On Thursday, November 14, 2019, the Commission released the Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration, and Further Notice of Proposed Rulemaking (“R&O”, “MO&O and Order on Recon.”, “FNPRM”) in the Bridging the Digital Divide for Low-Income Consumers, Lifeline and Link Up Reform and Modernization, and Telecommunications Carriers Eligible for Universal Service Support proceedings (WC Docket Nos. 17-287, 11-42, 09-197). The R&O restores the states’ role in designating eligible telecommunications carriers (“ETCs”), and takes targeted steps to improve program compliance and reduce waste, fraud, and abuse. The MO&O and Order on Recon. clarifies several of the Lifeline program rules, and the FNPRM seeks comment on program goals and metrics to modernize the Lifeline program and to maintain the programs integrity.

Fifth R&O – The R&O takes steps to promote the Lifeline program’s integrity, effectiveness, and efficiency by restoring the traditional state role in designating ETCs and traditional ETC categories, and increasing transparency in state oversight. The R&O also amends the Lifeline rules to improve the integrity of providers’ enrollment and recertification processes, establishes protections to help prevent improper payment claims, and improves Commission rules regarding Lifeline auditing practices.

  • States’ Role in Lifeline Program – The R&O restores the traditional state roles in designating ETCs, which makes states primarily responsible for designating ETCs and exercising their oversight authority, and eliminates the Lifeline Broadband Provider ETC category. The Commission takes a supporting role and designates carriers where states are not suited to do so, such as when a state lacks jurisdiction or in unserved areas where no carrier is willing to provide USF service.
    • This R&O overrules the 2016 Lifeline Order, explaining that the 2016 Order was not supported by sufficient Section 214 legal authority and did not serve the public interest. The R&O eliminates Section 54.201 from the rules, which precluded states from designated Lifeline Broadband Providers, effective 30 days after publication in the Federal Register.
  • Increased Transparency – The R&O directs USAC to increase the Lifeline program transparency, and specifically is directed to compile and make available on its website program aggregate subscribership data, including data broken down by county level and service type. The R&O instructs USAC to develop a process for suspicious activity, which it will share with the Commission staff, the Commission’s OIG, and relevant state agencies.
  • Enrollment and Recertification – The R&O establishes new enrollment and recertification rules and limits to reduce waste fraud and abuse in the program. First, the R&O establishes new rules on ETCs’ use of enrollment representatives to remove incentives to commit fraud and abuse in the Lifeline eligibility determination process. Second, it directs USAC to continue targeted reviews of enrollment documentation, and third, requires additional documentation during the annual recertification process for certain Lifeline subscribers.
    • The R&O concludes that ETCs are prohibited from paying commissions to enrollment representatives based on the number of submitted Lifeline applications or approved enrollments to individuals who enroll Lifeline subscribers or who verify eligibility of Lifeline subscribers on behalf of ETCs. The R&O codifies the requirement that USAC register all Lifeline ETC enrollment representatives, and clarifies that ETCs are responsible for ensuring the registration of enrollment representatives. This rule will become effective 90 days after publication of the RO&O in the Federal Register.
  • Enrollment Process Improvements
    • The R&O amends the rules to limit when an ETC can record an Independent Economic Household (“IEH”) worksheet in the NLAD. An ETC will only be permitted to do so where the consumer completing the worksheet shares an address with another Lifeline subscriber.
    • ETCs are prohibited from claiming subscribers identified as deceased for requesting or receiving Lifeline reimbursement, and USAC is directed to continue sampling existing subscribers on a quarterly basis and require proof of life documentation for subscribers identified as deceased.
    • The R&O codifies that the requirement that the number of eligible subscribers an ETC may claim for reimbursement must be no more than the number of qualifying subscribers the ETC directly serves.
  • Recertification – The R&O requires ETCs to collect eligibility documentation from subscribers at the time of recertification, if the subscriber’s eligibility was previously verified through a state or federal eligibility or income database and the subscriber’s continued eligibility can no longer be verified thorough that same database or another eligibility database. If the ETC cannot re-certify the subscriber, the ETC shall proceed with the de-enrollment requirements. These amendments will be effective 90 days after OMB approval.
  • Auditing – The R&O adopts a new audit approach that uses risk-based factors, rather than Lifeline disbursement information, to identify ETCs that must complete Biennial Audits. USAC is directed to develop and submit a list of proposed risk-based factors that would trigger a Biennial Audit, and the OMD and the Bureau are directed to update the Biennial Audit Plan as necessary.

MO&O and Order on Recon. – The MO&O and Order on Recon. addresses outstanding petitions to resolve pending questions relating to the rules and oversight of the Lifeline program and provide clarity to participants. The Order denies or dismisses as moot most of the petitions filed, with the except of the petitions of USTelecom and GCI and the joint petition of NTCA and WTA seeking reconsideration of the rolling reconsideration provision of the 2016 Lifeline Order, which the Commission grants in part.

  • The Commission partially grants USTelecom and GCI’s Petitions, requesting reconsideration of the 2016 decision to implement rolling recertification prior to the implementation of the National Verifier, arguing the Commission failed to provide sufficient notice of the change. Accordingly, the Commission reverses the rolling recertification requirement, which required an ETC to recertify a customer’s eligibility every 12 months, for ETCs pending disposition of the issues raised in the FNPRM. ETCs will not be required to complete recertification by the anniversary of a customer’s service initiation date, and instead the recertification process must merely be completed on an annual basis.

FNPRM – The FNPRM seeks comment on improving the operation and oversight of the Lifeline program. Specifically, the FNPRM seeks comment on increasing broadband adoption for those who would not otherwise subscribe to broadband, additional program integrity improvements, and privacy training requirements.

  • Program Goals and Metrics – The FNPRM seeks comment on whether the Lifeline program’s current goals adequately reflect the importance of measuring the program’s impact on adoption and continued connectivity, and how the program’s goals can be improved. The FNPRM proposes adding a new goal to the program of increasing broadband adoption for consumers who, without Lifeline, would not subscribe to broadband and the issues and collection methods associated with this goal. It seeks comment on this approach, as well as methods of measuring broadband adoption for certain customer groups.
  • Additional Program Integrity Recommendations – The FNPRM proposes requiring ETCs to upload their internal customer account numbers into the NLAD in order to help match records between USAC and ETC to eliminate fraud, and requiring ETCs and the National Verifier to record and retain a Lifeline applicant’s eligibility proof number and type of proof. It also seeks comment on requiring ETCs to provide the NLAD or National Verifier with access to the same data maintained by the ETC, and the best ways to ensure that customer broadband data usage is gathered accurately. The FNPRM proposes amending the de-enrollment process notification rules and timelines, and methods to minimize fraud and abuse of the free handsets distributed upon enrollment.
  • Certifying Privacy Protection Efforts – The FNPRM seeks comment on a recommendation to require ETCs and state agencies with access to the USAC NLAD and National Verifier systems to certify that they have given their employees and enrollment representatives appropriate privacy training before they have access to these systems. Additionally, the FNPRM seeks comment on whether state commissions and ETCs conduct background investigations of their staff that access USCA’s systems, the nature of the investigations, and whether the Commission should require that state commissions and ETCs certify that they complete these investigations.

The Fifth R&O, MO&O and Order on Recon, and FNPRM will be effective 30 days after publication in the Federal Register, with the exceptions of: amendments made to section 54.406(b) (prohibitions of commissions for enrollment representatives), which will be effective 60 days after publication in the Federal Register; section 54.406(a) (enrollment representative registration), which will be effective 90 days after publication in the Federal Register; and 54.404(b)(12) (enrollment verification) and 54.410(f) (eligibility determination) which will be effective 90 days after publication in the Federal Register of OMB approval.

On Friday, December 27, 2019, the Commission published the Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration, and Further Notice of Proposed Rulemaking in the Federal Register therefore establishing the following effective date and comment dates:

The Order is effective January 27, 2020, except for Sections 54.406(b) (prohibition of commissions for enrollment representatives) which is effective February 25, 2020 and 54.406(a) (enrollment representative registration) which is effective March 26, 2020. The rule changes to Sections 54.404(b)(12) (identifying subscriber living status) and 54.410(f) (annually recertifying subscribers) are delayed and the effective dates will be announced at a later date.

Comments on the FNPRM are due January 27, 2020.

Reply comments are due February 25, 2020.

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