4 FCC Red No. 3 Federal Communications Commission Record FCC 89J·2 
Before the 
Federal Communications Commission 
Washington, D.C. 20554 
CC Docket No. 88·341 
In the Matter of 
MTS and WATS Market Structure 
LINK UP AMERICA, and 
Amendment of Part 36 of the 
Commission"s Rules and 
Establishment of a Joint Board 
RECOMMENDED DECISION AND ORDER 
Adopted: January 11, 1989; Released: January 31, 1989 
By the Federal-State Joint Board: 
I. INTRODUCTION 
1. The preservation of universal service is a basic goal 
of this Federal-State Joint Board (Joint Board) and of the 
Federal Communications Commission (Commission). To 
further that goal, the Commission has adopted this Joint 
Board's recommendation to establish a federal assistance 
program known as "Link Up America." (Link Up) 1 The 
program is designed to encourage low-income households 
to subscribe to local exchange service by reducing initial 
service and installation connection charges. On July 18, 
1988, the Commission issued a Notice of Proposed Rule 
Making2 inviting comments on whether to eliminate cer­
tain provisions relating to the non-income eligibility re­
quirements for the program in states which verify the 
income eligibility of applicants. The present rules limit 
assistance to individuals who have lived at an address for 
at least three months prior to the date assistance is re­
quested, and who have not received this assistance within 
the last two years. Under the proposed rules, if the tele­
phone company or the state verifies the applicant's in­
come, then these two non-income criteria do not apply. 
Based on the comments received, we recommend that the 
Commission adopt the proposed rules. 
II. BACKGROUND 
2. The Link Up program furnishes federal assistance to 
cover one half of local exchange service installation and 
connection charges, to a maximum of 30. for eligible 
low-income beneficiaries. Additionally, when a local ex­
change carrier offers a deferred payment plan for service 
connection charges and does not assess the subscriber any 
interest charges, federal assistance is available to that car­
rier to cover the interest on deferred costs of up to 200.3 
3. In order for an individual to participate in the Link 
Up program, he or she must meet certain eligibilitv cri­
teria. These criteria were developed by this Joint Board 
and adopted by the Commission.4 The program was 
1219 
targeted to low-income households that were not presently 
telephone subscribers because those households could not 
afford high initial service connection costs. Accordingly, 
the Commission adopted Section 36.71l{b) of its Rules, 
47 C.F.R. § 36.71l(b), which provides that the applicant 
must: (1) have lived at an address where there has been 
no telephone service for at least three months; (2) not 
have received Link-Up assistance within the last two 
years; (3) not be a dependent for federal income tax 
purposes, unless older than 60 years of age; and ( 4) meet 
the requirements of a state-established income test. Assis­
tance is available for one telephone line per household at 
the applicant's principal place of residence.5 In order for 
a state or local exchange carrier to participate in the 
program, it must obtain Commission certification of its 
assistance plan before federal benefits are made available. 
Furthermore, the Commission's Rules provide that the 
state or telephone company verify either the three month 
and two year requirements or the income requirement. 
See Section 36.761(a)(2)-(3) of the Rules, 47 C.F.R. § 
36. 76 l(a)(2)-(3). 
4. Test markets were established in Arkansas, Texas, 
Washington, D.C., and West Virginia to monitor the Link 
Up program.6 Currently, 34 states, the District of Colum­
bia and Puerto Rico have been certified for federal assis­
tance through Link Up. Each participant in the program 
has chosen to verify income eligibility rather than to 
verify the three month and two year rules. Participating 
states have found that verification of the non-income eli­
gibility criteria was "administratively and economically 
infeasible, and impractical." 7 Furthermore, telephone 
companies in Maine, New York, and Wisconsin informed 
the Commission that they would not participate in the 
program. These companies stated that the three month 
residency rule and two year limitation on receiving assis­
tance would prevent deserving low-income households 
from subscribing to local exchange service.8 
S. Two state agencies, the New York Department of 
Public Service (NY DPS) and the Maine Public Utilities 
Commission (Maine), sought waivers of the Link Up eli­
gibility rules. The Commission's Common Carrier Bureau 
denied those petitions because the Bureau found that 
those state commissions had not made a showing of 
unique or extraordinary circumstances to justify a waiver 
of the rules.9 In response, Maine filed a motion contain­
ing a petition to reconsider the denial of its waiver re­
quest, a petition to commence a Rule Making to repeal 
the three month and two year eligibility requirement for 
Link Up, and a petition for reconsideration of those rules. 
The Common Carrier Bureau denied the petition for 
reconsideration. However, the Commission subsequently 
decided to address the issue in a new proceeding. Accord­
ingly, on July 18, 1988, the Commission issued the Notice 
in which it invited this Joint Board to review the eligibil­
ity criteria for the Link Up America program. Interested 
parties were invited to comment. Specifically, comments 
were sought on whether to eliminate the three month and 
two year requirements in those states which verify the 
income eligibility of applicants. 
FCC 89J-2 Federal Communications Commission Record 4 FCC Red No. 3 
III. SUMMARY OF COMMENTS AND REPLIES 
A. Comments 
6. Comments were received from 19 entities. 10 A major­
ity of the commenters are state public utility commissions 
or local exchange carriers. In addition, United States Tele­
phone Association (USTA), Florida Telephone Associ­
ation, Consumer Federation of America (CFA) and the 
City of New York (NYC) filed comments. All of the 
initial comments support the Commission's proposal to 
eliminate these eligibility requirements. Gener;i!ly, the 
commenters believe that these changes would ease admin­
istrative burdens and eliminate what they view as signifi­
cant barriers to service. 11 Most of them state that it is 
infeasible for telephone companies and state public ser­
vice commissions to maintain the necessary records to 
enforce the rules. See e.g., BellSouth Telephone Com­
panies (BellSouth) Comments at 3; Arkansas Public Ser­
vice Commission (Arkansas) Comments at 3; NY DPS 
Comments at 3. In addition, the commenters cite Com­
mission data which indicates that low income persons 
move more often than other families. The commenters 
agree that since it can be assumed that these people do 
not move simply to qualify for the Link Up program, it 
would be inconsistent with the Commission's universal 
service goal to deny connection assistance to the very 
people who need it because they have moved to a dif­
ferent residence. See e.g., Southwestern Bell Telephone 
Company (Southwestern Bell) Comments at 4; US West 
Comments at 5,7; Public Service Commission of Texas 
(Texas) Comments at 2-3. 
7. A number of the commenters, such as NYC and 
BellSouth note that fewer people than expected have par­
ticipated in the Link Up program and therefore the costs 
were lower than expected. Such commenters contend that 
this finding is consistent with the Commission's tentative 
conclusion that elimination of the non-income eligibility 
rules should not result in a large increase in the costs of 
providing the program. New York City Comments at 15; 
BellSouth Comments at 3. Conte! Corporation (Conte!) 
for example, cites the Commission's test market data 
which illustrate that only 15 percent more applicants 
would be eligible to participate if the criteria were modi­
fied, an increase in participation that would still fall 
below original cost projections for the program. Conte! 
Comments at 3, citing Notice, 3 FCC Red at 4535. See 
also, New England Telephone and Telegraph Company 
and New York Telephone Company (NYNEX) Comments 
at 3; BellSouth Comments at 2-3. 
8. No commenter advocated continuation of the three 
month rule. Southwestern Bell noted that in testing the 
program in Arkansas and Texas, at least 36 percent of the 
applicants did not meet the three month requirement. 
Southwestern Bell Comments at 3. This result was fairly 
typical in those states offering the program on a trial 
basis. 12 Several commenters note that in practice, the 
three month rule makes low-income families ineligible 
for the Link Up program through no fault of their own. 
US West observes that an individual may move for a 
variety of reasons, such as job opportunities or job loss, 
that have no bearing on his or her income qualifications 
for the program. US West Comments at 4-5. 
9. Commenters were unanimous in supporting the 
Commission's proposal to eliminate the rule that appli­
cants may only receive Link Up benefits once every two 
years. As the Commission indicated in the Notice, the 
1220 
original estimate of approximately 5 million eligible 
households has now been revised to about 2.9 million 
households. 13 Given these numbers, the commenters 
found little benefit in continuing the two year rule as a 
means of saving costs. Southwestern Bell Comments at 4; 
Texas Comments at 3. 
10. While all the commenters endorse easing the re­
quirement that customers not receive benefits more than 
once every two years, a number of them suggest that some 
limit on the frequency with which customers may use the 
program is needed. For example, the Wisconsin Public 
Service Commission (Wisconsin), US West, and 
Ameritech Operating Companies (Ameritech) suggest that 
the two year rule be replaced by a one year rule. These 
parties argue that the alternative rule would create a 
reasonable balance between the need to control program 
costs with the program's universal service goal. Wisconsin 
Comments at 2; US West Comments at 6: Ameritech 
Comments at 4. 
11. A number of other proposals were suggested by the 
commenters. The CFA suggests that the Commission 
eliminate the non-income eligibility requirements even in 
those states which do not have income verification. Ar­
kansas proposes that the Link Up program be extended to 
include construction charges to connect customers in ru­
ral areas to the public switched network. It argues that 
while the Commission provides assistance to local ex­
change carriers serving rural, high cost areas, this assis­
tance should be extended to the end users in those areas 
to offset the high cost of connection. Arkansas Comments 
at 3-4. In addition, the Virginia State Corporation Com­
mission (Virginia) advocates elimination of the require­
ment that recipients of Link Up not be dependents unless 
they are 60 years of age. Virginia claims, without elabora­
tion, that the provision is difficult to administer and 
enforce. Virginia Comments at 2-3. Finally, Southwestern 
Bell and US West propose that the Link Up program be 
expanded to include the transfer of service when a cus­
tomer moves to a location where he or she can transfer 
the existing service rather than initiate new service. US 
West states that under its interpretation of the rules, Link 
Up benefits are not available for the transfer of service. 
Southwestern Bell Comments at 6; US West Comments at 
8-9. 
B. Reply Comments 
12. Six of the 19 commenters filed reply comments. 14 
In response to Arkansas' proposal that the program be 
extended to include assistance in rural areas. five of the 
reply commenters oppose the idea, saying that it is be­
yond the scope of the program and is too costly. 15 See e.g., 
Ameritech Operating Companies Reply at 6; USTA Reply 
at 2 (stating that other programs offer assistance to rural 
subscribers). US West opposes the proposal of the CFA 
that the non-income eligibility criteria be eliminated re­
gardless of whether a state verifies income. It asserts that 
requiring state verification of applicant eligibility is an 
appropriare method of ensuring that the program assists 
those that are truly in need and of preventing abuse. US 
West Reply at 6. See also, BellSouth Reply at 2. 
Ameritech opposes Virginia's proposal to eliminate the 
requirement that applicants for Link Up not be depen­
dents for federal income tax purposes unless more than 
60 years of age. Ameritech claims that if this requirement 
were dropped, it could result in multiple members of the 
same household receiving Link Up assistance. Id. 
4 FCC Red No. 3 Federal Communications Commission Record FCC 89J-2 
NYNEX, however, supports Virginia's proposal, although 
it offers no explanation for its position. NYNEX Reply at 
2. US West suggests as an alternative that the Commission 
clarify the rule to establish that only one telephone line 
per household at the subscriber's principal place of resi­
dence be permitted. US West Reply at 7. 
13. The reply commenters support elimination of the 
two year rule but are divided on the implementation of a 
one year rule. For example, US West continues to support 
the proposal, although it now suggests that states which 
may wish to develop their own rules should be permitted 
to request and receive waivers of the Commission's Rules 
for that purpose. Id. at 4. BellSouth and NYNEX, on the 
other hand, reiterated their support for elimination of the 
two year rule. BellSouth Reply at 2; NYNEX Reply at 2. 
NYNEX suggests that while there is no reason to impose a 
blanket restriction of the number of times a person may 
receive Link Up assistance within a given period of time, 
NYNEX proposes instead that states address any problems, 
such as applicants repeatedly applying for Link Up bene­
fits after having their telephone service terminated for 
non-payment, which may result from eliminating the two 
year rule. NYNEX Reply at 2. 
IV. DISCUSSION. 
14. It is clear from the comments and reply comments 
that there is substantial support for the Commission's 
proposal to eliminate the non-income eligibility require­
ments for the Link Up program in states which verify 
income eligibility. Moreover, all of the parties cite statis­
tics concerning the frequency of moves by low income 
persons to support their position that the restrictions 
place an undue hardship on applicants who moved for 
personal reasons and then could not receive the benefits 
of the program designed to help them. These figures are 
consistent with those cited by the Commission in the 
Notice to support its tentative conclusion that the restric­
tions should be removed. Notice, 3 FCC Red at 
4534-4535. 
15. When the Link Up program was implemented, the 
Commission relied upon an estimate of five million 
unconnected low-income households to estimate the cost 
of connecting them to the local exchange network. Id. at 
4535. It appears that this estimate was too high and that 
only about 2.9 million low income households are with· 
out telephone service. Id. Also, the Commission noted 
that the pool of potential recipients is further reduced in 
certain states due to other state-imposed restrictions. Id. 
The Commission tentatively concluded that " ... it ap­
pears that we may be able to expand the scope of the 
program without exceeding our original cost estimates." 
Id. The comments received in this Rule Making support 
this conclusion. Thus, we find that elimination of the 
non-income eligibility requirements in states which verify 
income should not unduly increase the costs of imple­
menting the Link Up program. Moreover, as the 
commenters agreed with the Commission's tentative con­
clusion that states and telephone companies do not gen­
erally maintain the type of records necessary to enforce 
the non-income eligibility requirements, adoption of the 
proposed rules will, for all practical purposes, result in 
elimination of those criteria. Finally, the proposed rule 
changes should result in increased participation in the 
program, thus furthering the Commission's goal of uni­
versal service. 
1221 
16. We do not believe it is advisable at this time to 
replace the two year rule with the less restrictive one year 
rule as suggested by Wisconsin, Ameritech, and US West. 
It is clear from the comments that it is infeasible for states 
and telephone companies to maintain records necessary to 
verify the non-income criteria. Therefore, adoption of 
these revised rules will, for all practical purposes, elimi­
nate these criteria. We recommend that the Commission 
continue to monitor the Link Up program to determine 
what effect the revised rules have on participation in and 
costs of the program. We do favor, however, allowing the 
states to develop rules which would address the problem 
of persons repeatedly requesting Link Up assistance when 
they have been disconnected due to non-payment of tele­
phone charges. 16. 
17. No commenters supported Arkansas's proposal to 
expand the Link Up program to include assistance to 
rural subscribers. Ameritech Reply at 3; BellSouth Reply 
at 3; NYNEX Reply at 3. As USTA states, other programs 
exist to assist this class of subscribers. USTA Comments at 
2. Furthermore, the proposal is beyond the scope of this 
proceeding, which sought comments solely on whether, 
when income eligibility is verified, to eliminate the non­
income eligibility criteria from the Commission's rules. 
Accordingly, we do not recommend adoption of this pro­
posal. 
18. We do not endorse the CFA's suggestion that the 
non-income eligibility requirements be eliminated even in 
those states which do not verify income. This program 
was designed specifically to aid low income persons. With­
out some guidelines governing eligibility by either the 
state or telephone company administrating the program, 
there would be no protection against abuse. Therefore, 
there is ample reason to maintain some eligibility criteria. 
19. Finally, we address the proposal by Virginia that the 
60 year old dependancy rule be eliminated. We agree with 
Ameritech that, if the rule is eliminated, this could result 
in numerous members of a household being eligible for 
Link Up assistance. Ameritech Reply at 2. The Commis­
sion articulated its intent underlying the rule, namely that 
assistance "be available for a single telephone link at the 
principal place of residence." Report and Order, 2 FCC 
Red at 2955. Therefore, we see no need to revise the 
rule. 17 
V. CONCLUSION 
20. In summary, we conclude that it is in the public 
interest to eliminate two non-income eligibility criteria: 
that an applicant must have lived at an address where 
there has been no telephone service for at least three 
months prior to the date that assistance is requested, and 
that the applicant must not have received this assistance 
within the last two years, in states which verify income. In 
the Notice, the Commission expressed concern that these 
eligibility rules were impeding the Link Up program. It is 
apparent from the comments that the Commission's as­
sumptions were correct. These limits on eligibility were 
orginally recommended by this Joint Board and adopted 
by the Commission in order to target the participants for 
the program and to keep the costs of the program low. 
However, as the commenters make clear, the restrictions 
have worked to prevent persons from receiving benefits 
who should be eligible. At the same time, it has become 
apparent that fewer persons than originally estimated are 
eligible for the program. Therefore, we conclude that the 
FCC 89J·2 Federal Communications Commission Record 4 FCC Red No. 3 
restrictions can be removed without substantial cost in­
creases in the program. Under these circumstances, it is 
in the public interest to remove these non-income restric­
tions on the Link Up program in states where income is 
verified. 
VI. PAPERWORK REDUCTION ACT 
21. The action contained herein has been analyzed with 
respect to the Paperwork Reduction Act of 1980, and 
found to impose no new or modified information collec­
tion requirement on the public. Implementation of any 
new or modified requirement will be subject to approval 
by the Office of Management and Budget as prescribed by 
the Act. 
VII. ORDERING CLAUSE 
22. ACCORDINGLY, the Joint Board RECOMMENDS 
that the Commission adopt the proposals discussed above 
and the attached revisions to Part 67 of the Commission's 
Rules. 18 
FEDERAL COMMUNICATIONS COMMISSION 
FOR THE FEDERAL-STATE JOINT BOARD 
APPENDIX A 
LIST OF PARTIES FILING COMMENTS 
Ameritech Operating Companies 
Arkansas Public Service Commission 
Bell Atlantic Telephone Companies 
BellSouth Telephone Companies 
City of New York 
Consumer Federation of America 
Conte! Corporation 
Florida Public Service Commission 
Florida Telephone Association 
GTE Telephone Companies 
Maine Public Utilities Commission 
Mountain States Telephone and 
Telegraph Company, Northwestern Bell 
Telephone Company and Pacific Northwest 
Bell Telephone Company (US West) 
New England Telephone and Telegraph 
Company and New York Telephone Company 
(NYNEX) 
New York Department of Public Service 
Public Service Commission of the 
District of Columbia 
Public Utility Commission of Texas 
Southwestern Bell Telephone Company 
United States Telephone Association 
Virginia State Corporation Commission 
Wisconsin Public Service Commission 
1222 
APPENDIX B 
PARTIES FILING REPLIES 
Ameritech Operating Companies 
BellSouth Telephone Company 
City of New York 
NYNEX Telephone Companies 
United States Telephone Association 
US West 
PROPOSED RULE CHANGES 
Part 36 of Title 47 C.F.R. is proposed to be amended as 
follows: 
1. The AUTHORITY for Part 36 continues to be Sec­
tions 4, 201, 202, 203, 205, 218, 22l(c), 403, and 410(c) of 
the Communications Act of 1934 as amended, 47 U.S.C. 
Sections 154, 201, 202, 203, 205, 218, 221(c), 403, and 
410(c). 
2. Section 36.721 is proposed to be amended by revising 
the introductory text of paragraph (a)(2); the texts of 
(a)(2)(ii) and (a)(2)(iii); by adding a new paragraph 
(a)(2)(iv); and by revising paragraph (a)(3) and removing 
paragraph (a)(4), to read as follows: 
Section 36.721. Telephone company eligibility for lifeline 
connection assistance expense allocation. 
(a) In order to be entitled to the additional interstate 
expense adjustment described in this Subpart a telephone 
company: 
(1) * * * 
(2) Shall verify that subscribers meet the eligibility cri­
teria set out in Section 36.7ll(b) provided that: 
(i) * * * 
(ii) If the eligibility criterion in Section 36. 71 l(b )( 4) is 
verified, then the criteria in Section 36.71l(b)(l) and (2) 
shall not apply; 
(iii) If the eligibility criterion in Section 36. 71 l(b )( 4) is 
self-certified, then the eligibility criteria in Section 
36.7ll(b)(l) and (2) shall apply and must be verified; 
(iv) In all cases, the eligibility criterion in Section 
36.71 l(b)(3) may be self-certified. 
(3) Shall file information with the Commission Sec­
retary demonstrating that it is eligibile for the additional 
interstate expense adjustment. 
(b) The additional interstate expense adjustment shall 
be effective as soon as the Commission certifies that the 
state or local telephone company is eligible for the addi­
tional interstate expense adjustment, the local exchange 
company files the data required by Section 36.731 with 
the National Exchange Carrier Association, and the rel­
evant tariff provision become effective. 
4 FCC Red No. 3 Federal Communications Commission Record FCC 89J•2 
The AUTHORITY for Part 36 continues to be Sections 
4, 201, 202, 203, 205, 218, 221(c), 403, and 410(c) of the 
Communications Act of 1934 as amended, 4 7 U .S.C. Sec­
tions 154, 201, 202, 203, 205, 218, 221(c), 403, and 410(c). 
FOOTNOTES 
1 MTS and WATS Market Structure and Amendment of Part 
67 of the Commission's Rules, CC Docket Nos. 78-72 and 
80-286, 2 FCC Red 2953 (1987) (Report and Order), reconsider­
ation, 3 FCC Red 4543 (1988). 
2 MTS and WATS Market Structure, Link Up America, and 
Amendment of Part 36 of the Commission's Rules and Estab­
lishment of a Joint Board, Notice of Proposed Rule Making, 3 
FCC Red 4534 (1988) (Notice). 
3 The Commission has also adopted the recommendation of 
this Joint Board and established the Lifeline assistance program. 
This program helps low income households stay on the public 
switched network by exempting them from federal subscriber 
line charges in states which offer matching assistance benefits. 
MTS and WATS Market Structure and Amendment of Part 67 
of the Commission's Rules, CC Docket Nos. 78-72 and 80-286, 
51 Fed. Reg. 1371 (Jan. 13, 1986). 
4 MTS and WA TS Market Structure, Amendment of Part 67 
of the Commission's Rules and Establishment of a Joint Board, 
CC Docket Nos. 78-72 and 80-286, Recommended Decision and 
Order, 52 Fed. Reg. 19,896 (May 18, 1987) (Recommended De­
cision); Report and Order, supra, 2 FCC Red at 2956. 
s Report and Order, supra, 2 FCC Red at 2955-2956; Section 
36.711 (b)(l)-(4) of the Commission's Rules, 47 C.F.R. § 36.711 
(b )( 1)-(4 ). 
6 Notice, supra, 3 FCC Red at 4538 n. 13. 
7 Id. at 4535. 
8 Id. at 4534. 
9 Letter of Gerald Brock, Chief, Common Carrier Bureau, to 
John J. Kelliher, Secretary, State of New York Department of 
Public Service, Nov. 2, 1987; Letter of Gerald Brock, Chief, 
Common Carrier Bareau, to Charles Jacobs, Administrative Di­
rector, State of Maine Public Utilities Commission, Aug. 11, 
1987. 
10 The names of the parties who filed comments are listed in 
Appendix A. A number of the parties filed short comments 
supporting, without elaboration, the Commission's proposed 
rules. The Florida Public Service Commission (FPSC) filed its 
comments, which it titled "Reply Comments" although it had 
not filed comments, after the deadline for filing comments. In 
the interest of compiling a complete record, we will accept the 
FPSC filing. However, we will treat its submission as a com­
ment rather than as a reply. 
11 NYC states that its experience with New York Telephone's 
Life Line program indicates that the program has been quite 
successful in providing telephone service to low-income house­
holds. However, it asserts that many of the recipients would not 
have been eligible under the Link Up program. New York 
Telephone's program was denied participation in the Link Up 
program for failure to meet the Commission's eligibility re­
quirements. NYC Comments at 5, 9-10. 
12 USTA states that over 42 percent of total ineligible applica­
tions in Askansas, Texas, Washington, D.C., and West Virginia 
(C&P only) were due to the three month rule. USTA Com­
ments at 4. 
13 Notice, supra, 3 FCC Red at 4535 (1988). 
u These parties are listed in Appendix B. 
1223 
15 The remaining reply, that of US West, does not address 
Arkansas' proposal. 
16 The Maine Public Utility Commission has enacted one such 
regulation. The state established an Installation Subsidy Pro­
gram, which limits the use of the subsidy for restoration of 
service after disconnection to no more than once per year. 
Maine Comments at 2. Florida has adopted similar regulations. 
Florida Telephone Association Comments at 2. 
17 US West and Southwestern Bell contend that the current 
Link Up rules preclude a person who is transferring service, 
rather than initiating new service, from receiving Link Up 
assistance. We do not interpret the Commission's Rules to deny 
benefits to an applicant for Link Up assistance if the applicant is 
transferring service. 
18 This recommendation is adopted pursuant to Sections 4(i), 
4G). 201, 202, 203, 221, 403 and 410 of the Communications Act 
of 1934, as amended, 47 U.S.C. §§ 154(i-j), 201-203, 221, 403, and 
410.