Wireline Competition Bureau Rescinds Lifeline Designations

February 3, 2017–The FCC’s Wireline Competition Bureau released an order on reconsideration today rescinding Lifeline broadband provider (LBP) designation for nine carriers, citing the need to take more steps to prevent waste, fraud, and abuse in the program. The order was among a slew of items released today rescinding or retracting items released shortly before FCC Chairman Tom Wheeler left the agency last month (see separate story).The order on reconsideration released today reconsidered orders that had designated the following providers as Lifeline broadband providers (LBP): Spot On Networks LLC, Boomerang Wireless LLC, KonaTel, Inc., STS Media, Inc., Applied Research Designs, Inc., Kajeet, Inc., Liberty Cablevision of Puerto Rico LLC, Northland Cable Television, Inc., and Wabash Independent Networks, Inc.

The Wireline Competition Bureau had designated the carriers as LBPs in orders released in December and January. “The Bureau sets aside those orders, revokes the LBP designations for those providers, returns those petitions for LBP designation to their status as petitions pending before the Bureau, and removes them from streamlined treatment in light of the considerations discussed below,” according to the order, which was adopted in WC dockets 09-197 and 11-42.

“We find that reconsidering the above-listed petitions for designation as an LBP would promote program integrity by providing the Bureau with additional time to consider measures that might be necessary to prevent further waste, fraud, and abuse in the Lifeline program,” the bureau said. “Recent investigations in the Lifeline program raise concerns that substantial waste, fraud, and abuse appears to continue to exist in the program. For example, in December 2016 the Enforcement Bureau entered into a consent decree with Total Call Mobile, in which Total Call Mobile admitted to violating Lifeline program rules to claim reimbursement for duplicate and ineligible consumers and paid a settlement of $30 million. The Universal Service Administrative Company has also indicated that at least 16 other major Lifeline wireless resellers have used tactics similar to Total Call Mobile’s.”

Today’s order also said that the orders issued in December and January “erred in finding that expanding the number of designated Lifeline providers to include Lifeline Broadband Providers will combat waste, fraud, and abuse absent further steps or time for the agency to consider measures designed to ensure those providers will comply with the Lifeline program rules. For example, on reconsideration we are persuaded that the Bureau’s orders reflect a too-simplistic evaluation of waste, fraud, and abuse concerns. Potential waste, fraud, and abuse through the use of the independent economic household worksheet, identity verification dispute resolution processes, address verification, and discrepancies between reimbursement requests and subscriber listings in the National Lifeline Accountability Database (NLAD) raise concerns that the above-listed petitions fail to resolve. We therefore reconsider the December and January Lifeline orders, return the LBP designation petitions to pending status and decline to designate the providers listed in those orders until the Bureau has additional time to assess measures that might be necessary to prevent further waste, fraud, and abuse in the program.”

The order also said that some carriers failed to provide copies of their petitions to tribal entities as required and it said the December order granted LBP designation before the 30-comment deadline expired.

“To minimize disruption in service to Lifeline subscribers currently being served by Boomerang pursuant to an LBP designation, we take the following steps to establish a transition for impacted Boomerang subscribers,” the order said. “First, to prevent service disruption and hardship for the subscribers currently receiving a Lifeline-supported BIAS offering from Boomerang pursuant to Boomerang’s LBP designation, we delay the revocation of Boomerang’s LBP designation and return of its petition to its prior status as a petition pending before the Bureau until 60 days after the effective date of this Order. We direct Boomerang to notify, in writing, within 30 days of the effective date of this Order any of its customers who will be unable to receive a Lifeline discount on their broadband Internet access service as a result of this Order. This notice must inform customers that they will not receive the Lifeline discount on their current Lifeline-supported BIAS beginning 60 days after the effective date of this Order, but that they have the option of transferring their Lifeline benefits to another Lifeline provider.  Boomerang must also de-enroll those subscribers within 60 days of the effective date of this Order. We expect that any impacted customers who continue to receive the same BIAS offering after Boomerang can no longer seek Lifeline reimbursement as an LBP will see their monthly bills increase by no more than $9.25. Additionally, we waive the application of section 54.411 of the Commission’s rules to those subscribers for good cause.”

Commissioner Mignon L.  Clyburn criticized today’s order, saying it “reverses course on providing more competition and consumer choice for Lifeline customers. Rather than working to close the digital divide, this action widens the gap. By eliminating the designations of nine entities to provide Lifeline broadband service, the Bureau has substantially undermined businesses who had begun relying on those designations. These providers include a minority-owned business, a provider enabling students to complete their homework online, and others serving Tribal lands.

“Given the serious policy concerns at stake here, I asked to have this Order considered by the full Commission. But, clearly the goal was to include this in the ‘Friday News Dump’, as my request was flatly denied,” she added.

“I remain hopeful, however, that this is not the final answer and that the providers’ requests will remain pending after today’s action,” Ms. Clyburn said. “I implore the Chairman and the Bureau to consider these designation requests expeditiously. #ConsumersFirst.”

Public Knowledge also was critical of today’s action. “The Chairman’s arbitrary decision will likely result in needy families losing access to the critical connectivity they use to communicate with loved ones, look for employment, complete homework assignments, access vital health care information, and engage in civic life,” said Phillip Berenbroick, the group’s senior policy counsel.  “Less than two weeks ago, Chairman Pai committed that his leadership of the FCC would focus on closing the digital divide. Today, he has reneged on that commitment and signaled that the FCC might now be actively hostile toward small, competitive broadband providers and affordable access, which would exacerbate the digital divide.”

“From NARUC’s perspective — of course we are happy with this order,” said Brad Ramsay, general counsel of the National Association of Regulatory Utility Commissioners. “I think it is fair to suggest this may well indicate the FCC is pulling back from the illegal aspects of the Lifeline Modernization Order that are currently pending in our appeal.  As we said in the proceeding below — if the FCC does pull back from the federal only ETC designation procedure, this will provide additional service quality protections for end-users, should ultimately allow federal and state program benefits to coordinate more efficiently, and help keep more state ‘cops on the beat’ to reduce fraud in the program.”

Separately today, the FCC asked a federal appeals court to hold its proceedings on NARUC’s appeal of the Lifeline modernization order in abeyance (see separate story). —Paul Kirby, paul.kirby@wolterskluwer.com

Courtesy TRDaily