FEDERAL COMMUNICATIONS COMMISSION
April 17,2012
.JULIUS GENACHOWSKI
CHAIRMAN
Th~Honorable Claire McCaskill
United States Senate
717 Hart Senate Office Building
Washington, D.C. 20510
Dear Senator McCaskill:
Thank you for your letter regarding the Commission's action to reform 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 ofdollars annually.
I am glad to respond to the questions you pose by providing the attached responses
prepared by the Commission's Wireline Competition Bureau.
Please let me know ifI can be offurther assistance.
Enclosure
445 12n-i STREET S.W. WASHINGTON. D.C. 20554 • 202-418-1000
(1) The growth in the number of carriers participating in Lifeline since the wireless
expansion.
In 2008, the Commission designated TracFone, a prepaid wireless reseller, as an
eligible telecommunications carrier (ETC) for purposes ofparticipation in the Lifeline
program. The Commission has since designated other non-facilities-based carriers as
Lifeline-only ETCs, including Virgin Mobile, Conexions, and i-Wireless. States have
also granted Lifeline-only ETC designations to non-facilities-based carriers. The
number ofnew ETCs (both facilities-based and non-facilities-based) receiving low 
income support from 2008 through January 2012 is as follows:
ETC Designation Year Number ofNew ETCs Receiving Low-
Income Support
2008 54
2009 131
2010 103
2011 147
(2) The amount of duplication and the number of ineligible customers the FCC has
discovered in the last three years.
a. Duplicative Lifeline Support: On February 6,2012, the Commission
issued a Report and Order and Further Notice ofProposed Rulemaking to
comprehensively reform the Lifeline program (FCC 12-11). That Report and Order
notes (page 170) that, beginning in June 2011, the Commission directed the Universal
Service Administrative Company (USAC) to undertake a series ofin-depth data
validations to identify instances ofduplicative Lifeline support. Through the IDV
process, which has been completed in 12 states, USAC examined 3.6 million
customer records and directed ETCs to de-enroll over 292,000 customers receiving
duplicative Lifeline support. USAC found that this process will result in a savings to
the federal USF of$2.9 million per month, or $35 million annually. The detailed data
results ofthe IDVs as filed by USAC are publicly available on the Commission's
electronic filing system (ECFS), dated January 10,2012.
b. Ineligibility Data: As detailed in the Commission's February 6 Report
and Order (pages 49-50), carriers in non-federal-default states (i.e., states that
mandate Lifeline support) historically follow procedures prescribed by the state to
annually verify the continued eligibility oftheir Lifeline subscriber base. The
Commission has required carriers in federal default states (i.e., states that do not
mandate Lifeline support) to mmually verify a statistically valid random sample of
their Lifeline subscribers. In some states, this function is performed by a state
program administrator rather than the carrier. In the Report and Order (pages 66-74),
the Commission replaces the current verification methodology with a uniform re 
certification process that would require carriers in all states to mmually re-certify the
continued eligibility oftheir entire Lifeline subscriber base.
USAC compiles the annual verification results for carriers in federal default states
and carriers in states that require the submission ofverification results to USAC. For
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2009 and 2010, the number ofconsumers failing to respond to the carrier or state's
verification surveys was not tracked separately from the number ofconsumers found
to be ineligible for Lifeline; rather, both are presumed to be ineligible for Lifeline.
The results for 2011 separated the number ofnon-responders from consumers found
to be ineligible. The results for the prior three years are as follows:
1. 2009: Out of336,079 Lifeline subscribers surveyed, 52,776, or 16 percent
ofLifeline subscribers surveyed, failed to respond or were found
ineligible.
11. 2010: Out of61,370 Lifeline subscribers surveyed, 15,103, or 25 percent
ofLifeline subscribers surveyed, failed to respond or were found
ineligible.
111. 2011: Out of52,865 Lifeline subscribers surveyed, 4,694, or 9 percent of
Lifeline subscribers surveyed, responded that they were no longer eligible
for Lifeline. Additionally, 14,219, or 27 percent ofsubscribers surveyed,
could be deemed ineligible due to failure to respond to the carrier or state
administrator's verification attempts.
The detailed data results as filed by USAC are publicly available on the
Commission's electronic filing system (ECFS), in filings dated January 10,2012 and
January 24,2012. See also Appendix D ofthe Report and Order (pages 276-277) for
the data results for 2007 and 2011.
(3) The number and scope of audits that have been conducted by the FCC since the
wireless expansion and details of the audit findings.
Since January 2009, the USAC Board ofDirec'tors has approved 54 low-income
program audits (a total of215 audit findings). To date, USAC has recovered a total of
$480,796 based on those audit findings. Ofthose 54 low-income program audits, 23
contained monetary and non-monetary findings, 8 contained only monetary findings, 17
contained only non-monetary findings, and, in 6 instances, no negative audit finding was
made.
(4) The internal processes that the FCC has implemented to administer Lifeline and
prevent fraud, waste and abuse in the program.
The Commission has recently implemented several processes to detect and
prevent instances ofwaste, fraud, and abuse in the Lifeline program. First, as noted
above, beginning in June 2011, the Commission directed USAC to begin performing
in-depth data validations to identify instances ofduplicative Lifeline support. In that
month, the Commission also adopted a process for de-enrolling consumers found to
be receiving duplicative Lifeliny services and, to date, USAC has directed ETCs to
de-enroll over 292,000 customers in 12 states, saving the Fund $35 million annually.
Second, in the February 6 Report and Order and Further Notice ofProposed
Rulemaking, the Commission enacted several reforms to eliminate waste, fraud, and
abuse in the Lifeline program, including: adoption of a national duplicates database to
detect and eliminate duplicative Lifeline and Link Up support, which should be
functional as soon as possible and no later than 2013; the phase out ofToll Limitation
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Support (TLS) for eligible telecommunications carriers that offer service plans that
charge a fee for toll calls in addition to the per month or per billing cycle price for the
Lifeline service plan; elimination ofLink Up support to all ETCs on non-Tribal lands,
effective April 1,2012, and the limitation ofLink Up on Tribal lands to high cost
recipients deploying infrastructure; establishment ofrules preventing prepaid carriers
providing free Lifeline services from obtaining support for subscribers who do not
personally activate the phone, and requiring de-enrollment ofsubscribers who do not
use their Lifeline service within a 60-day period; adoption ofrules regarding the
marketing ofLifeline-supported services; revision ofthe Lifeline program audit and
oversight requirements; and adoption ofa three-month transition period for low 
income support to be disbursed based on actual support payments rather than based
on projected support amounts.
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