..JULIUS GENACHOWSKI CHAIRMAN FEDERAL COMMUNICATIONS COMMISSION April 17,2012 The Honorable Claire McCaskill Chairwoman Subcommittee on Contracting Oversight Committee on Homeland Security & Governmental Affairs United States Senate 601 Hart Senate Office Building Washington, D.C. 20510 Dear Chairwoman McCaskill: Thank you for your letter ofFebruary 13,2012 regarding the Universal Service Fund's (USF) Lifeline program. The Commission's unanimous, comprehensive reform of Lifeline earlier this year included strong measures to eliminate waste, fraud, and abuse, while modernizing Lifeline for the broadband age. These reforms are expected to save hundreds of millions of dollars annually. I am glad to respond to the questions you pose by providing the attached responses prepared by the Commission's Office of Managing Director, which oversees the management and administrative activities ofthe USF Administrator, the Universal Service Administrative Company. Please let me know ifI can be offurther assistance. Sincerely, Julius Genachowski cc: The Honorable Rob Portman, Ranking Member Subcommittee on Contracting Oversight Enclosure 445 12TH STREET S.W. WASHINGTON, D.C. 20554 • 202-418-1000 Information Request Concerning the Universal Service Fund Lifeline Program United States Senate Committee on Homeland Security & Governmental Affairs Subcommittee on Contracting Oversight (1) A copy of the Memorandum of Understanding (MOU) between FCC and USAC: Response: The MOU between the FCC and USAC is available on the FCC's webpage at, http://transition.fcc.gov/omd/usac-mou.pdf. An electronic copy ofthe MOU is also available on the enclosed disc. (2) The number of contractors employed by the FCC who perform work related to the management or oversight of Lifeline, and the number, value, and scope of all contractors under which those contractors are employed. Response: The FCC does not employ contractors to manage or oversee the Universal Service Fund, which consists ofthe High-cost, E-rate, Rural Health Care, and Lifeline programs. Instead, in 1997, the FCC established the Universal Service Administrative Company (USAC), a not for profit corporation, to administer the Universal Service Fund. USAC's responsibilities are detailed in the Commission's rules, Orders, the MOU (referenced above), letters, and other guidance. Among its responsibilities, USAC administers disbursements for the E-rate program, Rural Health Care program, High-cost program, and Low income program. (47 C.F.R. § 54.702). USAC also bills and collects contributions from telecommunications carriers and other providers oftelecommunications used to fund these program (47 C.F.R. § 54.702). In addition, pursuant to Commission rules, USAC may not "make policy, interpret unclear provisions ofthe statute or rules, or interpret the intent of Congress." (47 C.F.R. §54.701(c». For your reference, the enclosed disc includes electronic copies ofthe Commission's rules concerning USAC's Administration (also available at http://ecfr.gpoaccess.gov/cgi/t/text/text idx?c=ecfr&sid=eb4d91 Oe6e6b68bee76409caaab4cb69&rgn=div6&view=text&node=47:3.0.1.1 .7.8&idno=47) and USAC's most recent Annual Report (also available at http://www.usac.org/about/governance/annual-reports/201O.html) which provides comprehensive information concerning its operations for the past year. Additional information concerning USAC can be also be found on its website, available at, http://www.usac.org/default.aspx. (3) The number, value, and scope of all contracts, MOUs, or agreements between the FCC or USAC and other administrators of the Program. Response: There are no responsive documents to this item because, as discussed above, USAC is the sole administrator ofthe Universal Service Lifeline Program. Please see response to Item 2, above, addressing the responsibilities and operations ofUSAC. 1 (4) The number, value, and scope of all contracts, MOUs, or agreements between the FCC or USAC and eligible telecommunications carriers. Response: There are no responsive documents to this item. Eligible Telecommunications Carriers (ETCs) receive support under the Low Income program pursuant to the Communications Act of 1934, as amended by the Telecommunications Act of 1996 (1996 Act) and the Commission's rules. There are no contracts, MOUs, or agreements between the ETCs and the FCC or USAC. To be designated as an ETC, state commissions have primary responsibility for such designation pursuant to section 214(e)(2) ofthe 1996 Act. 47 U.S.C. § 214(e)(2). Section 214(e)(6) ofthe 1996 Act, however, directs the Commission to designate an ETC, upon request, when that carrier is not subject to the jurisdiction ofa State commission. 47 U.S.C. § 214(e)(6). Once designated, an ETC receives Lifeline reimbursement from USAC for each qualifying low-income consumer served (47 C.F.R. § 54.407). To process this reimbursement, among other things, ETCs must file one Lifeline and Link Up Worksheet (FCC Form 497), which is provided on the attached disc (also available at http://www.usac.org/li/telecom/step06/form497.aspx) for each month ofLow Income suppOli claimed. For your reference, electronic copies ofthe Commission 2012 Lifeline Reform Order (approving comprehensive reform and modernization of Lifeline), the Federal Register Publication detailing changes to the Commission's rules under the 2012 Lifeline Reform Order, and the 2011 Code of Federal Regulations edition ofthe Commission's rules concerning the Low Income progranl. Additional information concerning the Lifeline program is also available on the Commission and USAC websites, at http://transition.fcc.gov/wcb/tapd/universal service/lowincome.html and http://www.usac.org/li/. 5) All audits, evaluations, or reports related to the performance of USAC and eligible telecommunications carriers. Response: Per a discussion clarifying this request with Senator McCaskill's office on February 23, 2011, the enclosed disc contains electronic copies of all completed audits for Fiscal Year 2011. In addition, included are electronic copies ofall completed audits from the last five years with findings recommending recoverable Low Income disbursements in excess of $100,000. Also included is a spreadsheet summarizing these audits and providing status on recommended recovery amounts. (6) A list of eligible telecommunications carriers who participated in the program during FY 2011 and the amount of program disbursements received by each company. Response: The enclosed disc contains a spreadsheet which provides a list ofevery ETC who participated in the Lifeline program during FY 2011 and details the amount ofdisbursements received. 2 Information Request Concerning the Universal Service Fund Lifeline Program United States Senate Committee on Homeland Security & Governmental Affairs Subcommittee on Contracting Oversight Index of Electronic Copies Provided File Audits with Significant Findings • Summary Spreadsheet “McCaskillMaterialFindingsAudits3-20-12” • 9 Audits: LI2006BE004; LI2006LR003; LI2008BE006; LI2008LR003; LI2008LR005; LI2006BE204; LI2008BE001; LI2008BE012; LI2008LR004 Fiscal Year (FY) 2011 Audits • 33 Audits: LI2009BE001; LI2009BE002; LI2009BE003; LI2009BE004; LI2009BE005; LI2009BE006; LI2009BE007; LI2009BE008; LI2009BE009; LI2009BE010; LI2009BE011; LI2009BE012; LI2010BE016; LI2010LR003; LI2010LR005; LI2010LR015; LI2011BE001; LI2011BE002; LI2011BE003; LI2011BE004; LI2011BE005; LI2011BE006; LI2011BE007; LI2011BE008; LI2011BE009; LI2011BE010; LI2011BE011; LI2011BE012; LI2011BE013; LI2011BE014; LI2011BE015; LI2011BE016; LI2011BE017; LI2011BE018; LI2011BE019; LI2011BE020; LI2011BE021; LI2011BE023; LI2011BE025 US Code, Order, Rules, Forms • 47 C.F.R.Subpart E – Low Income Rules (10-01-11Edition) • 47 C.F.R.Subpart F – Administration (10-01-11Edition) • 47 U.S.C. Section 214 • 2011 Low Income Reform Order and NPRM • 2012 Lifeline Fed. Register Publication with Rule Changes • Form-497 • Form-497 Instructions FCC USAC Memorandum of Understanding USAC 2010 Annual Report Low Income Support State and Company FY 2011