Rule Change in USF Order Sets Off Debate on Lifeline Docket

The change has set off a debate on the Lifeline docket, No. 11-42, over whether the rule should be applied retroactively. On one side is TracFone, one of the nation’s biggest Lifeline vendors, and on the other is CompTel, records in the docket showed. FCC officials met on Tuesday to discuss the ongoing debate, one telecom official told us Tuesday.

According to records in the docket, red flags were set off last week after Wireline Bureau Chief Sharon Gillett told state regulators that the recently adopted USF order amends Section 54.101 of the FCC’s rules and now describes “core functionalities” of voice telephony to include “voice grade access to the public switched network or its functional equivalent; minutes of use of ... local service provided at no additional charge to end users; toll limitation to qualifying low-income consumers; and access to emergency 911 and enhanced 911 service to the extent the local government in an eligible carrier’s service area has implemented 911 or enhanced 911 systems supported by services,” according to an ex parte notice by Gillett (http://xrl.us/bmkwg6).

Left out of the revised formula are carriers that seek Lifeline-only ETC status but use their facilities only for operator and directory assistance, Gillett said. Such “applicants would be required first to seek forbearance from the facilities-based requirement from the Commission,” Gillett said, adding that the rules take effect Dec. 29.

A day after Gillett’s ex parte notice was published, CompTel Board Chairman Dale Schmick and lawyer Mary Albert met with Angela Kronenberg, wireline adviser to Commissioner Mignon Clyburn, and “relayed a concern about the lack of clarity in the meaning of ‘voice telephony’ and ‘facilities-based’ for purposes of Section 214(e)(1) of the [1934] Communications Act,” according to CompTel’s ex parte notice (http://xrl.us/bmkwgo). “To the extent that carriers have already been designated as ETCs by state commissions based on the use of a combination of their own facilities, including those used to provide operator services and directory assistance services, and the resale of another carrier’s services, those ETC designations should not be jeopardized by the change in the Commission’s rules,” CompTel said. “Nor should such ETCs’ eligibility for Lifeline reimbursement be adversely affected by the change in the Commission’s rules. While COMPTEL supports the Commission’s efforts to modernize and reform the universal service programs, it must do so [in] a manner that does not penalize the low income beneficiaries of the Lifeline program who receive service from a carrier designated as an ETC under the existing rules.” CompTel didn’t respond to a request seeking comment on its lobbying.

But TracFone, one of the nation’s largest Lifeline vendors, weighed into the controversy in an ex parte notice released Tuesday. “TracFone respectfully disagrees with CompTel’s characterization of a ‘lack of clarity,'” TracFone’s lawyer, GreenbergTraurig telecom attorney Mitchell Brecher, said in his ex parte notice (http://xrl.us/bmkvni). “It is difficult to imagine a more clear, more cogently-articulated statement of the rule than that codified in the amended Section 54.101(a) and the Commission’s concise explanation set forth at paragraph 78 of the USF/ICC Reform Order. The Commission -- not CompTel -- should determine whether to afford the amendment of Section 54.101(a) retroactive effect.”

"However,” TracFone added, “since the rule merely implements a statutory requirement, it is difficult to conclude that carriers may be ETCs without first obtaining forbearance unless they provide services supported by the USF using, at least in part, their own facilities. If a Lifeline provider is not using its own facilities to provide any of the services support by the Universal Service Fund, then that provider is not providing Lifeline-support service, at least in part, using its own facilities.”

In TracFone’s view, the best way forward is to eliminate “those artificial distinctions” between facilities-based and resale ETCs, the company said in its ex parte notice. If that happens, then “the concern expressed by CompTel will become insignificant,” TracFone said.

FCC Chairman Julius Genachowski all but promised to have a Lifeline order on the agenda for December’s meeting, but staff couldn’t meet the deadline. Two telecom officials told us Tuesday they expected an order to be ready for the first part of the year. FCC officials couldn’t be reached for comment Tuesday.