*Pages 1--4 from Microsoft Word - 46562.doc* Federal Communications Commission DA 05- 525 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of Verizon Communications Inc. ) ) ) File No. EB- 03- TC- 125 MEMORANDUM OPINION AND ORDER Adopted: March 1, 2005 Released: March 2, 2005 By the Chief, Enforcement Bureau: I. INTRODUCTION 1. In this Order, we admonish Verizon Communications Inc. (“ Verizon”) for violating Section 214( e)( 1)( B) of the Communications Act of 1934, as amended (“ the Act”), 1 and Sections 54.405( b) and 54.411( d) of the Commission’s rules, 2 by failing to publicize the availability of Lifeline or Link- Up services “in a manner reasonably designed to reach those likely to qualify” for the services. Specifically, Verizon failed adequately to publicize Lifeline or Link- Up to low- income residents of 11 tribes in its service area for a period of approximately three years. While, as discussed below, we are constrained from proposing a monetary sanction at this time, we find that an admonishment is necessary to redress the statutory and rule violations enumerated herein. Moreover, we believe it is appropriate to inform Verizon of our specific concerns to ensure future compliance. Finally, we require Verizon to file a report with the Enforcement Bureau (“ Bureau”) within 60 days of this Order detailing its plans for future compliance with the Act and the Commission’s rules and orders in this area. II. BACKGROUND 2. Section 214( e)( 1)( B) of the Act provides the statutory basis for the action we take here: “A common carrier designated as an eligible telecommunications carrier . . . shall be eligible to receive universal service support in accordance with Section 254 and shall, throughout the service area for which the designation is received advertise the availability of such services and the charges therefore using media of general distribution.” 3 Lifeline and Link- Up are universal service support mechanisms that provide for discounted services to low- income consumers. Lifeline provides low- income consumers with discounts on the monthly cost of telephone service for a single telephone line in their principle residence. 4 Link- Up provides low- income consumers with discounts on the initial costs of installing telephone 1 47 U. S. C. § 214( e)( 1)( B). 2 47 C. F. R. §§ 54. 405( b), 54. 411( d). 3 47 U. S. C § 214( e)( 1)( B). 4 47 C. F. R. § 54. 401( a)( 2); In the Matter of Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Report and Order, 12 FCC Rcd 8776, 8957, ¶ 341( 1997), affirmed in part, reversed in part and remanded in part sub nom. Texas Office of Public Utility Counsel v. FCC, 183 F. 3d 393 (5th Cir. 1999), cert. denied, 530 U. S. 1210 (2000), cert. dismissed, 531 U. S. 975 (2000). 1 Federal Communications Commission DA 05- 525 2 service. 5 Recognizing the unique needs and characteristics of tribal communities, Lifeline and Link- Up provide qualifying low- income individuals living on tribal lands with larger discounts than any other group, i. e., up to $25 more in monthly Lifeline support and $70 more in Link- Up discounts. 6 3. Verizon is an eligible telecommunications carrier (“ ETC”) in 14 states, 7 i. e., a telephone company eligible to receive universal service support in accordance with Section 254 of the Act. 8 Verizon indicates that it serves 67 tribes in its 14- state region. 9 On October 7, 2003, based on concerns raised informally with the Bureau by tribal leaders, the Bureau sent a Letter of Inquiry (“ LOI”) to Verizon 10 to investigate whether Verizon was satisfying its obligation under Sections 54.405( b) and 54.411( d) of the Commission’s rules to publicize the availability of Lifeline and Link- Up services to low-income residents on tribal lands “in a manner reasonably designed to reach those likely to qualify” for those services. 11 The LOI directed Verizon to describe actions it had taken to satisfy Sections 54.405( b) and 54.411( d) and to support its response with recordings or transcripts of any radio or television advertisements, written material, or narrative descriptions with accompanying documentation of any other outreach, such as coordination with social service agencies, contact with tribes that administer any relevant government assistance programs, or personal letters to eligible customers. Based on Verizon’s response, the Bureau sent a second LOI to Verizon on April 6, 2004 12 and later directed Verizon to clarify and supplement its earlier LOI responses. 13 III. DISCUSSION 4. The Commission’s Lifeline and Link- Up outreach rules give an ETC some flexibility in deciding the type and frequency of outreach that is “reasonably designed to reach those likely to qualify” for the services. In applying the outreach rules to tribal lands, however, the Commission stated that it was concerned that eligible subscribers may not be aware of the discounts. 14 The Commission further 5 47 C. F. R. § 54. 411( a)( 1). 6 47 C. F. R. §§ 54. 403( a)( 4), 54.411( a)( 3). “Tier four” support provides eligible subscribers living on tribal lands up to an additional $25 per month towards reducing basic local service rates, but this discount can not bring the subscriber’s cost for basic local service to less than $1. See 47 C. F. R. § 54.403. 7 Verizon has been an ETC in the following 14 states since 1998: Arizona, California, Florida, Idaho, Maine, Massachusetts, Michigan, Nevada, New York, North Carolina, Oregon, Rhode Island, Washington and Wisconsin. See Letter from Kathleen Grillo, Vice President, Federal Regulatory Advocacy, Verizon, to Cynthia Bryant, Attorney, FCC (Apr. 27, 2004) (“ Second LOI Response”). 8 47 U. S. C. § 254. 9 Second LOI Response at Exhibit 1. 10 See Letter of Inquiry from Colleen Heitkamp, Chief, Telecommunications Consumers Division, Enforcement Bureau, to Suzanne Carmel, Verizon (Oct. 7, 2003) (“ First LOI”). 11 47 C. F. R. §§ 54. 405( b), 54. 411( d). Based on concerns that low- income residents on tribal lands may not be aware of the benefits of Lifeline and Link- Up, the scope of the investigation was limited to Verizon’s efforts to publicize Lifeline and Link- Up to eligible residents on tribal lands. 12 See Letter of Inquiry from Colleen Heitkamp, Chief, Telecommunications Consumers Division, Enforcement Bureau, to Suzanne Carmel, Verizon (April 6, 2004) (“ Second LOI”). 13 See Email from Cynthia Bryant, Attorney, FCC, to Kathleen Grillo, Vice President, Federal Regulatory Advocacy, Verizon (Nov. 30, 2004). 14 See In the Matter of Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Twelfth Report and Order, 15 FCC Rcd 12208, 12249, ¶ 76 (2000) (“ Twelfth Report and Order”). 2 Federal Communications Commission DA 05- 525 3 expressed an expectation that ETCs would have a system of evaluating the need for and the most appropriate efforts of outreach to tribal communities. 15 5. Verizon states that it publicized Lifeline and Link- Up to 11 tribes in six states in late 2000 through January 2001 via social service agencies, tribal newspapers, and senior citizen centers. 16 Verizon did not renew its Lifeline or Link- Up outreach efforts to any of these tribes again until December 2003 in Wisconsin, 17 and February 2004 in the other fives states, 18 which came after the Bureau’s first LOI in October 2003. In sum, Verizon allowed more than two- and- a- half to three years to elapse between outreach efforts directed to these 11 tribes. 6. Although the Commission’s rules do not include a specific statement specifying how frequently carriers must conduct Lifeline and Link- Up outreach, we nevertheless conclude that a delay of approximately three years in providing outreach to these 11 tribes does not fulfill Verizon’s obligation to publicize Lifeline and Link- Up “in a manner reasonably designed to reach those likely to qualify.” Several factors support our conclusion. First, as the Commission recently noted, only one- third of eligible low- income residents subscribe to Lifeline and Link- Up. 19 Thus, regular outreach is necessary to reach the substantial portion of eligible subscribers who do not currently take advantage of the discounts. Second, eligibility criteria 20 and individual income levels change regularly such that persons who may not qualify in one year may qualify the next. Third, eligible individuals may move onto tribal lands and, absent regular outreach, may not be aware that they qualify for the unique discounts available to residents on those lands. Thus, a reasonably designed outreach program must be ongoing and frequent to ensure that new and existing eligible consumers are aware of the benefits of the discount programs. 21 Verizon’s lack of outreach for these 11 tribes left potential beneficiaries without Lifeline and Link- Up information for a significant period of time and is therefore not reasonable under the Act and the rules. 7. Our finding is supported by Verizon’s apparent ad- hoc approach to compliance. After its initial outreach to the 11 tribes in six states in late 2000 and early 2001, which came shortly after the Commission’s outreach rules took effect, the record indicates that Verizon’s next action with respect to these tribes came only after the Bureau’s initial LOI in October 2003. It appears that Verizon did not have any system or procedure for monitoring outreach needs and taking appropriate action for these tribal lands and states. In the future, we expect Verizon and other ETCs to take a proactive rather than reactive approach to complying with Section 214( e)( 1)( B) of the Act, and Sections 54.405( b) and 54.411( d) of the Commission’s rules. 15 Id. at 12250, ¶ 79. 16 Letter from Sara Cole, Associate Director, Federal Regulatory Advocacy, Verizon, to Lynn Vermillera, Attorney, FCC (Nov. 24, 2003) (“ First LOI Response”) at VZ- FCC 0493. The six states are Idaho, Michigan, North Carolina, Nevada, Oregon, and Wisconsin. This admonishment applies only to Verizon’s lack of outreach to the 11 tribes in these states. We make no finding regarding Verizon’s outreach to the remaining 56 tribes it serves. 17 First LOI Response at VZ- FCC 0519. 18 See Second LOI Response at VZ- FCC 2192- 99, 2101- 2305, 2310- 24; see also email from Kathleen Grillo, Vice President, Federal Regulatory Advocacy, Verizon, to Cynthia Bryant, Attorney, FCC (Dec. 10, 2003) at Exhibit 1. 19 See In the Matter of Lifeline and Link- Up, WC Docket No. 03- 109, Report and Order and Further Notice of Proposed Rulemaking, 19 FCC Rcd 8302, 8305, ¶ 1 (2004). 20 See, e. g., id. at 8308- 09, ¶ 10 (changing the federal default eligibility criteria for Lifeline and Link- Up to 135% of the Federal Poverty Guidelines, among other things). 21 The Commission recently provided examples of effective frequent outreach. See e. g., id. at 8327- 28, ¶ 46 (stating that carriers, among other things, “may wish to send regular mailings” as a means of reaching households that do not currently have telephone service). 3 Federal Communications Commission DA 05- 525 4 8. Notwithstanding Verizon’s violations of the Act and the Commission’s rules, we do not propose a forfeiture at this time. Section 503( b)( 6) specifies that a proposed forfeiture must be issued against a common carrier for violations of the Act or the Commission’s rules within one year of the occurrence of the violation. 22 Because Verizon undertook renewed outreach efforts in these six states within the last year, we are constrained from pursuing a proposed forfeiture at this time. Nevertheless, we will closely monitor Verizon’s outreach efforts to ensure future compliance with the Act and the Commission’s rules. IV. CONCLUSION AND ORDERING CLAUSES 9. After reviewing the record, we find that Verizon’s failure to publicize Lifeline and Link-Up for approximately three years for 11 tribes in its service area violates Section 214( e)( 1)( B) of the Act, and Sections 54.405( b) and 54.411( d) of the Commission’s rules. 23 Accordingly, IT IS ORDERED THAT, Verizon IS ADMONISHED for failing adequately to publicize Lifeline and Link- Up for 11 tribes in its service area in violation of Section 214( e)( 1)( B) of the Act, 24 and Sections 54. 405( b) and 54. 411( d) of the Commissions rules. 25 10. It is further ordered that Verizon shall file a report with the Enforcement Bureau within 60 days of this Order detailing its plans for future compliance with the Act and the Commission’s rules and orders regarding the obligation to advertise the availability of Lifeline and Link- Up “in a manner reasonably designed to reach those likely to qualify” for the services. 26 11. IT IS FURTHER ORDERED that a copy of this Memorandum Opinion and Order shall be sent by Certified Mail Return Receipt Requested to Kathleen Grillo, Vice President, Federal Regulatory Advocacy, Verizon, 1300 I Street NW, Suite 400 West, Washington, DC, 20005. FEDERAL COMMUNICATIONS COMMISSION David H. Solomon Chief, Enforcement Bureau 22 47 U. S. C. § 503( b)( 6). 23 47 C. F. R. §§ 54. 405( b), 54. 411( d). 24 47 U. S. C. § 214( e)( 1)( B). 25 47 C. F. R. §§ 54. 405( b), 54. 411( d). 26 See 47 C. F. R. §§ 54. 405( b), 54. 411( d). 4