Lifeline and Link Up Reform and Modernization

Date: 06/29/2011

Summary

On January 31, 2012, the Federal Communications Commission approved a comprehensive overhaul of its Lifeline program.

The Order:

Changes to eliminate waste, fraud, and abuse, saving up to $2 billion over 3 years

  • Setting a savings target of $200 million for 2012, and putting the Commission in a position to adopt an appropriate budget for the program in early 2013 after review of a six-month report and one-year report on the effects of the Order.
  • Creation of a National Lifeline Accountability Database to prevent multiple carriers from receiving support for the same subscriber. The database will build on FCC efforts in 2011 that eliminated nearly 270,000 duplicate subscriptions in 12 states following review of over 3.6 million subscriber records, saving $33 million.
  • Creation of eligibility databases from governmental data sources, enabling fully automated verification of consumers’ initial and ongoing Lifeline eligibility. This would reduce the potential for fraud while cutting red tape for consumers and providers. A database based on the three most common federal benefit programs through which consumers qualify for Lifeline will be created no later than the end of 2013.
  • Establishing a one-per-household rule applicable to all providers in the program, defining household as an “economic unit” so that separate low-income families living at the same address can get connected.
  • Establishing clear goals and metrics to measure program performance and effectiveness.
  • Phasing out support for services such as Toll Limitation – subsidies to carriers for blocking or restricting long-distance service—and ending Link Up – subsidies to carriers for initial connection charges. Link Up will continue in Tribal lands.
  • Reducing burdens on carriers by establishing a uniform, interim flat rate of reimbursement, allowing carriers to obtain a subscriber’s signature electronically, and streamlining enrollment through uniform, nationwide eligibility criteria.

Modernizing Lifeline

  • Adopting an express goal for the program of ensuring availability of broadband for all low-income Americans.
  • Establish a Broadband Adoption Pilot Program using up to $25 million in savings from other reforms to test and determine how Lifeline can best be used to increase broadband adoption among Lifeline-eligible consumers. Starting this year, the program will solicit applications from broadband providers and will select a number of projects to fund. Lifeline will help reduce the monthly cost of broadband service, but applicants will be expected to help address other challenges to broadband adoption, including the cost of devices and digital literacy.
  • Proposes increasing digital literacy training at libraries and schools. A Further Notice of Proposed Rulemaking seeks comment on using savings from other Universal Service Fund reforms to increase digital literacy training at libraries and schools, a key step in increasing broadband adoption.
  • Build on FCC efforts to close the broadband adoption gap and address digital literacy, including the Connect-to-Compete initiative, which enlists government, non-profit, and private sector leaders to address broadband adoption barriers through digital literacy training and low-cost broadband availability.
  • Allow Lifeline support for bundled services plans combining voice and broadband or packages including optional calling features.

On September 26, 2011, the FCC's Wireline Competition Bureau (WCB) sought comment on a proposal for disbursing Universal Service Fund low income support to eligible telecommunications carriers (ETCs) based upon claims for reimbursement of actual support payments made, instead of projected claims for support. Please click "Details" above to see a summary of the FCC's new request for input.
On August 5, 2011, the Federal Communications Commission identified four issues in particular that merit further inquiry. Please click "Details" above to see a summary of the FCC's new request for input.

On June 29, 2011, the FCC released a final rule to address potential waste in the universal service Lifeline and Link Up program (Lifeline/Link Up or the program) by preventing duplicative program payments for multiple Lifeline-supported services to the same individual.

The near-term reforms the FCC adopted are meant to reduce waste in the Fund and give the FCC flexibility to modernize the Low-Income Program in order to align it with changes in technology and market dynamics, such as the proposal we currently are reviewing to support broadband pilot projects for low-income consumers.

The FCC amended its rules to:

  • codify the restriction that an eligible low-income consumer cannot receive more than one Lifeline-supported service at a time,
  • provide that, upon a finding by USAC that a low-income consumer is the recipient of multiple Lifeline subsidies, any ETC notified that it has not been selected to continue providing Lifeline-discounted service to the consumer shall de-enroll that subscriber from participation in that ETC’s Lifeline program.

The FCC did not require a total termination of Lifeline discounts to the consumer in this situation, as the consumer will be permitted to maintain a single Lifeline service with one of the ETCs.

Status: Order adopted

Docket Numbers

WC Docket No. 11-42
CC Docket No. 96-45
WC Docket No. 03-109

Description

On September 26, 2011, the FCC's Wireline Competition Bureau (WCB) sought comment on a proposal for disbursing Universal Service Fund low income support to eligible telecommunications carriers (ETCs) based upon claims for reimbursement of actual support payments made, instead of projected claims for support.

Payment based on actual support payments could replace the current administrative process, under which the Universal Service Administrative Company (USAC) reimburses ETCs for low income support each month based on USAC’s projection of payments and on a “true-up” calculated using an ETC's actual support payments. USAC proposes to establish a monthly due date by which ETCs must submit their FCC Form 497 in order to receive a payment at the end of the following month. Carriers that do not file FCC Form 497 by the monthly deadline in a given month would not receive a payment in the following month. USAC would process an FCC Form 497 received after the monthly deadline during the following month, and would make a disbursement based on that support claim in the subsequent month. The FCC seeks comment on monthly filing deadline and on the process for disbursing payment to ETCs that miss a monthly deadline.

Comments are due on or before November 18, 2011. Reply comments are due on or before December 5, 2011.
See http://benton.org/node/93918


On August 5, 2011, the Federal Communications Commission identified four issues in particular that merit further inquiry: designing and implementing a Lifeline/Link Up broadband pilot program to evaluate whether and how Lifeline/Link Up can effectively support broadband adoption by low-income households; limiting the availability of Lifeline support to one discount per residential address; revising the definition of Link Up service, as well as the possible reduction of the $30 reimbursement amount for Link Up support; and improving methods for verifying continued eligibility for the program. The FCC seeks further comment focused on these areas. Comments are due August 26; reply comments are due September 2.

I. Broadband Pilot Program

a.) Scope of Permissible Funding. Some commenters support using universal service dollars to fund equipment and training for the proposed broadband pilot program, yet they do not cite to any legal authority to do so. The FCC seeks comment on the its statutory authority to permit universal service funds to be used for such purposes, directly or indirectly, and what other legal considerations must be addressed before the FCC proceeds with a broadband pilot program.

b.) Consumer Eligibility for Pilot Program. In the NPRM, the FCC sought comment on whether to allow some pilot projects to deviate from the federal default rules with regards to consumer eligibility. The FCC seeks additional focused comment specifically on whether to maintain the current eligibility requirements for consumers participating in the pilot program that are currently used in the low-income program, or whether to adopt stricter or more permissive eligibility requirements for those consumers. How might adjusting the eligibility criteria affect the FCC's ability to maximize broadband adoption while providing support that is sufficient, but not excessive? How would it affect the reliability and statistical significance of the results of the pilot program? How would it help the pilot programs yield better data on how to accomplish our goals of maximizing adoption in low-income communities?

c.) Barriers to Consumer Participation in Pilots. The National Association of Regulatory Utility Commissioners supports a Lifeline/Link Up broadband pilot program and urges the FCC not to require Lifeline/Link Up broadband service pilot program participants to change local telephone service providers, purchase bundled broadband and voice services, or otherwise be penalized when they purchase Lifeline and Link Up broadband services and enabling access devices. Commenters should address whether and how the Commission could implement those recommendations. Commenters are encouraged to provide a legal analysis to support their positions.

d.) Pilot Evaluation. The FCC invites further comment on the structure of the pilot projects, how to evaluate the results of pilot projects, and what reporting requirements should be adopted for pilot participants.

II. One-Per-Residence Limitation.

The FCC proposed to codify a rule that would allow eligible low-income consumers to receive only one Lifeline and Link Up discount per residential address, and sought comment on related issues.

a.) Defining "Household" or "Residence". The FCC seeks focused comment on whether a one-per-household or one-per-family rule would provide an administratively feasible approach to providing Lifeline/Link Up support, and how the Commission could implement such a rule.

b.) Exceptions or Waivers from the "One-Per-Household" or "One-Per-Residential-Address" Rule. On May 25, 2011, MFY Legal Services filed an ex parte presentation that included a copy of the National Telecommunications and Information Administration's (NTIA) rule providing a limited waiver of the household-based eligibility process for the Digital-to-Analog Converter Box Coupon Program to allow applications from individuals residing in nursing homes, intermediate care facilities, and assisted living facilities. The NTIA rule waived the one-per-residence requirement for individuals residing in nursing homes, intermediate care facilities, and assisted living facilities licensed by a state, as well as individuals using post office boxes for mail receipt. Third party designees, such as facility administrators and family members, were also allowed to apply on behalf of residents. The FCC seeks comment on whether that rule could serve as a model for how to address such situations in the context of the low-income program. If the FCC were to adopt a similar rule, what information should applicants be required to provide to demonstrate they reside in such a facility?

c.) One-per-person for Tribal Residents. Smith Bagley provides further calculations in its comments as to the costs associated with providing enhanced Lifeline service to one additional adult per household on Tribal lands. Smith Bagley projected that, assuming a 100% take rate, the cost of providing this additional funding would be $77.7 million per year, or just under one percent of the current size of the overall universal service fund. The FCC seeks comment on the analysis provided by Smith Bagley.

III. Link Up.

The NPRM addressed a number of issues regarding Link Up reimbursement for voice services.

a.) Sprint states that the costs associated with initiating phone service have fallen, noting that "the ever-increasing level of automation has reduced the cost of initiating service," and proposes that Link Up support be limited or eliminated. The FCC seeks comment on this proposal.

b.) Similarly, multiple commenters suggest that only costs actually incurred for initiating service should be reimbursable. Noting that several wireless providers (TracFone, Virgin Mobile, i-wireless) do not charge activation fees, and that even wireline service initiations sometimes do not require new installations or service visits, the Indiana Utility Regulatory Commission suggests that the FCC "eliminate the Link Up subsidy for wireless providers and for wireline providers alike, unless greenfield (new) installation of equipment and/or facilities is required." The FCC seeks further focused comment on whether the FCC should provide reimbursement for Link Up only for service initiations that involve the physical installation of facilities by the provider at the consumer's residence.

IV. Verification of Consumer Eligibility for Lifeline - Sampling Methodology.

In the 2011 Lifeline and Link Up NPRJvI, the Commission proposed to amend section 54.4 10 of its rules to establish a uniform methodology for conducting verification sampling that would apply to all ETCs in all states.42 The NPRM also asked commenters to consider two proposals for modifying the existing sampling methodology to more effectively balance the need for an administratively feasible sampling methodology with the Commission's obligation to ensure that ineligible consumers do not receive Lifeline/Link Up benefits. The FCC invites additional comment on this issue.


On March 3, 2011, the Federal Communications Commission proposed a set of reforms that will modernize and drive tougher accountability measures into the Lifeline/Link Up program.

In the last several years, Lifeline/Link Up has grown significantly, from an inflation-adjusted $667 million in 2000 to $1.3 billion in 2010, with new participation by firms, such as pre-paid wireless providers, that focus on serving low-income consumers. The time has come to review the program holistically, address the risks and challenges it now presents, and ensure that it is on a firm footing to efficiently and effectively achieve its statutory purpose.

In 2010, the Federal-State Joint Board on Universal Service recommended that the FCC:

  • encourage automatic enrollment as a best practice for all states;
  • adopt uniform minimum verification procedures and sampling criteria that would apply to all ETCs in all states;
  • allow states to utilize different and/or additional verification procedures so long as these procedures are at least as effective in detecting waste, fraud, and abuse as the uniform minimum required procedures;
  • equire all ETCs in all states to submit the data results of their verification sampling to the Commission, the states, and the Universal Service Administrative Company and make the results publicly available; and
  • adopt mandatory outreach requirements for all ETCs that receive low-income support and maintain advisory guidelines for states with respect to performing low-income outreach.

The Notice of Proposed Rulemaking (NPRM) adopted unanimously by the FCC seek comment on the Joint Board’s recommendations.

The NPRM takes steps to comprehensively reform and modernize the programs for 21st century communications needs. Building on recommendations of the Joint Board, the Government Accountability Office, and the National Broadband Plan, proposals include:

  • Strengthening protections against waste, fraud, and abuse, including through creation of a National Accountability Database to verify consumer eligibility;
  • Taking immediate steps to create a uniform national framework for validating ongoing eligibility;
  • Ensuring Lifeline only supports services consumers are actually using;
  • Allowing discounts to be used for bundled voice-broadband service plans;
  • Launching pilot programs to test strategies for supporting broadband service; and
  • Evaluating a cap on the program, either temporary or permanent, in light of recent, rapid growth.
  • Lifeline provides discounts of approximately $10 per month on telephone service for low-income households, while Link Up provides discounts of up to $30 on connection charges. Discounts are available for one connection, either wired or wireless, per household.

Initial Comment Date: April 21, 2011
Reply Comment Date on Sections IV, V (Subsection A), VII (Subsection B & D): May 10, 2011
Reply Comment Date on the Remaining Sections: May 25, 2011

Issues

The FCC proposes:

  • specific performance goals for the program, and metrics to measure its performance in advancing the universal service objectives established by Congress,
  • immediate steps to address waste, fraud, and abuse and to bolster mechanisms to detect and deter rule violations,
  • to strengthen rules and improve the incentives of program participants to ensure that the program does not provide multiple, duplicative discounts to the same residential address,
  • to eliminate reimbursement for certain services, including initiation fees that may be inflated or selectively applied only to low-income households,
  • to eliminate funding for services that go unused for more than sixty days,
  • expanding oversight, including through more extensive audits,
  • to impose an annual funding cap on Lifeline/Link Up,
  • addressing the unique situations facing residents on Tribal lands, who historically have had phone penetration substantially below the national average by clarifing eligibility requirements for low-income Tribal households, and to permit Tribal enrollment based on participation in the Food Distribution Program on Indian Reservations,
  • streamlining and improving overall program administration,
  • requiring all states to utilize the same baseline eligibility requirements that exist in federal rules, which could streamline enrollment and facilitate verification of ongoing eligibility, while allowing states to use eligibility standards that supplement the minimum federal uniform standards,
  • uniform national standards for the minimum verification of ongoing customer eligibility to stay enrolled in Lifeline
  • to use an automated information management system to prevent duplicate claims for support, provide real-time electronic verification of consumer eligibility, and provide a means of ongoing verification of eligibility,
  • to develop a record on what basic services the program should support and a framework for determining reimbursement levels
  • reforms to put Lifeline/Link Up on a more solid footing to achieve Congress’s goal of addressing the 21st century challenge of helping low-income households adopt broadband,
  • eligible households be permitted to use Lifeline discounts on bundled voice and broadband service offerings, and
  • to design a broadband pilot program that will help inform the FCC’s inquiry into meeting the 21st century communications needs of low-income consumers.

III. ESTABLISHING PROGRAM GOALS AND MEASURING PERFORMANCE

IV. IMMEDIATE REFORMS TO ELIMINATE WASTE, FRAUD, AND ABUSE

A. Duplicate Claims
B. Pro Rata Reporting Requirements
C. Eliminating Reimbursement for Toll Limitation Service
D. Customary Charges Eligible for Link Up
E. Customer Usage of Lifeline-Supported Service
F. De-Enrollment Procedures
G. Audits

V. CLARIFYING CONSUMER ELIGIBILITY RULES

A. One-Per-Residence
a. Defining “Residence”
b. Application of the One-Per-Residence Rule to Commercially Zoned Buildings
c. Application of the One-Per-Residence Rule in Tribal Communities
d. Ensuring Access for Residents of Group Living Quarters

B. Tribal Lifeline Eligibility

VI. CONSTRAINING THE SIZE OF THE LOW-INCOME FUND

VII. IMPROVING PROGRAM ADMINISTRATION

A. Eligibility Criteria for Lifeline and Link Up
B. Certification and Verification of Consumer Eligibility for Lifeline
C. Coordinated Enrollment
D. Database
E. Electronic Signature.

VIII. CONSUMER OUTREACH & MARKETING

IX. MODERNIZING THE LOW INCOME PROGRAM TO ALIGN WITH CHANGES IN TECHNOLOGY AND MARKET DYNAMICS

A.The Current Lifeline Program
1) Voice Services Eligible for Discounts
2) Support Amounts for Voice Service
3) Minimum Service Requirements for Voice Service
4) Support for Bundled Services

B. The Transition to Broadband
1) Support for Broadband
2) Broadband Pilot

C. Eligible Telecommunications Carrier Requirements

Comment due date: 04/21/2011

Comment reply due date: 05/25/2011

FCC Comment Form

Comments