bound by it), 
these protections also give us comfort that we can guard against the 
unlikely scenario where no voice service at all ultimately would be 
available in a manner sufficient for purposes of the overall weighing 
of policy considerations and conclusions that conditional forbearance 
is not contrary to the interests of consumers and that conditional 
forbearance is in the public interest in this context). Moreover, this 
forbearance from the Lifeline voice service obligation does not alter 
the regulatory framework established in this order for Lifeline 
broadband service. ETCs providing Lifeline broadband service are likely 
to have incentives to seek to attract customers to their Lifeline 
broadband offerings and to maximize the utilization of their networks. 
Providing attractive voice service offerings to subscribers of their 
Lifeline broadband service is one way to help achieve that. Such 
offerings will provide further alternatives for low-income consumers. 
(Thus, although some commenters express concern about whether such 
alternatives will be sufficiently affordable, we find reason to believe 
that providers are likely to have incentives to make available 
affordable offerings. Moreover, our forbearance decision does not rest 
solely on this ground, but relies on it as part of a wider range of 
considerations, including our tailoring of the scope of forbearance to 
effectively grandfather an ETC's existing voice Lifeline subscribers, 
as described above, which will protect many of the relevant 
subscribers).
    304. Fourth, we expect that the actions broadband providers take to 
promote broadband penetration in an effort to gain relief from Lifeline 
voice service obligations are likely to benefit low-income consumers, 
as well as the public more generally. In particular, we expect that 
providers seeking to trigger the conditional forbearance we grant are 
likely to undertake a variety of efforts, ranging from reducing the 
price and/or increasing the capabilities of a service at a given price 
point for retail broadband Internet access service offerings, making 
available attractive wholesale broadband Internet access service 
offerings, or undertaking other efforts such as digital literacy 
training or other measures to overcome barriers to broadband adoption. 
As broadband Internet access service becomes ever more important for 
all consumers, such efforts are likely to benefit many of the same 
consumers who currently might desire the otherwise-available Lifeline 
voice service offerings. In this scenario, then, the effects of 
conditional forbearance on such consumers inherently are themselves 
mixed, with benefits to those consumers coupled with, at most, some 
potential risks for those consumers.
    305. Finally, we also expect that the efforts providers undertake 
to trigger the conditions necessary for Lifeline voice forbearance are 
likely to promote competitive market conditions for broadband Internet 
access service. As indicated above, we anticipate that by making 
available this conditional forbearance, providers will have incentives 
to take steps such as reducing the price and/or increasing the 
capabilities of their broadband Internet access service at a given 
price point to spur adoption of their own broadband Internet access 
service. Facilities-based providers with a voice obligation may also 
seek to offer attractive wholesale data prices, for example, so other 
Lifeline providers can also increase broadband penetration. Where there 
are alternative broadband Internet access service providers to the 
existing ETCs, such actions are likely to promote competition. Under 
Section 10(b), the Commission is directed, in making the Section 
10(a)(3) public interest evaluation, to ``consider whether forbearance 
from enforcing the provision or regulation will promote competitive 
market conditions.'' ``If the Commission determines that such 
forbearance will promote competition among providers of 
telecommunications services, that determination may be the basis for a 
Commission finding that forbearance is in the public interest.'' Our 
finding that forbearance is likely to promote competitive market 
conditions reinforces the remainder of our analysis above, which 
persuades us that the conditional forbearance we adopt is in the public 
interest.
    306. We are unpersuaded by claims that forbearance would be 
contrary to the public interest insofar as it might reduce the number 
of Lifeline voice service providers and/or competition for Lifeline 
voice service customers. Although competition for Lifeline service can 
have benefits, that must be evaluated in the context of other policy 
considerations. As we explain above, we are modernizing our Lifeline 
efforts to support broadband Internet access service given its 
importance to consumers and consistent with the Commission's 
responsibilities under Section 254 of the Act and Section 706 of the 
1996 Act. At the same time, we find an at least somewhat diminished 
need for Lifeline-supported voice service where the relevant conditions 
are met. Moreover, we grandfather existing Lifeline voice service 
customers obtaining service at the time forbearance newly applies in a 
given county, providing protection for the customers at greatest 
potential risk of disruption. In this context, and for the reasons 
described above, we conclude that the conditional forbearance we grant 
properly weighs our various universal service objectives and our 
broader broadband policy goals, and that such forbearance is in the 
public interest.
    307. We also reject arguments suggesting that the Act requires the 
Commission to prioritize competition in the provision of Lifeline-
subsidized service over all other considerations. Although Section 
214(e)(2) anticipates multiple ETCs, at least in some areas, ETC 
designation deals only with the eligibility for support, and does not 
actually guarantee the receipt of support--and, consequently, does not 
guarantee that all ETCs will provide services discounted through the 
receipt of universal service funding. We therefore conclude that in 
evaluating forbearance from the Lifeline voice service obligation, 
Section 214(e) does not require us to prioritize having a greater 
number of providers over the other policy considerations relevant in 
this context under Section 254 of the Act and Section 706 of the 1996 
Act.
    308. We also disagree that any diminution in competition or loss of 
options for voice service from conditional forbearance from the 
Lifeline voice obligation for High-Cost/Lifeline ETCs necessarily will 
leave only inferior or less desirable service offerings so as to render 
conditional forbearance contrary to the public interest. As we explain 
above, the extent to which the loss of competition or of particular 
service offerings is, in fact, likely to occur is itself speculative, 
particularly against the backdrop of other Lifeline reforms adopted in 
this Order. Moreover, any comparison of different service offerings 
involves some trade-offs, and we are not persuaded that the examples in 
the record demonstrate that a particular offering is inherently 
superior for all customers. (We also find it speculative whether, or to 
what extent, historical differences cited in the record are material to 
our analysis here and are likely to persist in the future, given our 
Lifeline reforms). We thus find no basis to depart from our Section 
10(a)(3) determination above that conditional forbearance is in the 
public interest.
    309. Nor does our conditional forbearance from the Lifeline voice 
service obligation in Section 214(e)(1) and our implementing rules 
interfere with state interests in a manner that cuts

[[Page 33071]]

against forbearance. Forbearance from these requirements under federal 
law does not alter regulatory obligations imposed under state law 
authority, and we thus reject arguments against forbearance on those 
grounds. Further, some commenters express concern that the providers 
required to offer voice service subsidized by state low-income support 
programs might no longer be providing federal Lifeline-supported voice 
service as a result of forbearance. Rather than trying to craft federal 
universal service policy to mirror the variations and nuances of state-
adopted universal service programs, however, we conclude instead that 
it best serves the public interest and our statutory responsibilities 
to adopt the same conditional forbearance that is available in all 
areas of the nation where the conditions are met. States remain free, 
consistent with Section 254(f), to adopt their own universal service 
policies not inconsistent with those of the Commission, including, to 
the extent that they deem it warranted, modifying their own state low-
income support programs to make funding available to a wider range of 
providers or to increase state support levels.
    310. The forgoing analysis also persuades us that retaining the 
Lifeline voice service obligation in areas where the Lifeline broadband 
subscribership and competition condition is met is not necessary for 
the protection of consumers under Section 10(a)(2). For the reasons 
described in the paragraphs above, we conclude that consumers as a 
whole are likely to benefit more from our conditional forbearance than 
from retaining the Lifeline voice service obligation. Even as to low-
income consumers who desire the Lifeline voice service offerings that 
otherwise would remain available under our rules, the result of 
forbearance appears to be at most mixed, and under these circumstances, 
particularly as guided by policies of Section 706 of the 1996 Act, we 
conclude that the Lifeline voice requirement is not necessary to 
protect consumers under Section 10(a)(2) where the Lifeline broadband 
subscribership and competition condition is met.
    311. We also conclude that the Lifeline voice service obligation is 
not necessary to ensure just, reasonable, and not unjustly or 
unreasonably discriminatory rates and practices under Section 10(a)(1). 
As relevant to Section 10(a)(1), commenters' arguments appear to center 
on the effect of forbearance from the Lifeline voice service obligation 
on rates. Thus, we focus our Section 10(a)(1) analysis here by 
considering whether the conditional forbearance we grant from the 
Lifeline voice service obligation for High-Cost/Lifeline ETCs would 
have a negative effect on the justness and reasonableness of rates. 
Because we are dealing with obligations relating to supported services 
under Section 254, our interpretation of what is ``just'' and 
``reasonable'' for purposes of Section 10(a)(1) is informed by Section 
254. Notably, under Section 254(b)(1) and 254(i), the question of 
whether rates are ``just'' and ``reasonable'' is distinct from whether 
they are ``affordable.'' Given the relevant overlay of Section 254 
here, in this context we therefore consider under Section 10(a)(1) only 
whether the Lifeline voice service obligation is necessary to ensure 
just and reasonable and not unjustly or unreasonably discriminatory 
rates distinct from the question of affordability (which we fully 
consider in our analysis under other prongs above). (In particular, we 
consider possible effects on affordability of the services within the 
definition of universal service for Lifeline purposes under our public 
interest and consumer protection analyses above. We note that in the 
2015 Lifeline FNPRM the Commission granted forbearance from the ILECs' 
Section 251(c) resale obligation as it relates to Lifeline service, 
citing in its Section 10(a)(1) analysis the fact that ``low-income 
consumers will still be able to receive Lifeline-supported services 
from both wireless and wireline providers.'' The fact that such a 
finding could be sufficient to demonstrate that Section 10(a)(1) is 
satisfied does not imply such a finding is necessary to demonstrate 
that Section 10(a)(1) is satisfied in the Lifeline context, 
particularly given the overlay of Section 254(b)(1) and (i) as 
discussed above. Moreover, we also reject arguments that granting such 
forbearance undercuts the Section 251(c) Lifeline resale forbearance 
previously granted, given our analysis here that conditional 
forbearance from the Lifeline voice service obligation is warranted 
under the Section 10(a) criteria without any presumption of a 
particular level of marketplace participation of Lifeline ETCs. For 
these reasons, as well as those stated in the text, in the context of 
our Section 10(a)(1) analysis here we reject arguments suggesting that 
affordability is an element of the justness and reasonableness of 
rates).
    312. On the record here, we are not persuaded that the Lifeline 
voice service obligation is necessary to ensure just and reasonable 
rates or rates that are not unjustly or unreasonably discriminatory 
where the conditions on forbearance are met. Some of these areas will 
remain served by ETCs with high-cost voice service obligations, 
requiring them to offer and advertise voice telephony service 
throughout their designated service area. We find no basis in the 
record here to conclude that the rates charged for voice telephony 
services in these areas are likely to be unjust, unreasonable, or 
unjustly or unreasonably discriminatory as relevant to our Section 
10(a)(1) inquiry here if we forbear from the Lifeline voice service 
obligation where the relevant conditions are met.
    313. As to the remaining areas, the Commission granted forbearance 
from high-cost voice service obligations only after concluding that 
competition and other regulatory protections were adequate to, among 
other things, ensure just and reasonable and not unjustly or 
unreasonably discriminatory rates. We find no basis on the record here 
to reach a different conclusion regarding forbearance from the Lifeline 
voice service obligation in these areas under Section 10(a)(1), insofar 
as the relevant conditions on forbearance are satisfied.
    314. As an overlay to the forgoing analysis regarding voice 
telephony service rates, we note that in evaluating forbearance from 
applying Lifeline voice service obligations to a class of 
telecommunications carriers (carriers that are ETCs for both high-cost 
and legacy Lifeline voice purposes), Section 10(a)(1) speaks to the 
justness and reasonableness of rates (and practices) by those 
telecommunications carriers generally. Although we consider whether 
forbearance from the Lifeline voice service obligation will affect the 
justness and reasonableness of rates for voice telephony service, we 
also consider the effect of forbearance on these ETCs' broadband 
Internet access service. As described above, we anticipate that the 
potential to achieve conditional forbearance will spur ETCs to take 
actions that spur competition in the marketplace for broadband Internet 
access service. The Commission previously has recognized that 
competition helps ensure just and reasonable rates. As part of our 
Section 10(a)(1) analysis, we thus include the predictive judgment 
that, in the context of broadband Internet access service, forbearance 
is likely to have some effect in promoting or enhancing just and 
reasonable rates. Under the totality of the analysis above, we 
therefore find that the Lifeline voice service obligation is not 
necessary to ensure just, reasonable, and not unjustly and unreasonably 
discriminatory rates and practices under Section 10(a)(1).
    315. Details of the forbearance condition. We adopt a condition on

[[Page 33072]]

forbearance from the Lifeline voice service obligation for High-Cost/
Lifeline ETCs that we conclude is intended to create incentives for 
those carriers to promote broadband Internet access service 
subscribership and competition, targeted in this context to low-income 
consumers. To this end, forbearance from the Lifeline voice service 
obligation is granted where the following conditions are met: (a) 51% 
of Lifeline subscribers in a county are obtaining Lifeline broadband 
Internet access service; (b) there are at least 3 other providers of 
Lifeline BIAS that each serve at least 5% of the Lifeline broadband 
subscribers in that county; and (c) the ETC does not actually receive 
federal high-cost universal service support. (Because we find 
forbearance warranted where these readily-identifiable triggers are 
met, we reject concerns that forbearance from the Lifeline voice 
obligation would raise administrability concerns that counsel against 
such relief). As explained earlier in this Section, a number of High-
Cost/Lifeline ETCs have argued that application of the Lifeline voice 
obligation to them is unnecessary given other alternative voice 
options, and that such regulatory relief would free up resources to 
enable the advancement of broadband policy goals. The condition on 
forbearance that we adopt today enables us to ensure--in a way that 
those providers' proposals themselves did not--that regulatory relief 
from such ETCs' Lifeline voice service obligations genuinely will 
advance our broadband policy goals. We further expect that the 
resulting broadband marketplace not only will advance our broadband 
policies but will itself foster additional affordable options for voice 
service, as well.
    316. We adopt the first two elements of our forbearance condition 
to advance our policy goals of creating incentives to promote broadband 
Internet access service subscribership and competition, particularly 
for low-income consumers, but recognize that we are engaged in a line-
drawing exercise that cannot be resolved by available data. Regarding 
our subscribership criteria, we find that a requirement that a county 
have at least 51 percent of Lifeline subscribers that are subscribing 
to Lifeline broadband Internet access service establishes a threshold 
demonstrating that a meaningful portion of Lifeline subscribers are 
taking advantage of our new Lifeline broadband program. (As we explain 
elsewhere, given the increasing importance of broadband Internet access 
service today we are modernizing our universal service policies for 
low-income subscribers to reflect that increased importance, and taking 
this step to further promote broadband Internet access service 
subscribership by low-income consumers helps advance those overall 
goals). At the same time, we recognize that, because the Lifeline 
broadband program is newly-established, setting the threshold too high 
could result in diminished or delayed incentives by High-Cost/Lifeline 
ETCs to encourage such subscribership and competition if the threshold 
was viewed as unattainable in any reasonable timeframe. We believe the 
threshold we adopt appropriately balances these considerations.
    317. Our competition criteria likewise seeks to balance our goal of 
promoting a meaningful level of competition for Lifeline broadband 
Internet access service subscribers, with the realities that this is a 
new program. (As explained earlier in this Section, we conclude that it 
advances our universal service policy implementation of Section 254 of 
the Act to promote competition for Lifeline broadband services). A 
requirement that a county have at least 3 other providers of Lifeline 
BIAS besides the High-Cost/Lifeline ETC that would avail itself of our 
forbearance, with each of those other Lifeline broadband providers 
serving at least 5 percent of the Lifeline broadband subscribers in the 
county demonstrates some level of competition. (The Commission has 
previously acknowledged that competition between even two providers 
theoretically can result in meaningful competition in some 
circumstances, but by adopting a materially higher threshold for the 
number of competitors we avoid such questions. By requiring that each 
of the other providers need only serve 5% of the Lifeline broadband 
Internet access service subscribers we are persuaded that that this 
threshold remains realistically attainable, while guarding against the 
possibility of counting purely de minimis providers in identifying the 
counties where forbearance applies. We emphasize that in this context 
we seek to identify readily-administrable bright-line thresholds that 
establish meaningful thresholds while balancing the need to set them at 
feasibly attainable levels to ensure appropriate incentives for High-
Cost Lifeline/ETCs to pursue steps that result in regulatory relief. We 
therefore caution that the particular thresholds we adopt here do not 
necessarily reflect how the Commission will evaluate competition in any 
other context). It also is our predictive judgment that, even though 
the Lifeline broadband program is new, and some providers thus will 
need to seek Lifeline broadband ETC designations before competing for 
those subscribers, this threshold is likely to be realistically 
attainable in many circumstances. (We note in this regard that we take 
other steps in this Order to facilitate competition for Lifeline 
broadband services).
    318. The subscribership and competition thresholds we adopt also 
have the advantage of being calculations we can make based on NLAD, 
state administrator, or National Verifier data. Those data will be 
readily available to the Commission, making these calculations readily 
administrable. In the interim period of time before the National 
Verifier is in place, we direct USAC to obtain and have systems for 
regularly updating the relevant data from the NLAD or from the states 
that have opted-out of the NLAD by December 1, 2016. (One of the 
requirements for any state that opted-out of the NLAD was that it 
ensure that the Commission and USAC would have access to records as 
needed for oversight purposes). In addition, because the NLAD or 
National Verifier data (as well as the state data) are, in the first 
instance, used to guard against improper universal service support 
disbursements, there already is a strong incentive to ensure that they 
are as accurate and up-to-date as possible. We also direct USAC, in 
coordination with the Bureau, to collect as part of its administrative 
function the information necessary to determine whether Lifeline 
consumers are receiving Lifeline-supported BIAS either on a standalone 
basis or as part of a bundle so that the necessary determinations 
called for can be made.
    319. We further conclude that evaluating whether the condition is 
met at the county level strikes a reasonable balance in this context. 
Smaller geographic areas could have more widely variable numbers of 
Lifeline subscribers, leading to anomalous results under our 
subscribership and competition thresholds that do not accurately 
capture the policies we are seeking to advance. (For example, as of the 
end of 2015 USAC estimates that there were approximately 13.1 million 
subscribers participating in Lifeline. Thus, on average, there are 
approximately 172 Lifeline subscribers per census tract. In practice, 
however, we anticipate that there is likely to be sufficient 
variability census tract-to-census tract that some tracts could have 
only an extremely small number of Lifeline subscribers. Use of census 
tracts

[[Page 33073]]

as the geography could, in those cases, mean that the subscribership 
threshold is met based on only an extremely small number of Lifeline 
broadband Internet access subscribers and/or that it might be very 
difficult for three additional providers to offer Lifeline service in 
that tract and each have at least 5% share of Lifeline broadband 
subscribers. These problems would be exacerbated by using even smaller 
geographic areas for purposes of the condition). On the other hand, 
larger geographies could encompass sufficiently significant areas 
outside a given High-Cost/Lifeline ETC's service territory as to render 
it much more difficult for that ETC to promote Lifeline broadband 
subscribership and competition to a sufficient degree to qualify for 
the forbearance from the Lifeline voice service obligation. (Many ILEC 
study areas are far smaller than a state, for example). The less 
realistically attainable the condition appears, the less the provider 
will have incentives to take the broadband-promoting actions we seek to 
advance in an effort to realize forbearance. Other geographies, such as 
study areas or service areas, can vary considerably provider-to-
provider and we are not persuaded that using such geographic areas for 
applying our condition would result in similarly-situated providers 
being treated similarly. Although we have not identified any single, 
ideal geographic area to rely on for purposes of our condition, we 
conclude that calculations at the county level provides a reasonable 
middle ground relative to larger, smaller, or even more variable 
alternatives. (Counties fall within the range of geographies that the 
Commission reports in the context of its broadband progress reports, 
for example).
    320. In a county where the first two criteria of our forbearance 
condition are met, our forbearance from the Lifeline voice service 
obligation is further conditioned on the High-Cost/Lifeline ETC not 
actually receiving federal high-cost universal service support. Thus, 
for any county where the first two criteria of our forbearance 
condition are met, our conditional forbearance from the Lifeline voice 
obligation only applies in those areas within the county where the 
High-Cost/Lifeline ETC is not, in fact, receiving federal high-cost 
universal service support. In areas where the ETC does receive federal 
high-cost universal service support, the public, through the federal 
universal service fund, is making an ongoing investment in the ETC's 
provision of voice telephony service and in the underlying broadband-
capable network used to offer that service. In that context, we are 
persuaded that there is an ongoing, overriding policy interest that 
such networks and services--already being supported by universal 
service support, with the associated high-cost voice service 
obligation--continue to be available to advance our low-income voice 
policy goals, as well. By contrast, where there is no such ongoing 
federal high-cost universal service investment, we are persuaded that 
the potential to advance our broadband policy goals tips the balance in 
favor of forbearance for all the reasons described in this Section 
above. (In the context of the overall balancing of policy interests 
with respect to the conditional forbearance we grant, we thus reject 
arguments that high-cost ETCs should perpetually have Lifeline voice 
service obligations throughout their entire designated service areas).
    321. To effectuate this condition on forbearance, we direct USAC, 
one year after the effective date of this Order and annually 
thereafter, to submit data to the Bureau to enable the identification 
of counties where the subscribership and competition criteria are met. 
After review, within thirty days of the receipt of these data from 
USAC, we direct the Bureau to issue a Public Notice announcing the 
counties where the subscribership and competition criteria of our 
forbearance condition are met. Sixty days after the release of that 
Public Notice, forbearance from the Lifeline voice service obligation 
will apply to each High-Cost/Lifeline ETC in the identified counties 
insofar as each ETC is not receiving high-cost support. This 
forbearance will continue to apply in each county identified in the 
Public Notice--subject to the high-cost support condition--until sixty 
days after the next year's Public Notice. At that time, the list of 
counties identified in the next year's public notice will govern, 
including any additions of newly-qualifying counties or the elimination 
of counties that no longer meet the criteria (and thus no longer fall 
within the scope of the conditional forbearance).
(iii) Lifeline Broadband Provider ETCs
    322. As explained above, we interpret Section 214(e)(1) to impose 
service obligations on ETCs that mirror the service defined as 
supported under Section 254(c) in the context of the specific universal 
service rules, mechanisms, or programs for which they were designated. 
Consequently, providers that obtain an ETC designation as an LBP 
receive a designation that is specific to the Lifeline broadband 
program and will only have Section 214(e)(1) service obligations for 
BIAS. Thus, by default, providers do not have any Lifeline voice 
service obligations as a result of their designation specifically as an 
LBP.
d. Obligation To Advertise the Availability of and Charges for Lifeline 
Service
    323. In addition to the actions described above, we further 
encourage competition and market entry in the Lifeline program by 
interpreting ETCs' obligation to advertise the availability of Lifeline 
services and the charges thereof for purposes of receiving 
reimbursement from the Lifeline program. We find that interpreting 
ETCs' obligations under Section 214(e)(1)(B) will provide clarity and 
reduce burdens on providers, making it easier to enter and remain in 
the Lifeline program.
    324. Under Section 214(e)(1)(B) of the Act, an ETC must, among 
other requirements, ``advertise the availability of such services and 
the charges therefor using media of general distribution.'' The 
requirement to advertise the availability and price of service on 
``media of general distribution'' creates ambiguity that, added with 
other obligations for ETCs, can discourage providers from seeking 
designation and entering the Lifeline program. This ultimately harms 
Lifeline-eligible consumers, who are left with few choices among 
discounted services. However, as Free Press and New America's Open 
Technology Institute have argued, we acknowledge that the requirement 
to advertise the availability and price of service need not necessarily 
be overly burdensome if implemented properly.
    325. We therefore find that, while the requirement to advertise the 
availability and price of service is a useful one, the Commission can 
reduce the perhaps unintended burden of this provision on carriers by 
interpreting the phrase ``media of general distribution'' to provide 
further clarity. Under Section 214(e)(1)(B), ``media of general 
distribution'' is any media reasonably calculated to reach the general 
public or, for an LBP, the specific audience that makes up the 
demographic for a particular service offering. For example, for an LBP 
partnering with a school to offer Lifeline-discounted BIAS to that 
school's community, ``media of general distribution'' may include 
flyers, newspaper advertisements, or local television advertisements in 
that school's geographic area. For a Lifeline-only broadband ETC 
offering a service designed with eligible low-income subscribers with 
hearing disabilities, ``media of general distribution'' may include web 
advertisements reasonably

[[Page 33074]]

calculated to reach the relevant community, mail, email, or other text-
based methods of advertising.
    326. Combined with our other actions in this Order to encourage 
provider participation in the Lifeline program and create a robust, 
competitive market for Lifeline subscribers, we expect that our 
interpretation of the requirement of Section 214(e)(1)(B) will give 
clarity to participating providers and remove one more potential source 
of uncertainty to encourage providers to enter the program.

F. Lifeline Service Innovation

    327. To fully obtain the benefits of a modernized Lifeline program, 
the Commission and others must encourage and facilitate the meaningful 
access and adoption to quality advanced telecommunications services 
among low-income households. We recognize that in order to access and 
adopt advanced telecommunications services, households will require 
devices that enable them to bridge the digital divide. We therefore 
require Lifeline providers that provide both supported mobile broadband 
service and devices to their consumers to provide devices that are Wi-
Fi enabled, and we also require the same providers to offer the choice 
to Lifeline customers of devices that are equipped with hotspot 
functionality. We also require fixed broadband Lifeline providers that 
provide devices to their customers to provide devices that are Wi-Fi 
enabled. The requirement to provide Wi-Fi-enabled devices does not 
apply to devices provided to consumers prior to the effective date of 
the requirement. Additionally, we direct the Consumer and Governmental 
Affairs Bureau (CGB) to develop a comprehensive plan for the Commission 
to better understand the non-price barriers to digital inclusion and to 
propose how the Commission can facilitate efforts to address those 
barriers.
1. Bridging the ``Homework Gap'' and ``Digital Divide'' With Wi-Fi and 
Hotspot-Enabled Devices
    328. In recognition of the need for students, job applicants, and 
others to access the Internet on multiple platforms and in various ways 
we now require Lifeline providers that provide supported broadband 
service and devices to their consumers to provide devices that are Wi-
Fi enabled, and to offer devices that are equipped with hotspot 
functionality. We adopt these requirements because Wi-Fi enabled phones 
are essential tools to help individuals stay connected, and because the 
hotspot requirement will help to ensure that households without fixed 
Internet access will be able to share their access to the Internet 
among multiple members if so desired.
    329. Discussion. In the 2015 Lifeline FNPRM the Commission 
recognized the need for forward-thinking, innovative solutions to 
address the ``digital divide'' and the ``homework gap,'' and emphasized 
that it was vital for low-income consumers to ``have access to 
broadband-capable devices that provide the ability to send and receive 
critical information, as well as broadband service with sufficient 
capacity, security, and reliability to be dependable in times of 
need.'' In its comments TracFone emphasized a similar point, and stated 
that ``Lifeline providers offering no charge Lifeline services can--and 
should be--required to provide such Wi-Fi enabled devices.'' We 
conclude that Lifeline providers who make devices available with or 
without charge for use with a Lifeline-supported fixed or mobile 
broadband service must ensure that all such devices are Wi-Fi enabled. 
(This requirement does not apply to devices provided to consumers prior 
to the date that the new requirement goes into effect.) Lifeline 
providers who make devices available with or without charge for use 
with a Lifeline-supported mobile broadband service must also offer 
devices that are capable of being used as a hotspot. (We note that 
while we decline to support devices as discussed supra in para. 105, 
these requirements are only conditions for receiving support if the 
Lifeline provider chooses to provide devices for the purpose of 
extending the connectivity supported by Lifeline. Lifeline providers 
retain the flexibility to decide whether to provide devices in general 
and if so, what amount to charge, if any, for a device). By 
conditioning support for Lifeline services in this way, we seek to 
increase the value of the supported connection so that Lifeline 
consumers can regularly and reliably access the Internet.
    330. As explained in more detail in the paragraphs that follow, 
this condition on support under the Lifeline broadband mechanism for 
providers that make devices available to Lifeline subscribers promotes 
Lifeline subscribers' access to advanced services and the affordability 
of those services. Importantly, the condition guards against the risk 
that the Lifeline subscribers and their households would be hindered in 
their ability to avail themselves of options for using the Internet 
that are less expensive than purchasing additional usage or additional 
services as could be necessitated if Lifeline providers only provided 
devices that lack the capabilities required under this condition. 
Adopting this condition on the Lifeline broadband support mechanism 
advances the objectives in Section 254(b) and (i) of the Act, as well 
as our responsibilities under Section 706 of the 1996 Act. The 
Commission has invoked Section 254(b) of the Act and Section 706 of the 
1996 Act to place conditions on the receipt of universal service 
support in the past, and courts likewise have affirmed conditions on 
the receipt of universal service support in other ways. Greater 
availability of devices with the capabilities we require under our 
condition also provides greater incentives for the public to fund 
advanced services to schools and libraries, including those in low-
income areas, given that a larger proportion of the students or patrons 
can avail themselves of the opportunities made available, thereby 
advancing additional objectives of Section 254 of the Act and Section 
706 of the 1996 Act. We discuss the specific elements of our condition 
on Lifeline broadband funding in greater detail below.
    331. Wi-Fi Enabled. Wi-Fi enabled devices help many of the most 
vulnerable members of society stay connected. Many public buildings, 
such as schools and libraries, offer public Wi-Fi access and a Lifeline 
consumer with a Wi-Fi enabled device will be able to take advantage of 
public Wi-Fi networks and look for jobs, check email, or make a 
doctor's appointment, all without using any mobile data. This ensures 
consistent Internet access even when a Lifeline consumer is away from 
home, and it allows the consumer to save money and avoid going over any 
data caps, and it also helps to bridge the homework gap, as students 
with Wi-Fi enabled devices can utilize public Internet networks to 
complete their assignment. As we noted in the 2015 Lifeline FNPRM, in 
some communities students must go to local restaurants to use Wi-Fi to 
study. While this situation is far from ideal, it highlights the vital 
importance of Wi-Fi enabled devices as a complement to a consumer's 
primary broadband service, because without these devices many students 
would be unable to access the Internet outside of the classroom at all. 
Additionally, a ``substantial majority'' of American consumers already 
own Wi-Fi enabled smartphones, as 88 percent of new phone purchases, 
and 77 percent of total mobile phones, are Wi-Fi enabled smartphones. 
Furthermore, Wi-Fi enabled routers and modems for use with fixed 
broadband service also increase the value of the connection by

[[Page 33075]]

allowing simultaneous use of multiple devices of varying types.
    332. Hotspot Functionality. Next, we adopt a phased-in requirement 
that recognizes the importance of devices with hotspot functionality to 
help connect households to the Internet. Many of the most economically 
vulnerable members of society do not have fixed Internet access, and 
rely solely on mobile devices. A recent report indicates that 7 percent 
of Americans are ``smartphone dependent,'' meaning that a smartphone 
provides their only access to the Internet. In households without fixed 
broadband, using a smartphone or other device as a mobile hotspot can 
help to partially alleviate this limitation and permit others in that 
household to access the Internet. The Commission previously stated that 
tethering can provide mobile broadband consumers ``access to the same 
applications and functionalities as consumers served through fixed 
connections.'' A typical American household has 2.3 smartphones, along 
with additional devices capable of accessing the Internet. In a 
household with Wi-Fi enabled devices and no fixed Internet connection, 
a tethered connection can help to ensure Internet access for multiple 
family members. A student can do research for a homework assignment at 
the same time her parents send emails or apply for jobs. This assists 
in bridging the homework gap for those students, helping make them 
competitive academically and better preparing them for the challenges 
of the 21st Century. A hotspot enabled device also helps bridge the 
digital divide, and efficiently maximizes the value of a single mobile 
broadband connection. Devices with hotspot functionality are also 
becoming increasingly ubiquitous, and in order for a consumer to 
utilize the benefits of mobile broadband, the consumer should have to 
the choice of a device that provides access to hotspot functionality. 
Because devices that are equipped with hotspot functionality are 
valuable tools to keep individuals and families connected to the 
Internet, we conclude that Lifeline providers who provide devices to 
their consumers should include devices with this capability among other 
offerings. (We clarify that this does not require Lifeline providers 
offering broadband service to necessarily provide a device. 
Furthermore, this requirement does not prevent a subscriber using a 
device not provided by the Lifeline provider of the supported service. 
Rather, to the extent the Lifeline provider, its affiliate(s), or 
business partner make devices available to the Lifeline subscriber, 
such devices must be Wi-Fi-enabled, and hotspot-enabled devices must be 
offered if the Lifeline provider is to receive Lifeline support). In 
addition, because of the importance of tethering to bridging the 
``digital divide,'' providers may not impose an additional cost on 
tethering service for tethering that does not exceed the relevant 
minimum service standard for mobile broadband data usage allowance. (As 
an example, if the applicable minimum service standard for mobile 
broadband data usage allowance is 2 GB, a provider may not impose a 
tethering-specific fee or surcharge for tethering if the 2 GB data 
usage allowance has not been reached. Providers may charge consumers 
who choose to purchase data above the minimum data usage allowance).
    333. To ensure that the market can adjust and reflect the evolution 
of available devices while also ensuring that consumers have affordable 
choices, we adopt a phase in transition for this requirement. Beginning 
in December 1, 2016, we require that providers of broadband Lifeline 
service that make devices available include at least one device that 
has hotspot capability. Building on that, fifteen percent of the 
devices a provider makes available from December 1, 2017 to November 
30, 2018 shall be hotspot enabled. Twenty percent of the devices a 
provider makes available from December 1, 2018 to November 30, 2019, 
shall be hotspot enabled. Twenty-five percent of the devices a provider 
makes available from December 1, 2019 to November 30, 2020 shall be 
hotspot enabled. Thirty-five percent of the devices a provider makes 
available from December 1, 2020 to November 30, 2021 shall be hotspot 
enabled. Forty-five percent of the devices a provider makes available 
from December 1, 2021 to November 30, 2022 shall be hotspot enabled. 
Fifty-five percent of the devices a provider makes available from 
December 1, 2022 to November 30, 2023 shall be hotspot enabled. Sixty-
five percent of the devices a provider makes available from December 1, 
2023 to November 30, 2024 shall be hotspot enabled. Seventy-five 
percent of the devices a provider makes available beginning December 1, 
2024 onward shall be hotspot enabled. We believe that this approach 
ensures that consumers have robust choices--both with and without 
hotspot functionality. Accordingly, we amend Section 54.422(b) of our 
rules to require carriers to certify their compliance with these 
requirements on our Form 481.
2. Importance of Digital Inclusion
    334. In this Section, we direct the Consumer and Governmental 
Affairs Bureau (CGB) to develop a comprehensive plan for the Commission 
to better understand the non-price barriers to digital inclusion and to 
propose how the Commission can facilitate efforts to address those 
barriers. This plan should address promoting digital inclusion 
generally and also as it particularly relates to the new Lifeline 
program established in this Order. CGB should specifically work with 
other bureaus and offices, as well as USAC, to ensure all Lifeline 
stakeholders' views are incorporated into this effort. We direct CGB to 
submit this plan to the Commission within six months of the effective 
date of the order. Through this effort, we initiate an ongoing campaign 
to build the Commission's digital literacy capacity and to keep us 
apprised and abreast of the state of digital inclusion across the 
country.
    335. Lowering non-price barriers to digital inclusion is an 
important component of increasing the availability of broadband service 
for low-income consumers. As explained above, the key purpose of our 
actions in this order is to increase the affordability of broadband 
service, which remains the chief impediment to broadband adoption among 
low-income consumers. We nonetheless recognize, and concur with, the 
findings of other governmental and private researchers that there are 
multiple barriers to digital inclusion among low-income consumers. 
(Digital inclusion includes but reaches beyond broadband adoption and 
affordability). Notably, lack of digital literacy and perceived 
relevance are significant non-price barriers. All of these barriers are 
interrelated. Recent studies confirm that consumers may consider 
broadband service to be relevant if other barriers, such as digital 
literacy and price are overcome. The fact that a consumer may not be 
able to afford broadband service may also reduce the relevance of 
broadband service to that consumer. Many low-income consumers that are 
online may not be able to take advantage of all that the Internet has 
to offer. By one estimate, approximately 36 million Americans don't use 
the Internet at all and approximately 70 million Americans have low 
digital skills. Based on the foregoing, we believe that low-cost 
broadband coupled with strategic, effective digital inclusion efforts 
will significantly impact the lives of millions of consumers across the 
Nation, particularly those with lower incomes and in key demographic 
groups, such as

[[Page 33076]]

seniors, veterans, persons with disabilities, rural communities, and 
those living on Tribal lands, many of which may also have an increased 
need for access to educational, public health and/or public safety 
services. Accordingly, we find that the public interest would be served 
by building upon earlier efforts by the Commission and others to study 
and monitor the impact of digital inclusion efforts.
    336. We recognize the important role consumer groups, community and 
philanthropic organizations, local government, and industry 
stakeholders play in assisting consumers in overcoming the non-price 
barriers to digital inclusion. Therefore, CGB's plan should include 
proposals for engagement of these groups to explore strategies for 
promoting increased broadband adoption as well as increased digital 
literacy of low-income and other consumers. In its plan, CGB should 
explore how to connect efforts to increase the availability of 
affordable service and equipment, digital literacy training, and 
relevance programming to make digital inclusion a reality in light of 
the modernized regulatory framework.
    337. In addition, we encourage Lifeline providers to work with 
schools, libraries, community centers and other organizations such as 
food banks and senior citizen centers that serve low-income consumers 
to increase broadband adoption and address non-price barriers to 
adoption. Providers should make available contact information for 
Lifeline subscribers as part of their outreach. CGB's plans should 
further this objective. Broadband can be a critical tool for seniors to 
realize many economic and health gains as well as increased 
socialization, but seniors lag behind other demographic groups in terms 
of adoption and digital inclusion. Education and awareness programs 
targeting seniors can be effective in overcoming these barriers and 
increasing broadband adoption among low-income seniors.
    338. CGB's plan should propose how it will convene stakeholders, 
including both Lifeline and non-Lifeline broadband providers, community 
and philanthropic organizations, local governments, and anchor 
institutions to explore how digital inclusion efforts can be tailored 
to local conditions by trusted community-based partners to maximize 
their effect. Digital inclusion organizations have found that the most 
successful training is provided through a trusted, community-based 
partner that provides the social support necessary for increasing 
broadband access. Moreover, local social and demographic conditions may 
make one solution work in one place while another approach is more 
appropriate elsewhere. Based on their experience, many digital 
inclusion organizations have moved from classes to one-on-one training 
to improve outcomes. One-on-one training can be the most effective in 
part because it helps lower the barrier of perceived relevance; each 
consumer learns how the Internet can assist them accomplish tasks of 
particular importance to them. CGB's plan should address how digital 
inclusion organizations can share their experience in tailoring digital 
inclusion efforts to local conditions.
    339. In addition, CGB's plan should address information and studies 
available from digital inclusion experts regarding best practices for 
increasing the digital skills of those already online and how those 
best practices can be spread throughout the digital inclusion 
community. Digital literacy efforts can increase the digital inclusion 
of those who already have access to the Internet to be fully 
``digitally ready.'' Schools, libraries, and community organizations 
across the country have already begun developing digital learning 
curriculums that have enabled low-income populations to more 
meaningfully engage with all the Internet has to offer. Some of the 
same community-based, grass-roots approaches to increasing digital 
inclusion for those who do not have access may also be useful in 
closing the digital readiness gap among those that already have access 
to broadband. As with programs promoting digital inclusion generally, a 
``one-size-fits all'' solution to increasing digital skills may not be 
the most efficient or effective approach. CGB's plan should propose how 
to facilitate communication among these organizations regarding how to 
tailor digital inclusion efforts to deepen the value of broadband to 
those already online.
3. Lifeline Service Stability
    340. To further incentivize investment in high-qualify Lifeline 
service offerings, we implement Lifeline benefit port freezes--of 12 
months for data services and 60 days for voice services--that will give 
providers greater certainty when planning new or updated Lifeline 
offerings. Providers may not seek or receive reimbursement through the 
Lifeline program for service provided to a subscriber who used the 
Lifeline benefit to enroll in a qualifying Lifeline-supported BIAS 
offering with another Lifeline provider within the previous 12 months. 
Providers also may not seek or receive reimbursement through the 
Lifeline program for service provided to a subscriber who used the 
Lifeline benefit to enroll in a qualifying Lifeline-supported voice 
telephony service offering with another Lifeline provider within the 
previous 60 days. These port freeze rules for both BIAS and voice 
service will be subject to certain conditions to ensure Lifeline 
consumers are sufficiently protected.
    341. Twelve-month benefit port freeze for Lifeline-supported 
broadband service. To facilitate market entry for Lifeline-supported 
BIAS offerings, provide additional consumer benefits, and encourage 
competition, we now establish that providers may not seek or receive 
reimbursement through the Lifeline program for service provided to a 
subscriber who used the Lifeline benefit to enroll in a qualifying 
Lifeline-supported BIAS offering with another Lifeline provider within 
the previous 12 months, except as explained below. (For the purposes of 
this Section, the use of the term ``transfer'' is meant to include any 
mechanism to move a subscriber from one carrier to another, and the 12-
month period will be measured from the subscriber's service initiation 
date. As a function of the 12-month port freeze, USAC will determine 
the best method and practices to handle carrier de-enrollments to 
prevent improper practices by carriers to circumvent the port freeze.) 
We find that allowing broadband providers the security of a longer term 
relationship with subscribers will incentivize greater up-front 
investments from providers. Those investments in broadband-capable 
devices and broadband services should improve the quality of new offers 
for subscribers and further spur competition among providers to offer 
more innovative services. While we acknowledge that this rule will 
decrease Lifeline providers' incentive to compete for customers that 
have recently signed up with another Lifeline provider, we find that 
Lifeline-eligible consumers will nonetheless benefit more from a 
Lifeline market in which a benefit port freeze gives providers stronger 
incentive to vigorously compete for eligible customers through better 
broadband service offerings and outreach.
    342. Except in circumstances described below, providers may not 
seek or receive reimbursement through the Lifeline program for service 
provided to a subscriber who used the Lifeline benefit to enroll with 
another Lifeline provider for qualifying Lifeline-supported BIAS 
service within the previous 12 months. For a subscriber to continue 
receiving the Lifeline benefit after the subscriber has received 
Lifeline-supported service from a provider for 12 months, the 
subscriber

[[Page 33077]]

must be recertified as eligible, at which point the subscriber may 
choose to receive Lifeline-supported service from the same Lifeline 
provider month-to-month, being recertified every 12 months. If, 
however, the subscriber switches to a different Lifeline provider after 
the initial 12-month period, a new initial 12-month period will begin 
with the new Lifeline provider. (If the subscriber opts to continue 
receiving service from her current Lifeline provider at the end of the 
initial 12-month period, that provider may not temporarily 
``terminate'' the subscriber's service for purposes of obtaining a 
second 12-month port freeze immediately following the first. 
Additionally, as part of the transfer of the subscriber's benefit, the 
new Lifeline provider will follow the same subscriber enrollment rules 
for a new subscriber, such as verifying eligibility and beginning a new 
12-month recertification cycle). Lifeline disbursements will be made by 
USAC to the Lifeline provider each month, as in the current program, 
and we expect this eligibility modification to encourage Lifeline 
providers to offer more robust services in light of the additional 
customer certainty this rule change provides.
    343. A provider that enrolls Lifeline-eligible subscribers cannot 
materially change the initial terms or conditions of that service 
offering without the consent of the subscriber until the end of the 12 
months, except to increase the offering's speeds or usage allowances. 
Changes that lower the quality or speed of service, lower the 
offering's usage allowance, or increase the service's price are 
presumptively material changes to the terms or conditions of service, 
even if such changes are made in response to an amendment to the 
Commission's rules or a change to the Lifeline program's minimum 
service standards. If a subscriber cancels service or is de-enrolled 
for non-usage, the Lifeline provider cannot continue to receive 
reimbursement for that subscriber, nor can the subscriber re-enroll in 
the program with another provider until the end of the initial 12-month 
period. Where permitted by the terms and conditions of the service 
offering, a Lifeline subscriber at any time may move their Lifeline 
benefit to a different qualifying Lifeline service offered by the same 
provider, whether broadband, voice, or a bundled offering so long as 
the service is eligible for support by the Lifeline program. However, 
if the subscriber switches to another plan offered by the Lifeline 
provider that offers Lifeline qualifying voice telephony service but 
not Lifeline qualifying BIAS, the subscriber's 12-month port freeze 
will end immediately and the subscriber will instead be subject to a 
60-day benefit port freeze.
    344. Sixty-day benefit port freeze for Lifeline-supported voice 
telephony service. A Lifeline provider also may not seek or receive 
reimbursement through the Lifeline program for service provided to a 
subscriber who used the Lifeline benefit to enroll in a qualifying 
Lifeline-supported voice telephony service offering with another 
Lifeline provider within the previous 60 days, except in circumstances 
explained below. (For the purposes of the 60-day port freeze, the 
period will begin to run from the subscriber's service initiation 
date). We find that, for the reasons described above, a benefit port 
freeze will encourage provider investment and high-quality service 
offerings in voice telephony service as well as BIAS. However, since 
the service and device costs associated with standalone voice telephony 
service are generally lower than costs for comparable broadband 
offerings, the benefit port freeze for Lifeline-supported offerings 
that do not meet the program's minimum service standards for BIAS need 
not be a full 12 months. Instead, we find that the existing 60-day 
period administered by USAC is sufficient to encourage investment and 
quality offerings for voice services, and we accordingly codify that 
period in our rules.
    345. Exceptions to the BIAS and voice telephony Lifeline benefit 
port freezes. In certain circumstances, however, an eligible low-income 
subscriber may transfer their Lifeline benefit to another provider 
prior to completion of the 12-month period. A subscriber may transfer 
their Lifeline benefit to another provider prior to completion of the 
12-month period if:
     The subscriber moves their residential address;
     the provider ceases operations or otherwise fails to 
provide service;
     the provider has imposed late fees for non-payment related 
to the supported service(s) greater than or equal to the monthly end-
user charge for service; or
     the provider is found to be in violation of the 
Commission's rules during the benefit year and the subscriber is 
impacted by such violation.
    346. In any of the above circumstances, Lifeline subscribers may 
cancel service and receive a new Lifeline-supported service with 
another provider until the end of the original 12-month period. In 
these circumstances, the subscriber is not required to re-verify 
eligibility until the end of the original 12-month period. In such 
cases, we direct USAC to implement a process for facilitating the 
necessary sharing of information between the Lifeline providers so the 
subscriber's benefit can be transferred to the new provider in 
accordance with Commission rules. We also direct USAC to make necessary 
modifications to the NLAD for enforcing these rules and to incorporate 
such functionality into the National Verifier. We also require states 
that have opted-out of the NLAD, in coordination with USAC, to update 
their systems and processes to implement this rule. We insert Section 
54.411 of our rules to establish when and under what circumstances a 
subscriber may transfer his or her Lifeline benefit to a new provider. 
Our addition of Section 54.411 of the Commission's rules, as discussed 
in this Section, will become effective 60 days after announcement in 
the Federal Register of OMB approval of the subject information 
collection requirements or December 1, 2016, whichever is later.

G. Managing Program Finances

    347. In the 2015 Lifeline FNPRM, we sought comment on establishing 
a budget for the Lifeline program, and determining an appropriate 
budget amount. While many commenters supported instituting a budget, 
some worried that a budget would lead to eligible consumers being 
denied Lifeline support or being placed on waiting lists. Still others 
argued that sufficient data to set a budget for the program is not 
available and the Commission should decline to adopt a budget at this 
time. We conclude that a budget mechanism, implemented as described 
below, will ensure the financial stability of the Lifeline program and 
guarantee access to all eligible consumers, and we revise Section 
54.423 the rules. Given the significant changes we adopt today, we find 
it prudent to apply this budget to the Lifeline program at this time 
rather than wait until after implementation of the changes. In so 
doing, we must balance the need to ensure that the Lifeline program 
continues to reduce the contribution burden on the nation's ratepayers, 
will continue to support service to eligible consumers, and will 
provide information to the Commission as it monitors the Lifeline 
program's growth following such significant programmatic changes.
    348. Initial Budget Amount. We adopt an initial annual budget of 
$2.25 billion based on our projections of how the program will be 
updated once BIAS is a supported service. This budget will apply for 
the calendar year beginning January 1, 2017. We arrive at this level

[[Page 33078]]

by considering current participation rates, possible growth of the 
program as we seek to raise awareness of its benefits, and the 
safeguards already in place to reduce waste, fraud, and abuse.
    349. Currently, approximately 13.1 million households are enrolled 
in Lifeline, and USAC estimates a 32 percent participation rate. As 
occurred after the last major expansion of Lifeline, we can expect 
program participation to increase. We note, however, that the 
Commission has instituted many significant safeguards against waste, 
fraud, and abuse in the last five years and that some measures we adopt 
in this item today--such as the imposition of new minimum service 
standards that may result in higher subscriber out-of-pocket costs 
versus today's program--may depress demand for Lifeline services in the 
near term. For the purpose of establishing a budget for this program, 
we prepare for participation in the program to increase. A $2.25 
billion budget would allow over 20 million households to participate in 
the program with basic support for an entire year before the budget is 
reached. We believe this budget establishes a ceiling with appropriate 
room for organic growth in the modernized, accountable Lifeline program 
we adopt today. (While some Lifeline subscribers will receive enhanced 
tribal support, it is difficult to forecast the number well in light of 
other changes that we make to the program).
    350. Reporting on Budget. While we believe this budget level will 
provide ample room for new households to enroll in the program, we must 
also monitor the program and account for the reasons for growth in the 
program in order to make adjustments, if necessary. We therefore direct 
the Bureau to issue a report to the Commission by July 31 of the 
following year if total Lifeline disbursements exceeded 90 percent of 
the budget in the previous calendar year. For example, if in calendar 
year 2017, when the budget is set at $2.25 billion, the total 
disbursements for 2017 totaled $2 billion, equal to 90.9 percent of 
$2.25 billion, then by July 31, 2018 the Bureau would be required to 
issue such a report. This report should offer an evaluation of program 
disbursements, including the causes of program growth, an evaluation of 
the different services and technologies supported by Lifeline, 
disbursement amounts by state or other geographic areas, and any other 
information relevant to the Commission's necessary oversight of the 
Lifeline program. The report should also make recommendations about 
what should be done, for example, including making adjustments to the 
minimum service standards, changing the support levels, altering other 
requirements, or modifying the budget amount. We expect the full 
Commission will take appropriate action to address the Lifeline budget 
within six months of receiving the report.
    351. Indexing the Budget for Inflation. The budget amount will be 
indexed to inflation in accordance with the Consumer Price Index for 
all items from the Department of Labor, Bureau of Labor Statistics. The 
budget for the next calendar year beginning January 1 shall be 
announced in a Public Notice on or before July 31 of each year.

H. Efficient Program Administration

1. Program Evaluation
    352. In this Section, we clarify our goals and goal measurements to 
better align them with the modernized Lifeline program. We also direct 
the Bureau, working with USAC, to conduct a program evaluation of the 
newly reformed program so that the Commission and the public may have 
better information about the operation and effectiveness of the 
program.
    353. Discussion. This order creates a revitalized broadband-
centered Lifeline program. In light of these changes, we revise our 
program goals and call for evaluating the efficacy and efficiency of 
our newly revamped program in reaching its goals.
    354. First, we explicitly include affordability of voice and 
broadband service as a component of our first and second program goals 
and separately measure progress towards that goal component. We clarify 
that the Lifeline program includes as its goal ensuring the 
affordability of voice and broadband service. We will measure progress 
toward this component of our first two goals by measuring the extent to 
which voice and broadband service expenditures exceed two percent of 
low-income consumers' disposable household income as compared to the 
next highest income group. (This approach is similar to the approach 
taken in other measures of affordability. We note that the United 
Nations set a goal for developing countries that, by 2015 ``entry 
level'' broadband Internet access should account for no more than 5% of 
disposable income. The most recent data from 2014 indicates that for 
the poorest 20 percent of U.S. households, a fixed broadband connection 
constitutes 2.47 percent of monthly disposable income while a 500MB 
month mobile broadband plan is 4.94 percent of disposable income). We 
direct the Bureau to implement the details of this measurement, examine 
the available data, and publish the results in the annual Universal 
Service Monitoring Report.
    355. Second, we begin a thorough, long-term process of evaluating 
the newly revitalized Lifeline program. Within 12 months of Federal 
Register publication of this Order, we direct USAC to begin a 
procurement process for an outside, independent, third-party evaluator 
to complete a program evaluation of the Lifeline program's design, 
function, and administration. The evaluation should be consistent with 
current GAO guidance on program evaluations. If appropriate, the 
evaluation should discuss ways in which resources and data from other 
agencies can be helpful in evaluating the program. The outside 
evaluator must complete the evaluation and USAC must submit the 
findings to the Commission by December 31, 2020 so that the evaluation 
can be incorporated, as appropriate, into the State of the Lifeline 
Marketplace Report, due June 30, 2021. The Commission will make the 
final evaluation publicly available to the extent not otherwise 
precluded by law. We believe that an extended period until completion 
of the final report is necessary to evaluate whether the newly revised 
Lifeline program is operating efficiently and effectively in 
fulfillment of its goals.
    356. Our direction here is consistent with prior direction given to 
USAC to undertake reviews of the extent to which our universal service 
rules, as implemented, are advancing relevant program goals. Because a 
key element of this forthcoming review will involve the evaluation of 
whether the implementation of the modified Lifeline rules is achieving 
our program goals, we follow a similar approach here. We also note that 
the efficacy of the legacy voice program has already been studied in 
depth by third parties, and therefore find that limited USF funds 
should be better spent designing and implementing, as soon as possible 
to enable a full analysis of a revamped program, an evaluation of the 
Lifeline program, which includes analysis of its effectiveness in 
meeting its newly revised goals.
2. Non-Usage Reforms
    357. We next provide additional flexibility for those Lifeline 
subscribers and service providers who must demonstrate that the 
subscriber has used the service within the established time frame, 
while still maintaining fiscal responsibility. In the 2012 Lifeline 
Reform Order, as a measure intended to reduce waste in the program, the

[[Page 33079]]

Commission introduced a requirement that a Lifeline service provider 
who did not assess and collect from its subscribers a charge (e.g., a 
pre-paid provider) could not receive support for subscribers who had 
either not initiated service, or who had not used the service for a 
consecutive 60-day period. In this way, service providers would only 
receive support for eligible low-income subscribers who actually use 
the service. The Commission established ways in which a subscriber 
could establish ``usage'' for purposes of the rule.
    358. In the 2015 Lifeline FNPRM, we proposed to amend Section 
54.407(c)(2) of our rules to allow the sending of a text message by a 
subscriber to constitute ``usage.'' We recognized that, while text 
messaging was not a supported service, it is widely used by wireless 
consumers for their basic communications needs. Moreover, there was an 
indication that there is increasing reliance on text messaging by 
individuals who are deaf, hard of hearing, or have difficulty with 
speech. We also asked whether it was appropriate to base a subscriber's 
intention to use a supported service on that subscriber's use of a non-
supported service. The 2015 Lifeline FNPRM also sought comment on the 
conclusion not to allow the receipt of text messages to qualify as 
usage. Finally, the 2015 Lifeline FNPRM proposed to reduce the non-
usage interval from 60 to 30 days, as part of our ongoing efforts to 
reduce waste and inefficiency in the Lifeline program.
    359. All those who commented on whether to allow the sending of 
text messages to constitute usage for purposes of Section 54.407(c)(2) 
of our rules supported this broadening of our requirements. Many 
commenters stated that for many of today's wireless consumers, 
including Lifeline subscribers, text messaging is the prevalent means 
of communication. Sprint, for example, stated that a significant 
percentage of Assurance Wireless customers used their Lifeline handset 
for text messaging even when they did not have any voice usage. Several 
commenters also highlighted that texting is the primary means by which 
many people with disabilities communicate.
    360. Based on our review of the record and the communications 
landscape overall, we conclude that it is appropriate to allow the 
sending of a text message by the subscriber to qualify as ``usage'' for 
purposes of Section 54.407(c)(2). (This determination should not be 
confused with any decision regarding the regulatory status of texting 
service. Likewise, we make no decisions at this time regarding whether 
text messaging qualifies as a Lifeline-supported service). Our decision 
is based on the reality that many consumers today view texting, voice, 
and broadband as interchangeable means of communication and often use 
text messages as the sole or primary means of communication. Many 
Lifeline subscribers may assume that using any of the services 
available from the device provided by their Lifeline service provider 
will qualify as usage, and it seems unnecessarily burdensome to require 
them to distinguish among the services to ensure compliance with the 
program's usage requirement. While TracFone continues to urge the 
Commission to allow both the sending and receipt of texts to qualify as 
``usage,'' we conclude, consistent with the 2015 Lifeline FNPRM, that 
only the sending of texts from the subscriber's device will qualify as 
sufficient indication of usage. We will, therefore, modify Section 
54.407(c)(2) of our rules to reflect the inclusion of outbound texts as 
a means for establishing ``usage.'' In addition, given this Order's 
inclusion of BIAS as a supported service, we also make certain 
modifications to Sec.  54.407(c)(2)(i) and (ii) of our rules to account 
for the inclusion of broadband service as a supported service.
    361. Broadening the list of services that can be used to 
demonstrate ``usage'' for purposes of Section 54.407(c)(2) of our rules 
should greatly ease consumers' ability to show their desire to retain 
Lifeline service. Consequently, we find it appropriate at this time to 
shorten the non-usage period from 60 to 30 days, along with a 
corresponding reduction in the time allotted for service providers to 
notify their subscribers of possible termination from 30 to 15 days. 
Under this scheme, Lifeline service providers must notify subscribers 
of possible termination on the 30th day and terminate service if, 
during the subsequent 15 days, the subscriber has not used the service. 
In this way, the subscriber will have a total of 45 days in which to 
demonstrate ``usage.'' In making this determination, we are mindful of 
the concerns raised by commenters such as Sprint who assert that 
decreasing the time period may lead to a higher number of de-
enrollments. We note, however, that such assessments are based on a 
scenario in which the Commission did not permit texting, one of the 
most prevalent means of wireless communications, to be used as a basis 
for demonstrating usage. Moreover, we expect that Lifeline service 
providers will educate their subscribers about the usage requirements 
and de-enrollment that will result from non-usage. Hence, we will 
modify Section 54.405(e)(3) of our rules to reflect the change in the 
non-usage interval. Finally, we emphasize that only if a carrier bills 
on a monthly basis and collects or makes a good faith effort to collect 
any money owned within a reasonable amount of time will the carrier not 
be subject to the non-usage requirements. Carriers that fail to take 
such steps and do not de-enroll subscribers pursuant to the non-usage 
requirements may be subject to enforcement action or withholding of 
support.
3. Rolling Recertification
    362. In the 2015 Lifeline FNPRM, we also sought comment on whether 
we should make any changes to the recertification process as we 
modernize the administration of the Lifeline program. We find that 
requiring Lifeline customers' eligibility to be recertified every 12 
months, as measured from the subscriber's service initiation date, will 
result in administrative efficiencies and avoid imposing undue burdens 
on providers, USAC, or the National Verifier. Previously, Lifeline 
providers were required to annually recertify all subscribers except in 
states where the state Lifeline administrator or other state agency is 
responsible for recertification.'' Recertification was considered 
complete when a carrier had, by December 31, de-enrolled all 
subscribers who did not respond to recertification efforts.
    363. We find that, particularly as the National Verifier is 
launched in multiple states, annually recertifying subscribers on a 
rolling basis, based on the subscriber's service initiation date, will 
prevent the entity responsible for recertification from processing 
recertification and potential de-enrollment procedures for all 
subscribers at the same time. This will make the recertification 
process more manageable and result in a recertification process that 
reflects the amount of time the subscriber has actually been enrolled 
in the Lifeline program. We also expect that this change will enable 
providers and the National Verifier to respond to any customers who 
need assistance in the recertification process without being 
overwhelmed by customer service requests.
    364. Prior to the implementation of the National Verifier in a 
state, to prevent the enrollment of ineligible customers, we require 
providers to conduct an initial eligibility

[[Page 33080]]

determination for every enrolling customer, regardless of whether that 
customer had previously received Lifeline-discounted service from 
another provider. That provider must then recertify the customer's 
eligibility 12 months after the subscriber's service initiation date 
with that provider. However, after the National Verifier has been 
implemented in a state, the National Verifier's eligibility records for 
a subscriber will permit the National Verifier to only recertify the 
subscriber's eligibility every 12 months after the subscriber's first 
initiation of a Lifeline-discounted service. Thus, even if a subscriber 
changes Lifeline providers during the course of the year, the National 
Verifier will only need to recertify eligibility 12 months after the 
subscriber's first service initiation date, and every 12 months 
thereafter. We therefore revise Section 54.410(f) of our rules to 
reflect this change. The rules establishing and related to rolling 
recertification will be effective for all enrollments made beginning 
the later of January 1, 2017 or upon PRA approval. Subscribers enrolled 
on or after such date will be subject to recertification requirements 
at the end of the 12-month period that begins with their service 
initiation date. (Subscribers already enrolled prior to January 1, 2017 
will be subject to rolling recertification based on their current 
service initiation date. We direct USAC to communicate with carriers 
and consumers as necessary to provide information on each subscriber's 
relevant date). For subscribers enrolled prior to January 1, 2017, 
recertification for 2016 will be conducted in accordance with current 
Lifeline practices and require recertification by December 31, 2016. 
Additionally for subscribers enrolled prior to January 1, 2017, rolling 
recertification will begin July 1, 2017. Beginning July 1, 2017, all 
subscribers enrolled prior to January 1, 2017 will need to be 
recertified on a rolling basis based on the subscriber's service 
initiation date. (We recognize that in this interim period subscribers 
will be recertified in a period ranging from six months to 18 months 
from the subscriber's last recertification. This interim period is 
required to effectively transition the program to rolling 
recertification. The period from January 1, 2017 to July 1, 2017 is 
meant to provide the appropriate transition for ETCs and subscribers, 
while preventing immediate recertification of subscribers with service 
initiation dates during those six months. Additionally, the transition 
to rolling recertification for existing subscribers needs to begin 
promptly to maintain program integrity and guard against improper 
payments).
    365. We also revise Section 54.410(f) to clarify that the entity 
responsible for recertifying subscribers must first query the 
appropriate state or federal database to determinate on-going 
eligibility prior to using other means to recertify subscribers. In the 
2012 Lifeline Reform Order, the Commission specifically required ``in 
instances where ongoing eligibility [could] not be determined through 
access to a qualifying database either by the ETC or the state,'' 
service providers could then recertify subscribers using other methods, 
including in person, in writing, by phone, by text message, by email or 
otherwise through the Internet to confirm continued eligibility.'' The 
revised recertification rules reflect the Commission's determination.
    366. Further, we revise Section 54.405(e)(4) to require a 
subscriber be given 60 days to respond to recertification efforts, and 
consistent with our other de-enrollment rules, non-responsive 
subscribers will be de-enrolled within five days following the 
expiration of the 60-day response window. We take this step to ease the 
recertification burden for providers and the National Verifier. 
Expanding the recertification period will allow batching of daily 
subscriber recertification deadlines into more manageable weekly or 
monthly groupings.
    367. Finally, we revise Section 54.405(e)(1) to require de-
enrollment within five business days after the expiration of the 
subscriber's time to demonstrate eligibility. In so doing, we add 
consistency to the various provisions in Section 54.405 related to de-
enrollment due to ineligibility. We also adopt Section 54.405(e)(5) to 
require service providers to de-enroll a subscriber who has requested 
de-enrollment within two business days after making such a request. We 
take this action to ensure that subscriber de-enrollment requests are 
resolved in a timely manner.
4. Publishing Lifeline Subscriber Counts
    368. Discussion. We direct USAC before December 1, 2016 to modify 
its online Lifeline tool to make available to the public information 
about the Lifeline program, such as the total number of subscribers for 
which a provider seeks support for each SAC, including how many 
subscribers are receiving enhanced Tribal support. Although the public 
can already derive the Lifeline subscriber counts by referencing 
information from USAC's Web site and Quarterly Reports, relatively 
simple changes to USAC's systems can make this and other information 
about the Lifeline program far easier to access. Moreover, having USAC 
directly publish subscriber counts increases transparency and continues 
to promote accountability in the program. USAC shall also make 
available information about the number of subscribers receiving support 
for each of the supported services. Commenters also agree that 
publishing the amount of subscribers served by providers will increase 
transparency.
    369. We direct USAC to work with the Bureau and OMD to formulate a 
plan for making available additional Lifeline information consistent 
with the Commission's historical commitment to transparency as well as 
taking into consideration any valid concerns about divulging non-public 
information. USAC should consider how other useful information can be 
made publically available, such as by using the National Verifier. In 
addition, we direct USAC to consider new ways in which states or other 
government entities may be given increased access to the National 
Verifier or NLAD for the purposes of better program administration. 
Before giving such access, USAC should obtain approval from the Bureau.
5. Audits
    370. In this Section, we adopt our proposal to revise Section 
54.420 of our rules requiring all Lifeline providers to undergo an 
audit within their first year of receiving Lifeline disbursements. 
Adopting the revised Section 54.420 will allow the Commission 
flexibility to determine the appropriate and most cost effective time 
to audit entities that are new providers in the Lifeline program.
    371. Discussion. We now modify our rule to delegate to OMD, in its 
role overseeing the USF audit programs, to work with USAC to identify 
those audits of first-year Lifeline providers that will be conducted 
within the one-year deadline and those that will be audited after the 
one-year deadline. Given the three years of experience auditing these 
carriers, we have found that many new providers have not yet had a 
sufficient number of subscribers to draw conclusions regarding 
compliance with the program rules. To be clear, this approach is a 
strengthening of the audit process because it will allow USAC to more 
efficiently direct audit resources to audit providers that have a 
higher risk of non-compliance and/or receive a larger percentage of the 
total Lifeline program disbursements, rather than being required to 
conduct audits that may be of little practical value. Further,

[[Page 33081]]

we do not expect such audit flexibility to result in these entities not 
being audited, and we delegate to OMD, working with USAC, to determine 
the most cost-effective time to audit an entity when it has sufficient 
data to conduct a meaningful audit, to provide OMD with recommendations 
on which first-year service providers would be cost effective to audit 
after their first year, and which service providers should be audited 
after their first year. We direct USAC to provide all first-year 
service providers notice within 30 days of their one-year deadline 
regarding whether the audit will or will not be conducted.
    372. We also believe that the overall audit program should include 
a check on whether the service was provided and whether the service 
provided met the standards articulated in this Order. We delegate to 
OMD working with USAC to include such performance auditing in its 
overall audit plan. We view our audit program as a key factor in 
promoting program integrity and direct USAC working with OMD to 
continue to improve and focus the overall program on providers for whom 
the risk of non-compliance is high and whose non-compliance would have 
a large impact on the overall fund.
6. Universal Consumer Certification, Recertification, and Household 
Worksheet Forms
    373. In this Section we delegate to the Bureau to create uniform, 
standardized Lifeline forms approved by the Office of Management and 
Budget (OMB) for all subscribers receiving a federal Lifeline benefit, 
if it believes that doing so will aid program administration.
    374. Discussion. In this Order, we delegate to the Bureau to 
propose to OMB Lifeline forms for certification, recertification and 
the one-per-household requirement, if it believes that doing so will 
aid program administration. (We also delegate to the Bureau the ability 
to phase out and/or combine forms as needed. With implementation of the 
National Verifier, many forms may need to be adjusted, phased-out, or 
combined). We revise Section 54.410 to reflect the use of certification 
and recertification forms, and one-per-household worksheets for the 
Lifeline program, if such forms are implemented. (Our revisions to the 
rule recognize that certification and recertification forms and one-
per-household worksheets are used by entities enrolling subscribers. 
Currently, such forms are developed by service providers and must 
include the items required by Section 54.410 and the 2012 Lifeline 
FNPRM). We believe that the enormous benefits to the program, such as 
increased understanding and compliance by both subscribers and 
providers, outweigh any concerns with the standardized approach. (While 
we create federal forms by this order, states are free to require 
subscribers to complete additional state forms to assist with state 
programs). If the Bureau moves forward on uniform forms, it may use the 
forms that we sought comment on, displayed on USAC's Web site, as such 
forms contain the information on eligibility and certification, the 
one-per-household requirement, the obligations of the subscriber, that 
should be included at a minimum on these Lifeline forms. We will 
continue to require that subscribers sign the forms under penalty of 
perjury, regardless of whether they are forms created by the service 
providers or by the Bureau. However, we expect that if the Bureau 
adopts forms, any such forms will explain the meaning and import of 
those terms to the subscriber and the consequences of providing false 
and misleading information. We expect that the above-mentioned concepts 
will be contained in any Bureau form and we delegate to the Bureau the 
ability to create wording and formatting that is easily understood by 
the consumer and improves program compliance, if it chooses to adopt 
such forms. We also delegate to the Bureau to amend the forms as 
necessary as changes in the program are made, such as the deployment of 
the National Verifier. (Once deployed, we direct the National Verifier 
to adapt the OMB-approved forms to the methods available to consumers 
to contact the National Verifier, such as paper and electronic 
versions). Recognizing that there may continue to be relevant program 
differences across states and territories, we direct the Bureau to 
account for such differences in any standardized forms, as necessary. 
In this way, we seek to be responsive to some concerns that a uniform 
approach may not fit every situation. We expect that, if the Bureau 
creates standardized forms, the forms will be responsive to evolving 
program needs and that the Bureau can and should propose changes to OMB 
as needed.

I. Delegation to the Bureau

    375. Given the complexities associated with modifying existing 
rules as well as other reforms adopted in this Order, we delegate 
authority to the Wireline Competition Bureau to make any further rule 
revisions as necessary to ensure the reforms adopted in this Order are 
reflected in the rules. This includes correcting any conflicts between 
the rules and this Order. If any such rule changes are warranted, the 
Bureau shall be responsible for such change, but in no event shall such 
change create new or different policy than that articulated by this 
Order. We note that any entity that disagrees with a rule change made 
on delegated authority will have the opportunity to file an Application 
for Review by the full Commission.

IV. Further Report and Order

    376. In the Map Implementation Order, released on February 2, 2016, 
the Wireline Competition Bureau (Bureau) granted a request for 
extension of time for the implementation of the Oklahoma Historical Map 
until June 8, 2016, in order to complete the consultation process with 
Tribal leaders and allow providers time to implement the map and 
appropriately notify customers. In the Map Implementation Order, the 
Bureau specifically emphasized the need to further discuss the status 
of the Cherokee Outlet, and whether it should remain as a ``former 
reservation in Oklahoma'' for purposes of the Lifeline Program. The 
Bureau also released a shapefile containing the boundaries of the 
Cherokee Outlet in order to give potentially affected parties advance 
notice of any potential changes. After completing consultations, and 
upon recommendation from the Bureau as required by the 2015 Lifeline 
FNPRM, we are convinced that the Cherokee Outlet, due to its long 
history of usage by the Cherokee Nation, is properly defined as a 
``former reservation in Oklahoma'' for our purposes of defining areas 
eligible for enhanced Lifeline support. Accordingly, residents of the 
Cherokee Outlet will remain eligible for enhanced Tribal support. The 
Oklahoma Historical Map will become effective on June 8, 2016.

V. Order On Reconsideration

    377. In this Section, we grant petitions filed by GCI, USTelecom, 
TracFone and Sprint asking that we reconsider three rules, adopted in 
the 2012 Lifeline Reform Order, related to the reporting of temporary 
addresses. These rules were put in place to ensure that the often 
mobile Lifeline population can obtain service while protecting the fund 
against waste, fraud and abuse from duplicative support. However, based 
on our experience, we find that the burden of these rules outweighs any 
countervailing benefit. Existing measures, including the robust 
identify verification and checks for duplicative support already built 
into the NLAD that do not rely on the temporary address rules, as well 
as the

[[Page 33082]]

actions we take in this order, including the establishment of the 
National Verifier, provide adequate protections against waste and abuse 
in the absence of the temporary address rules. While Lifeline providers 
may still enroll eligible subscribers using a temporary address, those 
subscribers will no longer be required to certify to the temporary 
address every 90 days and those providers will no longer be required 
recertify the temporary address every 90 days. (We note that this 
temporary address recertification process is separate from subscriber 
recertification of program or income eligibility).
    378. Discussion. On reconsideration, we now eliminate Sec.  
54.410(g) and (d)(3)(v) and the portion of Section 54.405(e)(4) related 
to temporary addresses. As explained by the parties seeking 
reconsideration of this rule, we conclude that these rules impose a 
burden on providers without a significant benefit. While these rules 
were put in place to prevent possible waste, fraud and abuse from 
customers representing a ``small portion of an ETC's Lifeline 
subscriber base,'' experience has shown that, in fact, the other 
subscriber data (e.g. address at time of application, name, last four 
digits of social security number and date of birth) collected by USAC 
has been sufficient to verify subscriber's identity and check for 
duplicative support. Additional protections put in place in this order, 
including the establishment of a National Verifier, further reduce the 
need for these rules. As explained elsewhere in this order, we conclude 
that the elimination of unnecessary and burdensome requirements will 
increase the incentive and likelihood of additional providers entering 
the Lifeline marketplace. We therefore conclude that elimination of 
these rules is in the public interest. We will, however, continue to 
require subscribers to indicate on their certification forms whether 
the address is permanent or temporary. We find that this requirement 
assists the Commission and USAC by providing important demographic 
information about the Lifeline subscriber-base. (USAC data indicates 
that, as of March 2016, almost 6 percent (or approximately 700,000) of 
Lifeline subscribers in the NLAD) have temporary addresses, 
underscoring the critical benefit that Lifeline provides to the most 
vulnerable Americans).

VI. Severability

    379. All of the Lifeline rules that are adopted in this Order are 
designed to work in unison to make telecommunications services more 
affordable to low-income households and to strengthen the efficiency 
and integrity of the program's administration. However, each of the 
separate Lifeline reforms we undertake in this Order serve a particular 
function toward those goals. Therefore, it is our intent that each of 
the rules adopted herein shall be severable. If any of the rules is 
declared invalid or unenforceable for any reason, it is our intent that 
the remaining rules shall remain in full force and effect.

VII. Procedural Matters

A. Final Regulatory Flexibility Analysis

    380. As required by the Regulatory Flexibility Act of 1980 (RFA), 
the Commission has prepared a Final Regulatory Flexibility Analysis 
(FRFA) relating to this Third Report and Order, Further Report and 
Order, and Order on Reconsideration. The FRFA is set forth in in 
section VII.D of this document.

B. Paperwork Reduction Act Analysis

    381. This Third Report and Order, Further Report and Order, and 
Order on Reconsideration contains new information collection 
requirements subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. It 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 will be invited to comment 
on the revised 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, the Commission 
previously sought specific comment on how it might further reduce the 
information collection burden on small business concerns with fewer 
than 25 employees.

C. Congressional Review Act

    382. The Commission will include a copy of this Third Report and 
Order, Further Report and Order, and Order on Reconsideration in a 
report to be sent to Congress and the Government Accountability Office 
(GAO) pursuant to the Congressional Review Act, see 5 U.S.C. 
801(a)(1)(A).

D. Final Regulatory Flexibility Analysis

    383. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Federal Communications Commission (Commission) 
included an Initial Regulatory Flexibility Analysis (IRFA) of the 
possible significant economic impact on a substantial number of small 
entities by the policies and rules proposed in the Lifeline Second 
FNPRM in WC Docket Nos. 11-42, 09-197, 10-90. The Commission sought 
written public comment on the proposals in the Lifeline Second FNPRM, 
including comment on the IRFA. This Final Regulatory Flexibility 
Analysis (FRFA) conforms to the RFA.
1. Need for, and Objectives of, the Final Rules
    384. The Commission is required by section 254 of the 
Communications Act of 1934, as amended, to promulgate rules to 
implement the universal service provisions of section 254. The Lifeline 
program was implemented in 1985 in the wake of the 1984 divestiture of 
AT&T. On May 8, 1997, the Commission adopted rules to reform its system 
of universal service support mechanisms so that universal service is 
preserved and advanced as markets move toward competition. Since the 
2012 Lifeline Reform Order, the Commission has aggressively addressed 
waste, fraud and abuse in the Lifeline program and improved program 
administration and accountability. In this Third Report and Order, 
Further Report and Order, and Order on Reconsideration (Order), we 
recognize the importance of broadband access in today's world. Those 
who have access use the Internet to, among other things, connect with 
family, work, and friends, stay abreast of the news, monitor important 
civic activities, research issues, stay in contact with healthcare 
providers. However, not all American can access the Internet and enjoy 
the benefits of broadband access in today's society. In this Order, we 
therefore take measures to reform the Lifeline program to become part 
of the solution to the Nation's broadband affordability challenge by 
focusing the Lifeline program on broadband and encouraging broadband 
providers to offer supported broadband services that meet specific 
Commission established standards. We also take steps to improve the 
management and design of the Lifeline program by streamlining program 
rules and eliminating outdated obligations with the goal of providing 
incentives for broadband providers to participate and increasing 
meaningful broadband offerings to Lifeline subscribers.
    385. Specifically, in this Order, to create a competitive Lifeline 
broadband program, we take a variety of actions to encourage more 
Lifeline providers to deliver supported broadband services. Most 
significantly, we allow support for robust, standalone fixed and mobile 
broadband services to ensure meaningful levels of connectivity. At the 
same time, we transition the Lifeline program from primarily supporting 
voice services to targeting support at

[[Page 33083]]

modern broadband services. Additionally, to encourage entry of new 
Lifeline providers to supply broadband, we create a streamlined 
Lifeline Broadband Provider designation process, and modernize the 
obligations of broadband providers by reinterpreting parts of the 
statute and granting providers forbearance from parts of the statute in 
order to ensure just and reasonable rates and the protection of 
consumers.
    386. Additionally, in order to ensure that the Lifeline program is 
designed to operate in an efficient, and highly accountable manner with 
the reorientation of the Lifeline program to broadband, we take a 
number of additional actions in this Order to reform the program. Most 
significantly, we set minimum service standards for broadband and 
mobile services to ensure those services meet the needs of consumers; 
create a National Lifeline Eligibility Verifier (National Verifier) to 
transfer the responsibility of making eligibility determinations away 
from Lifeline providers and remove the opportunities for Lifeline 
providers to inappropriately enroll subscribers; streamline the 
criteria for Lifeline program qualification in recognition of the way 
the vast majority of Lifeline subscribers gain entry to the program; 
require Lifeline providers to make available Wi-Fi enabled devices and 
hotspot capable devices when providing devices for use with Lifeline-
supported service; and adopt a budget for the Lifeline program to bring 
the Lifeline program in to alignment with the other three universal 
service fund programs, each of which operates within a budget, and to 
ensure that the program is designed to operate in an efficient, highly 
accountable manner. We also take several other measures to improve the 
efficient administration and accountability of the Lifeline program, 
such as establishing an annual eligibility process, imposing a port 
freeze on Lifeline services, revising the audit procedures, and 
creating standardized Lifeline forms. We believe that these new rules 
and reforms, taken together, will greatly expand the reach of the 
Lifeline program to all consumers and further increase utilization of 
the Lifeline program.
2. Summary of Significant Issues Raised by Public Comments to the IRFA
    387. We received one comment specifically addressing the IRFA from 
the Small Carriers Coalition (Coalition). In the 2015 Lifeline Second 
FNPRM, in order to increase eligible telecommunications carrier (ETC) 
accountability and compliance with the Lifeline rules, we proposed a 
requirement that all company employees and third-party agents 
interfacing with customers receive sufficient training on the Lifeline 
rules, and that such persons receive training annually. The Coalition 
notes that the Commission's analysis of the compliance burden of this 
requirement on small entities was insufficient. Specifically, the 
Coalition asserts that, while the burden of executing a certification 
that appropriate training has been received may be minor, the burden of 
arranging and paying for such training, and requiring employees and 
agents to undergo such training, is much higher. The Coalition asserts 
that the burden of arranging and paying for such training was not 
addressed as well as the burden of requiring a 24-hour customer service 
call center requirement for the sole purpose of de-enrolling Lifeline 
customers. The Coalition recommends that the training requirement be 
eliminated, or, if retained for small carriers, reduced such that only 
one supervisory employee be required to undergo training. The Coalition 
asserts that, by tailoring this requirement, it would more closely 
align the burden of training with the limited public interest benefit 
of requiring training for carriers with few Lifeline customers. The 
Coalition also recommends that the 24-hour customer service requirement 
not be applied to small carriers, because such requirement dwarfs the 
potential public interest benefit.
    388. In this Order, we do not adopt this proposal as a final rule. 
We recognize the additional compliance burden and cost imposed upon 
small entities of this requirement. As an alternative measure to 
increase eligible telecommunications carrier (ETC) accountability and 
compliance with the Lifeline rules, in this Order, we have established 
the National Verifier with its primary function being to verify 
customer eligibility for Lifeline support. The National Verifier will 
also perform a variety of other functions necessary to enroll eligible 
subscribers into the Lifeline program, such as, but not limited to, 
enabling access by authorized users, providing support payments to 
providers, and conducting recertification of subscribers, to add to the 
efficient administration of the Lifeline program. Additionally, we have 
streamlined eligibility for Lifeline support to increase efficiency and 
improve the program for consumers, Lifeline providers, and other 
participants. By relying on highly accountable programs that 
demonstrate limited eligibility fraud, we will reduce the potential of 
waste, fraud, and abuse occurring due to eligibility errors. These 
alternative measures therefore will help ensure compliance with the 
Commission's rules and reduce the potential risk for error when 
interfacing with customers while at the same time limiting any 
additional burden upon small businesses.
3. Response to Comments by the Chief Counsel for Advocacy of the Small 
Business Administration
    389. Pursuant to the Small Business Jobs Act of 2010, which amended 
the RFA, the Commission is required to respond to any comments filed by 
the Chief Counsel of the Small Business Administration (SBA), and to 
provide a detailed statement of any change made to the proposed rule(s) 
as a result of those comments.
    390. The Chief Counsel did not file any comments in response to the 
proposed rule(s) in this proceeding.
4. Description and Estimate of the Number of Small Entities to Which 
the Final May Apply
    391. 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 
28.2 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.''
    392. Small Entities, Small Organizations, Small Governmental 
Jurisdictions. Our actions, over time, may affect small entities that 
are not easily categorized at present. We therefore describe here, at 
the outset, three comprehensive small entity size standards that could 
be directly affected herein. As of 2014, according to the SBA, there 
were 28.2 million small businesses in the U.S., which represented 99.7 
percent of all businesses in the United States.

[[Page 33084]]

Additionally, a ``small organization is generally any not-for-profit 
enterprise which is independently owned and operated and not dominant 
in its field''. Nationwide, as of 2007, there were approximately 
1,621,215 small organizations. Finally, 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 2011 
indicate that there were 90,056 local governmental jurisdictions in the 
United States. We estimate that, of this total, as many as 89,327 
entities may qualify as ``small governmental jurisdictions''. Thus, we 
estimate that most local governmental jurisdictions are small.
a. Wireline Providers
    393. 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 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 employment of 1,000 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. 
Thus under this category and the associated small business size 
standard, the majority of these incumbent local exchange service 
providers can be considered small.
    394. 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 category for this service is the 
category Wired Telecommunications Carriers. Under the category of Wired 
Telecommunications Carriers, such a business is small if it has 1,500 
or fewer employees. Census Bureau data for 2007 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 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.
    395. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for providers of 
interexchange services. The appropriate category for Interexchange 
Carriers is the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census Bureau data for 2007, which now supersede data from 
the 2002 Census, show that there were 3,188 firms in this category that 
operated for the entire year. Of this total, 3,144 had employment of 
999 or fewer, and 44 firms had had employment of 1,000 employees or 
more. Thus under this category and the associated small business size 
standard, the majority of these Interexchange carriers can be 
considered small entities. According to Commission data, 359 companies 
reported that their primary telecommunications service activity was the 
provision of interexchange services. Of these 359 companies, an 
estimated 317 have 1,500 or fewer employees and 42 have more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
interexchange service providers are small entities that may be affected 
by rules adopted pursuant to the Notice.
    396. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
operator service providers. The appropriate category for Operator 
Service Providers 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 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.
    397. 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.
    398. 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.

[[Page 33085]]

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.
    399. 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.
    400. 800 and 800-Like Service Subscribers. (We include all toll-
free number subscribers in this category, including those for 888 
numbers.) 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 category for these 
services is the category Telecommunications Resellers. Under that 
category and corresponding size standard, such a business is small if 
it has 1,500 or fewer employees. Census data for 2007 show that 1,523 
firms provided resale services during that year. Of that number, 1,522 
operated with fewer than 1000 employees and one operated with more than 
1,000. Thus under this category and the associated small business size 
standard, the majority of resellers in this classification can be 
considered small entities. To focus specifically on the number of 
subscribers than on those firms which make subscription service 
available, the most reliable source of information regarding the number 
of these service subscribers appears to be data the Commission collects 
on the 800, 888, 877, and 866 numbers in use. According to our data, 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 affected 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.
b. Wireless Carriers and Service Providers
    401. Wireless Telecommunications Carriers (except Satellite). This 
industry comprises establishments engaged in operating and maintaining 
switching and transmission facilities to provide communications via the 
airwaves. Establishments in this industry have spectrum licenses and 
provide services using that spectrum, such as cellular phone services, 
paging services, wireless Internet access, and wireless video services. 
The appropriate size standard under SBA rules is for the category 
Wireless Telecommunications Carriers. The size standard for that 
category is that a business is small if it has 1,500 or fewer 
employees. For this category, census data for 2007 show that there were 
11,163 establishments that operated for the entire year. Of this total, 
10,791 establishments had employment of 999 or fewer employees and 372 
had employment of 1000 employees or more. (Available census data do not 
provide a more precise estimate of the number of firms that have 
employment of 1,500 or fewer employees; the largest category provided 
is for firms with ``100 employees or more.''). Thus under this category 
and the associated small business size standard, the Commission 
estimates that the majority of wireless telecommunications carriers 
(except satellite) are small entities that may be affected by our 
proposed action.
    402. 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 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.
    403. Satellite Telecommunications Providers. Two economic census 
categories address the satellite industry. The first category has a 
small business size standard of $32.5 million or less in average annual 
receipts, under SBA rules. The second has a size standard of $32.5 
million or less in annual receipts.
    404. 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.
    405. 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

[[Page 33086]]

connections are also included in this industry.'' The SBA has developed 
a small business size standard for All Other Telecommunications, which 
consists of all such firms with gross annual receipts of $ 32.5 million 
or less. 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.
    406. Common Carrier Paging. As noted, since 2007 the Census Bureau 
has placed paging providers within the broad economic census category 
of Wireless Telecommunications Carriers (except Satellite).
    407. In addition, in the Paging Second Report and Order, the 
Commission adopted a size standard for ``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. The SBA has approved this definition. An initial auction 
of Metropolitan Economic Area (``MEA'') licenses was conducted in the 
year 2000. Of the 2,499 licenses auctioned, 985 were sold. Fifty-seven 
companies claiming small business status won 440 licenses. A subsequent 
auction of MEA and Economic Area (``EA'') licenses was held in the year 
2001. Of the 15,514 licenses auctioned, 5,323 were sold. One hundred 
thirty-two companies claiming small business status purchased 3,724 
licenses. A third auction, consisting of 8,874 licenses in each of 175 
EAs and 1,328 licenses in all but three of the 51 MEAs, was held in 
2003. Seventy-seven bidders claiming small or very small business 
status won 2,093 licenses.
    408. Currently, there are approximately 74,000 Common Carrier 
Paging licenses. According to the most recent Trends in Telephone 
Service, 291 carriers reported that they were engaged in the provision 
of ``paging and messaging'' services. Of these, an estimated 289 have 
1,500 or fewer employees and two have more than 1,500 employees. We 
estimate that the majority of common carrier paging providers would 
qualify as small entities under the SBA definition.
    409. 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 2010 Trends 
Report, 413 carriers reported that they were engaged in wireless 
telephony. Of these, an estimated 261 have 1,500 or fewer employees and 
152 have more than 1,500 employees. We have estimated that 261 of these 
are small under the SBA small business size standard.
c. Internet Service Providers
    410. 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 $32.5 million or less.
5. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities
    411. A number of our rule changes will result in additional 
reporting, recordkeeping, or compliance requirements for small 
entities. For all of those rule changes, we have determined that the 
benefit the rule change will bring for the Lifeline program outweighs 
the burden of the increased requirement/s. Other rule changes decrease 
reporting, recordkeeping, or compliance requirements for small 
entities. We have noted the applicable rule changes below impacting 
small entities.
a. Increase in Projected Reporting, Recordkeeping and Other Compliance 
Requirements
    412. Compliance burdens. All of the rules we implement impose some 
compliance burdens on small entities by requiring them to become 
familiar with the new rules to comply with them. For several of the new 
rules, such as the new budget and the revised audit procedures, the 
burden of becoming familiar with the new rule in order to comply with 
it is the only additional burden the rule imposes.
    413. Broadband as a Supported Service. Expanding the Lifeline 
program to support broadband Internet access service (BIAS) at a 
discounted rate by Lifeline providers will increase recordkeeping and 
compliance burdens for small entities since they will now be required 
to revise their business plans and make any necessary IT changes to 
account for the delivery of broadband services and the gradual 
reduction in monthly support for voice-only service. Additionally, 
small entities seeking designation as a Lifeline Broadband Provider 
will also be subject to additional reporting and compliance 
requirements, such as submitting information describing the terms and 
conditions of any BIAS plans offered to Lifeline subscribers. However, 
the benefit of providing a robust, affordable broadband service 
offering to low-income consumers who may not otherwise be able to 
afford and utilize the service outweighs any additional recordkeeping 
or compliance obligations upon small businesses. Moreover, an 
overwhelming majority of commenters support the inclusion of broadband 
in the Lifeline program as broadband access is of critical importance 
for consumers of all incomes.
    414. Minimum Service Standards. Requiring broadband providers 
claiming Lifeline support to certify compliance with the minimum 
service standards and making them subject to the Commission's audit 
authority increases recordkeeping, reporting, and compliance 
requirements for those fixed broadband providers claiming Lifeline 
support. These certification and compliance requirements are necessary, 
however, in order to ensure that Lifeline customers obtain the type of 
robust service which is essential to participate in today's society. 
Additionally, these standards ensure that service offerings will be 
affordable for small entities.
    415. Wi-Fi Enabled Devices. Requiring Lifeline providers who make 
devices available with or without charge for use with a Lifeline-
supported fixed or mobile broadband service to ensure that all such 
devices are Wi-Fi enabled, and requiring Lifeline providers who make 
devices available with or without charge for use with a Lifeline-
supported mobile broadband service to also offer devices that are 
capable of being used as a hotspot, will increase the compliance and 
reporting burdens upon small businesses. This requirement will require 
businesses to offer certain products that they may not have otherwise 
provided to consumers and

[[Page 33087]]

certify to such compliance consistent with our rules. Conditioning 
support for Lifeline services in this way, however, will increase the 
value of the supported connection so that Lifeline consumers can 
regularly and reliably access the Internet. Additionally, in order to 
reduce the immediate burden upon small businesses, we have provided for 
a transition period for complying with this requirement.
    416. De-enrollment. In revising our rules regarding de-enrollment 
to add consistency and clarity, we now require de-enrollment within 
five business days after the expiration of the subscriber's time to 
demonstrate eligibility. This change may increase the compliance burden 
on small entities where previously their systems did not have to track 
the timeframe for de-enrollment. This burden, however, is outweighed by 
the benefit this rule change will bring to the Lifeline program by 
ensuring that subscriber de-enrollment requests are resolved on a 
timely basis.
b. Decrease in Projected Reporting, Recordkeeping and Other Compliance 
Requirements
    417. Annual Recertification. Requiring Lifeline providers to 
annually recertify all subscribers on a rolling basis, based on the 
subscriber's date of enrollments, decreases the burden of the 
recordkeeping requirement for small businesses by eliminating the need 
to process recertification and potential de-enrollment procedures for 
all subscribers at the same time. Thus, making the recertification 
process more manageable for small businesses and enable providers (and 
the National Verifier) to respond to any customers who need assistance 
in the recertification process without being overwhelmed by customer 
service requests.
    418. Eliminating the Reporting of Temporary Addresses. Eliminating 
certain sections of the Commission's rules related to requiring service 
providers to recertify the temporary addresses of their subscribers 
will reduce reporting and recordkeeping burden upon small entities. The 
elimination of these unnecessary and burdensome requirements should 
also increase the incentive and likelihood of additional small 
businesses entering the Lifeline marketplace.
    419. National Lifeline Eligibility Verifier. The establishment of a 
National Verifier to make eligibility determinations and perform a 
variety of other functions necessary to enroll eligible subscribers 
into the Lifeline Program will lessen the recordkeeping and compliance 
burden on small entities by relieving them of the obligation to conduct 
eligibility determinations. Further, the establishment of the National 
Verifier will, among other things, help to not only lower costs to the 
Fund but also to Lifeline providers, including small businesses, 
through increasing administrative efficiencies.
    420. Streamlining Lifeline Eligibility. Streamlining eligibility 
for Lifeline support by eliminating certain programs from the default 
federal assistance eligibility and removing income-based eligibility 
and state-specified eligibility criteria as avenues to access Lifeline 
support will reduce the recordkeeping burden upon small entities to 
make eligibility determinations, and increase efficiency and improve 
the Lifeline program for not only consumers but also providers.
    421. Program Audits. Allowing the Office of Managing Director (OMD) 
to determine if a Lifeline provider should be audited within the first 
year of receiving Lifeline benefits in the state in which it was 
granted ETC status, rather than requiring all first-year Lifeline 
providers to undergo an audit within the first year of receiving 
Lifeline benefits, will minimize the burden on a substantial number of 
small entities within the first year of receiving Lifeline benefits to 
respond to requests for information as part of an audit. This 
requirement, while reducing the number of audits conducted within the 
first year of receiving Lifeline benefits, nonetheless, is essential in 
promoting program integrity and ensuring compliance with the 
Commission's rules.
    422. Universal FCC Forms. The implementation of standardized FCC 
Forms that all ETCs, where applicable, must use in order to certify a 
consumers' eligibility for Lifeline benefits and the one-per-household 
requirements should decrease recordkeeping and compliance burdens upon 
small entities by having the Commission develop Lifeline forms for the 
use by providers and subscribers. Ultimately, this standardized 
approach will increase overall compliance with the Commission's rules 
and facilitate administration of the Lifeline program.
6. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    423. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed 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 and 
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 such small 
entities.''
    424. This rulemaking could impose minimal additional burdens on 
small entities. We considered alternatives to the rulemaking changes 
that increase projected reporting, recordkeeping and other compliance 
requirements for small entities.
a. Alternatives Permitted
    425. Lifeline Obligations for ETCs (Lifeline Voice Service 
Obligation). We grant a conditional forbearance from the Lifeline voice 
service obligation for existing ETCs that are not Lifeline-only ETCs.
    426. Lifeline Obligations for ETCs (Lifeline Broadband Service 
Obligation). We also grant a forbearance to Lifeline-only ETCs from the 
requirement to offer BIAS to allow such ETCS to solely offer voice 
service. Further, we grant a forbearance to ETCs that are not Lifeline-
only from the requirement to offer Lifeline-BIAS to allow such ETCs to 
solely offer voice service in the Lifeline program.
    427. While the above forbearances could have a significant impact 
on small entities insofar as it would make this conditional forbearance 
theoretically available to many small entities (all rate-of-return 
incumbent local exchange carriers (ILECs), for instance), it would be a 
benefit to small entities, not a burden. However, it is unclear how 
many small entities (vs. large entities like price cap ILECs) actually 
will take advantage of the forbearances provided.
b. Alternatives Considered and Rejected
    428. Minimum service standards (Fixed Broadband). The best source 
of subscriber data to obtain minimum service standards for fixed 
broadband is the FCC Form 477. Although there were other proposed 
methods provided by commenters, such as specific numeric thresholds and 
existing Commission testing mechanisms, providers are already required 
to report extensively on their offerings on the FCC Form 477 twice a 
year; therefore, it is the less burdensome method to acquire data to 
set and regularly update the minimum service standards for fixed 
broadband speeds.

[[Page 33088]]

    429. Minimum service standards (Mobile Broadband). The best source 
of data to set and update minimum service standards for mobile 
broadband data usage is data set forth in the Commission's annual 
Mobile Competition Report. Although a commenter proposed a method 
utilizing a numeric threshold, this report is updated annually with 
mobile subscriber data; therefore, it is the less burdensome method to 
calculate and regularly update the mobile data usage level for mobile 
broadband standards.
    430. Report to Congress: The Commission will send a copy of this 
Third Report and Order, Further Report and Order, and Order on 
Reconsideration, including this FRFA, in a report to be sent to 
Congress pursuant to the SBREFA. In addition, the Commission will send 
a copy of this Third Report and Order, Further Report and Order, and 
Order on Reconsideration, including the FRFA, to the Chief Counsel for 
Advocacy of the SBA. A copy of the Third Report and Order, Further 
Report and Order, and Order on Reconsideration, and the FRFA (or 
summaries thereof) will also be published in the Federal Register.

VIII. Ordering Clauses

    431. Accordingly, it is ordered, that pursuant to the authority 
contained in sections 1 through 4, 201 through 205, 254, 303(r), and 
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151 
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of 
the Telecommunications Act of 1996, 47 U.S.C. 1302, this Third Report 
and Order, Further Report and Order, and Order on Reconsideration is 
adopted effective June 23, 2016, except to the extent provided herein 
and expressly addressed below.
    432. It is further ordered, that pursuant to the authority 
contained in Sections 1 through 4, 201 through 205, 254, 303(r), and 
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151 
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of 
the Telecommunications Act of 1996, 47 U.S.C. 1302, part 54 of the 
Commission's rules, 47 CFR part 54, is amended, and such rule 
amendments to Sections 54.201, 54.400, and 54.423 shall be effective 30 
days after announcement in the Federal Register of OMB approval of the 
subject information collection requirements or December 1, 2016, 
whichever is later.
    433. It is further ordered that, pursuant to the authority 
contained in Sections 1 through 4, 201 through 205, 254, 303(r), and 
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151 
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of 
the Telecommunications Act of 1996, 47 U.S.C. 1302, part 54 of the 
Commission's rules, 47 CFR part 54, that the rule amendments to 
Sections 54.202(a)(6), (d), and (e) and 54.205(c) are subject to the 
PRA and will become effective immediately upon announcement in the 
Federal Register of OMB approval of the subject information collection 
requirements.
    434. It is further ordered that, pursuant to the authority 
contained in Sections 1 through 4, 201 through 205, 254, 303(r), and 
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151 
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of 
the Telecommunications Act of 1996, 47 U.S.C. 1302, part 54 of the 
Commission's rules, 47 CFR part 54, that the rule amendments to 
Sec. Sec.  54.101, 54.401(a)(2), (b), (c), and (f), 54.403(a), 
54.405(e)(1) and (e)(3) through (5), 54.407(a), (c)(2), and (d), 
54.408, 54.409(a)(2), 54.410(b) through (e) and (g) through (h), 
54.411, 54.416(a)(3), 54.420(b), and 54.422(b)(3) are subject to the 
PRA and will become effective 60 days after announcement in the Federal 
Register of OMB approval of the subject information collection 
requirements or December 1, 2016, whichever is later.
    435. It is further ordered that, pursuant to the authority 
contained in sections 1 through 4, 201 through 205, 254, 303(r), and 
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151 
through 154, 201 through 205, 254, 303(r), and 403, and Section 706 of 
the Telecommunications Act of 1996, 47 U.S.C. 1302, part 54 of the 
Commission's rules, 47 CFR part 54, that the rule amendment to Sec.  
54.410(f) is subject to the PRA and will become effective 60 days after 
announcement in the Federal Register of OMB approval of the subject 
information collection requirements or January 1, 2017, whichever is 
later.
    436. It is further ordered that, pursuant to the authority 
contained in Sections 1 through 5 and 254 of the Communications Act of 
1934, as amended, 47 U.S.C. 151 through 155 and 254, and Sec.  1.429 of 
the Commission's rules, 47 CFR 1.429, the Petitions for Reconsideration 
filed by GCI on April 2, 2012, Sprint Nextel on April 2, 2012, and the 
Petitions for Reconsideration and Clarification filed by TracFone on 
April 2, 2012 and USTelecom on April 2, 2012 are granted.
    437. It is further ordered that the Commission shall send a copy of 
this Third Report and Order, Further Report and Order and Order on 
Reconsideration to Congress and to the Government Accountability Office 
pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
    438. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of the Third Report and Order, Further Report and Order, and Order 
on Reconsideration, 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 recordkeeping 
requirements, Telecommunications, Telephone.


Federal Communications Commission.
Gloria J. Miles,
Federal Register Liaison Officer, Office of the Secretary.

Final Rules

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

PART 54--UNIVERSAL SERVICE

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

    Authority:  Section 1, 4(i), 5, 201, 205, 214, 219, 220, 254, 
303(r), and 403 of the Communications Act of 1934, as amended, and 
section 706 of the Communications Act of 1996, as amended; 47 U.S.C. 
151, 154(i), 155, 201, 205, 214, 219, 220, 254, 303(r), 403, and 
1302 unless otherwise noted.


0
2. Revise Sec.  54.101 to read as follows:


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

    (a) Services designated for support. Voice telephony services and 
broadband service shall be supported by federal universal service 
support mechanisms.
    (1) 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

[[Page 33089]]

limitation services to qualifying low-income consumers as provided in 
subpart E of this part.
    (2) Eligible broadband Internet access services must provide the 
capability to transmit data to and receive data by wire or radio from 
all or substantially all Internet endpoints, including any capabilities 
that are incidental to and enable the operation of the communications 
service, but excluding dial-up service.
    (b) An eligible telecommunications carrier eligible to receive 
high-cost support must offer voice telephony service as set forth in 
paragraph (a)(1) of this section in order to receive federal universal 
service support.
    (c) An eligible telecommunications carrier (ETC) subject to a high-
cost public interest obligation to offer broadband Internet access 
services and not receiving Phase I frozen high-cost support must offer 
broadband services as set forth in paragraph (a)(2) of this section 
within the areas where it receives high-cost support consistent with 
the obligations set forth in this part and subparts D, K, L and M of 
this part.
    (d) Any ETC must comply with subpart E of this part.

0
3. Amend Sec.  54.201 by adding paragraph (j) to read as follows:


Sec.  54.201  Definition of eligible telecommunications carriers, 
generally.

* * * * *
    (j) A state commission shall not designate a common carrier as a 
Lifeline Broadband Provider eligible telecommunications carrier.

0
4. Amend Sec.  54.202 by adding paragraph (a)(6) and adding paragraphs 
(d) and (e) to read as follows:


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

    (a) * * *
    (6) 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 broadband Internet access service plans offered to 
Lifeline subscribers, including details on the speeds offered, data 
usage allotments, additional charges for particular uses, if any, 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.
* * * * *
    (d) A common carrier seeking designation as a Lifeline Broadband 
Provider eligible telecommunications carrier must meet the requirements 
of paragraph (a) of this section. The Commission should process such 
petitions for designation as follows:
    (1) If the petitioning common carrier has offered broadband 
Internet access service to the public for at least two years before the 
date of the filing and serves at least 1,000 non-Lifeline customers 
with voice telephony and/or broadband Internet access service as of the 
date of the filing, the common carrier's petition for designation as a 
Lifeline Broadband Provider eligible telecommunications carrier shall 
be deemed granted within 60 days of the submission of a completed 
filing unless the Commission notifies the common carrier that the grant 
will not be automatically effective.
    (2) If the petitioning common carrier provides service on Tribal 
lands and is a facilities-based provider more than 50 percent owned by 
one or more federally recognized Tribal Nations or Tribal consortia and 
actually controlled by one or more federally recognized Tribal Nations 
or Tribal consortia, the common carrier's petition for designation as a 
Lifeline Broadband Provider eligible telecommunications carrier shall 
be deemed granted within 60 days of the submission of a completed 
filing unless the Commission notifies the common carrier that the grant 
will not be automatically effective.
    (3) If the petitioning common carrier does not qualify under 
paragraph (d)(1) or (2) of this section, the common carrier's petition 
for designation as a Lifeline Broadband Provider eligible 
telecommunications carrier shall be acted upon within six months of the 
submission of a completed filing.
    (e) A provider designated as a Lifeline Broadband Provider (LBP) 
may obtain designation as an LBP in additional service areas by 
submitting to the Commission a request identifying the service areas in 
which the LBP plans to offer Lifeline-supported service and a 
certification that there has been no material change to the information 
submitted in the petition for which the LBP received designation as an 
LBP. Such a request shall be deemed granted five business days after it 
is submitted to the Commission, unless the Commission notifies the 
applicant that the grant will not be automatically effective.

0
5. Amend Sec.  54.205 by adding paragraph (c) as follows:


Sec.  54.205  Relinquishment of universal service.

* * * * *
    (c) In the case of a Lifeline Broadband Provider eligible 
telecommunications carrier, a Lifeline Broadband Provider's notice of 
relinquishment shall be deemed granted by the Commission 60 days after 
the notice is filed, unless the Commission notifies the Lifeline 
Broadband Provider that the relinquishment will not be automatically 
effective. This paragraph (c) shall not apply to Lifeline Broadband 
Providers that also receive high-cost universal service support.

0
6. Amend Sec.  54.400 by revising paragraphs (f) and (j) and adding 
paragraphs (l) through (o) to read as follows:


Sec.  54.400  Terms and definitions.

* * * * *
    (f) Income. ``Income'' means gross income as defined under section 
61 of the Internal Revenue Code, 26 U.S.C. 61, for all members of the 
household. This means all income actually received by all members of 
the household from whatever source derived, unless specifically 
excluded by the Internal Revenue Code, Part III of Title 26, 26 U.S.C. 
101 et seq.
* * * * *
    (j) Qualifying assistance program. A ``qualifying assistance 
program'' means any of the federal or Tribal assistance programs the 
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; Veterans and Survivors Pension Benefit; 
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).
* * * * *
    (l) Broadband Internet access service. ``Broadband Internet access 
service'' is defined as a mass-market retail service by wire or radio 
that provides the capability to transmit data to and receive data from 
all or substantially all Internet endpoints, including any capabilities 
that are incidental to and enable the operation of the communications 
service, but excluding dial-up service.
    (m) Voice telephony service. ``Voice telephony service'' is defined 
as voice grade access to the public switched

[[Page 33090]]

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.
    (n) Supported services. Voice Telephony services and broadband 
Internet access services are supported services for the Lifeline 
program.
    (o) National Lifeline Eligibility Verifier. The ``National Lifeline 
Eligibility Verifier'' or ``National Verifier'' is an electronic and 
manual system with associated functions, processes, policies and 
procedures, to facilitate the determination of consumer eligibility for 
the Lifeline program, as directed by the Commission.

0
7. Amend Sec.  54.401 by revising paragraphs (a)(2) and (b) and 
paragraph (c) introductory text and adding paragraph (f) to read as 
follows:


Sec.  54.401  Lifeline defined.

    (a) * * *
    (2) That provides qualifying low-income consumers with voice 
telephony service or broadband Internet access service as defined in 
Sec.  54.400. 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 with the minimum service levels set forth in Sec.  54.408 that 
includes fixed or mobile voice telephony service, broadband Internet 
access service, or a bundle of broadband Internet access service and 
fixed or mobile voice telephony service; and plans that include 
optional calling features such as, but not limited to, caller 
identification, call waiting, voicemail, and three-way calling.
    (1) Eligible telecommunications carriers may permit qualifying low-
income consumers to apply their Lifeline discount to family shared data 
plans.
    (2) Eligible telecommunications carriers may allow qualifying low-
income consumers to apply Lifeline discounts to any residential service 
plan that includes voice telephony service without qualifying broadband 
Internet access service prior to December 1, 2021.
    (3) Beginning December 1, 2016, eligible telecommunications 
carriers must provide the minimum service levels for each offering of 
mobile voice service as defined in Sec.  54.408.
    (4) Beginning December 1, 2021, eligible telecommunications 
carriers must provide the minimum service levels for broadband Internet 
access service in every Lifeline offering.
    (c) Eligible telecommunications carriers may not collect a service 
deposit in order to initiate Lifeline for voice-only service plans 
that:
* * * * *
    (f) Eligible telecommunications carriers may aggregate eligible 
subscribers' benefits to provide a collective service to a group of 
subscribers, provided that each qualifying low-income consumer 
subscribed to the collective service receives residential service that 
meets the requirements of paragraph (a) of this section and Sec.  
54.408.

0
8. Amend Sec.  54.403 by revising paragraph (a)(1), redesignating 
paragraph (a)(2) as paragraph (a)(3), adding a new paragraph (a)(2), 
removing and reserving paragraph (b)(2), and removing paragraph (c) to 
read as follows:


Sec.  54.403  Lifeline support amount.

    (a) * * *
    (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, except as provided in paragraph (a)(2) of this 
section, 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) For a Lifeline provider offering either standalone voice 
service, subject to the minimum service standards set forth in Sec.  
54.408, or voice service with broadband below the minimum standards set 
forth in Sec.  54.408, the support levels will be as follows:
    (i) Until December 1, 2019, the support amount will be $9.25 per 
month.
    (ii) From December 1, 2019 until November 30, 2020, the support 
amount will be $7.25 per month.
    (iii) From December 1, 2020 until November 30, 2021, the support 
amount will be $5.25 per month.
    (iv) On December 1, 2021, standalone voice service, or voice 
service not bundled with broadband which meets the minimum standards 
set forth in Sec.  54.408, will not be eligible for Lifeline support 
unless the Commission has previously determined otherwise.
    (v) Notwithstanding paragraph (a)(2)(iv) of this section, on 
December 1, 2021, the support amount for standalone voice service, or 
voice service not bundled with broadband which meets the minimum 
standards set forth in Sec.  54.408, provided by a provider that is the 
only Lifeline provider in a Census block will be the support amount 
specified in paragraph (a)(2)(iii) of this section.
* * * * *

0
9. Amend Sec.  54.405 by revising paragraphs (e)(1), (3), and (4) and 
adding paragraph (e)(5) to read as follows:


Sec.  54.405  Carrier obligation to offer Lifeline.

* * * * *
    (e) * * *
    (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 de-enroll any 
subscriber who fails to demonstrate eligibility within five business 
days after the expiration of the subscriber's time to respond. A 
carrier

[[Page 33091]]

providing Lifeline service in a state that has dispute resolution 
procedures applicable to Lifeline termination must comply with the 
applicable state requirements.
* * * * *
    (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 30 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 15 days' notice, 
using clear, easily understood language, that the subscriber's failure 
to use the Lifeline service within the 15-day notice period will result 
in service termination for non-usage under this paragraph. 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); or who fails to 
provide the annual one-per-household re-certifications as required by 
Sec.  54.410(f). 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 will trigger de-enrollment. 
A subscriber must be given 60 days to respond to recertification 
efforts. 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.
    (5) De-enrollment requested by subscriber. If an eligible 
telecommunications carrier receives a request from a subscriber to de-
enroll, it must de-enroll the subscriber within two business days after 
the request.

0
10. Amend Sec.  54.407 by revising paragraphs (a), (c)(2), and (d) 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 customers it serves directly 
as of the first day of the month. After the National Verifier is 
deployed in a state, reimbursement shall be provided to an eligible 
telecommunications carrier based on the number of actual qualifying 
low-income customers it serves directly as of the first day of the 
month found in the National Verifier.
* * * * *
    (c) * * *
    (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 30 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 or usage of data;
    (ii) Purchase of minutes or data 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;
    (iv) Responding to direct contact from the eligible communications 
carrier and confirming that he or she wants to continue receiving 
Lifeline service; or
    (v) Sending a text message.
    (d) In order to receive universal service support reimbursement, an 
officer of each eligible telecommunications carrier must certify, as 
part of each request for reimbursement, that:
    (1) The eligible telecommunications carrier is in compliance with 
all of the rules in this subpart; and
    (2) The eligible telecommunications carrier has obtained valid 
certification and recertification forms to the extent required under 
this subpart for each of the subscribers for whom it is seeking 
reimbursement.
* * * * *

0
11. Add Sec.  54.408 to read as follows:


Sec.  54.408  Minimum service standards.

    (a) As used in this subpart, with the following exception of 
paragraph (a)(2) of this section, a minimum service standard is:
    (1) The level of service which an eligible telecommunications 
carrier must provide to an end user in order to receive the Lifeline 
support amount.
    (2) The minimum service standard for mobile broadband speed, as 
described in paragraph (b)(2)(i) of this section, is the level of 
service which an eligible telecommunications carrier must both 
advertise and provide to an end user.
    (b) Minimum service standards for Lifeline supported services will 
take effect on December 1, 2016. The minimum service standards set 
forth below are subject to the conditions in Sec.  54.401. The initial 
minimum service standards, as set forth in paragraphs (b)(1) through 
(3) of this section, will be subject to the updating mechanisms 
described in paragraph (c) of this section.
    (1) Fixed broadband will have minimum service standards for speed 
and data usage allowance, subject to the exceptions in paragraph (d) of 
this section.
    (i) The minimum service standard for fixed broadband speed will be 
10 Megabits per second downstream/1 Megabit per second upstream.
    (ii) The minimum service standard for fixed broadband data usage 
allowance will be 150 gigabytes per month.
    (2) Mobile broadband will have minimum service standards for speed 
and data usage allowance.
    (i) The minimum service standard for mobile broadband speed will be 
3G.
    (ii) The minimum service standard for mobile broadband data usage 
allowance will be:
    (A) From December 1, 2016 until November 30, 2017, 500 megabytes 
per month;
    (B) From December 1, 2017, until November 30, 2018, 1 gigabyte per 
month;
    (C) From December 1, 2018 until November 30, 2019, 2 gigabytes per 
month; and
    (D) On and after December 1, 2019, the minimum standard will be 
calculated using the mechanism set forth in paragraphs (c)(2)(ii)(A) 
through (D) of this section. If the data listed in paragraphs 
(c)(2)(ii)(A) through (D) do not meet the criteria set forth in 
paragraph (c)(2)(iii) of this section, then the updating mechanism in 
paragraph (c)(2)(iii) will be used instead.
    (3) The minimum service standard for mobile voice service will be:
    (i) From December 1, 2016, until November 30, 2017, 500 minutes;
    (ii) From December 1, 2017, until November 30, 2018, 750 minutes; 
and

[[Page 33092]]

    (iii) On and after December 1, 2018, the minimum standard will be 
1000 minutes.
    (c) Minimum service standards will be updated using the following 
mechanisms:
    (1) Fixed broadband will have minimum service standards for speed 
and data usage allowance. The standards will updated as follows:
    (i) The standard for fixed broadband speed will be updated on an 
annual basis. The standard will be set at the 30th percentile, rounded 
up to the nearest Megabit-per-second integer, of subscribed fixed 
broadband downstream and upstream speeds. The 30th percentile will be 
determined by analyzing FCC Form 477 Data. The new standard will be 
published in a Public Notice issued by the Wireline Competition Bureau 
on or before July 31, which will give the new minimum standard for the 
upcoming year. In the event that the Bureau does not release a Public 
Notice, or the data are older than 18 months, the minimum standard will 
be the greater of:
    (A) The current minimum standard; or
    (B) The Connect America Fund minimum speed standard for rate-of-
return fixed broadband providers, as set forth in 47 CFR 54.308(a).
    (ii) The standard for fixed broadband data usage allowance will be 
updated on an annual basis. The new standard will be published in a 
Public Notice issued by the Wireline Competition Bureau on or before 
July 31, which will give the new minimum standard for the upcoming 
year. The updated standard will be the greater of:
    (A) An amount the Wireline Competition Bureau deems appropriate, 
based on what a substantial majority of American consumers already 
subscribe to, after analyzing Urban Rate Survey data and other relevant 
data; or
    (B) The minimum standard for data usage allowance for rate-of-
return fixed broadband providers set in the Connect America Fund.
    (2) Mobile broadband will have minimum service standards for speed 
and capacity. The standards will be updated as follows:
    (i) The standard for mobile broadband speed will be updated when, 
after analyzing relevant data, including the FCC Form 477 data, the 
Wireline Competition Bureau determines such an adjustment is necessary. 
If the standard for mobile broadband speed is updated, the new standard 
will be published in a Public Notice issued by the Wireline Competition 
Bureau.
    (ii) The standard for mobile broadband capacity will be updated on 
an annual basis. The standard will be determined by:
    (A) Dividing the total number of mobile-cellular subscriptions in 
the United States, as reported in the Mobile Competition Report by the 
total number of American households, as determined by the U.S. Census 
Bureau, in order to determine the number of mobile-cellular 
subscriptions per American household. This number will be rounded to 
the hundredths place and then multiplied by;
    (B) The percentage of Americans who own a smartphone, according to 
the Commission's annual Mobile Competition Report. This number will be 
rounded to the hundredths place and then multiplied by;
    (C) The average data used per mobile smartphone subscriber, as 
reported by the Commission in its annual Mobile Competition Report. 
This number will be rounded to the hundredths place and then multiplied 
by;
    (D) Seventy (70) percent. The result will then be rounded up to the 
nearest 250 MB interval to provide the new monthly minimum service 
standard for the mobile broadband data usage allowance.
    (iii) If the Wireline Competition Bureau does not release a Public 
Notice giving new minimum standards for mobile broadband capacity on or 
before July 31, or if the necessary data needed to calculate the new 
minimum standard are older than 18 months, the data usage allowance 
will be updated by multiplying the current data usage allowance by the 
percentage of the year-over-year change in average mobile data usage 
per smartphone user, as reported in the Mobile Competition Report. That 
amount will be rounded up to the nearest 250 MB.
    (d) Exception for certain fixed broadband providers. Subject to the 
limitations in paragraphs (d)(1) through (4) of this section, the 
Lifeline discount may be applied for fixed broadband service that does 
not meet the minimum standards set forth in paragraph (b)(1) of this 
section. If the provider, in a given area:
    (1) Does not offer any fixed broadband service that meets our 
minimum service standards set forth in paragraph (b)(1) of this 
section; but
    (2) Offers a fixed broadband service of at least 4 Mbps downstream/
1 Mbps upstream in that given area; then,
    (3) In that given area, a fixed broadband provider may receive 
Lifeline funds for the purchase of its highest performing generally 
available residential offering, lexicographically ranked by:
    (i) Download bandwidth;
    (ii) Upload bandwidth; and
    (iii) Usage allowance.
    (4) A fixed broadband provider claiming Lifeline support under this 
section will certify its compliance with this section's requirements 
and will be subject to the Commission's audit authority.
    (e) Except as provided in paragraph (d) of this section, eligible 
telecommunications carriers shall not apply the Lifeline discount to 
offerings that do not meet the minimum service standards.
    (f) Equipment requirement. (1) Any fixed or mobile broadband 
provider, which provides devices to its consumers, must ensure that all 
such devices provided to a consumer are Wi-Fi enabled.
    (2) A provider may not institute an additional or separate 
tethering charge for any mobile data usage that is below the minimum 
service standard set forth in paragraph (b)(2) of this section.
    (3) Any mobile broadband provider which provides devices to its 
consumers must offer at least one device that is capable of being used 
as a hotspot. This requirement will change as follows:
    (i) From December 1, 2017 to November 30, 2018, a provider that 
offers devices must ensure that at least 15 percent of such devices are 
capable of being used as a hotspot.
    (ii) From December 1, 2018 to November 30, 2019, a provider that 
offers devices must ensure that at least 20 percent of such devices are 
capable of being used as a hotspot.
    (iii) From December 1, 2019 to November 30, 2020, a provider that 
offers devices must ensure that at least 25 percent of such devices are 
capable of being used as a hotspot.
    (iv) From December 1, 2020 to November 30, 2021, a provider that 
offers devices must ensure that at least 35 percent of such devices are 
capable of being used as a hotspot.
    (v) From December 1, 2021 to November 30, 2022, a provider that 
offers devices must ensure that at least 45 percent of such devices are 
capable of being used as a hotspot.
    (vi) From December 1, 2022 to November 30, 2023, a provider that 
offers devices must ensure that at least 55 percent of such devices are 
capable of being used as a hotspot.
    (vii) From December 1, 2023 to November 30, 2024, a provider that 
offers devices must ensure that at least 65 percent of such devices are 
capable of being used as a hotspot.
    (viii) On December 1, 2024, a provider that offers devices must 
ensure that at least 75 percent of such devices are capable of being 
used as a hotspot.

[[Page 33093]]

0
12. Amend Sec.  54.409 by revising paragraph (a)(2) and removing 
paragraph (a)(3) to read as follows:


Sec.  54.409  Consumer qualification for Lifeline.

    (a) * * *
    (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; or Veterans and Survivors Pension Benefit.
* * * * *
0
13. Amend Sec.  54.410 by
0
a. Revising paragraphs (b)(1) introductory text, (b)(1)(i)(B), 
(b)(1)(ii), (b)(2) introductory text, (b)(2)(i), (c)(1) introductory 
text, (c)(1)(ii), (c)(2) introductory text, (c)(2)(i), (d) introductory 
text, (d)(1) introductory text, (d)(2) introductory text, and (d)(3) 
introductory text;
0
b. Removing paragraph (d)(3)(v);
0
c. Redesignating paragraphs (d)(3)(vi) through (ix) as paragraphs 
(d)(3)(v) through (viii);
0
d. Revising paragraphs (e), (f)(1), and (f)(2)(ii) and (iii);
0
e. Adding paragraph (f)(2)(iv);
0
f. Revising paragraphs (f)(3) introductory text, (f)(3)(ii) and (iii), 
(f)(4) and (5), and (g); and
0
g. Adding paragraph (h).
    The revisions and additions read as follows:


Sec.  54.410  Subscriber eligibility determination and certification.

* * * * *
    (b) * * *
    (1) Except where the National Verifier, 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 using the income-based 
eligibility criteria provided for in Sec.  54.409(a)(1) an eligible 
telecommunications carrier:
    (i) * * *
    (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). 
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 securely retain copies of documentation demonstrating a 
prospective subscriber's income-based eligibility for Lifeline 
consistent with Sec.  54.417, except to the extent such documentation 
is retained by National Verifier.
    (2) Where the National Verifier, 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 National Verifier, 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); and
* * * * *
    (c) * * *
    (1) Except in states where the National Verifier, 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) or (b), an 
eligible telecommunications carrier:
* * * * *
    (ii) Must securely retain copies of the documentation demonstrating 
a subscriber's program-based eligibility for Lifeline, consistent with 
Sec.  54.417, except to the extent such documentation is retained by 
the National Verifier.
    (2) Where the National Verifier, 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(a)(2) or (b), an eligible 
telecommunications carrier must not seek reimbursement for providing 
Lifeline to a subscriber unless the carrier has received from the 
National Verifier, state Lifeline administrator or other state agency:
    (i) Notice that the subscriber meets the program-based eligibility 
criteria set forth in Sec.  54.409(a)(2) or (b); and
* * * * *
    (d) Eligibility certification form. 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 provide the information in paragraphs (d)(1) 
through (3) of this section in clear, easily understood language. If a 
Federal eligibility certification form is available, entities enrolling 
subscribers must use such form to enroll a qualifying low-income 
consumer into the Lifeline program.
    (1) The form provided by the entity enrolling subscribers must 
provide the information in paragraphs (d)(1)(i) through (vi) of this 
section:
* * * * *
    (2) The form provided by the entity enrolling subscribers must 
require each prospective subscriber to provide the information in 
paragraphs (d)(2)(i) through (viii) of this section:
* * * * *
    (3) The form provided by the entity enrolling subscribers shall 
require each prospective subscriber to initial his or her 
acknowledgement of each of the certifications in paragraphs (d)(3)(i) 
through (viii) of this section individually and under penalty of 
perjury:
* * * * *
    (e) The National Verifier, 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 National Verifier, state Lifeline administrator 
or other state agency for that carrier's subscribers.
    (f) * * *
    (1) All eligible telecommunications carriers must re-certify all 
subscribers 12 months after the subscriber's service initiation date 
and every 12 months thereafter, except for subscribers in states where 
the National Verifier, state Lifeline administrator, or other state 
agency is responsible for the annual re-certification of subscribers' 
Lifeline eligibility.
    (2) * * *

[[Page 33094]]

    (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.
    (iii) If the subscriber's program-based or income-based eligibility 
for Lifeline cannot be determined by accessing one or more state 
databases containing information regarding enrollment in qualifying 
assistance programs, then the National Verifier, state Lifeline 
administrator, or state agency may obtain a signed certification from 
the subscriber on a form that meets the certification requirements in 
paragraph (d) of this section. If a Federal eligibility recertification 
form is available, entities enrolling subscribers must use such form to 
re-certify a qualifying low-income consumer.
    (iv) In states in which the National Verifier has been implemented, 
the eligible telecommunications carrier cannot re-certify subscribers 
not found in the National Verifier by obtaining a certification form 
from the subscriber.
    (3) Where the National Verifier, state Lifeline administrator, or 
other state agency is responsible for re-certification of a 
subscriber's Lifeline eligibility, the National Verifier, state 
Lifeline administrator, or state agency must confirm a subscriber's 
current eligibility to receive a Lifeline service by:
* * * * *
    (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.
    (iii) If the subscriber's eligibility for Lifeline cannot be 
determined by accessing one or more databases containing information 
regarding enrollment in qualifying assistance programs, then the 
National Verifier, state Lifeline administrator, or state agency may 
obtain a signed certification from the subscriber on a form that meets 
the certification requirements in paragraph (d) of this section. If a 
Federal eligibility recertification form is available, entities 
enrolling subscribers must use such form to recertify a qualifying low-
income consumer.
    (4) Where the National Verifier, state Lifeline administrator, or 
other state agency is responsible for re-certification or subscribers' 
Lifeline eligibility, the National Verifier, 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 by the National Verifier, a 
state Lifeline administrator, 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) One-Per-Household Worksheet. The prospective subscriber will 
complete a form certifying compliance with the one-per-household rule 
upon initial enrollment. Such form will provide an explanation of the 
one-per-household rule; include a check box that the applicant can mark 
to indicate that he or she lives at an address occupied by multiple 
households; a space for the applicant to certify that he or she shares 
an address with other adults who do not contribute income to the 
applicant's household and share in the household's expenses or benefit 
from the applicant's income; and the penalty for consumer's failure to 
make the required one-per-household certification, i.e. de-enrollment. 
At re-certification, if there are changes to the subscriber's household 
that would prevent the subscriber from accurately certifying to Sec.  
54.410(d)(3)(vi), then the subscriber must complete a new One-Per-
Household Worksheet. If a Federal One Per Household Form is available, 
entities enrolling subscribers must use such form.
    (h) National Verifier transition. As the National Verifier is 
implemented in a state, the obligations in paragraphs (b) through (g) 
of this section with respect to the National Verifier and eligible 
telecommunications carriers will also take effect.

0
14. Add Sec.  54.411 to read as follows:


Sec.  54.411  Lifeline benefit portability.

    (a) A provider shall not seek or receive reimbursement through the 
Lifeline program for service provided to a subscriber who has used the 
Lifeline benefit to enroll in a qualifying Lifeline-supported broadband 
Internet access service offering with another Lifeline provider within 
the previous 12 months.
    (b) A provider shall not seek or receive reimbursement through the 
Lifeline program for service provided to a subscriber who has used the 
Lifeline benefit to enroll in a qualifying Lifeline-supported voice 
telephony service offering with another Lifeline provider within the 
previous 60 days.
    (c) Notwithstanding paragraphs (a) and (b) of this section, a 
provider may seek and receive reimbursement through the Lifeline 
program for service provided to a subscriber prior to the completion of 
the 12-month period described in paragraph (a) of this section or the 
60-day period described in paragraph (b) of this section if:
    (1) The subscriber moves their residential address;
    (2) The subscriber's current provider ceases operations or 
otherwise fails to provide service;
    (3) The provider has imposed late fees for non-payment greater than 
or equal to the monthly end-user charge for the supported service; or
    (4) The subscriber's current provider is found to be in violation 
of the Commission's rules during the 12-month period and the subscriber 
is impacted by such violation.
    (d) If a subscriber transfers his or her Lifeline benefit pursuant 
to paragraph (c) of this section, the subscriber's Lifeline benefit 
will apply to the newly selected service until the end of the original 
12-month period. In these circumstances, the subscriber is not required 
to re-certify eligibility until the end of the original 12-month 
period. The subscriber's original provider must provide the 
subscriber's eligibility records to either the subscriber's new 
provider or the subscriber to comply with the 12-month service period.

0
15. Amend Sec.  54.416 by adding paragraph (a)(3) to read as follows:


Sec.  54.416  Annual certifications by eligible telecommunications 
carriers.

    (a) * * *
    (3) An officer of the eligible telecommunications carrier must 
certify that the carrier is in compliance with the minimum service 
levels set forth in Sec.  54.408. 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.
* * * * *

0
16. Amend Sec.  54.420 by revising paragraph (b) to read as follows:


Sec.  54.420  Low income program audits.

* * * * *
    (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

[[Page 33095]]

support, unless otherwise determined by the Office of Managing 
Director.

0
17. Amend Sec.  54.422 by revising paragraph (b)(3) to read as follows:


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

* * * * *
    (b) * * *
    (3) Certification of compliance with applicable minimum service 
standards, as set forth in Sec.  54.408, service quality standards, and 
consumer protection rules;
* * * * *

0
18. Add Sec.  54.423 to read as follows:


Sec.  54.423  Budget.

    (a) Amount of the annual budget. The initial annual budget on 
federal universal support for the Lifeline program shall be $2.25 
billion.
    (1) Inflation increase. In funding year 2016 and subsequent funding 
years, the $2.25 billion funding cap on federal universal service 
support for Lifeline shall be automatically increased annually to take 
into account increases in the rate of inflation as calculated in 
paragraph (a)(2) of this section.
    (2) Increase calculation. To measure increases in the rate of 
inflation for the purposes of paragraph (a) of this section, the 
Commission shall use the Consumer Price Index for all items from the 
Department of Labor, Bureau of Labor Statistics. To compute the annual 
increase as required by this paragraph (a), the percentage increase in 
the Consumer Price Index from the previous year will be used. For 
instance, the annual increase in the Consumer Price Index from 2015 to 
2016 would be used for the 2017 funding year. The increase shall be 
rounded to the nearest 0.1 percent by rounding 0.05 percent and above 
to the next higher 0.1 percent and otherwise rounding to the next lower 
0.1 percent. This percentage increase shall be added to the amount of 
the annual funding cap from the previous funding year. If the yearly 
average Consumer Price Index decreases or stays the same, the annual 
funding cap shall remain the same as the previous year.
    (3) The Wireline Competition Bureau shall issue a public notice on 
or before July 31 containing the results of the calculations described 
in Sec.  54.403(a)(2) and setting the budget for the upcoming year 
beginning on January 1.
    (b) If spending in the Lifeline program meets or exceeds 90 percent 
of the Lifeline budget in a calendar year, the Wireline Competition 
Bureau shall prepare a report evaluating program disbursements and 
describing the reasons for the program's growth along with any other 
information relevant to the operation of the Lifeline program. The 
Bureau shall submit the report to the Commission by July 31st of the 
following year.

[FR Doc. 2016-11284 Filed 5-23-16; 8:45 am]
 BILLING CODE 6712-01-P