PUBLIC NOTICE Federal Communications Commission 445 12th St., S.W. Washington, D.C. 20554 News Media Information 202 / 418-0500 Internet: http://www.fcc.gov TTY: 1-888-835-5322 DA 09-1775 Release Date: August 10, 2009 DEADLINE FOR ANNUAL LIFELINE VERIFICATION SURVEYS AND CERTIFICATIONS WC Docket No. 03-109 Each year, eligible telecommunications carriers (ETCs) are required to verify the continued eligibility of a statistically valid sample of their Lifeline subscribers.1 Under the terms of the Lifeline Order, states that have their own state-based low-income programs are required to establish state-specific verification procedures.2 These state procedures should include methods ETCs should use to verify continued eligibility and should specify to whom the results should be submitted.3 States that do not have state-based low-income programs are designated “federal default states.” ETCs in federal default states must follow the certification and verification procedures set out in the Lifeline Order.4 This public notice serves as a reminder that an ETC in a state with its own state-based low- income program must submit a certification, signed by an officer of the company, to the Universal Service Administrative Company (USAC) by August 31, 2009, and on August 31 of each subsequent year thereafter, attesting that the ETC has complied with the state verification procedures.5 All ETCs in 1 Federal-State Joint Board on Universal Service Lifeline and Link-Up, WC Docket No. 03-109, Report and Order and Further Notice of Proposed Rulemaking, 19 FCC Rcd 8302 (2004) (Lifeline Order). TracFone Wireless, Inc. (TracFone), pursuant to a condition imposed by the Commission in granting TracFone forbearance from the ETC facilities ownership requirement, must require each of its Lifeline customers to self-certify annually that he or she is the head of the household and receives Lifeline-supported service only from TracFone. TracFone must maintain these self-certifications and provide such documentation to the Commission upon request. See Petition of TracFone Wireless, Inc. for Forbearance from 47 U.S.C. § 214(e)(1)(A) and 47 C.F.R. § 54.201(i), CC Docket No. 96-45, Order, 20 FCC Rcd 15095, 15103, para. 18, n.50 (2005). Accordingly, verification of continued Lifeline eligibility based on a statistically valid sample of customers does not apply to TracFone. 2 Lifeline Order, 19 FCC Rcd at 8322, para. 33. 3 Id. at 8324, para. 37. 4 Id. 5 See 47 C.F.R. § 54.410(c)(1); see also Deadline for Annual Lifeline Verification Surveys and Certifications, WC Docket No. 03-109, Public Notice, 23 FCC Rcd 11917 (Wireline Comp. Bur. 2008); Deadline for Annual Lifeline Verification Surveys, Public Notice, 22 FCC Rcd 12753 (Wireline Comp. Bur. 2007); Deadline for Annual Lifeline Verification Surveys, Public Notice, 21 FCC Rcd 7184 (Wireline Comp. Bur. 2006). If August 31 falls on a holiday, the certification must be filed on the next business day. See 47 C.F.R. § 1.4(e)(2) and (j). 2 federal default states must also submit their annual Lifeline verification survey results to USAC by August 31, 2009, and on August 31 of each subsequent year thereafter.6 The Wireline Competition Bureau and USAC have received several inquiries concerning the Lifeline certification and verification procedures. In Attachment A to this public notice, we provide answers to frequently asked questions. People with Disabilities: To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (tty). The full text of this document is available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, S.W., Room CY- A257, Washington, D.C. 20554. They may also be purchased from the Commission’s duplicating contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, S.W., Room CY-B402, Washington, D.C. 20554, telephone: (202) 488-5300, fax: (202) 488-5563, or via e-mail www.bcpiweb.com. For further information, please contact Elizabeth Valinoti McCarthy, Telecommunications Access Policy Division, Wireline Competition Bureau at (202) 418-7400 or TTY (202) 418-0484. - FCC – 6 See 47 C.F.R. § 54.410(c)(2); see also 47 C.F.R. §§ 1.4(e)(2), (j). ATTACHMENT A Annual Lifeline Certification and Verification Procedures Frequently Asked Questions 1. Which states are “federal default states”? Delaware, Hawaii, Iowa, Indiana, Louisiana, New Hampshire, American Samoa, and the Northern Mariana Islands have identified themselves as “federal default states.”1 If your state is not included in this list, you should contact the state commission for its certification and verification procedures. If a state changes its designation, the state commission should notify the Federal Communications Commission. 2. What is the deadline for filing the results of the statistically valid sampling of Lifeline customers for purposes of verification and how should filings be made? For federal default states, all verification sampling results must be submitted to USAC by August 31, 2009, and on August 31 of each subsequent year thereafter.2 ETCs in federal default states must submit a signed copy of the results by only one of the following methods: (a) Facsimile to: (202) 776-0080; (b) E-mail to: LiVerifications@usac.org; or (c) U.S. Mail to: USAC - Low Income Program 2000 L Street, NW, Suite 200 Washington, DC 20036 ETCs must submit their verification results on the OMB-approved “Annual Lifeline Certification and Verification” form, which can be found on USAC’s website at http://www.usac.org/li/telecom/step08/verification-of-eligibility.aspx. ETCs may confirm the receipt of their submissions on USAC’s website at http://www.usac.org/_res/documents/li/pdf/cert- ver/2009%20Certifications%20and%20Verifications%20Received.pdf. 3. How do ETCs in states that have their own state-based Lifeline and Link-Up programs comply with the verification survey deadline? 1 Federal-State Joint Board on Universal Service Lifeline and Link-Up, WC Docket No. 03-109, Report and Order and Further Notice of Proposed Rulemaking, 19 FCC Rcd 8302, 8355, Appendix G (2004) (Lifeline Order). Since the release of the Lifeline Order, additional states have notified USAC of the change in their status. The list in this Public Notice represents the most current information available. USAC will update its website as the list is updated. See http://www.universalservice.org/li/tools/frequently-asked-questions/faq-lifeline-linkup-order.aspx#q1. 2 Id. at 8323, para. 35; see also 47 C.F.R. §§ 54.410(c)(2), 1.4(e)(2), (j); Deadline for Annual Lifeline Verification Surveys and Certifications, WC Docket No. 03-109, Public Notice, 23 FCC Rcd 11917 (Wireline Comp. Bur. 2008); Deadline for Annual Lifeline Verification Surveys, Public Notice, 22 FCC Rcd 12753 (Wireline Comp. Bur. 2007); Deadline for Annual Lifeline Verification Surveys, Public Notice, 21 FCC Rcd 7184 (Wireline Comp. Bur. 2006). 4 ETCs in states that have their own state-based Lifeline and Link-Up programs must comply with their states’ certification and verification procedures, including any deadlines set by those states. ETCs must also send USAC a certification indicating that they have complied with state verification procedures.3 These certifications must be submitted by August 31, 2009, and on August 31 of each subsequent year thereafter.4 ETCs must submit their certifications on the OMB-approved “Annual Lifeline Certification and Verification” form, which can be found on USAC’s website at http://www.usac.org/li/telecom/step08/certification.aspx. ETCs may confirm receipt of their submissions on USAC’s website at http://www.usac.org/_res/documents/li/pdf/cert- ver/2009%20Certifications%20and%20Verifications%20Received.pdf. 4. My state has its own state-based Lifeline and Link-Up program. The state’s Lifeline verification procedures direct ETCs to submit their verification results to USAC. Is this permissible? Yes. States with state-based Lifeline and Link-Up programs may either: (1) collect the verification results on a date that the state chooses; or (2) direct ETCs in their states to send the verification results to USAC.5 If companies are submitting the results to USAC, they should do so by August 31, 2009, and on August 31 of each subsequent year thereafter.6 Results submitted directly to USAC will be processed in the same manner as those received from ETCs in federal default states. 5. How should the verification sample be taken? In federal default states, the verification sample should be drawn from the company’s Lifeline customers on a state-wide basis, not on a study area or nation-wide basis. ETCs should provide a separate list of the study areas, including the Study Area Code, within its territory on the sample letter. ETCs should also enter a “0” where appropriate, instead of leaving a column blank. ETCs in states that have their own state-based Lifeline and Link-Up programs should consult the state verification procedures. 6. How do I determine the number of customers that constitutes a statistically valid sample? As explained in Appendix J of the Lifeline Order, the size of a statistically valid sample is based on: (1) the number of Lifeline subscribers; and (2) the percentage of Lifeline subscribers that inappropriately took Lifeline service in the immediate prior year.7 Using these two numbers and the chart attached to Appendix J of the Lifeline Order (and included as Attachment B to this public notice), ETCs can determine how many Lifeline subscribers should be surveyed.8 Values for the 3 Lifeline Order, at 8324, para. 34. 4 See 47 C.F.R. § 54.410(c)(1); see also 47 C.F.R. §§ 1.4(e)(2), (j); supra n.2. 5 Lifeline Order, at 8322, para. 34. 6 See 47 C.F.R. § 54.410(c)(1); see also 47 C.F.R. §§ 1.4(e)(2), (j); supra n.2. 7 Lifeline Order, at 8365, Appendix J. In the first year of verification, all ETCs assumed that the percentage of subscribers inappropriately taking Lifeline was one percent or .01. Thereafter, ETCs use actual figures to determine the percentage of subscribers inappropriately taking Lifeline. 8 Id. Under the terms of the Lifeline Order, companies may calculate their sample sizes directly by using the formulas set out in footnote 2 of Appendix J. 5 number of Lifeline subscribers are listed in the first column. Values for the percentage of inappropriate Lifeline subscribers are listed in the first row. By plotting the intersection of the two values, the ETC can determine the number of Lifeline subscribers that constitutes a statistically valid sample. To calculate the statistically valid sample size: a. Determine the current number of Lifeline subscribers: (a) ____________. b. Determine the number of Lifeline subscribers that were surveyed last year: (b) _____________. c. Determine the number of Lifeline subscribers that were surveyed last year that had their service terminated because they were found to be inappropriately taking Lifeline: (c)_____________. d. Divide line (c) by line (b), which is the percentage of surveyed Lifeline customers that were found to be taking Lifeline inappropriately: (d) _________________. e. Go to the chart in Appendix J (Attachment B to this public notice). Using the figure in line (a), find the closest value, rounding up to the nearest value. For example, if the ETC has 730 current Lifeline subscribers, the ETC should use the row for 800 subscribers. f. Find the appropriate column in Appendix J that corresponds to the percentage in line (d). If the percentage is less than .01, use the column for .01. If the percentage is greater than .06, use the column for .06. For percentages between .01 and .06, round up to the nearest half percent. For example, if the percentage in line (d) is .043, use the column marked “.045.” g. Find the number that is at the intersection of the row determined in step (e) and the column determined in step (f). This is the number of current Lifeline subscribers that the ETC must survey this year. 7. Last year, several Lifeline subscribers in my statistical sample did not reply. How should I account for that in determining the appropriate sample size for this year’s survey? If an ETC terminated Lifeline benefits because a consumer failed to respond, that subscriber should be included in the calculation of the proportion of those inappropriately taking Lifeline.9 By way of example: Last year, an ETC had 10,000 Lifeline customers. Its survey size was 43 Lifeline subscribers. There was one non-respondent, whose Lifeline benefits were terminated after the appropriate termination procedures were completed. In addition, there was one customer determined to be inappropriately taking Lifeline. The proportion of those inappropriately taking Lifeline would be: 2 / 43 = 0.047 or 4.7 percent. Under the directions included in Appendix J, the ETC should round up to the closest percentage listed in the chart, which would be 0.05 (or 5 percent) in the example above. This year, the ETC still has 10,000 Lifeline customers. The ETC should use the figure at the intersection of the row for 10,000 9 Id. 6 customers and the column for 0.05 percent, which is 202. This year, the ETC in the example should survey 202 current Lifeline customers. 8. When may ETCs terminate Lifeline subscribers who no longer qualify for Lifeline support? In states with existing dispute resolution procedures that apply to termination of Lifeline benefits, ETCs should follow such procedures.10 Specifically, if a state maintains its own procedures that would require, at a minimum, written customer notification of impending termination of Lifeline benefits, similar to the federal default requirements, that state will retain the flexibility to develop its own appeals process.11 If an ETC is in a state without dispute resolution procedures applicable to Lifeline termination and the ETC has a reasonable basis to believe that consumers no longer qualify for Lifeline support, the ETC must notify consumers by letter of their impending termination of Lifeline benefits and implement a 60-day period of time in which the consumers can demonstrate continued eligibility.12 For example, a consumer who does not respond to a request to verify his or her continued eligibility might no longer be eligible for Lifeline. Accordingly, ETCs should send a second letter to consumers who fail to respond to verification requests indicating that the consumer must demonstrate continued eligibility for Lifeline within 60 days or lose the Lifeline discount. A consumer who appeals must present proof of continued eligibility to the ETC consistent with the state’s verification requirements or federal verification requirements.13 This procedure is only required when the ETC has initiated termination of benefits, and is not necessary when the Lifeline subscriber has notified the ETC that he or she is no longer eligible.14 10 Lifeline Order, at 8316, para. 21; see also 47 C.F.R. §§ 54.405(c), (d). 11 Lifeline Order, at 8316, para. 21. 12 Id. at 8316, para. 22; see also 47 C.F.R. §§ 54.405(c), (d). 13 Lifeline Order, at 8316-17, para. 22; see also 47 C.F.R. §§ 54.405(d), 54.410(c). 14 Lifeline Order, at 8317, para. 22. ATTACHMENT B Appendix J of the Lifeline Order1 STATISTICALLY VALID SAMPLE Eligible Telecommunications Carriers (ETCs) subject to the federal default criterion will be required to verify the continued eligibility of a statistically valid sample of their Lifeline customers. The size of a statistically valid sample, however, varies based upon many factors, including the number of Lifeline subscribers (N) and the previously estimated proportion of Lifeline subscribers inappropriately taking Lifeline service (P). For the first year that ETCs verify subscribers’ continued eligibility, all ETCs should assume that the proportion P of subscribers inappropriately taking Lifeline service is .01, if there is no evidence to assume a different proportion. In subsequent years, ETCs should use the results of samples from previous years to determine this estimated proportion. In all instances, the estimated proportion P should never be less than .01 or more than .06. For ETCs with large numbers of Lifeline subscribers (more than 400,000), a statistically valid sample size must be calculated pursuant to the following formula:2 Sample Size = 2.706 * P*(1 – P) / .000625. For ETCs with 400,000 Lifeline subscribers or less, the above formula could yield a sample size that is larger than needed to be statistically valid.3 To simplify the calculation of a statistically valid sample, a table of sample sizes based on two variables N (number of Lifeline subscribers) and P (previously estimated proportion of Lifeline subscribers inappropriately taking Lifeline service) is provided below. Various numbers of Lifeline subscribers N are listed in the left-most column. Various previously estimated proportions P are listed on the first row. To determine the sample size, find the box that matches your number of Lifeline subscribers N and proportion P. If the number of Lifeline subscribers is not listed and/or the proportion is not listed, ETCs should use the next higher number for N and/or P that is in the table, i.e. always round up to the next higher value for N and/or P. For example, if 3.8 percent of 9,500 Lifeline subscribers inappropriately took Lifeline service, the ETC would use a sample size of 164 (value using 10,000 customers and proportion .04). Because the adjustment for the number of Lifeline subscribers is de minimus above 400,000 Lifeline subscribers, ETCs with more than 400,000 Lifeline subscribers must use the above formula to calculate the sample size. All ETCs must provide the estimated proportion for their samples to the Administrator, i.e., the proportion of sampled subscribers inappropriately taking Lifeline service. 1 Federal-State Joint Board on Universal Service Lifeline and Link-Up, WC Docket No. 03-109, Report and Order and Further Notice of Proposed Rulemaking, 19 FCC Rcd 8302, 8365 (2004) (Lifeline Order). 2 Lifeline Order, at 8365-68. The values 2.706 and .000625 in this formula are mandated by OMB. See Office of Management and Budget, Memorandum M-03-13 (May 21, 2003). 3 Id. Sample sizes for ETCs with 400,000 Lifeline subscribers or less are calculated pursuant to the following formula: sample size = N/(1+{[N-1]/n}). N is the number of Lifeline subscribers and n = 2.706 * P*(1 – P) / .000625, where P is the previously estimated proportion of Lifeline subscribers inappropriately taking Lifeline service. ETCs may choose to calculate their sample sizes using these formulas. Sample Size Table Previously Estimated Proportion of Subscribers Inappropriately Taking Lifeline Service (P)4 (N) Number of Lifeline Subscribers 0.01 0.015 0.02 0.025 0.03 0.035 0.04 0.045 0.05 0.055 0.06 400,000 43 64 85 106 126 146 166 186 206 225 244 100,0005 43 64 85 105 126 146 166 186 206 225 244 90,000 43 64 85 105 126 146 166 186 205 224 244 70,000 43 64 85 105 126 146 166 186 205 224 243 60,000 43 64 85 105 126 146 166 185 205 224 243 30,000 43 64 85 105 125 146 165 185 204 223 242 20,000 43 64 85 105 125 145 165 184 204 223 241 15,000 43 64 84 105 125 145 164 184 203 222 240 10,000 43 64 84 104 124 144 164 183 202 220 238 9,000 43 64 84 104 124 144 163 182 201 220 238 8,000 43 63 84 104 124 144 163 182 201 219 237 7,000 43 63 84 104 124 143 162 181 200 218 236 6,000 43 63 84 104 123 143 162 180 199 217 235 5,000 43 63 83 103 123 142 161 179 198 215 233 4,000 42 63 83 103 122 141 160 178 196 213 230 3,000 42 63 83 102 121 139 158 175 193 209 226 2,000 42 62 81 100 119 136 154 170 187 202 218 _______________________________________ 4 Id. For the first year of verification, ETCs should assume that this percentage is .01, if there is no evidence to assume a different percentage. In subsequent years, ETCs should use the results of samples from previous years to determine this estimated percentage. 5 Id. Sample sizes for ETCs with less than 400,000 Lifeline subscribers are calculated pursuant to the following formula: sample size = N/(1+{[N-1]/n}). N is the number of Lifeline subscribers. n is (2.706 * P*(1 – P)) / .000625, where P is the estimated percentage of Lifeline subscribers inappropriately taking Lifeline service. ETCs may choose to calculate their sample sizes using these formulas. 3 Sample Size Table Previously Estimated Proportion of Subscribers Inappropriately Taking Lifeline Service (P) (N) Number of Lifeline Subscribers 0.01 0.015 0.02 0.025 0.03 0.04 0.04 0.045 0.05 0.55 0.06 1,500 42 61 80 99 116 133 150 166 181 196 210 1,000 41 60 78 96 112 128 142 157 171 184 196 900 41 60 78 95 111 126 140 154 168 180 192 800 41 59 77 94 109 124 138 151 164 176 187 700 41 59 76 92 107 121 134 147 159 170 181 600 40 58 74 90 104 118 130 142 154 164 174 500 40 57 73 88 101 113 125 136 146 155 164 400 39 55 70 84 96 107 118 127 136 144 152 300 38 53 66 79 89 98 107 115 122 129 135 200 36 49 60 70 78 85 91 97 102 106 110 150 34 45 54 62 69 74 79 83 87 90 93 120 32 42 50 57 62 66 70 73 76 78 81 100 30 39 46 52 56 60 63 65 68 69 71 90 29 38 44 49 53 56 59 61 63 64 66 80 28 36 41 46 49 52 54 56 58 59 60 70 27 34 39 42 45 48 49 51 52 54 55 60 25 31 35 39 41 43 44 46 47 48 48 50 23 28 32 34 36 37 39 40 40 41 42 40 21 25 27 29 31 32 32 33 34 34 34 35 20 23 25 27 28 28 29 30 30 30 31 30 18 21 22 24 24 25 26 26 26 27 27 25 16 18 19 20 21 21 22 22 22 23 23 20 14 15 16 17 17 18 18 18 18 18 19 4 Sample Size Table Previously Estimated Proportion of Subscribers Inappropriately Taking Lifeline Service (P) (N) Number of Lifeline Subscribers 0.01 0.015 0.02 0.025 0.03 0.04 0.04 0.045 0.05 0.55 0.06 17 12 14 14 15 15 15 16 16 16 16 16 15 11 12 13 13 13 14 14 14 14 14 14 13 10 11 11 12 12 12 12 12 12 12 12 11 9 10 10 10 10 10 10 10 10 11 11 10 8 9 9 9 9 9 9 10 10 10 10 9 8 8 8 8 8 9 9 9 9 9 9 8 7 7 7 8 8 8 8 8 8 8 8 7 6 6 7 7 7 7 7 7 7 7 7 6 5 6 6 6 6 6 6 6 6 6 6 5 5 5 5 5 5 5 5 5 5 5 5 4 4 4 4 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1