Refocus Efforts on Stabilizing Lifeline, FCC Asked Amid Other Actions

Stakeholders interviewed last week want the FCC to delay further Lifeline changes and promptly answer an industry petition requesting a pause on stricter minimum broadband service standards set for Dec. 1 (see 1906280012). A proposed order and Further NPRM has stirred some concern, as the poor could lose access to mobile broadband if the cost to provide new minimum service levels exceeds incentives from federal reimbursements.

Last month, Chairman Ajit Pai circulated the "administrative clean-up" order and FNPRM on waste, fraud and abuse (see 1908290028). Industry and consumer groups are frustrated Pai didn't make the drafts public. Since a "highly problematic" 2017 NPRM on Lifeline fraud and abuse, Public Knowledge has been cautious about Pai's Lifeline proposals, said Policy Director Phillip Berenbroick. "There's an 18-month lag between reply comments and the order." If proposals in the current drafts weren't in a previous NPRM, adopting them through an order might open the agency to a challenge, he said.

Industry groups are focusing on a representative accountability database (RAD) that collects personally identifying information (PII) from sales agents and employees of eligible telecom carriers (ETCs) who interact with the national verifier database to sign up and renew Lifeline subscribers (see 1906270071). They filed in docket 17-287.

Mike Romano, NTCA senior vice president-business development and industry affairs, understands the FCC's concerns in wanting accountability for fraudulent subscriber registrations but wants the agency to pause the requirements until it can evaluate them further. NTCA believes ETC employees shouldn't have to provide PII because the telecom companies can track down employees. Romano said the RAD asks employees for personal details such as the last four digits of their Social Security number and home address on a voluntary basis, saying such information would be required if the FCC doesn't decide otherwise by year-end. "It's hard to put the toothpaste back in the tube. If in four months, it turns out you don't need it, that information is already out there. If we're going to think this through, let's wait." A proposal on circulation would require employees and sales agents register with Universal Service Administrative Co. before accessing program databases.

ITTA had meetings involving the RAD, said President Genny Morelli, including some last week and others set for this week. ITTA, too, is arguing ETC employees who don't receive commissions to sign up Lifeline subscribers shouldn't have to register. If they do, information should be limited to name, title, business phone number and email, Morelli said. She's encouraged commissioners' offices were still taking meetings: "I would hope the folks we've met with and will meet with are open to our concerns. We haven't been told our concerns don't make sense."

Keep Commissions

Judson Hill, a Republican former Georgia state senator and counsel to Lifeline reseller TruConnect, said some sales agents work for more than one Lifeline reseller, and it's important to be able to hold the salespeople accountable. He said a RAD in place to oversee distribution of federal funds makes sense, and he supports requiring personal information as long as it's secured. "If I'm a sales guy, then the government has a right to confirm I am who I say I am."

Hill isn't a fan of 100 percent commission-based compensation but as long as certain protections are in place, "rewarding some success is important, because that's what happens in the private sector." He favors port freezes of 60-90 days so agents receiving commission wouldn't have as much incentive to churn subscribers from one provider to another as often as once a day or three times a week. The draft bars commissions.

"Mandating how participating providers pay their employees and agents likely oversteps and arbitrarily dismisses the importance of raising program participation rates by helping eligible consumers learn about Lifeline and navigate the unduly cumbersome verification and enrollment process," emailed John Heitmann, counsel for the National Lifeline Association: "With so much on the FCC staff and USAC's plate, and with chronic regulatory uncertainty imperiling the success of this Lifeline program, I question whether we need a new rulemaking to discuss goals and metrics at this time -- especially when the National Verifier's goals are being badly missed."

Phoenix Center Chief Economist George Ford warned against "throwing the baby out with the bathwater" through overregulation. Is the FCC using concerns over fraud and abuse to "superficially" curb the program, he wondered. "People rely on that program."

Another proposal would require USAC verify potential Lifeline subscribers are living at the time of enrollment by checking a Social Security master death index rather than just using the database to de-enroll subscribers as they die. Heather Gate, Connected Nation director-digital inclusion, is among those who don't see much controversy here. The FCC wants "to strengthen the enrollment and reimbursement program" and standardize the program's efforts to eliminate fraud, Gate said. She supports ensuring no one is "gaming the system," as long as the FCC can make sure it won't punish anyone who really needs Lifeline service.

Service Standards

The Communications Workers of America and other groups seek pause in implementation of minimum service standards set to take effect in two and a half months until a report on Lifeline enrollments declines in June 2021. They want the agency to pause lowering the reimbursement for voice-only Lifeline services. The petition was filed early in the summer, before the new items.

There's an urgency for the FCC to make a decision on the minimum service standard implementation delay petition "in weeks, not months," Heitmann told us. Some states are required to give consumers and state and local regulatory bodies 30 or 60 days' notice before changing service standards, he noted.

Raising the broadband minimum service standards is counterproductive, said Phoenix's Ford. "You reduce the ability of companies to provide at a very, very low price a service," and "when the price goes up, you reduce the ability of low-income people to afford it." The FCC should modify its plans "to adjust to economic analysis" rather than "hang onto ideological, uninformed positions," he said.

Stakeholders heard rumors the item on circulation might propose prohibiting Lifeline ETCs or resellers from offering free mobile phones to new Lifeline subscribers. PK's Berenbroick said that would be a strange choice, since historically the FCC has encouraged more participation from companies to service low-income customers, and a prohibition could be seen as rate regulating a device's cost, which the agency doesn't do. Since a phone's cost could be a barrier to some potential Lifeline subscribers, placing a prohibition on free phones reduces the size of the program, he said.

Most customers looking for Lifeline subscriptions are cash-only customers, said Hill. That makes long-term contracts or paying for their own phone less likely.

The industry petition to delay implementation of new broadband minimum service standards for the Lifeline program remains "under review," an agency spokesperson emailed Friday. The representative doesn't expect any draft items not covered in a recent press call to prove controversial.