FCC Clarifies Lifeline Eligibility and Verification Rules for Wireless Providers, but Creates a Two-tier System

In a February 2, 2010 Order the FCC finally responded to petitions filed back in 2005 by various wireless providers regarding which Lifeline eligibility and verification rules apply to them – the FCC’s or the state’s rules. The FCC determined that even though states – like New York – may have enacted their own Lifeline programs (known as “non-federal default states”), these rules only apply to providers over which the state has jurisdiction. In all other cases, the FCC’s Lifeline requirements apply to the company offering the service. Why is this distinction important?

Only providers which have been designated as Eligible Telecommunications Carriers (“ETCs”) may offer Lifeline discount telephone service and Link-Up connection assistance and receive reimbursement from the federal Universal Service Fund. Where the state has jurisdiction over the provider and decides whether to grant the ETC status, the carrier will also be eligible for reimbursement from any state universal service fund, such as the Targeted Accessibility Fund (“TAF”) in New York State. Once designated, among the other requirements of being an ETC, the ETC is responsible for ensuring that its Lifeline customers are eligible for the benefit and must annually verify that their Lifeline customers continue to be eligible.

Eligible consumers in federal default states are required to certify that their income is at or below 135 percent of the federal poverty guidelines or that they participate in at least one of the following public assistance programs: Federal Public Housing Assistance, Food Stamps, Low Income Home Energy Assistance, Medicaid, National School Lunch Program’s Free Lunch program, Supplemental Security Income, or Temporary Assistance for Needy Families. As a non-federal default state, New York sets its own eligibility criteria; for example, it currently does not recognize Public Housing Assistance or the Free Lunch program, but does include Safety Net Assistance and the Veterans Disability Pension/Veterans Surviving Spouse Pension (although the state’s eligibility programs are not codified in regulation or statute and vary slightly by carrier).

Upon reviewing the petitions (after over four years), the FCC determined “that when a state has mandated Lifeline support but does not impose or enforce its certification and verification requirements on some carriers that operate within that state or on some Lifeline customers who reside within the state, the affected carriers and customers must follow federal default procedures. . . . Without clarification, some carriers may presume that they are not subject to either federal or state certification and verification requirements. In fact, the Commission’s rules contemplate that all ETCs will verify the continued eligibility of their Lifeline customers to ensure that the low-income support mechanism is updated, accurate, and carefully targeted to provide support to only eligible consumers. Verification also is an effective way to prevent fraud and abuse and ensure that only eligible consumers receive benefits. Because the ETCs described herein do not appear to be required by their relevant states to follow state certification and verification procedures, the only alternative means to comply with the Commission’s certification and verification requirements is to require them to follow the federal default rules for certifications and to submit their verification data to USAC [the Universal Service Administrative Company].”

What all this means is that some Lifeline providers in New York, the traditional landline telephone companies, can only add Lifeline customers which fall into certain public assistance programs (such as Safety Net Assistance), but can draw additional support from TAF (which they pay into). Meanwhile, other ETCs, the wireless providers, can draw customers from different eligibility programs (like the School Lunch program), but are ineligible to receive support from TAF (which they do not pay into) and are exempt from state consumer protection and service quality standards. Why should there be two separate Lifeline programs operating in New York? While the wireless providers can tap into arguably a larger pool of eligible customers (with the School Lunch program and Public Housing Assistance), they may not be able to offer as large a discount as their landline competitors because they receive less reimbursement.

The solution? Codify the state’s eligibility criteria to include all of the federal criteria, plus any additional programs (which the state legislature attempted with A.4967 in the previous session). Then, follow the language in section 5(6) of the Public Service Law and have the New York State Public Service Commission make a determination that the time has come to eliminate the jurisdictional suspension over wireless service. Then, encourage all wireless providers, especially those which already received ETC designation from the FCC, to seek ETC status in New York so they would be eligible for TAF reimbursement.

Lou Manuta