KELLEY DRYE & WARREN LLP A LIMITED LIABILITY PARTNERSHIP WASHINGTON HARBOUR, SUITE K STREET, NW WASHINGTON, D.C (202)
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1 A LIMITED LIABILITY PARTNERSHIP NEW YORK, NY LOS ANGELES, CA CHICAGO, IL STAMFORD, CT PARSIPPANY, NJ WASHINGTON HARBOUR, SUITE K STREET, NW WASHINGTON, D.C (202) FACSIMILE (202) BRUSSELS, BELGIUM AFFILIATE OFFICES MUMBAI, INDIA DIRECT LINE: (202) jheitmann@kelleydrye.com VIA ECFS Federal Communications Commission th Street, S.W. Washington, DC Re: Telrite Corporation; Boomerang Wireless, LLC; and i-wireless LLC Notice of Ex Parte Presentation; WC Docket Nos Dear Ms. Dortch: On December 6, 2013, Brian Lisle of Telrite Corporation, Paul McAleese and Jeni Kues of i-wireless LLC, Dennis Henderson of Boomerang Wireless, LLC, Chuck Campbell of CGM, LLC and John Heitmann and Joshua Guyan of Kelley Drye & Warren LLC met with Radhika Karmarkar, Jonathan Lechter and Anita Patankar-Stoll of the Wireline Competition Bureau to discuss the Lifeline program and specifically applicable databases. 1 At the meeting, representatives of the ETCs discussed the following: Michigan Duplicate Address Pilot We discussed the ETCs request that they be permitted to elect to contact their own customers to obtain the household worksheet where household duplicates are identified. 1 The eligible telecommunications carriers ( ETCs ) represented are all members of the Lifeline Reform 2.0 Coalition ( Coalition ), which filed in June a petition for rulemaking proposing further reforms to the Lifeline program. See Lifeline Reform 2.0 Coalition s Petition for Rulemaking To Further Reform The Lifeline Program, WC Docket Nos , , CC Docket No (filed June 28, 2013) ( Lifeline 2.0 Petition ). The Coalition members are Blue Jay Wireless, LLC; Boomerang Wireless, LLC; Global Connection Inc. of America; i-wireless LLC and Telrite Corporation.
2 Page Two There are several benefits to this approach, which were described in detail in an ex parte filed on December 5, First, due to lessons learned from last year s recertification process, most ETCs have developed more efficient and effective methods of reaching out to their Lifeline subscribers than sending letters (e.g., text messages, calling and even hotlining the subscriber s phone service to the ETC s customer service operators for purposes of obtaining a household worksheet). Further, customers know their ETCs and are more likely to respond to communications from their Lifeline service provider than from the Universal Service Administrative Company ( USAC ), which is an entity that they do not know. Second, allowing ETCs to conduct this activity would remove the expense of the process from USAC and shift it to the ETCs. Third, ETCs using the more efficient methods described above will have greater success at obtaining subscriber responses to resolve address duplicate issues, resulting in fewer disgruntled customers. National Lifeline Accountability Database ( NLAD ) The ETCs expressed their desire to see the NLAD implemented according to the timelines announced by USAC and with adequate testing. In addition, the ETC representatives discussed their experience taking part in the CGM Intercompany Duplicates Database ( IDD ) and Mr. Campbell informed the staff that since its inception the IDD has blocked more than 312,000 suspected duplicate enrollment attempts, resulting in savings to the Lifeline Program estimated at nearly $15 million. The monthly savings are estimated at nearly $3.7 million, which breaks down to $1,078,601 per month at the tribal reimbursement rate plus $2,597,816 per month at the non-tribal reimbursement rate. Using a four month average customer retention, the $3.7 million in monthly savings results in $14,705,669 in savings from 312,337 voluntarily blocked enrollments. The ETCs and CGM expressed their willingness to continue to work with the Commission and USAC on the implementation of the NLAD. Texas Databases The ETCs reported significant progress with respect to the Texas duplicates database, which will soon include an Application Programming Interface ( API ) for real-time duplicate checks, a reservation system to allow the first ETC to sign-up a customer to reserve that customer for up to 30 days to stop customers from enrolling in Lifeline service with another 2 See Ex Parte of Telrite Corporation; i-wireless LLC; Boomerang Wireless, LLC; Global Connection Inc. of America and Blue Jay Wireless, LLC, WC Docket No (filed Dec. 5, 2013).
3 Page Three Lifeline provider in the same month, 3 and a real-time notification of a duplicate address, which will allow the ETC to obtain the household worksheet at the time of enrollment. However, the ETCs reported that the Texas eligibility database will continue to use applicant zip code as a required field for eligibility confirmation, which results in many eligible applicants being denied Lifeline service because low-income consumers are more transient than the population in general. 4 Boomerang Wireless and i-wireless both report that 80 percent of their applications were rejected by the LIDA eligibility database, even though each applicant was able to produce proof of eligibility. In addition, using the zip code for eligibility verification is not required by the Texas Opt Out of the NLAD, which addresses the validity of the Texas duplicates database, not its eligibility database. 5 As discussed below, there are currently no minimum requirements for state eligibility databases. Therefore, in order to avoid denial of essential Lifeline service to eligible customers in Texas, LIDA should remove applicant zip code from the eligibility verification process. Minimum Standards for State Eligibility Databases The Commission has recognized that states may develop their own databases to address Lifeline applications. However, there must be some standards set for those databases to avoid allowing duplicate enrollments or denying Lifeline service to eligible consumers. In an The potential for this exists because the applicant does not become an active Lifeline subscriber until the end of the month when the ETC can include the applicant on its subscriber list submitted to the administrator. Note that the Melissa address data is generally updated at the end of the month. The Texas Low-Income Discount Administrator ( LIDA ) eligibility database currently requires ETCs to provide the applicant s Last Name, date of birth, last four digits of the social security number and zip code for a real-time eligibility check. While Lifeline applicants names generally do not change, and their date of birth and social security number cannot change, their zip codes change frequently. In many instances, an ETC will receive a response of non-eligible from the LIDA Health and Human Services Commission ( HHSC ) eligibility check even though the ETC is sitting in front of the applicant and looking at their photo identification and currently valid documentation of eligibility. The ETC has to inform the applicant that, even though they are qualified for Lifeline service and have all of the required documentation, the ETC cannot enroll the applicant for Lifeline service. This situation most likely occurs because the applicant s zip code has changed since they originally signed up for the qualifying program, such as Medicaid or Supplemental Nutritional Assistance Program ( SNAP ). See Amendment to the Petition to Opt Out of the National Database Pursuant to 47 C.F.R (a) By The Public Utility Commission of Texas, WC Docket Nos , , and CC Docket No (filed Nov. 16, 2012).
4 Page Four October 2012 Public Notice, the Commission provide[d] guidance to states regarding the process of opting out of the National Lifeline Accountability Database and required states to build duplicates databases at least as robust as the NLAD. 6 If the state duplicates database fails to meet the minimum requirements, then ETCs in the state are required to use the NLAD for duplicate detection. The Commission has not provided any guidance to states or set minimum standards with respect to eligibility databases, which could have important implications for Lifeline-eligible consumers. Therefore, the ETCs propose that the Commission establish minimum requirements for state eligibility databases. The ETCs propose the following minimum requirements for any state Lifeline eligibility database: (1) Real-time API access to data (2) Updated in a timely fashion, which ideally would be real-time or within 24-hours (3) Simple yes/no response without access to underlying data (to address privacy concerns) (4) Match based on last name, date-of-birth and last four digits of the applicant s social security number (no address-related field) (5) Efficient exceptions and dispute resolution process (6) Provide access to the Commission and USAC for audit purposes The ETCs believe these are all essential elements of an effective state eligibility database. A database that meets these minimum criteria is unlikely to result in significant numbers of eligible Lifeline customers being turned away. However, there should be an exceptions management process for situations where eligible consumers are not found in the applicable state eligibility database as described below. 6 See Wireline Competition Bureau Clarifies Minimum Requirements for States Seeking to Opt Out of National Lifeline Accountability Database, WC Docket Nos , , and CC Docket No , Public Notice, DA (rel. Oct. 11, 2012) ( Opt Out Public Notice ).
5 Page Five Commission Rules Regarding Use of State Eligibility Databases The ETCs also addressed ambiguity regarding the Commission s rules governing the use of state eligibility databases and noted that this ambiguity often results in eligible consumers being denied Lifeline benefits. To avoid this untenable outcome, the ETCs explained that the most reasonable reading of the Commission s Lifeline enrollment rules allows eligible Lifeline applicants to enroll in Lifeline service by showing documentation of eligibility even if they are not found in an available state eligibility database. Section (c)(1)(i)(B) of the Commission s rules regarding program-based eligibility provides, If an [ETC] cannot determine a prospective subscriber s program-based eligibility for Lifeline by accessing eligibility databases, the [ETC] must review documentation demonstrating that a prospective subscriber qualifies for Lifeline under the program-based eligibility requirements. 7 Section (b)(1)(i)(B) of the rules provides the same language with respect to income-based eligibility. 8 If the applicant is found in the database, the applicant s eligibility has been determined and the ETC can enroll the applicant in Lifeline. If the applicant is not found in the state eligibility database, then the applicant s eligibility cannot be determined by the state database, and the ETC must review documentation of eligibility from the applicant to enroll the applicant in Lifeline. This reasonable interpretation of Sections (c)(1)(i)(B) and (b)(1)(i)(B) of the Commission s rules allows ETCs to enroll demonstrably eligible lowincome consumers in Lifeline rather than having to turn them away. This interpretation of the rule also is consistent with the Bureau s interpretation of the Lifeline re-certification requirement in situations where state eligibility databases are available. In an October 2012 Public Notice, the Bureau stated its policy with respect to recertification: If there is a database in the state, but the ETC or state agency cannot re-certify the subscriber through that database (i.e., the subscriber cannot be found in the database), the state agency or ETC may re-certify the continued eligibility of a subscriber by obtaining a signed certification from the subscriber that meets the requirements of 47 C.F.R (d). For re-certification the signed subscriber self-certification is the default when databases are not available just as providing proof of eligibility is the default for enrollment when databases are not available C.F.R (c)(1)(i)(B). See 47 C.F.R (b)(1)(i)(B).
6 Page Six In order to prevent eligible consumers from being denied service, the Bureau should issue guidance that removes ambiguity and confirms that, if an applicant is not found in the state eligibility database, then the applicant s eligibility cannot be determined by the state database, and the ETC must review documentation of eligibility from the applicant to enroll the applicant in Lifeline. Retention of Proof of Eligibility The ETCs discussed the Lifeline Reform 2.0 Coalition proposal that ETCs be permitted to retain proof of eligibility for audit purposes and in order to respond to negative media stories that claim an ETC did not require proof of eligibility. 9 The ETCs understand the Commission s and other parties concerns raised by this proposal regarding Lifeline subscriber privacy rights, and the ETCs also seek to ensure that strict privacy controls are maintained. For that reason, the Coalition proposed in its Petition that the Commission require that the electronic storage of documentation of eligibility be encrypted according to a reasonable standard. Further, the ETCs propose a limited retention period to allow for USAC auditing and to respond to media inquiries or reports. In addition, after discussions with Lifeline stakeholders, the Coalition also supported the concept of having a trusted third party such as USAC or another entity retain the documentation of eligibility, rather than the ETCs. In this manner, a single encryption standard can be chosen and all private information can be stored in a single location rather than at multiple locations with multiple ETCs. Lifeline Notices of Apparent Liability The ETCs also discussed the burden placed on the entire Lifeline program and ETC industry by the recently released Notices of Apparent Liability ( NALs ). The ETCs explained that the NALs are adversely impacting investment and job creation even for ETCs that have not received an NAL because of the uncertainty that they introduce to the market. The ETCs support fair and equitable enforcement, however, the NALs and the forfeiture structure announced in them do not represent a rational, fair or equitable approach to enforcement. This is in part because the Commission has failed to provide a clear and consistent definition of what constitutes a duplicate enrollment leaving the industry to guess as to which accounts with similar but not identical subscriber data USAC will subjectively deem to be duplicates. The Commission also has failed to notify ETCs of the steps they must take to identify and reject consumer certifications (made under penalty of perjury) that may result in duplicate benefits being provided to the consumer. Apparently, relying on electronic screening mechanisms such as those presently incorporated into the NLAD is not good enough. Although 9 See Lifeline 2.0 Petition at 6-7 and Reply Comments filed Aug. 29, 2013 at 7-8.
7 Page Seven the Commission was required to have the NLAD in place for screening duplicate enrollment attempts as of early this year, the NLAD would not have identified many of the NALs alleged duplicates as duplicates (because the NLAD as currently constituted does not define a duplicate in the same way that USAC did in its audits that form the basis for the NALs). 10 Notwithstanding these shortcomings, it is our understanding that the alleged instances of intracompany duplicate enrollments at issue in these NALs typically amount to less than 1% of each ETC s enrollments analyzed, which is well under the 1.5% threshold set by the Improper Payments Elimination and Recovery Act ( IPERA ) for significant improper payments by a government agency disbursement program. Finally, counsel for the ETCs explained that the proposed fines are excessive and reckless in that they threaten the viability of ETCs and their ability to provide Lifeline services to eligible consumers. This letter is being filed electronically for inclusion in the public record of the above-referenced proceeding. Please feel free to contact the undersigned with any questions. Respectfully submitted, John J. Heitmann Joshua T. Guyan Counsel to Telrite Corporation, Boomerang Wireless, LLC and i-wireless LLC cc: Radhika Karmarkar, WCB Jonathan Lechter, WCB Anita Patankar-Stoll, WCB 10 This is not to suggest that there is a problem with the manner in which the NLAD would identify a duplicate. The problem is with the NALs and the Commission s proposals therein to (a) hold ETCs strictly liable for failing to guess properly which consumer certifications USAC deems to be fraudulent, and (b) fine ETCs based on an outrageous forfeiture framework that is patently unlawful.
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