FCC Olive Branch Fails to Pacify States Over Lifeline

The FCC extended USF low-income subsidies to broadband in March (see 1603310056). States support a broadband expansion, but they sued the FCC over its decision to shift potential responsibility for verifying Lifeline broadband provider eligibility from the states to a national third party (see 1606030053). The “hard work of implementing” the Lifeline order has begun, and the FCC looks forward to working with NARUC on outreach efforts about the changes, Lauren Wilson, aide to Consumer and Governmental Affairs Bureau Chief Alison Kutler, said Tuesday at the business meeting of the NARUC Committee on Telecommunications.

“I’d be remiss if I didn’t address the elephant in the room,” Wilson said. “I know that you and a lot of other lawmakers believe that states are being cut out of overseeing Lifeline providers and that fraud will increase as a result. We at the FCC really do believe, though, that states will continue to play a critical role in Lifeline, including … the approval of Lifeline providers, voice services, broadband or both when they’re not seeking nationwide approval. States will also play an important role in combating waste, fraud and abuse in the program in tandem with the FCC’s new national eligibility verifier.”

Nelson thanked Wilson for raising the issue. “Obviously, we have a difference of opinion on the legality of what the FCC has done in that area, but that will play out in the courtroom,” said the Republican chairman of the South Dakota Public Utilities Commission. In an interview after the meeting, Nelson said he remains skeptical of the FCC order. “You have to listen very carefully to how [Wilson] answered that,” he said. “It was ‘We believe this,' completely ignoring the plain language that federal law says. You can believe all you want, but at the end of the day we have to comply with federal law, and federal law says states must have a role.”

Wednesday morning, the Universal Service Administrative Company fielded questions from states about Lifeline. "We are very humble in knowing that we need to learn from states," said Jessica Zufolo, senior advisor to the USAC CEO. "We can't do this alone." USAC recognizes the state role in protecting consumers, she said. "We want to preserve that as much as possible." USAC wants to better understand and support effects on existing state eligibility systems and processes, said USAC Vice President-Lifeline Program Michelle Garber.

USAC wants to dispel state myths about the program, Garber said. One incorrect myth is that the Lifeline changes will take away state eligibility processes, she said. Those will be preserved and the national verifier will work with states, she said. Also, it’s not true the national verifier will collect and store information from state databases in a master eligibility database, she said. Rather, the national verifier will ping states for a yes/no verification about a consumer's eligibility, she said. It would keep a record of the yes or no response, however, she said. “USAC has no interest” in storing personally identifiable information, Zufolo said.

State officials peppered the USAC officials with questions about how eligibility will work after the changes. Nelson asked how the national verifier will deal with states that don’t allow it to ping its database. In response, Garber said the national verifier will find a workaround, such as asking consumers to provide documents proving their eligibility. Nelson replied that pinging a state database directly would limit fraud better than having USAC analyze the authenticity of documents mailed by consumers. Garber agreed the more direct approach would be preferred. Idaho Commissioner Paul Kjellander asked how much a $9.25 coupon will really help, considering the size of broadband invoices. Garber said that’s a policy question USAC couldn't answer.

California seeks the ability to opt out of national verification because the state already has a strong third-party verifier with a “robust Lifeline database and process,” said Commissioner Catherine Sandoval of the state's Public Utilities Commission on a later panel. "While we support the idea that there is verification throughout the nation, we want to make sure any national process is as fast as California's." She applauded the new minimum service standards in the order but said federal law places states in charge of eligible telecommunications carrier verification. The national program isn’t yet proven to be as effective as the state process, she said. “Paying for a program that doesn't work is a waste of federal money and an exercise in frustration.”

The FCC isn't "taking away the state role or their traditional consumer protection role," Wireline Bureau Chief Matthew DelNero said on the panel. Working with states is a must to implement the Lifeline order, he said. "It is critical we get [the national verifier] up and running," he said. The FCC’s goal was to modernize Lifeline and support broadband, and the national verifier will reduce waste, fraud and abuse in the program, he said.