Lifeline and Link Up Reform and Modernization, Telecommunications Carriers Eligible for Universal Service Support, Connect America Fund

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 11-42, 09-197, 10-90; FCC 16-38]

Lifeline and Link Up Reform and Modernization, Telecommunications Carriers Eligible for Universal Service Support, Connect America Fund

AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

In this document, the Federal Communications Commission (the Commission) fully modernizes the Lifeline program so it supports broadband services and obtains high value from the expenditure of Universal Service funds. This Order will increase consumer choice and encourage competition among Lifeline providers to deliver supported broadband services.

DATES:

Effective June 23, 2016 except for §§ 54.101, 54.202(a)(6), (d), and (e), 54.205(c), 54.401(a)(2), (b), (c), and (f), 54.403(a), 54.405(e)(1) and (e)(3) through (5), 54.407(a), (c)(2), and (d), 54.408, 54.409(a)(2), 54.410(b) through (h), 54.411, 54.416(a)(3), 54.420(b), and 54.422(b)(3) which contain information collection requirements that are not effective until approved by the Office of Management and Budget. The Federal Communications Commission will publish a separate document announcing such approval and the relevant effective date(s).

FOR FURTHER INFORMATION CONTACT:

Nathan Eagan, Wireline Competition Bureau, (202) 418-7400 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Third Report and Order, Further Report and Order, and Order on Reconsideration (

2016 Lifeline Order

) in WC Docket Nos. 11-42, 09-197, 10-90; FCC 16-38, adopted on March 31, 2016 and released on April 27, 2016. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW., Washington, DC 20554 or at the following Internet address:

https://apps.fcc.gov/edocs_public/attachmatch/FCC-16-38A1.docx.

I. Introduction

1. The time has come to modernize Lifeline for the 21st Century to help low-income Americans afford access to today's vital communications network—the Internet, the most powerful and pervasive platform in our Nation's history. Accessing the Internet has become a prerequisite to full and meaningful participation in society. For those Americans with access, the Internet has the power to transform almost every aspect of their lives, including their ability to stay in contact with work, friends, and family; to stay abreast of news, to monitor important civic initiatives, to look for a new home, or to make essential financial decisions. Households with schoolchildren access the Internet to research issues, check assignments, and complete homework, while people with critical or even routine health needs use the Internet to access information about their condition and stay in touch with health care providers.

2. But not all Americans are able to enjoy the benefits of broadband in today's society, even as the importance of broadband grows. There are still 64.5 million people without a connection to the Internet and that figure hits hardest on those with the lowest incomes. The biggest reason these Americans don't sign up for broadband today is cost. Only half of all households in the lowest income tier subscribe to a broadband service and 43 percent say the biggest reason for not subscribing is the cost of the service. Of the low-income consumers who have subscribed to mobile broadband, over 40 percent have to cancel or suspend their service due to financial constraints. Affordability remains the primary barrier to broadband adoption.

3. In this Order, we adopt reforms to make the Commission's Lifeline program a key driver of the solution to our Nation's broadband affordability challenge. Intended initially as a mechanism to reduce the cost of phone service for low-income customers, the Lifeline program has worked in lockstep with telephone providers and consumers to increase the uptake in phone service throughout the country and has kept pace with changes in technology as the Nation moved from a wireline world to one where the number of mobile devices and services now exceeds the population of the United States. But at a time when our economy and lives are increasingly moving online and millions of Americans remain offline, the Lifeline program must keep pace with this technological evolution to fulfill its core mission.

4. Our actions here are also compelled by the Congressional directives that guide our approach to all of universal service. Congress expressed its intent in the Communications Act of 1934 to make available communications service to “all the people of the United States” and, more recently, in the Telecommunications Act of 1996, Congress asserted the principle that rates should be “affordable,” and that access should be provided to low-income consumers in all regions of the nation. Congress also recognized at the same time that new technologies, in addition to landline telephone service, could provide telecommunication services to consumers and that “[u]niversal service is an evolving level of telecommunications services.” Given the evolution of communications technologies and the great strides the Commission has made in improving the performance of the Lifeline program, we must modernize the Lifeline program so it can play an essential and important role in helping those low-income Americans that most need access to valuable broadband services.

5. The Order we adopt today focuses the Lifeline program on broadband by encouraging broadband providers to offer supported broadband services that meet standards we set to ensure ratepayers supporting the program are obtaining value for their contributions and Lifeline subscribers can participate fully in today's society. We also take important steps to improve the management and design of the program by streamlining program rules and eliminating outdated program obligations with the goal of providing incentives for broadband providers to participate and increasing competition and meaningful broadband offerings to Lifeline subscribers. Finally, we follow through on the important and highly effective reforms the Commission initiated in 2012 by making several additional changes to combat waste, fraud, and abuse, including establishing a National Lifeline Eligibility Verifier (National Verifier) that will remove the responsibility of determining Lifeline subscriber eligibility from providers.

II. Executive Summary

6. To create a competitive Lifeline broadband program, this Order takes a variety of actions that work together to encourage more Lifeline providers to deliver supported broadband services as we transition from primarily supporting voice services to targeting support at modern broadband services. We first allow support for robust, standalone fixed and mobile broadband services to ensure meaningful levels of connectivity and we continue to support bundled voice and broadband services. We also establish minimum service standards for broadband and mobile voice services to ensure those services meet the needs of the consumers, and we recognize and allow an exception in areas where fixed

broadband providers do not meet the minimum standards. Finally, in recognition of the important operational needs of Lifeline providers we implement a five and one-half year transition, during which we will gradually increase mobile voice and data requirements and gradually decrease voice support levels. After completion of this multi-year transition, Lifeline funding will be focused on supporting modern services.

7. We next take a step that will curb abuse in the program and encourage provider participation by creating the National Verifier, which will transfer the responsibility of eligibility determination away from Lifeline providers. By lowering Lifeline providers' costs of conducting verification and reducing the risks of facing a verification-related enforcement action, the National Verifier will make the Lifeline program more attractive to providers. The National Verifier will also remove many opportunities for Lifeline providers to inappropriately enroll subscribers. This step—taking determination of eligibility out of the hands of the same parties that stand to benefit financially from a finding of eligibility—is critical to preventing waste, fraud, and abuse. At the same time, we streamline the criteria for Lifeline program qualification in recognition of the way the vast majority of Lifeline subscribers gain entry to the program as well as through a new program for veterans. We will allow entry based on participation in SNAP, Medicaid, SSI, Federal Public Housing Assistance, and the Veterans Pension benefit program, as well as all current Tribal qualifying programs. We will continue to allow low-income consumers to qualify by demonstrating income of less than 135 percent of the federal poverty guidelines.

8. The Order also encourages entry of new Lifeline providers to supply broadband by creating a streamlined federal Lifeline Broadband Provider (LBP) designation process. (Since Lifeline Broadband Providers will be a subset of eligible telecommunications carriers (ETCs) but ETCs that are not LBPs may also be eligible to receive reimbursement for offering Lifeline-supported broadband Internet access service, some of our rules will apply specifically to LBPs while others will apply more broadly to all ETCs participating in the Lifeline program. In this Order we refer to LBPs specifically when the rule being discussed applies only to LBPs.) Working within the statutory construct in Sections 214 and 254 limiting support to eligible telecommunications carriers (ETCs), we establish a process by which broadband providers may receive a designation from FCC staff to provide broadband Lifeline to qualifying low-income consumers. This new LBP designation process provides an additional alternative to the current ETC designation processes, which remain in place. At the same time, we modernize the obligations of broadband Lifeline providers by interpreting and forbearing from parts of the statute that are not needed in the modern broadband marketplace to ensure just and reasonable rates and the protection of consumers. In particular, we allow for broadband-only provision of service, flexibility in service areas, and streamlining of the relinquishment process. We also interpret Section 214(e)(1)(B) to minimize advertising burdens on providers. We establish a pathway for certain existing Lifeline providers currently obligated to provide voice services to obtain relief from such obligations as clear, measurable benchmarks are met. The benchmarks are designed in such a way that providers have strong incentives to encourage uptake of broadband services.

9. We also recognize that increasing digital inclusion means more than addressing the affordability of broadband service. To that end, we require that Lifeline providers make available Wi-Fi enabled devices when providing such devices for use with the Lifeline-supported service. We also require Lifeline providers of mobile broadband service to make available hotspot-enabled devices. We believe these measures will help to extend the connectivity of the service Lifeline supports. We also direct the Consumer and Governmental Affairs Bureau (CGB) to develop and execute a digital inclusion plan that will bring together a variety of stakeholders to determine how Lifeline can best be leveraged.

10. This Order next recognizes the importance of fiscal responsibility in the program, establishes an annual budget of $2.25 billion, and directs the Bureau to submit a report to the Commission if Lifeline disbursements in a year exceed 90 percent of this level, with an expectation that the Commission will act within six months of this report. It is essential that we ensure the program is designed to operate in an efficient, highly accountable manner that obtains great value from the expenditure of ratepayer dollars. In establishing a budget mechanism, we bring the Lifeline program into alignment with the other three programs of the Universal Service Fund, each of which operates within a budget.

11. We also make a number of changes to further improve the efficient administration and accountability of the Lifeline program. We implement measures to evaluate the Lifeline program to determine whether it is achieving its objectives, we reform the non-usage rules, we make recertification a rolling process, we establish a 12-month benefit port freeze for broadband offerings, we take steps to increase transparency in the program, and we modify program forms to reduce administrative burdens on providers.

III. Third Report and Order

A. Modernizing Lifeline To Support Broadband

1. Broadband as a Supported Service

12. There is widespread consensus among commenters that the time has come for the Commission to modernize the Lifeline program to support broadband consistent with the national policy of promoting universal service. Based on the record before us, we take the important step toward achieving one of the express goals of the program by amending the definition of Lifeline to include broadband Internet access service (BIAS) as a supported service in the Lifeline program. Through our actions today, we hereby amend § 54.101 to include BIAS as a supported service. More specifically, our definition of BIAS mirrors that under section 8.2(a) of the Commission rules, which defines BIAS as a mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service. Finally, consistent with our change to Section 54.101, we also amend Section 54.401 in our Lifeline rules to include BIAS as eligible for Lifeline support. (These amendments to the Commission rules will take effect on the same date as the minimum service standards set forth in Section 54.408 of the Commission rules.

See infra

Section III.B.2. (Minimum Service Standards). By adopting these amendments as well as our forbearance in Section III.E.2 (Lifeline Obligations for Eligible Telecommunications Carriers), we allow service providers to provide BIAS as a standalone offering to qualifying low-income consumers. The obligations for receiving Lifeline support for both BIAS and voice telephony service are further defined below.

13. Our actions today are consistent with the universal service goals

promulgated by Congress. Congress articulated national goals in Section 254 of the Act that services should be available at “affordable” rates and that “consumers in all regions of the nation, including low-income consumers . . . should have access to telecommunications and information services.” Congress also made clear in Section 254(c) that “[u]niversal service is an evolving level of telecommunications services that the Commission shall establish periodically under this section, taking into account advances in telecommunications and information technologies and services.” As recently as 2009, Congress, in directing the Commission to develop a National Broadband Plan, specifically dictated that such a plan must provide a detailed strategy for achieving affordability of broadband services.

14. Within the record before us, there is ample evidence to find that BIAS meets the standard set forth in Section 254(c) given the many ways that individuals rely on broadband in their daily lives, the significant percentage of the population with means subscribing to such services, and the deployment and investment spent on infrastructure. Taking these factors into account, we conclude it is imperative for us to include BIAS as a supported service.

15. More than 200 commenters responded to the Commission's

2015 Lifeline FNPRM

with nearly all of them urging the Commission to include broadband in the Lifeline program. There is widespread consensus from a range of commenters including service providers, state public utilities commissions, academics, software companies, and consumer advocates.

16. Moreover, objections to modernizing the Lifeline program to include support for broadband principally concern collateral effects that can be addressed without sacrificing program modernization. We do so elsewhere in this Order. For example, both AT&T and Verizon have expressed concern over amendments to Section 54.101 to include BIAS as a supported service on the theory that all ETCs receiving high-cost support would be obligated to offer BIAS throughout their designated service areas, even in those areas where they do not receive high-cost support or have not deployed broadband networks with the minimum speed standards. We recognize that, subsequent to the 1996 Act, state public utilities commissions designated ILECs as ETCs wherever they offered voice telephony service in a state and defined their designated service areas for purposes of receiving federal universal service support as such, including Census blocks where the provider does not currently receive high-cost support or is not obligated to build-out broadband at 10 megabits per second (Mbps) download/1 Mbps upload (10/1 Mbps) speeds pursuant to Commission rules. As a result, ILECs have had the Lifeline obligation to provide discounted voice service throughout their designated service area. (Existing ETCs currently continue to have a Lifeline voice obligation throughout their designated service areas, regardless of their receipt of high-cost support. In this Order, however, we provide conditional forbearance from this obligation). We are sympathetic to ILECs' concerns about requiring them to offer broadband in Census blocks within their ETC designated service areas where the provider is not obligated to build-out broadband services pursuant to our high-cost rules, where broadband services are not commercially available, and in those Census blocks where the provider does not receive high-cost support. To address these concerns, we forbear from Section 214(e)(1) such that ETCs are not required to offer Lifeline-supported broadband service in Census blocks throughout their designated service areas, but instead only where the provider receives high-cost support and is commercially providing broadband consistent with the provider's obligations set forth in the Commission's high-cost rules and requirements.

17. In addition, for recipients of high-cost support, in those areas where the provider receives high-cost support but has not yet deployed a broadband network consistent with the provider's high-cost public interest obligation to offer broadband, the obligation to provide Lifeline broadband services does not begin until such time as the provider has deployed a broadband network and is commercially offering service to that area. We also recognize some carriers' arguments that the Commission should not impose a Lifeline broadband obligation on ETCs in areas where those carriers receive frozen high-cost support, because the frozen support program is an interim program that will be eliminated after the Commission conducts the Connect America Fund Phase II competitive bidding process and frozen support recipients are not required to meet the Lifeline program's minimum speed standards for BIAS offerings. We agree that carriers' receipt of frozen high-cost support should not carry with it a Lifeline broadband obligation, and we therefore clarify that those ETCs receiving frozen high-cost support—whether incumbent providers or competitive ETCs—are not required to offer Lifeline-supported broadband services in their designated service areas where they receive frozen support. (

See

47 CFR 54.312(a); 54.313(c)(4) (requirements for incumbent LECs receiving Phase I frozen support); 47 CFR 54.307 (frozen support for competitive ETCs). However, those carriers serving non-contiguous areas that elected to continue receiving their existing high-cost support amounts in lieu of model-based support for Connect America Phase II will be subject to Lifeline broadband obligations once the Commission adopts their carrier-specific Phase II obligations.) Finally, we also clarify in that ETCs receiving high-cost support are not required to offer broadband services in Census blocks where the ETC does not receive high-cost support. We adopt these requirements to ensure that all consumers living in high-cost areas, including low-income consumers, have the option of subscribing to broadband once it is commercially available.

18. Some parties, such as ITTA, suggest that the Lifeline program should be overhauled before providing support for broadband. (Given the significant changes we adopt within the Lifeline program, we adopt a budget to continue to reduce the contribution burden on consumers). This argument, however, overlooks the significant measures already put in place over the last five years to root out waste, fraud, and abuse and, just as importantly, underestimates the critical importance broadband plays for individuals on a daily basis. Since 2012, when the Universal Service Administrative Company (USAC), the Administrator of the Fund, disbursed more than $2.1 billion in Lifeline support payments, reforms to improve program integrity have reduced disbursements by nearly a third, with Lifeline support payments dropping below $1.5 billion in 2015.

19. In modernizing the Lifeline program to include broadband, we also clarify that the current rule that prohibits the collection of service deposits “for plans that . . . [d]o not charge subscribers additional fees for toll calls,” applies only to standalone voice services. Lifeline service providers are not precluded from collecting service deposits for eligible broadband services. That rule plainly was written with standalone voice service in mind, and it does not have an analog in the context of broadband offerings. For these reasons, Section 54.401(c) is amended to clarify that the prohibition on collecting service deposits is limited to voice-only service plans.

2. Legal Authority

20. The principles listed in Section 254 of the Act make clear that deployment of, and access to, telecommunications and information services are important components of a robust and successful federal universal service program, including the directive to address low-income needs. In Section 254, Congress expressly recognized the importance of ensuring that low-income consumers “have access to telecommunications and information services, including . . . advanced telecommunications and information services” and that universal service is an “evolving level of telecommunications service.” Section 254 of the Act also sets forth the principles that “[q]uality services should be available at just, reasonable, and affordable rates” and that “access to advanced telecommunications and information services should be provided in all regions of the Nation.”

21. Consistent with those statutory objectives, we conclude that Section 254 authorizes us to support bundled voice and BIAS as well as standalone BIAS by defining BIAS as a supported service for purposes of a Lifeline broadband program. For purposes of a given universal service program, Section 254(c)(1) authorizes the Commission to define universal service as an evolving level of telecommunications services that the Commission establishes periodically based on an analysis of several factors. The BIAS that we define as a supported service for the Lifeline broadband program is a telecommunications service that warrants inclusion in the definition of universal service in this context. (In the

Open Internet Order,

the Commission concluded that BIAS is a telecommunications service subject to our regulatory authority under Title II of the Act regardless of the technological platform over which the service is offered. Even before that, however, during the time the Commission had classified BIAS as generally an information service, it recognized the possibility of broadband Internet access transmission being offered on a common carrier basis as a telecommunications service. Thus, even beyond the classification of BIAS generally, we make clear that BIAS as the supported service for the Lifeline broadband program is a telecommunications service.).

22. Based on the record before us, we find there is ample evidence for us to conclude that circumstances have “evolved” where BIAS can and should be included as an element of universal service pursuant to Section 254(c) and made available to Lifeline participants. The criteria set forth in Section 254(c) fully justify our finding. BIAS has, indeed, become “essential to education, public health and public safety. . . . ” (Low-income consumers should have access to the same public safety features as all Americans. Lifeline providers offering a supported service must meet any obligations generally applicable to that service, including, for example, with respect to Next Generation 911 Services.

See generally

47 CFR 20.18. We also make clear that Lifeline providers offering texting services must provide text-to-911 capability to subscribers in accordance with Commission rules.

See

47 CFR 20.18(q). Lifeline providers should not assess a fee for texts or calls to 911.). As detailed above, the Commission has a legal and factual basis to include BIAS as a supported service. The Commission also previously has concluded that directly applying Section 254 to BIAS will help enable us to promote adoption of broadband services and more flexibility going forward. We thus conclude that defining BIAS as the supported service for purposes of the Lifeline broadband program strongly advances the public interest, convenience, and necessity under Section 254(c)(1)(D).

23. Our approach is also supported by Section 254(c)(1)(A). Under that provision, the Commission considers whether a given supported service is “essential to education, public health, or public safety.” We explain above the importance of BIAS to education and healthcare, among other things, along with the need for discounts in order to enable low-income consumers to realize those benefits. We therefore conclude that BIAS is essential for education and public health for low-income Americans.

24. Section 254(c)(1)(B) directs the Commission to consider whether the service at issue has “through the operation of market choices by customers, been subscribed to by a substantial majority of residential customers.” As noted above, it is reported that 84 percent of American adults use the Internet and surveys have shown that when households have the means, they connect to the Internet at home at rates upward of 95 percent with approximately two-thirds of Americans subscribing to broadband at home. Based on this data, we find that a substantial majority of residential customers subscribe to broadband services. Likewise, we find that BIAS is widely “being deployed in public telecommunications networks by telecommunications carriers” under Section 254(c)(1)(C) given the billions of dollars in capital investment that broadband service providers have spent on broadband networks over the last few years.

25. We also conclude that our action to include BIAS as a supported service is consistent with and advances the Congressional direction and goals set forth under Section 706 of the 1996 Act. Section 706(a) directs the Commission to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.” Section 706(b) requires the Commission to determine whether “advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion. . . .,” and, if the Commission concludes that it is not, to “take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.” The Commission has determined that broadband deployment is not proceeding in a reasonable and timely manner, most recently in the

2016 Broadband Progress Report.

Providing support to service providers to subsidize low-income consumers' purchase of BIAS helps achieve our 706 objective of “removing barriers to infrastructure investment.” The Commission has recognized that a key barrier to infrastructure investment is lack of affordable broadband Internet access service. The Commission has previously recognized that providing federal support for low-income consumers' purchase of BIAS will broaden the base of consumers able to purchase such services, thereby increasing consumer demand and incentives to deploy broadband in areas where broadband is not yet available. Given the Commission's objective of ensuring availability and affordability of broadband services, and the importance of broadband to consumers in the 21st Century, providing support to Lifeline providers to subsidize low-income consumers' purchase of broadband services helps achieve our Section 706 objectives.

B. Characteristics of Lifeline Support

26. In Section III.A, Modernizing Lifeline to Support Broadband, we take the important step of amending our rules to include BIAS as a supported service. In this Section, we now act on several proposals in the

2015 Lifeline FNPRM

directed at improving the Lifeline program so that it better supports robust service and strategically targets valuable universal service funds

in a way that is faithful to our mandate to make services affordable to low-income consumers. We are persuaded that giving qualifying consumers the choice of receiving support for either fixed or mobile offerings will better serve consumers as competitive forces help to encourage all Lifeline providers to make attractive offerings within the Lifeline market. In particular, we modify our Lifeline rules to direct support over time to broadband services. We also adopt minimum service standards designed to ensure robust service levels for Lifeline subscribers and which can be updated on a regular basis so that the support provided by the Lifeline program continues to meet our statutory mandate to ensure “reasonable comparability” of services. We also establish permanent monthly support levels.

1. Supported Modes of Service

27.

Discussion.

In this Section, we adopt several reforms to empower low-income consumers with competitive choices for robust, affordable Lifeline services necessary for full participation in today's economy. First, to keep pace with the marketplace and our goals of ensuring the availability of broadband and voice services, we hereby amend our rules to permit Lifeline providers to receive Lifeline support for standalone mobile or fixed broadband service offerings. Second, for both fixed and mobile voice services, to ensure the Lifeline program continues to focus its funding on modern, future-facing services for which affordability is an issue, we phase in a requirement that to be eligible for Lifeline support, a voice service must include broadband service, thereby phasing-out support for voice service as a standalone option. In doing this, we carve out an exception for the phase-out of standalone voice service provided by ETCs in those Census blocks where the ETC is the only Lifeline service provider in that given Census block. To prevent undue disruption and allow the marketplace to adjust, we adopt a multi-year transition and also direct the Bureau, near the end of the transition, to review the Lifeline market and submit a report to the Commission recommending whether action should be taken to revise the approach to supported services that we adopt today (State of the Lifeline Marketplace Report). We expect the full Commission will take appropriate action if necessary to make changes to the program within six months of receiving the report, for example adjusting support levels or minimum service standards, so that the Lifeline program continues to achieve its objectives. Barring further Commission action, once this transition is complete, we will require voice service to be bundled with an eligible broadband service in order for it to be supported. Finally, we retain our approach to permit support for bundled offerings and our limit of one Lifeline subscription per household.

28.

Fixed and Mobile Broadband Offerings.

Given the importance of broadband to consumers in our society and how it is has become essential to education, public health, and public safety, we believe it is necessary to provide Lifeline consumers the option of applying the Lifeline benefit to a standalone broadband offering. Standalone broadband services are increasingly popular as consumers transition from bundled services to broadband-only plans. In many areas, as the communications market evolves, broadband is replacing traditional telephone service and providing subscribers with voice and texting options in addition to Internet access. To close the digital divide and ramp up digital readiness for all consumers in the United States, we amend our rules to give Lifeline providers the option of offering standalone broadband services as a Lifeline supported service. By allowing support for standalone broadband services with Lifeline, we add an additional measure of consumer choice as well as the opportunity for innovative providers to serve low-income consumers in new ways. Supporting standalone broadband offerings will not only allow consumers to subscribe to offerings that work best for their needs, but Lifeline providers will also seek to find solutions that work best for their customers. (We make clear that ETCs receiving high-cost support are required to offer a Lifeline-supported standalone broadband offering where the ETC is required to offer Lifeline-supported BIAS to ensure that all low-income consumers, including those living in high-cost areas, have the option to subscribe to standalone broadband offerings).

29. We allow Lifeline subscribers to apply the discount to fixed or mobile standalone broadband offerings. (In the

USF/ICC Transformation Order,

the Commission made clear that carriers may not charge any Lifeline customers an Access Recovery Charge (ARC). By extension, as we include broadband as a Lifeline-supported service, we make clear that rate-of-return carriers are not required to impute an amount equal to their ARC rate for consumer broadband-only loops provided to Lifeline broadband customers.). We empower consumers to make this choice. While fixed and mobile broadband services both provide access to online services, there are some key tradeoffs consumers must consider regarding the utility of each service. We recognize these tradeoffs both in terms of technological constraints and how each mode is offered in the market. We also recognize different households will have different preferences for certain product characteristics, such as mobility or data usage allowance. Therefore, we find it important to give qualifying consumers the choice of receiving support for either fixed or mobile broadband service. This allows households a choice as to which service to apply the discount towards. Permitting a Lifeline provider to offer standalone broadband offerings will also ensure that Lifeline consumers are not forced to purchase services they may not want within a bundle. We agree with many commenters who argue that it is important to enable low-income consumers to choose the services that best meet their needs, but at the same time put measures in place to ensure such Lifeline offerings are affordable and comparable to what is currently available in the market. For many people, this includes the option of subscribing to a standalone broadband offering.

30. We are persuaded that giving qualifying consumers the option of receiving support for either fixed or mobile standalone broadband will better serve consumers as competitive forces encourage Lifeline providers to make valuable broadband offerings supported by the Lifeline program. More attractive offers which result in higher consumer benefits will mean that the funds provided by contributors will be used to provide greater value. For example, we envision a Lifeline provider seeking to address various “digitally divided” consumers with attractive offers of service unique to families with children or the elderly.

31.

Voice-only Offerings.

As part of our modernization efforts, and with a keen view toward directing Lifeline funds toward services in a way that reflects the technological and marketplace evolution toward data services, we find that Lifeline services must include a broadband offering after the transition period set forth below. To be sustainable and achieve our goals of providing low-income consumers with robust, affordable, and modern service offerings, a forward-looking Lifeline program must focus on broadband services. Therefore, based on the record before us, we conclude that it is necessary that going forward the Lifeline discount will no longer apply to

a voice-only offering following an extended transition period, except as provided below in Census blocks with only one Lifeline provider. We are persuaded that it is necessary to use a multi-year transition ending in 2021. After this transition, we will continue to support voice service when bundled with a broadband service which meets the minimum service standards set forth below.

32. As a general matter, we adopt a technologically neutral approach and the schedule with respect to support for standalone voice service will apply equally to mobile and fixed providers of voice services. We recognize, however, that in some limited circumstances an ETC that is providing voice service may be the only Lifeline provider in a given area when Lifeline support for standalone voice service otherwise would have been phased out. With respect to any area where a provider is the only Lifeline provider, consistent with the transition described in detail below, the provider will retain its ETC obligations as a Lifeline provider and may receive Lifeline support up to $5.25 per month for standalone voice service provided to eligible subscribers. (

See infra

Section III.B.3 (Support Levels). This assumes that the ETC has not qualified for the conditional forbearance described in Section III.E.2 (Forbearance Regarding the Lifeline Voice Service Obligations) or relinquished its ETC status in relevant part.

33. The animating principle of the Lifeline program has always been affordability. For years, Lifeline support focused on making affordable fixed residential voice services, providing a discount that combined with a customer contribution to help low-income Americans connect to the telephone network. In 2005, we expanded the program to allow participation by non-facilities-based providers, including prepaid wireless resellers. Since then, the marketplace for both Lifeline and non-Lifeline voice offerings has evolved dramatically. Indeed, non-Lifeline voice rates have fallen drastically since the

2012 Lifeline Reform Order.

(By the end of 2011, an offering of 450 voice minutes and unlimited text, would cost $49.99. Today, one can subscribe to an unlimited voice and text plan for $25 per month). Some observers have pointed out that even though millions of households are eligible for—but do not participate in—the Lifeline program, the vast majority of these non-participating households still manage to obtain access to voice communications. (USAC reports that there are at least 39.7 million eligible Lifeline households in the states and District of Columbia with a participation rate of 32 percent). In contrast, broadband adoption among low-income households remains well below that of other groups, and affordability is widely cited as one of the primary reasons.

34. Our review of the record reveals that voice service is declining in price within the marketplace. This is particularly true of mobile voice services. Some voice-only plans run as low as $10 per month. As we recognized in the

2015 Lifeline FNPRM,

the cost of provisioning wireless voice service has decreased significantly since the

2012 Lifeline Reform Order,

and there are no indications such cost decreases will cease. Even outside the Lifeline program, cost decreases have led to a large variety of reasonably priced voice options provided by providers. One indication that voice service is declining in price is that, as of January 2014, mobile voice adoption rates exceeded 90 percent overall and 84 percent for low-income adults. In the

Eighteenth Mobile Competition Report,

the Wireless Telecommunications Bureau reported that the nationwide penetration for mobile connections now exceeds 100 percent, meaning that the number of connected devices exceeds the total population of the United States. As of September 2015, CTIA has reported over 355.4 million mobile phone subscribers. The

Eighteenth Mobile Competition Report

also noted that, according to CTIA, reported annual minutes of use in 2014 reached over 2.45 trillion. In contrast, the record reveals that data is not as ubiquitous as voice and certainly not as affordable. Pew Research Center recently reported that home broadband adoption appears to have plateaued with 67 percent subscribing to such service, down slightly from 70 percent in 2013. Smartphone adoption is also only 64 percent overall and 13 percent of low-income Americans rely solely on a smartphone for their Internet access. (In the

Eighteenth Mobile Competition Report,

the Wireless Telecommunications Bureau noted that, according to ComScore, approximately 77 percent of all mobile subscribers had a smartphone in the third quarter of 2015, compared to approximately 51 percent in the third quarter of 2012). Furthermore, as demonstrated by the Pew Research Center, many Americans experience difficulties in affording and retaining service on smartphones. In fact, those who rely the most on only their smartphone for Internet access have the most difficulty retaining service given that such consumers frequently reached their data caps as part of their monthly plan.

35. Technological evolution and market dynamics have also resulted in more choices and decreasing prices for fixed voice service. The record reflects that customers are increasingly opting for voice services made possible through fixed broadband connections, including VoIP as well as over-the-top voice applications. While some differences between VoIP and traditional fixed voice service remain, we agree with commenters that note that such VoIP services will likely improve and introduce more competition into the marketplace over time. Meanwhile, the Consumer Price Index, maintained by the Bureau of Labor Statistics, has found that telephone services, including both mobile and fixed offerings, have only increased in price during one year from 2010 to 2014, while the price of all goods and services generally increased each year during the same time period. We also recognize the nationwide trend that consumers are increasingly migrating away from fixed residential voice service to mobile voice services, which, as discussed above, have decreased in price. This information further supports our technologically neutral conclusion that, while recent trends in fixed and mobile voice service offerings are not identical, both modes of voice service are undergoing significant change in response to technological developments and new competitive service offerings enabled by those developments.

36. Affordability must remain a central touchstone within the Lifeline program. Mindful of Congress's Section 254 mandate that “[q]uality services should be available at just, reasonable and affordable rates,” we believe that the Lifeline program should directly support those services that are otherwise unaffordable to consumers, but for a Lifeline discount. We also find that continuing to support a voice-only product that is reasonably priced will result in a Lifeline program that fails to deliver the “evolving level” of services that “

are being

deployed” (emphasis added). While much of the Lifeline market is competitive, we are concerned that continuing to support a voice-only service would artificially perpetuate a market with decreasing demand and incent Lifeline providers to avoid adjusting their business practices. Instead, these Lifeline providers may have an incentive to maintain the

status quo

and avoid providing low-income customers with modern services as Congress intended. For these reasons, we do not believe it is consistent with Congress' directive to continue providing support to voice-only service

within the Lifeline program outside of the transition period discussed below.

37. Several commenters have argued that the Commission should continue to permit Lifeline providers to offer standalone voice service. These parties contend that the Commission should retain support for standalone voice service given that many low-income and unemployed Americans rely on such means of communication within their daily lives. We agree with such commenters that voice continues to be an important resource for consumers to utilize in communicating with others. But we are not persuaded that such service will no longer be available or affordable if it is part of a bundle with broadband services. We make this judgment based on evidence of the power of market forces in the marketplace to compete and innovate to meet consumer demand. We take it as given that many consumers have demanded and will continue to demand voice communications. We predict that Lifeline providers will be responsive to this consumer demand by bundling voice with data offerings and otherwise ensuring consumers are able to easily use a voice service with their data plan. We believe that the innovative Lifeline providers currently in the program will be just as innovative in packaging competitive voice offerings with the supported broadband service. Indeed, wireless Lifeline providers have already recognized the increased demand for broadband and as a result are starting to include broadband options within their Lifeline offerings.

38. We further recognize that, in the existing Lifeline marketplace, Lifeline providers have met consumers' demands for texting, although it is not a Lifeline-supported service. Many Lifeline providers under their own volition have offered unlimited texting with the Lifeline voice service. Mobile plans offered to non-Lifeline subscribers are priced as low as $20 for unlimited talk and text when bundled with data, whereas some Lifeline plans offer as much as approximately 500 voice minutes and text. In the same way, we would expect Lifeline providers would be incentivized by competitive forces to meet the demand for voice service and make voice services available to customers.

39. We emphasize that nothing in our rule change will prevent a Lifeline provider from offering a bundle of voice and broadband service that delivers the voice component over either non-IP or IP technologies. In this way, we allow for Lifeline providers to choose how, whether, and when to transition to the use of newer technologies for delivering voice service. As part of the overall Lifeline modernization, this change sets the stage for a full program modernization where Lifeline providers are delivering voice services to customers over modern technologies in a much more efficient way that benefits consumers and provides more value to the Fund.

40. In summary, to ensure that future Lifeline offerings are sufficient for consumers to participate in the 21st Century economy at affordable rates, and to obtain the most value possible from the Lifeline benefit, we modify the Lifeline rules to support voice services only through a bundle that includes broadband services pursuant to the transition period detailed below. This phase-out of support will not apply to ETCs providing voice service in census blocks where they are the only Lifeline service provider. We are persuaded that Lifeline must provide a robust, affordable service and be forward-looking so that as newer technologies become more widely available, the program can continue to deliver value to the low-income subscriber and to the ratepayers supporting the program. Encouraging use of such voice-only service indefinitely is inconsistent with the Act's guidance that “[u]niversal service is an evolving level of telecommunications services” that “are being deployed in public telecommunications networks.”

41.

Transition.

We recognize, however, that a transition is necessary to avoid undue consumer disruption and to allow Lifeline providers sufficient time to adjust operations as the Commission moves from a primarily voice-only Lifeline program to a Lifeline program embracing broadband services. We believe the best way to conduct this transition is by gradually reducing the monthly support level for voice-only service. At the same time, we will phase-in higher mobile broadband minimum service standards. As detailed in Sections III.B.3 (Support Levels) and III.B.2.b (Minimum Service Standards for Lifeline Services), the support level for voice-only service will decline over a multi-year period while the minimum service standard for mobile voice-only service will be set at an initial level, and will be increased until the minimum standard will be 1,000 minutes per month. Such a path to robust offerings is in line with the fact that a “substantial majority” of non-Lifeline subscribers already purchase plans with 1,000 or more minutes using either fixed or mobile services. Given that fixed voice service often already includes unlimited minutes, we will not impose minimum service standards on fixed voice service offerings.

42. This initial voice-only minimum service standard will become effective the later of December 1, 2016 or 60 days after the date when the Commission receives approval from the Office of Management and Budget (OMB) for the new information collection requirements in this Order subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. At the same time, beginning on the same date, a phase-in of mobile broadband will begin. As described below, this transition is scheduled to continue until December 1, 2021. During the initial phase-in period, from December 1, 2016 through November 30, 2019, a voice and broadband Lifeline bundle must include at least one supported service meeting the minimum service standards applicable at that time. From December 1, 2019 to November 30, 2021, a voice and broadband Lifeline bundle must include a BIAS offering that meets the broadband minimum service standards applicable at that time in order to receive the full $9.25 benefit. From December 1, 2019 to November 30, 2021, a voice and broadband Lifeline bundle with a broadband offering that does not meet the applicable mobile broadband minimum service standards but does meet the mobile voice minimum service standard may receive the applicable support level for standalone mobile voice.

43. Prior to December 1, 2019, voice-only support will be set at $9.25 per month. Beginning December 1, 2019 the support amount will decline to $7.25 per month; beginning December 1, 2020, it will decline further to $5.25 per month. During that time period, we will also phase-in increasing minimum service standards for mobile voice service. Beginning the later of December 1, 2016 or 60 days after PRA approval, supported mobile voice offerings must include at least 500 minutes per month; beginning December 1, 2017, supported mobile voice offerings must include at least 750 minutes per month; and beginning December 1, 2018, supported mobile voice offerings must include 1000 minutes per month. Beginning December 1, 2021, there will no longer be support for voice-only service, or voice service bundled with a broadband offering that does not meet the applicable minimum service standard for BIAS, unless the Commission has acted upon recommendations to do otherwise presented in the State of the Lifeline Marketplace Report. However, voice service will continue to be supported as long as it is offered with

a broadband service meeting the minimum service standards.

44. Over the same period for which the voice-only support level declines for fixed and mobile voice services, fixed and mobile broadband will receive $9.25 in monthly support and the minimum service standard for mobile broadband service will gradually increase. Specifically, on the later of December 1, 2016 or 60 days after the Commission receives PRA approval of the information collection requirements in this Order, the mobile broadband minimum service standards for data usage allowance will be set at 500 megabytes (MB) monthly at 3G speeds. The minimum data usage allowance will increase to 1 gigabyte (GB) on December 1, 2017 and to 2 GB on December 1, 2018. On December 1, 2019, the minimum standard for mobile data usage will be set based on a forward-facing updating mechanism using objective data as described below. From December 1, 2016 to November 30, 2019, a voice and broadband Lifeline bundle must include at least one supported service meeting the minimum service standard applicable at that time for such supported service. (

See infra

Section III.B.2.)

45.

Minimum Service Standards.

After December 1, 2021, in order to receive the full support amount of $9.25 for mobile services, ETCs must provide the minimum service standards for BIAS as a Lifeline supported service to qualifying low-income consumers.

See infra

paras. 97-22). As discussed above, from December 1, 2019 to November 30, 2021 a voice and broadband Lifeline bundle must include a broadband offering that meets the applicable minimum service standard to be eligible for the full $9.25 benefit.

46. However, given the inherent uncertainty in the future Lifeline marketplace, we also direct the Bureau by June 30, 2021, to submit to the Commission a State of the Lifeline Marketplace Report. This report should review the Lifeline marketplace for the purpose of recommending to the Commission whether the transition set out in this Order should be completed or whether the Commission should act to continue delaying Lifeline's transition to chiefly supporting broadband services. This report should in particular consider the prevalence of subscriptions to various service offerings in the Lifeline program, the affordability of both voice and broadband services, the pace since adoption of this Order at which voice and data usage has changed, and the associated net benefits of continuing to support voice service as a standalone option. (The Bureau in the State of the Lifeline Marketplace Report should in particular follow the principles presented in Part E of OMB Circular A-4 for the purpose of determining whether to continue support for voice-only service.

See

OMB Circular A-4

https://www.whitehouse.gov/omb/circulars_a004_a-4/

). We expect the full Commission will take appropriate action if necessary to make changes to the program within six months of receiving the report, for example, adjusting support levels or minimum service standards, so that the Lifeline program continues to achieve its objectives. If the Commission does not act following the recommendation(s) in the State of the Lifeline Marketplace Report then the transition will be completed on December 1, 2021.

47.

Bundled Service Offerings.

We continue to allow low-income consumers to apply the Lifeline discount to support fixed and mobile bundles that include one or more of the supported services so long as one of the supported services offered satisfies the minimum service standard requirements. In other words, the discount may be applied to a mobile bundle of voice and data services so long as

either

the voice service

or

the data service meets the applicable minimum service standard. Other non-supported services (

e.g.,

texting) may be bundled with supported services and the Lifeline discount may be applied to the bundle. This does not represent a change in policy as many Lifeline providers have voluntarily offered non-supported services to consumers bundled with Lifeline-supported services. We agree with commenters and view such offerings as enhancing consumer benefits. We recognize this as an illustrative case whereby Lifeline providers identify consumer demand for a non-supported service such as texting and voluntarily provide the service consumers demand apart from any regulation from the Commission.

48.

One-Per-Household Rule.

Through our reforms today, we continue to believe it is necessary to apply the one-per-household requirement within the Lifeline program. Just as the Commission concluded in the 2012

Lifeline Reform Order,

we believe a one-per-person rule or one-per-service rule—providing an individual household an opportunity to receive one supported service for both voice and broadband—could increase the size of the Lifeline program by a significant percentage above the projected Fund size. By limiting support to one Lifeline offering and one household, we find that continued implementation of the one-per-household rule strikes an appropriate balance between ensuring that support is available for eligible low-income households against disbursing universal service funds in a fiscally prudent and sustainable way. By continuing to enforce the one-per-household rule, we also decline to adopt some commenters' suggestions that a household be able to receive more than one discount to support multiple services. Instead we take an alternate path suggested by commenters, providing consumers a choice as to which service (or set of bundled services) their Lifeline discount is used to support.

2. Minimum Service Standards

a. Introduction

49. In the

2015 Lifeline FNPRM,

we proposed establishing minimum service standards for all Lifeline service offerings “to ensure the availability of robust services for low-income consumers,” and we proposed updating the minimum service standards. We now adopt detailed rules in line with these proposals, and revise Section 54.408 of the rules. In order for Lifeline customers to obtain the type of robust service which is essential to participate in today's society, we conclude that forward-looking minimum service standards are required, and that those standards must be updated on a regular basis.

50. The minimum service standards we adopt are rooted in the statutory directives to ensure that quality services are available at “just, reasonable, and affordable rates,” and that advanced telecommunications services, the services which have “been subscribed to by a substantial majority of residential customers,” are available throughout the nation. We interpret these directives as requiring the Commission to ensure that low-income consumers can both afford and physically access services that are available throughout the Nation. The standards adopted below ensure that Lifeline supports the type of service the Act specifically requires, and the updating mechanisms will give Lifeline subscribers confidence that their supported service will remain robust as technology improves through a predictable mechanism.

51. The minimum standards we establish will also account for the need for Lifeline service offerings to be affordable. As we noted, “the Lifeline program is specifically targeted at affordability,” and it is necessary to establish minimum service levels that are both affordable and reasonably comparable. Commenters also

emphasized the importance of affordability to facilitate broadband adoption. The minimum standards that we establish strike a balance between the demands of affordability and reasonable comparability by providing consumers with services that allow them to experience many of the Internet's offerings, but not mandating the purchase of prohibitively expensive offerings.

52. We first explain which services will have minimum service standards. We also set initial minimum service standards and provide updating mechanisms. Finally, we describe exceptions made for providers who do not offer services meeting our minimum standards.

b. Minimum Service Standards for Lifeline Services

53.

Discussion.

We now modify our rules to establish minimum service standards for all Lifeline supported services based on services to which a “substantial majority” of consumers have already subscribed. We also set forth the data sources that will be used to set and update minimum service standards. We establish separate standards covering speed and data usage allowances for both fixed and mobile services in recognition of each service's distinct characteristics, and we establish minimum standards for mobile voice service, until standalone mobile voice is no longer a supported service.

54. Numerous commenters support establishing minimum service standards for broadband; they emphasize that Lifeline customers should not need to accept “second-tier” service, and that functional Internet access is essential to allow consumers to fully participate in society. Broadband access can help households meet their “basic needs for education, health care, disabilities access, and public safety.” While other commenters argue that minimum service standards are unnecessary, or unduly burdensome, we generally believe that, at a minimum, services that are subscribed to by a substantial majority of the nation's consumers should receive Lifeline funding. We are unpersuaded by the argument that minimum service standards are unduly burdensome. As discussed in greater detail,

infra,

we grant exemptions in certain situations where a fixed broadband provider does not currently offer service meeting the minimum standards.

55. In the

2015 Lifeline FNPRM,

we also sought comment on “whether and how service levels would vary between fixed and mobile broadband service.” While some commenters argued that the same standards should apply to fixed and mobile broadband, we believe that different standards are appropriate because of the technological differences between fixed and mobile broadband, the two services' different capacity patterns, and the different constraints on service. For example, mobile broadband providers face spectrum constraints that fixed providers do not, and the speed mobile broadband providers can deliver to consumers is far more dependent on the consumer's location. For similar reasons, the Commission has established different minimum service standards for fixed and mobile broadband when setting carrier obligations in the Connect America Fund (CAF). Based on all of these factors, we conclude that different minimum service standards for fixed and mobile broadband are appropriate.

56. Finally, while setting initial minimum service standards is necessary to guarantee access to services that a “substantial majority” of residential consumers have already subscribed to, it is equally important to regularly update those standards to make sure that Lifeline continues to support an evolving level of telecommunications service. Because technology develops at a rapid pace, any minimum standards we set would quickly become outdated without a timely updating mechanism. Commenters also agree that any minimum service level must be updated regularly. Accordingly, we conclude that minimum standards must be updated on a regular basis to ensure that consumers are able to continue to receive sufficiently robust service similar to what a substantial majority of American consumers subscribe to. We also conclude that the updating mechanism will rely on an “objective, data-based methodology,” as we proposed in the

2015 Lifeline FNPRM.

Finally, we update Section 54.408 of our rules in accordance with this conclusion.

(i) Fixed Broadband

57. We first discuss the minimum standards for fixed broadband service. In the

2015 Lifeline FNPRM,

we sought comment on “establish[ing] an objective standard that could be updated on a regular basis simply by examining new data about fixed broadband service.” Although we recognized that “the prevailing benchmark for fixed broadband is the speed of the service,” we also sought comment on data caps and whether to set a minimum data usage allowance for fixed broadband service. While some commenters opposed minimum service standards for fixed broadband, many other commenters suggested that minimum standards were necessary for both speed and data usage allowance. We believe that for consumers to fully benefit from the same type of Internet service that has “been subscribed to by a substantial majority” of Americans, those consumers must have access to services of both sufficient speed and data usage allowance. Accordingly, we establish minimum service standards for both speed and data usage allowance which both must be met for providers to receive Lifeline funds.

58.

Data Sources.

In response to the

2015 Lifeline FNPRM

commenters proposed various methods to set initial minimum service standards for fixed broadband: Some commenters proposed using specific numerical thresholds; others supported using existing Commission testing mechanisms to determine initial minimum service standards; and a third group of commenters supported “functional” minimum service standards with a focus on making sure that consumers could “perform a full range of online activities.”

59. In the

2015 Lifeline FNPRM

we asked if we should “consider setting any minimum standards based on the FCC Form 477 (Form 477) data,” and several commenters supported the idea. We also sought comment on using CAF standards in the Lifeline program. While a few commenters opposed using CAF standards because meeting the CAF standards would be too expensive for providers, or because the CAF standards would not provide sufficient flexibility for providers who do not currently meet the standards, other commenters supported using CAF standards to determine the initial minimum standards for fixed broadband.

60. We conclude that the minimum service standards for fixed broadband speed should be based on the service to which a “substantial majority” of consumers subscribe as determined using available subscriber data reported on the Form 477. As we discuss in greater detail below, while we do not formally define the term “substantial majority” for all supported services, we believe that 70 percent of consumers constitutes a “substantial majority” in the context of fixed broadband speeds. (While we conclude that 70 percent of consumers constitutes a “substantial majority” as it relates to fixed broadband speeds, we lack the data to precisely determine what percent of consumers subscribe to other modes of services at particular service levels. Despite this, we still set minimum standards for other supported services at levels that in our judgement constitute

a substantial majority of consumers based on the information available.).

61. We also conclude that focusing solely on the “functionality” of a consumer's Internet service would not provide a workable standard for the Commission to use when updating annual service standards because it would require the Commission to determine the numerical threshold of “functionality” on a regular basis. By using numerical thresholds indexed to what consumers actually subscribe to, the Commission will allow consumer usage to determine what speeds are “reasonably comparable.”

62. Because providers already “report extensively on their offerings” on Form 477 twice a year, it is an appropriate repository for data to set and regularly update the minimum service standard for fixed broadband speeds. Additionally, the Commission previously emphasized that it uses Form 477 to “update our universal service policies and monitor whether our statutory universal service goals are being achieved.” Because Form 477 provides an accurate picture of what services American consumers actually subscribe to, and because it is collected on a regular basis, we conclude that Form 477 provides the best data with which to set and update the minimum service standard for fixed broadband speeds.

63. In addition, for the fixed broadband data usage allowance minimum service standard, we conclude that the data usage allowance standards currently used in the Connect America Fund for rate of return carriers electing A-CAM support are appropriate. We base the initial data usage allowance standard on this CAF standard because we do not currently have a source of available data that could be used to determine what percentage of subscribers purchase offerings with certain data usage allowance limits. We therefore set the initial data usage allowance standard for fixed broadband at the CAF rate-of-return standard for carriers electing A-CAM support, which is 150 GB per month for fixed broadband. We further conclude that the minimum service standards for data usage shall be updated based on data in the Commission's Urban Rate Survey and other appropriate and relevant data sources. The Urban Rate Survey was originally created as part of the Commission's Connect America Fund initiative in part to allow the Bureau “to specify an appropriate minimum for data usage allowance allowances” in CAF, and we believe it can serve a similar purpose here. While we set the initial data usage allowance standard for fixed broadband based on the CAF rate-of-return standard for carriers electing A-CAM support, we also believe the Urban Rate Survey in the future will help guide the Bureau to determine the usage allowance most commonly offered in the fixed broadband marketplace. (We also encourage providers to explore options for increasing usage allowances for Lifeline consumers who are deaf, hard of hearing, deaf-blind, or have a speech disability and rely on video connection for Video Relay Services and point-to-point calls and other bandwidth-intensive accessibility functionalities.).

64.

Initial Minimum Service Standards.

While we conclude that Form 477 data will be used to set and update the minimum standards for download and upload speeds, we also conclude that the Connect America Fund rate-of-return standard is the best starting point for setting minimum service standards for data usage allowance. Finally, we recognize that for the purpose of updating the minimum standard for capacity, the Urban Rate Survey and potentially other data will be useful sources for the Bureau to consider.

65.

Speed.

We conclude that in order to determine what fixed broadband speeds a “substantial majority” of Americans subscribe to, we will use the 30th percentile of subscribed speeds based on Form 477 data. By using the 30th percentile, we arrive at a speed to which 70 percent of Americans already subscribe, and we conclude that 70 percent constitutes a substantial majority. Although the Commission has not previously defined what constitutes a “substantial majority,” it has concluded that it is more than a simple majority. Based on the most recent Form 477 data, the 30th percentile of subscribed fixed broadband speeds is 10/1 Mbps. Put differently, this means that 70 percent of residential broadband subscriptions already meet or exceed 10/1 Mbps speeds. (To order the subscription data in Form 477 for the purposes of determining percentiles, residential subscriptions were ordered lexicographically by download speed and then upload speed.). Based on Form 477 data on what consumers actually subscribe to, we set the initial minimum service speed standards for fixed broadband at 10 Mbps for download and 1 Mbps for upload. An offering must meet both download and upload speed minimums to be considered to meet the minimum service standards.

66.

Usage Allowance.

As stated

supra

we set the initial usage allowance standard for fixed broadband at the CAF rate-of-return standard, which is 150 GB per month for fixed broadband.

67.

Updating Minimum Service Standards.

We conclude that Form 477 will be used to update the minimum service standard for fixed broadband speed. When updating the minimum service standards in the future, the Bureau will use data from the most recently available and usable Form 477. Using Form 477, the 30th percentile level of residential broadband service speeds reported nationally will be used as the speed component of the minimum service standard. We find that this benchmark represents a service standard that is consistent with our statutory directive in Section 254 of the Act. Accordingly, we conclude that using the 30th percentile of residential broadband speed is appropriate, because this level indicates that seventy percent of Americans subscribe to it, or something more robust.

68. For the fixed broadband minimum service standards, the Bureau will, on delegated authority, on an annual basis, release a Public Notice on or before July 31 notifying the public of the updated standard levels for speed and data usage allowance to be effective on December 1 for the next twelve months. The updated speed standard will be calculated using the above specified values from the most recent available Form 477. In the event the Bureau does not issue the Public Notice by July 31, or if any of the data required by the calculation are older than 18 months, the minimum service level for fixed broadband speed will be set at the greater of either (1) its current level; or (2) the fixed broadband speed standard used in the Connect America Fund for rate-of-return carriers. Because the Connect America Fund is also designed to provide advanced telecommunications services to America's consumers, we conclude that its fixed broadband speed standards provide an acceptable alternative in the event the Bureau does not complete its update in a timely manner.

69. For the fixed broadband minimum service data allowance usage standard, the Bureau will, on delegated authority, on an annual basis, release a Public Notice on or before July 31 notifying the public of the updated standard level to be effective on December 1 for the next twelve months. The updated fixed broadband minimum service standard for data allowance usage will be the greater of (1) an amount the Bureau concludes a “substantial majority” of American consumers already subscribe to; or (2) the Connect America Fund data usage allowance standard set for rate-of-return carriers.

(ii) Mobile Broadband

70. We next discuss the minimum service levels for mobile broadband services in the Lifeline program and revise Section 54.408 of the rules. In the

2015 Lifeline FNPRM,

we sought comment on whether minimum standards were appropriate for mobile broadband, and what criteria should be used to set those standards. Multiple commenters supported minimum standards for mobile broadband, while others were opposed. We agree with commenters who argue that some consumers only have access to mobile broadband, and that low-income consumers are particularly likely to only have access to mobile broadband. For these low-income consumers, it is vital that the offered service provides sufficient speed and capacity to allow the user to utilize all that the Internet has to offer. Accordingly, we conclude that minimum standards for both speed and data usage allowance are appropriate.

71.

Data Sources.

In the

2015 Lifeline FNPRM,

we sought comment on setting minimum service standards for mobile broadband. We specifically sought comment on setting a minimum standard for capacity at 1.8 GB per person per month, which is what the average American consumer used in 2014. Some commenters believed that requiring 1.8 GB would be too expensive for providers, or would require a significant charge for consumers, while others argued that 1.8 GB per month per subscriber would be insufficient for consumers without access to fixed broadband. While most commenters did not propose specific numerical thresholds, one commenter proposed requiring 1 GB of 4G data and unlimited 3G data. We are mindful that Lifeline is meant to support a household, as opposed to an individual, and we must take this into consideration when setting the proper minimum service standard for mobile broadband. Accordingly, as we discuss in more detail below, we conclude that after an initial schedule of minimum service standards, updated minimum service standards for mobile broadband data usage allowance will be based on calculation of a mobile data usage level by using data set forth in the Commission's annual

Mobile Competition Report

and other available data sources For the mobile broadband minimum service standard for speed, we rely on Form 477 data while also incorporating industry mobile technology generation (

i.e.

3G, 4G).

72.

Initial Schedule of Data Usage Allowance.

We conclude that, in order to allow the Lifeline market an appropriate period to adjust to the introduction of mobile broadband into the program, we should adopt a phased-in schedule of minimum service standards for mobile data usage allowances. After the period of time addressed in the schedule, the regular updating mechanism for mobile broadband service will apply unless the Commission acts otherwise based on recommendations in the State of the Lifeline Marketplace Report. Beginning on the later of December 1, 2016 or 60 days after PRA approval, the minimum data usage allowance standard for mobile broadband will be 500 MB per month. Beginning December 1, 2017, the minimum data usage allowance standard for mobile broadband will increase to 1 GB per month. Beginning December 1, 2018, the minimum data usage allowance standard for mobile broadband will increase to 2 GB per month. Beginning December 1, 2019, the minimum data usage allowance standard for mobile broadband will be determined, and updated thereafter, based on the procedures below.

73.

Data Usage Allowance.

We conclude that after the phase-in of mobile data usage allowance standards, in order to update mobile broadband standards for data usage allowance in line with the principle of supporting services that a “substantial majority” of American consumers subscribe to, and given the types of data that are publically and regularly available, the minimum service standard for mobile broadband data usage allowance will be 70 percent of the calculated average mobile data usage per household. These values will be calculated as follows:

• First, the average number of mobile subscriptions per household will be determined by dividing the total number of mobile-cellular subscriptions in the United States, as reported in the

Mobile Competition Report

or by CTIA, by the total number of American households, as determined by the U.S. Census Bureau. This number will be rounded to the hundredths place. (Based on the most recent data, there are 3.03 mobile subscriptions per American household. [355,400,000/117,259,427]).

• Second, the number of mobile subscriptions per American household will be multiplied by the percentage of mobile subscribers who own a smart phone, as reported by the Commission in its annual

Mobile Competition Report,

or other publicly available data sources if necessary, in order to determine the number of mobile smartphone subscriptions per American household. Because this value should not include mobile subscriptions that are not data-capable, phones that are not data-capable will not be used when calculating the mobile broadband minimum service standards. Additionally, phones that are not data-capable have no impact on the average household's mobile data capacity. This product will be rounded to the hundredths place. (Based on the most recent data, there are 2.33 smartphone subscriptions per household. [3.03 * .77]).

• Third, the calculated average number of mobile smartphone subscriptions per household will be multiplied by the average data used per mobile smartphone subscriber, as reported by the Commission in its annual

Mobile Competition Report,

(

Eighteenth Mobile Competition Report

30 FCC Rcd at 14609, Chart VII.B.2 (stating that the average smartphone user uses 1.361 GB per month of data) to determine the average mobile broadband data usage per household. This number will be rounded to the hundredths place and then multiplied by 0.7 (Based on the most recent data, this currently amounts to 2.22 GB per month per household [2.33 * 1.361 * 0.7]) to adjust for the fact that in these circumstances a “substantial majority” of subscribers will use less than the average.

• Fourth, to provide more simplicity for providers, the per-household capacity will be rounded down to the nearest 250 MB. (Based on current data, the 2.22 GB household capacity leads to a minimum capacity standard of 2 GB per month).

74. If applied today, the minimum service standards for mobile data usage allowance would be set at 2 GB per month, however, as discussed

supra,

we choose to adopt a more gradual phase-in of this standard. After the phase-in, in order to update the minimum standard for mobile broadband capacity, the Bureau will perform the same calculations listed above with the updated data from the

Mobile Competition Report

and other specified sources.

75.

Speed.

We now set the initial value for the minimum speed standard for mobile broadband. As stated above, our initial mobile broadband speed standard is based on technology generation, while the updated standard will incorporate Form 477 data. A coalition of Lifeline providers indicated that the Commission should require mobile broadband providers to offer speeds of 3G or better, and we agree. We conclude that, to claim Lifeline support for a mobile broadband service, a provider must provide to the Lifeline subscriber a service advertising at least

3G mobile technology for at least the amount of data usage allowance specified by the minimum service standards. (Many mobile offerings will provide a certain amount of data at a certain speed and then provide data service beyond that amount at lower speeds. The minimum service standard requires the usage allowance standard be met at the speed standard). We believe this is an appropriate starting point given the Commission's actions in the Mobility Fund, where funding was limited to those who deployed networks at 3G or higher. The initial mobile speed minimum service standard will be effective beginning on the later of December 1, 2016 or 60 days after PRA approval.

76.

Updating Minimum Service Standards.

For the mobile broadband minimum service standards, the Bureau will on delegated authority, on an annual basis, release a Public Notice on or before July 31 notifying the public of the updated standard to be effective on December 1 of the same year for the next 12 months. After the phase-in of the data usage allowance minimum standards, the updated data usage allowance standard will be calculated using the above specified values from the most recent versions available of each required data source. In the event the Bureau does not issue the Public Notice by July 31, or if any of the data sources required by the calculations are older than 18 months, the minimum service level for mobile broadband capacity will automatically increase or decrease on December 1 of the same year from its previous level by the most recent year-over-year percentage change in smartphone data usage per household, as reported in the two most recent

Mobile Competition Reports.

The value of the previous minimum service level adjusted by the most recent year-over-year percentage change in smartphone data usage per subscriber will then be rounded up to the nearest 250 MB level. As an example, in 2013, the average smartphone user used 1.152 GB per month. In 2014, the average smartphone user used 1.361 GB per month. This indicates an 18.1 percent increase. If the Bureau did not issue the required Public Notice performing the calculations detailed above, the most recent minimum standard would be increased by 18.1 percent and rounded up to the nearest 250 MB level.

77. We recognize that the minimum service standards for mobile broadband speeds may not need to be updated as frequently as the mobile data usage allowance standard given the pace at which new mobile technology generations are deployed. We therefore direct the Bureau to consider updating the mobile broadband speed standard at the same time it updates the minimum service standard for mobile broadband data usage allowance. The Bureau should consider mobile Form 477 data and other relevant sources to determine whether the mobile speed standard should be updated. Because we recognize that the minimum standard for mobile broadband speeds may not need to be updated on an annual basis, it will not be subject to an automatic increase; instead, it will only be adjusted if the Bureau determines that it ought to be adjusted after determining that, based on Form 477 data or other relevant sources, the “substantial majority” principle is best satisfied by an adjusted speed standard. In any case, the same Public Notice updating the mobile broadband data usage allowance standard should also establish the mobile broadband speed standard in effect beginning December 1, regardless of whether it is adjusted from its previous level.

(iii) Fixed Voice

78. In the

2015 Lifeline FNPRM,

we sought comment on how to ensure fixed voice service is “reasonably comparable” and affordable to low-income consumers. After consideration of the record, we decline to set minimum service standards for fixed voice service and instead maintain the

status quo

in this portion of the Lifeline market. It is not apparent that in this segment of the market Lifeline consumers are likely to be offered a less robust service than non-Lifeline consumers. In the fixed voice segment, providers typically apply the Lifeline discount to the price of the generally available residential voice service. In this way, the same services available to non-Lifeline customers are made more affordable to Lifeline customers. Additionally, while numerous commenters emphasize the need to retain fixed voice as a supported service, no commenters stated that specific minimum service standards for fixed voice service are necessary. Accordingly, we see no need at this time to intervene in such a situation.

(iv) Mobile Voice

79. In the

2015 Lifeline FNPRM,

we proposed establishing minimum service levels for voice-only service, and we sought comment on requiring providers to offer unlimited talk and text to consumers. Commenters emphasized that voice-only service remained an essential part of the program, at least until the IP-enabled transition is complete, and many other commenters supported requiring providers to offer unlimited talk and text. While some providers argued that minimum standards for mobile voice are unnecessary or “uneconomical,” we believe that requiring mobile voice providers to offer 1,000 minutes to consumers is consistent with our statutory directive to ensure that Lifeline consumers have access to the same services to which a substantial majority of American consumers subscribe. While we conclude that requiring providers to offer 1,000 minutes is appropriate, we are also mindful of providers' concerns about the affordability and feasibility of immediately requiring providers to offer 1,000 minutes and the resulting disruption to current Lifeline subscribers. Accordingly, we adopt a transition period beginning with an initial minimum standard of 500 voice minutes per month increasing over time to 1,000 minutes on December 1, 2018. We also at this time decline to include texting as a supported service, and thus we also decline to follow some commenters' suggestion that we set a minimum service standard for texting.

80. Based on recently available data, it is clear that a “substantial majority” of American consumers already subscribe to plans that offer 1,000 or more minutes, because “none of the smartphone plans for the United States have limited minutes,” and 77 percent of cell phones in the United States are smartphones. Accordingly, we conclude that Lifeline providers that seek support for mobile voice-only service, after the transition set out here, must provide 1,000 voice minutes in order to satisfy the minimum service standards until mobile voice is no longer a supported standalone service. Because we will require mobile voice providers to offer at least 1,000 minutes beginning on December 1, 2018, the mobile voice minimum service standard will not be updated annually after that date.

81. We therefore adopt the following transition for mobile voice minimum service requirements. The minimum service standards for mobile voice are as follows. Beginning the later of December 1, 2016 or 60 days after PRA approval, providers will be required to offer at least 500 minutes per month to mobile voice consumers. Multiple providers have indicated that they will be able to offer consumers 500 minutes a month, (To the extent that some of these providers suggest we should not at this time schedule any increase above 500 minutes, we disagree. Under the schedule we have adopted, providers will have well over 18 months to prepare for a phase-in of the 750-minute

minimum standard and another year to prepare for the phase-in of the 1,000 minutes requirement); and we accordingly conclude that this requirement is not unduly burdensome. Beginning December 1, 2017, providers will be required to offer at least 750 minutes per month to mobile voice consumers. Beginning December 1, 2018, and until voice telephony is no longer a supported service, providers will be required to offer at least 1000 minutes per month to mobile voice consumers. We believe this provides a gradual transition period that will allow Lifeline providers and consumers to adjust to the new mobile voice minimum standards reflective of the mobile voice plans offered to the substantial majority of American consumers.

(v) Bundled Offerings

82. In the

2012 Lifeline Reform Order,

we amended our rules to allow providers to offer bundled packages of voice and data service. In the

2015 Lifeline FNPRM

we sought comment on how bundles should affect the Lifeline support level. We now clarify that providers remain free to offer bundled offerings as a way to improve their service offerings and attract consumers. However, beginning December 1, 2019, when support for voice-only service is phased down, in order for Lifeline providers to receive the full $9.25 reimbursement from the program for services offered as part of a bundle, the broadband component of the bundle must meet the applicable minimum service standards. (If the broadband component does not meet the applicable minimum service standard but the voice offering does meet the applicable minimum service standard, then the provider may still receive the then-applicable benefit provided for voice-only service). We believe this requirement is necessary to ensure that Lifeline subscribers continue to receive robust broadband service while affording reasonable flexibility to the provider and choice to the consumer.

c. Application of the Minimum Service Standard

83. While numerous commenters supported minimum service standards, many commenters worried about reduced consumer choice, or providers being forced from the Lifeline market if they could not offer services that meet the minimum standard. We are mindful of these issues, but we conclude that allowing the Lifeline benefit to be used on services that do not meet our minimum service standards would lead to the type of “second class” service that the minimum service standards are meant to eliminate. One of the reasons behind adopting minimum service standards was our belief that such standards would “remove the incentive for providers to offer minimal, un-innovative services.” If providers were able to collect support for services that did not meet our standards, this would lead providers to continue to offer low-quality services. For this reason, we require, for fixed broadband, that any Lifeline supported service meet both the speed and data usage allowance minimum standards.

84. We also decline to allow mobile broadband services to be supported if the service does not meet the minimum service standards for both speed and data usage allowance. We do not believe that mobile broadband speeds of less than 3G are sufficiently advanced to warrant Lifeline funding. Further, we believe the current wireless and Lifeline marketplaces would allow mobile service providers to structure their offerings in such a way that the minimum service standards would not promote robust service. For this reason, we require that any Lifeline mobile broadband service meet both the speed and data usage allowance minimum service standards. For mobile voice-only service, as long as it is supported as a standalone service and subject to the transition detailed above, the service provided must meet the minimum service standard.

85. In order to ensure that Lifeline service meets the minimum service standards, we require service providers to annually certify compliance with the applicable minimum service level rules. Accordingly, we amend Section 54.422(b) to require carriers to certify their compliance with these requirements on our Form 481.

d. Exceptions Where Providers Do Not Meet Minimum Service Standards

86. We next provide an exception to our minimum standard requirements targeted towards fixed providers who have yet to deploy broadband capable networks in specific geographic areas that meet the minimum service standards. While we are mindful of our statutory directive to ensure that residents of underserved areas have access to services that are “reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas,” we have also recognized that many people, especially those living in rural areas, might not yet have access to broadband services that meet our minimum service requirements. Many commenters have similarly emphasized the different levels of infrastructure present in rural areas. In the

2016 Broadband Progress Report,

the Commission noted that 25 percent of residents of rural areas did not have access to download speeds of at least 10 Mbps.

87. We recognize that the necessary infrastructure is not present in all areas, and that there are providers which are not currently capable of offering services which meet or exceed the minimum service standards. Accordingly, we address commenters' concerns with a limited exception to our minimum service standards. This approach maintains our objective of providing robust service where available while also not precluding a subscriber from obtaining a Lifeline benefit in situations where the infrastructure does not yet support the minimum service standard. Additionally, our conclusion is consistent with Commission precedent, as the Commission has previously granted certain recipients of Universal Service funding waivers from our minimum service standards because of infrastructure constraints. As we explain in more detail below, the exception applies in the following circumstances.

88.

First,

we apply the exception only to fixed broadband providers. (47 CFR 8.2(d) (defining a fixed broadband service as a broadband Internet access service that serves end users primarily at fixed endpoints using stationary equipment. Fixed broadband Internet access service includes fixed wireless services (including fixed unlicensed wireless services, and fixed satellite services.). We find the exception is only appropriate for fixed broadband because fixed broadband is the mode for which there are still significant areas of the country in which locations do not have access to the minimum fixed broadband standards. While we acknowledge that some areas also do not have mobile broadband coverage meeting the minimum standards, there are far fewer of these areas. Further, we are concerned, given inherent differences in mobile and fixed technologies and the attendant business models of each, that an exception for mobile service could more easily be used to undercut our objective of supporting robust service in the Lifeline program. (More specifically, for mobile services we find that the business economics of the marketplace mean a mobile broadband provider could much more easily than a fixed broadband provider craft a business model with a set of very low usage allowance offerings for the purpose of triggering this exception to meeting the

minimum service standards. We find that allowing such behavior would undercut this Order's commitment to funding meaningful levels of robust service.).

89.

Second,

the exception applies only where the provider does not offer

any

generally available residential fixed broadband packages which meet the minimum service standards at a prospective subscriber's residence. Because we do not believe Lifeline funding should support “second-tier” service, we find that providers who meet the minimum service standards with a generally available residential offering to a location should not be eligible for the exception at the location where they meet the minimum service standards.

90.

Third,

the exception only applies if the provider offers a generally available residential fixed broadband service to the prospective subscriber with speeds meeting or exceeding 4 Mbps download and 1 Mbps upload. We believe this requirement is necessary to ensure that providers who offer “second-tier” service are not rewarded for failing to upgrade their networks. We delegate to the Bureau the rulemaking authority to increase, but not decrease, this speed floor as it determines is appropriate.

91. A provider qualifying for this exception may claim Lifeline support for a household even when providing service that does not meet the minimum standards for fixed broadband as long as the Lifeline discount is applied only to the purchase of its highest performing generally available residential offering that meets or exceeds 4Mbps/1Mbps. A provider will certify that it is providing the service in accordance with Commission rules, including that this exception has been appropriately applied. However, as always, the Commission will retain its audit authority and may use it to periodically evaluate whether a provider is complying with the rule.

92. Finally, while we do not at this time provide an exception to the minimum service standards for mobile broadband, our longstanding waiver rule permits the Commission to waive any rule “in whole or in part, for good cause shown.” We accordingly will consider waivers on a case-by-case basis for providers who do not meet our minimum speed standard for mobile broadband in particular areas. Pursuant to our general waiver rule, waiver of the mobile minimum service standards for broadband would be appropriate only if special circumstances warrant a deviation from those standards, and such a deviation will serve the public interest. We could envision that such special circumstances and public interest benefits would most likely be present in cases in which a provider seeks a waiver to apply the Lifeline benefit to the fastest mobile broadband product it offers, but that product does not meet the minimum service standards for mobile broadband due to lack of a deployed network able to achieve that standard.

3. Support Levels

93.

Baseline Level of Support.

In the

2015 Lifeline FNPRM,

we tentatively concluded that we should make permanent the non-Tribal support amount of $9.25 per month. We now conclude that the non-Tribal support amount will be up to $9.25 per month. We believe that establishing a permanent support amount provides an additional amount of certainty for interested parties, and it allows for continued administrative simplicity by enabling more accurate funding need projections. While $9.25 will be the permanent support level which will apply to all modes of service other than voice-only service, the non-Tribal support level for voice-only service will be adjusted as specified below.

94. Many commenters argue that the current $9.25 support level may be insufficient to cover the total cost of the supported service. Other commenters support the adoption of “tiered” service levels, with the amount of Lifeline support varying with the service provided, and the provision of a greater benefit for broadband service and a smaller benefit for voice-only service. We partially adopt such proposals, because we conclude that a greater benefit amount should be offered for broadband providers to facilitate the program's transition to broadband.

95. Although we take no position on whether $9.25 will be sufficient to support the entire cost of supported service, we emphasize that Lifeline was created to provide affordable, rather than free service, and past Commission decisions have emphasized this point. Additionally, we believe that other changes made in today's Order, such as the creation of a National Verifier and the streamlined eligibility determination process, will lower Lifeline providers' costs, and those savings can be passed on to consumers.

96.

Support for Voice-only Service.

For voice-only service, we adopt a schedule indicating the level of Lifeline support provided for voice-only service. As discussed above, prior to December 1, 2019, voice-only service meeting the minimum service standards shall be supported by $9.25 per month. From December 1, 2019 through November 30, 2020, voice-only service meeting the minimum service standards shall be supported by $7.25 per month. From December 1, 2020 through November 30, 2021, voice-only service meeting the minimum service standards shall be supported by $5.25 per month. On December 1, 2021, no support generally shall be provided for voice-only service except in certain circumstances identified below, or unless the Commission, having considered the recommendations of State of the Lifeline Marketplace Report, orders otherwise. In all events, voice service may still be provided in the context of an offering receiving Lifeline support if bundled with BIAS meeting the applicable minimum service standards.

97. Although we decide generally to phase-out Lifeline support for voice-only service as of December 1, 2021, we create an exception where particular circumstances are met. Specifically, we preserve the final phase-down level of Lifeline support ($5.25) even after December 1, 2021, for the provision of voice-only service to eligible subscribers by a provider that is the only Lifeline provider in a Census block. In particular, in any such Census block, such a provider will continue to receive $5.25 per month in federal Lifeline support for providing voice telephony service meeting the minimum standards to eligible subscribers, and thus will discount such voice service in the amount of the support received in accordance with our Lifeline rules.

98. Although we conclude that Lifeline should transition to focus more on broadband Internet access service given the increasingly important role that service plays in the marketplace, we remain mindful of the importance historically placed on voice service. We also recognize that although we provide a transition during which support is phased down, consumer migration to new technologies is not always uniform, and certain measures to continue addressing the affordability of voice service may be appropriate consistent with the objectives of Sections 254(b)(1), (b)(3) and (i). At the same time, in implementing Section 254 the Commission has a “responsibility to be a prudent guardian of the public's resources.” Collectively, this persuades us that although it remains appropriate to use some universal service resources for Lifeline voice even after such support otherwise generally has been phased out, we should prioritize supporting, in an administrable way, those areas where we anticipate there to be the greatest likely need for doing so.

99. Balancing those objectives, we conclude that the pre-December 1, 2021, level of Lifeline support—$5.25—will remain available even after December 1, 2021, for a provider to provide voice-only service to eligible subscribers in any Census block where it is the only Lifeline provider. Although one theoretically could imagine targeting this continued Lifeline support for voice-only service in other ways—

e.g.,

to other geographies, on the basis of certain demographic criteria, or otherwise—we are not persuaded that such other approaches would be as readily administrable, either in terms of identifying the area(s) or consumer(s) to be served with discounted service in implementing the Lifeline mechanism and/or in terms of our ability to estimate and predict Lifeline demand for purposes of budget evaluations. (As described below, data sufficient to initiate the analysis required under our approach will already be available to the Commission as part of its implementation of universal service support.).

100. Further, having focused on these areas, we conclude that it makes more sense to provide any continued Lifeline support for voice-only service to the existing, single ETC serving the relevant Census block, rather than necessitating the designation of an entirely new ETC simply to serve this post-phase out role, particularly given that the Commission is phasing out Lifeline support for voice-only service more generally. With respect to any such Census block, Lifeline support for voice-only service provided by the sole Lifeline provider shall remain in place—together with the ETC's obligations as a Lifeline provider (This assumes that the ETC has not qualified for the conditional forbearance described in Section III.E.2.c (Forbearance Regarding the Lifeline Voice Service Obligations) or relinquished its ETC status in relevant part)—until the first year after the Commission (or the Bureau, acting on delegated authority) announces that a second Lifeline provider has begun providing service in the Census block.

101. For purposes of identifying the providers and Census blocks initially subject to this rule, we direct the Bureau to conduct a process to identify the Census blocks where there only is one Lifeline provider. The results of that initial process should be announced at least six months prior to the date on which support for standalone voice is scheduled to phase down to $0,

i.e.,

by June 1, 2021. The Bureau will have substantial data available to it by the time this process would need to occur in order to identify proposed Census blocks, and providers, that would (or would not) be encompassed by this continued Lifeline support for voice-only service. In particular, data will be available from the NLAD, from states that previously opted-out of the NLAD, and from the National Verifier, among others. This list shall be updated on an annual basis, such that support for standalone voice service provided by the relevant provider—and thus any accompanying obligation to offer service discounted by passing through the Lifeline support—shall end in a census block as of December 1 of the year that the Bureau identifies the census block as being served by more than one Lifeline provider.

102.

Support for Bundled Service.

For a bundled voice and broadband service, the support level will depend on whether the voice and broadband components meet the minimum service standard effective at the time. If the broadband component meets the broadband minimum service standards (both speed and data usage allowance) then $9.25 per month of support shall be provided. If the broadband component does not meet the minimum service standards but the voice component meets the minimum service standard, then support shall be provided at the level in effect for voice-only service as explained

supra.

103.

Other Issues.

We also address concerns raised by several providers claiming that they are unable to process any form of payment. While some Lifeline providers currently operate as prepaid wireless carriers, and therefore do not have dedicated billing departments, these providers nevertheless collect revenue from both Lifeline and non-Lifeline customers, such as through the purchase of reload cards, and they appear to be able to receive funds either via online payment or by mail. Many of these providers partner with physical retailers who provide locations for Lifeline providers to sell such cards or even process payments. In addition, we also highlight the flexibility provided for providers under the rules we adopt. Since the $9.25 of monthly support must only be applied to an eligible service provided for a month's time, and since we do not mandate pricing or any terms of payment for the Lifeline-supported service, a provider has a wide range of options for collecting additional revenue from the consumer if it so desires. For example, a provider may choose to have the consumer make a one-time payment upon enrollment, monthly payments, or payments on a more flexible schedule. A wide variety of approaches are possible, thus allowing providers the ability to find approaches to their business which work best for their customers. In sum, we are confident that a dynamic and competitive Lifeline marketplace will adapt to the changes we make.

104. Finally, we address the issue of whether the Lifeline program should support the cost of handsets or customer premise equipment. In the

2015 Lifeline FNPRM,

we sought comment on whether to include the cost of Consumer Premise Equipment (CPE) when determining a service's affordability. While many commenters stated that the cost of CPE must be considered, and that the Commission should provide a subsidy to facilitate the purchase of the equipment, we do not believe that such a subsidy is warranted at this time. Past Commission precedent makes it clear that Lifeline, with the exception of a brief period after Hurricane Katrina, has been used to fund services, and not equipment. At this time we see no reason to deviate from that approach. While we do not separately fund the purchase of equipment, we encourage the private sector to work collaboratively with the Lifeline program and Lifeline providers to help make devices more available. We further encourage Lifeline providers to explore options for offering accessible devices for consumers with disabilities.

C. National Lifeline Eligibility Verifier

105. In this Section, we establish a National Lifeline Eligibility Verifier (National Verifier) to make eligibility determinations and perform a variety of other functions necessary to enroll eligible subscribers into the Lifeline Program. The National Verifier is more than simply a piece of technology; it is a system relying on both human resources and technological elements to increase the integrity and improve the performance of the Lifeline program for the benefit of a variety of Lifeline participants, including Lifeline providers, subscribers, states, community-based organizations, USAC, and the Commission. As described below, the National Verifier will have both electronic and manual methods to process eligibility determinations and will have at its center a Lifeline Eligibility Database (LED), which will contain records of all subscribers deemed eligible by the National Verifier. The National Verifier will also engage in a variety of other functions, such as, but not limited to, enabling access by authorized users, providing support payments to providers, and conducting recertification of subscribers, to add to the efficient administration of the Lifeline program. This Order directs

USAC, with the oversight and approval of the Bureau and OMD, to procure the necessary parts to the National Verifier. As described below, certain aspects of the implementation will be overseen mainly by the Bureau with additional oversight by OMD, as necessary and appropriate. We delegate to the Bureau and OMD all aspects of the development, implementation, and performance management of the National Verifier. We delegate to the Bureau authority to provide any rule clarifications or guidance with respect to the National Verifier. Along with the other important changes we make to the program today, the National Verifier is an integral part of our vision for the future of this program. We revise Sections 54.400 and 54.410 of the Lifeline rules to incorporate the National Verifier.

1. Objectives for the National Verifier

106. The Commission's key objectives for the National Verifier are to protect against and reduce waste, fraud, and abuse; to lower costs to the Fund and Lifeline providers through administrative efficiencies; and to better serve eligible beneficiaries by facilitating choice and improving the enrollment experience.

107.

Reducing Waste, Fraud, and Abuse.

As recognized by commenters, the National Verifier will close one of the main avenues historically leading to fraud and abuse in the Lifeline program: Lifeline providers determining subscriber eligibility. Before 2008 when the first non-facilities-based wireless providers started to enter the program, Lifeline was a traditional wireline voice service program and consumer eligibility determinations were necessarily made by the providers. Today, the Lifeline program is a modern, dynamic, multi-provider program with wireline, wireless, and broadband service. Modern Lifeline providers have varied business models and some have a greater financial interest in the eligibility determination, as the more subscribers they enroll, the higher the disbursement they will receive from the Fund. Therefore, commenters have noted that the program should remove the responsibility of determining eligibility from an entity who is providing service to the subscriber. Commenters agree that given today's modernization, adopting the National Verifier eligibility process to help enforce program rules and address concerns with eligibility determinations will greatly increase Lifeline accountability.

108.

Reducing Costs to Lifeline Providers.

As noted in the comments, by removing the responsibility of determining eligibility from providers, the Lifeline program will also be a more attractive business opportunity as providers recognize significant reductions in administrative and compliance costs. Commenters argue that variation across states has made the program more costly for multi-state providers who have had to use and comply with multiple eligibility systems and that the overall costs most likely exceed $600 million per year. By providing a central point of verification, Lifeline providers can avoid the patchwork of systems currently required to enroll subscribers in various states. By reducing compliance costs and burdens and attracting more Lifeline providers, the program will benefit from greater competition and, as a result, deliver more value to subscribers. Once implemented, the National Verifier functionality will further reduce administrative burdens for Lifeline providers by streamlining the flow of payments from USAC to providers. Further, commenters note that the risk of enforcement liability caused by the actions of third parties prevents providers from participating in the Program. By adopting the National Verifier, the risk of enforcement actions against providers for eligibility related issues will decline as the National Verifier takes on the risk of determining eligibility for subscribers. Overall, transferring the eligibility certification process away from providers will make it easier on providers to comply with the Lifeline rules.

109.

Facilitating Consumer Choice and Improving the Enrollment Process.

The National Verifier will also facilitate subscriber choice, and serve as a single, unified platform for administering the new modernized Lifeline program. Commenters note that Lifeline's current model of primarily determining eligibility through ETCs places significant limitations on the choices of eligible subscribers. The existing model leaves little room for participation by third-party organizations, such as schools, community-based organizations, or digital literacy groups, to assist eligible subscribers in understanding the value of the Lifeline benefit as well as navigating the process of seeking an eligibility determination. As we move to a broadband-supporting Lifeline program, we agree with commenters that it is critical to provide maximum subscriber choice as well as enlist the assistance of third-party organizations to help subscribers get and stay connected with broadband. These comments note that organizations who do not have a financial interest in the provision of Lifeline benefits and have social motivations to help low-income subscribers will improve the integrity of and participation in the program. A subscriber-focused National Verifier will facilitate third-party participation by allowing them to help subscribers with eligibility questions and in applying the benefit to a Lifeline-supported service.

2. Functions of the National Verifier

110. As supported by the record, we establish the National Verifier and explain how its core functions will achieve each objective described above. The National Verifier is a comprehensive integrator of processes and systems. The National Verifier will, first and foremost, determine subscriber eligibility for the Lifeline program. It will also perform other necessary functions, such as enabling Lifeline providers to verify eligibility of a subscriber, providing access to authorized users, and providing support payments to providers. At the core of the National Verifier will be the Lifeline Eligibility Database (LED), which will contain a list of Lifeline eligible, non-duplicative potential subscribers. (As described below, USAC may propose to the Bureau how and whether the information in the NLAD can or should be used to populate the LED). While we set forth the basic functions and structure below, we direct USAC to work with the Bureau, and OMD as appropriate, to implement the National Verifier and to make administrative and efficiency improvements consistent with the core elements described below.

111.

Determination of Subscriber Eligibility.

A primary function of the National Verifier will be to determine eligibility for potential Lifeline subscribers in a manner that is cost-effective and administratively efficient. As revised by this Order, subscribers will demonstrate eligibility for the Lifeline program by showing proof of enrollment in specific Federal and Tribal programs. These programs, such as the Supplemental Nutrition Assistance Program (SNAP) and Medicaid, have extremely robust program integrity and enrollment procedures. By using these programs as determinants of eligibility here, the Lifeline program can draw upon their vast fraud prevention and program integrity capabilities. As recommended by commenters, the eligibility certification process will have both manual and electronic components to accommodate the needs of subscribers. Manual certification will use human review of documents and other

information to assess eligibility, while electronic certification will rely on communications between the National Verifier and other systems and databases. (We direct USAC to propose acceptable documentation for the manual review to the Bureau. In particular, USAC shall consider how the National Verifier can address possible misuse of eligibility documentation (

e.g.

SNAP cards lacking identifying information)). We agree with the commenters that the program databases checked should, to the extent possible, include those owned by states, (For example, the SNAP program uses databases that are owned by the states), those owned by Federal entities, or those owned by other entities. (For example, the Supplemental Security Income program uses databases that are owned by the Social Security Administration). We expect that the National Verifier will be able to accommodate and utilize many of the varying state databases available. We also envision that the electronic certification process will produce at least near real-time results.

112. Both the manual and electronic approaches will apply program rules, including identity verification, as necessary, to determine a subscriber's eligibility. (For example, if a state administrator verifies identity in the same robust manner as the federal identification verification check, USAC may propose to the Bureau to rely on the state's check). The National Verifier will also check to ensure that the subscriber is not a duplicate of any existing subscriber already receiving a Lifeline benefit. By checking this, the National Verifier will reinforce and build on the NLAD to enforce Lifeline's one-per-household rule, and prevent duplicates. Subscribers will be able to submit information about themselves (

e.g.

such as verifying identity and documenting the basis for eligibility) to the National Verifier through a variety of methods, such as via mail and an online portal, and certify their eligibility. (USAC currently maintains a list of documents that can be used to establish identity. Commenters have suggested that improvements be made to the documents used to establish identity. Thus, we direct USAC to review the Web site list and propose to the Bureau changes to the list.). The National Verifier will also have a dispute resolution process whereby subscribers found to be ineligible may have an opportunity to dispute the finding. (We direct USAC to propose a process for dispute resolution to the Bureau for approval for the National Verifier).

113. The National Verifier will have both a manual and electronic certification process. We agree with commenters that our long-term goal should be to determine the eligibility of most subscribers through the more efficient means of electronic certification. We recognize that electronic certification of eligibility will generally have lower long-run costs relative to labor-intensive manual certification. We have streamlined the programs used to determine eligibility for Lifeline to those that have substantial automation and electronic process in place already. We direct USAC to seek the most cost effective and efficient means to incorporate electronic eligibility certification into the National Verifier wherever feasible. We expect USAC and the Bureau to work closely with the states, other federal agencies, and Tribal Nations to foster partnerships that will help the National Verifier develop the most efficient pathways to determining subscriber eligibility. For example, USAC should consider co-enrollment with states, other federal entities, or Tribal Nations or coordination with other entities that have enrollment responsibilities to more efficiently determine eligibility. We believe such actions based on electronic certification will better support our objectives to reduce the costs to the Fund and to better serve subscribers with an improved certification process.

114. The National Verifier will implement a complete eligibility review prior to providing a Lifeline benefit. We believe that it is vital to deploy the National Verifier with the expectation that it will conduct comprehensive and timely reviews. In the

2015 Lifeline FNPRM,

we sought comment on whether we should implement a pre-approval process to mitigate delays in the review period. Commenters argued that completing full reviews of eligibility will reduce waste, fraud, and abuse. We agree with the comments filed and, at this time, do not adopt a pre-approval process that would allow Lifeline providers to claim Lifeline support for a subscriber prior to a full review. Only after a full review is complete may the Lifeline provider claim and receive support for the subscriber. Lifeline supported service must begin on the day that the Lifeline provider certifies it will begin claiming support for serving the subscriber. (Note that a provider could “claim” a subscriber in the Lifeline Eligibility Database (LED) but not claim support until a later time when service begins. The claiming process in the National Verifier will make it clear when the provider is certifying to providing service and therefore eligible to collect support for a subscriber.). If the subscriber is not listed and claimed in the Lifeline Eligibility Database (LED), the Lifeline provider has no claim on support.

115.

Population of the Lifeline Eligibility Database.

The LED will contain records of Lifeline-eligible subscribers. As such, another important function of the National Verifier will be to allow for cost effective and administratively efficient ways to populate the LED. (For the purposes of defining a framework for the National Verifier, “database” is not intended to have any technological meaning requiring the National Verifier to follow a specific path toward technically implementing these requirements. “Database” is meant as a general term denoting a collection of data organized for rapid search and retrieval. The Commission directs USAC to implement the National Verifier in accordance with this Section using the most appropriate technological means.). The National Verifier will populate the LED with all necessary subscriber records after determining the subscriber is eligible. However, this need not be the only method of populating the LED with eligible subscribers. We envision multiple other methods, including utilizing state databases, which are already being used today by current Lifeline providers in a number of states, and building on existing processes used by states and/or community organizations which interact regularly with low-income subscribers. Our objective is to provide multiple pathways to populate the LED with records associated with Lifeline-eligible subscribers in order to simplify the enrollment process for subscribers and Lifeline providers. We therefore direct USAC to work with the Bureau to develop other efficient and reliable methods of listing eligible subscribers in the LED. Additionally, USAC must develop processes regardless of the pathway used, to obtain subscriber consent to the collection, retention, use, and sharing of a subscriber's personally identifiable information, including information about their use of Lifeline services with USAC, the National Verifier, and other appropriate users. As described further below, the LED will also maintain information about the supported services of the Lifeline subscribers.

116.

Access by Different Users.

The National Verifier will also function as an interface for authorized users for

many different activities. We agree with commenters and anticipate that eligible subscribers, Lifeline providers, states, and Tribal Nations will require access to establish or verify eligibility. We also expect the National Verifier to have varying interface methods to accommodate these different groups of users. (For example, the National Verifier may have an interface that is consumer-friendly and geared towards subscribers. It may have another interface that is geared toward providers that may allow application programming interfaces (machine-to-machine interaction). We direct USAC to work with the Bureau to develop interfaces that promote the objectives of the National Verifier and serve the needs of users in a cost-effective and efficient manner.

117.

Access by Lifeline Providers.

For Lifeline providers, the National Verifier will support many functions, such as allowing permissible queries to the LED to verify if a subscriber is eligible, (The National Verifier will only permit queries which facilitate the purposes of the Lifeline program. After obtaining approval of the Bureau, USAC may implement useful administrative queries to facilitate the needs of the modernized the program) allowing the claiming of a subscriber as a Lifeline customer, and allowing reimbursement based upon subscribers served. For example, the National Verifier will allow Lifeline providers to easily confirm a subscriber's eligibility status in the LED by using an appropriate set of personal information provided by the subscriber. After obtaining authorization from the subscriber, Lifeline providers intending to initiate a supported service will use the LED to claim that subscriber as a Lifeline customer. By claiming the subscriber, the Lifeline provider will certify that it will be providing a Lifeline-supported service to the subscriber in accordance with Commission rules. Providers will be able to enter into the LED the correct support amount (non-Tribal or Tribal) for the claimed subscriber. We also agree with commenters who argue that the National Verifier should also allow Lifeline providers to relinquish subscribers in the LED, thus discontinuing support, in accordance with Commission rules. We expect that the technology used for the National Verifier will allow claiming and relinquishing either a single subscriber record or batches of records. However, irrespective of the technical abilities of the National Verifier, service providers must follow the Commission's rules on enrollment and de-enrollment.

118.

Access by Subscribers.

The National Verifier will also allow potential subscribers (we use the term potential subscribers here generally to refer to both successful and unsuccessful applicants to the Lifeline program), to contact it directly to initiate and complete eligibility determinations and applications for Lifeline service, to obtain information about Lifeline providers and services, and to resolve any issues through dispute resolution as recommended by commenters. The National Verifier may use standardized forms and easy-to-use processes to assist subscribers in completing applications. It will have internal controls and utilize document management processes to aid the submission of complete applications, regardless of the submission method used. (For example, applications submitted via a secure Web site should have standardized, mandatory fields that require input and provide error messages before advancing to the next screen.). During the application and certification process, the National Verifier will communicate with subscribers to notify them of application status at relevant milestones in the process. Subscribers will be notified of either an affirmative or negative eligibility determinations by the National Verifier. Once a subscriber is listed in the LED, he or she will be notified, and be given information such as, but not limited to, the manner in which the Lifeline benefit may be used, as well as information on services and Lifeline providers in their area. Subscribers must consent to providing the information to the National Verifier, should be made aware of what information is being stored and used by the National Verifier, and should also be allowed to view and modify their records in the National Verifier as appropriate. The National Verifier may also communicate with subscribers for other purposes related to the efficient administration of the program as determined to be necessary by USAC, with the approval of the Bureau.

119. We also expect the National Verifier to use a variety of methods to communicate with subscribers who have limited means of connection, both in terms of the mode used (such as mail, telephone, text messages, email, etc.) and in terms of form used (such as various languages and access for disabled individuals). The mode of communication from the National Verifier to the subscriber at a minimum must be appropriate and commensurate with the mode through which the subscriber initiated contact with the National Verifier or requested to be contacted. We also expect the National Verifier to provide access to subscribers with disabilities in accordance with all applicable laws and to provide service in multiple languages as directed by the Bureau.

120.

Access by States, Tribal Governments and State/Tribal Administrators.

As recommended by commenters, the National Verifier will also support access by states, Tribal governments, and state/Tribal administrators and will also support communications between it and the states. Commenters note that some states have already implemented processes for determining Lifeline eligibility for individuals in their states, and we seek to cooperate with such state efforts as we jointly continue to protect the integrity of the program and the subscriber experience with the Lifeline eligibility certification process. Recognizing that existing state efforts will provide a way to more efficiently and cost-effectively determine eligibility, we direct USAC, as part of its development and operation of the National Verifier to consider opportunities to coordinate and partner with states. USAC should ensure any partnership promotes the objectives of the National Verifier to improve administrative efficiency, better the subscriber experience, and prevent waste, fraud, and abuse in the program. (One commenter suggested that connection to a state database should only be mandatory if the provider has more than 5,000 subscribers in the state. While we do not impose such a policy here, we direct USAC to consider the most efficient ways to partner with the states). It is also imperative that a Tribal or state eligibility determination is congruent with the Commission's rules. Prior to initiating these Tribal or state partnerships, USAC must submit a proposed partnership plan to the Bureau indicating how it is congruent with the National Verifier and the Bureau must approve of establishing such a partnership as proposed by USAC.

121.

Support Payments Based on the National Verifier.

The National Verifier will also function as the default basis for determining support payments to providers. (After obtaining approval from the Bureau, we also direct USAC to implement administrative solutions to resolving concerns with the accuracy of the number of active subscribers in the database. For example, subscribers remain actively enrolled during the 30 day cure period following an initial 60 days of non-usage. Providers will be paid based upon the records of claimed subscribers in the LED absent some

other basis for suspending, delaying or declining to provide such support. (For a provider to receive Lifeline support for serving a claimed subscriber, not only must there be a record of the claimed subscriber in the LED, but the service provider must be acting in compliance with relevant applicable statutory requirements and Lifeline program rules. Moreover, Section 54.707 of the rules authorizes USAC to suspend or delay universal service support amounts if a carrier fails to provide adequate verification of its entitlement to such support upon reasonable request or if USAC is directed by the Commission to suspend or delay universal service support amounts. 47 CFR 54.707. In the 2012 Lifeline Reform Order, the Commission provided guidance to USAC regarding the procedures it should follow in the Lifeline context regarding the suspension or delay of universal service support amounts if a carrier fails to provide adequate verification of its entitlement to such support upon reasonable request under Section 54.707 of the rules. As also observed in the 2012 Lifeline Reform Order, the Commission has responsibilities to maintain the integrity of the universal service fund and will pursue recapture of funds and/or seek to impose penalties where warranted. Thus, in addition to the role of USAC audits under Section 54.707 of the rules and the associated guidance in the 2012 Lifeline Reform Order, the Commission itself can direct USAC to suspend or delay universal service support amounts under Section 54.707 of the rules, as noted above. In this context, we anticipate that the Commission could direct USAC to suspend or delay universal service support amounts, either wholly or in part, when the Commission has proof, or credible information, that leads it to reasonably believe, based on the totality of the information available, that all or part of a payment would be in violation of the statutes and regulations applicable to the Lifeline program. Furthermore, in extraordinary cases where advance notice would likely cause significant harm to the universal service fund, for instance, by hindering the possibility of recovering funds, the Commission reserves the right to direct USAC to initiate the suspension or delay of Lifeline support amounts even in advance of notice to the relevant service provider.) This approach will serve to enforce Commission rules and significantly reduce duplicates, ineligible subscribers, and improper payments. We direct USAC to provide the Bureau and OMD with a transition plan for phasing out the FCC Form 497, currently used to seek Lifeline support. With approval of the Bureau and OMD, USAC will begin executing this plan and moving to a system where support payments are based on the records in the LED. We also direct USAC to propose to the Bureau and OMD improved methods of providing payment to the Lifeline providers that will reduce costs and burdens to the Fund and to Lifeline providers. For example, we received comments from AT&T suggesting that payments could be received by providers as electronic funds transfers. USAC should consider comments such as these and provide recommendations to the Bureau as to whether the model of payment currently in place is the most efficient method of serving Lifeline subscribers.

122. Additionally, we direct USAC to consider how the National Verifier might facilitate initiatives that aggregate eligible subscribers' Lifeline benefits so as to streamline the payment of benefits and therefore encourage provider participation. The Bureau will work with USAC to establish procedures and guidance USAC can use to coordinate “aggregation projects” in the Lifeline program consistent with the objective of preventing waste, fraud, and abuse. At a minimum, to create an aggregation project, the Lifeline provider must certify that the aggregation project will provide Lifeline eligible service directly to the eligible low-income subscribers' residences, describe the technologies the Lifeline provider plans to utilize for that specific project, and certify that the service provided through the project will otherwise comply with all other Lifeline rules. We note here that aggregated benefit programs must meet the minimum standards set out in the Lifeline rules, as measured by the service provided to each individual subscriber. We therefore amend § 54.401 to enable payment for providers' servicing aggregation projects. Further, we direct the Bureau to work with USAC, as part of implementing the National Verifier, to provide Lifeline providers with guidance and procedures for creating aggregation projects and for enrolling subscribers in aggregation projects. (USAC's role will be to develop processes to ease and streamline the administration of aggregation projects by implementing special systems, technical support, and coordination efforts. USAC will not fund consumer outreach efforts but may provide administration and expertise to community-based organizations, housing associations, and institutions seeking to coordinate the aggregation of benefits). Finally, total reimbursement distributed to the Lifeline provider will be tied directly to the number of subscribers affiliated with an aggregation project who have been determined eligible for a Lifeline benefit.

3. Performance Management of the National Verifier

123. In this Section, we direct USAC to develop a robust performance management system to advance the objectives and to analyze, on an ongoing-basis, the effectiveness of the National Verifier. We recognize that our success with the National Verifier is integral to the Lifeline program. We provide below a range of components to be utilized in evaluating the performance of the National Verifier. Our list is not exhaustive, and we expect USAC, in consultation with the Bureau and OMD, to continue to update the performance of the National Verifier and its performance management system.

124.

Time of Review.

We first discuss the time it will take for the National Verifier to review a subscriber's eligibility. We expect that both the manual and electronic certification processes will be completed in a reasonable amount of time from the time of application receipt by the National Verifier to final eligibility determination and population of the LED. We expect that the National Verifier will develop review processes that balance the needs of subscribers to receive a decision quickly with our responsibility to conduct accurate eligibility reviews. To the extent it would improve the subscriber's experience and improve program efficiency, the National Verifier may implement any solutions, such as queuing, to manage demand. We also require the National Verifier to forecast and provide innovative solutions to enrollment fluctuations that may affect review times. At a minimum, the National Verifier should use project management processes, maximum automation, and flexible staffing to facilitate the rapid response time required to best serve the stakeholder community.

125.

Performance of the LED.

The LED will, at a minimum, maintain a list of subscribers for whom eligibility has been confirmed for Lifeline-supported services and a list of claimed subscribers. Recognizing that some providers and subscribers may have concerns about the frequency with which the LED is updated, we direct USAC to have the National Verifier modify and make available listings, de-listings, and other record changes in the

LED quickly, taking into account the need for reliable information and cost considerations of varying levels of service.

126.

Development Environment.

The National Verifier must include a development environment that can be used by interested parties to test the components of the National Verifier prior to the live date. The development environment should allow the National Verifier and stakeholders to test new functionalities before the National Verifier launches and as new functions are added.

127.

Use of the NLAD.

In order to build the National Verifier in an efficient and timely manner, we permit USAC to integrate or repurpose the NLAD in whole or in part as necessary. If the National Verifier has integrated into it all the responsibilities and functions of the NLAD, including but not limited to subscriber duplicate prevention and detection and identify verification, then USAC may propose to the Bureau to discontinue the NLAD. Further, records currently contained in the NLAD may be incorporated into the National Verifier if such incorporation promotes the operation of the National Verifier. We delegate to the Bureau the ability to revise the rules regarding the NLAD, including but not limited to Section 54.404, as necessary to allow for the transition and implementation of the National Verifier.

128.

Use of Acceptable Documents for Eligibility and Identity Certification.

The National Verifier will require subscribers to submit documentation for determination of eligibility. Given the great diversity in types of documentation available for establishing identity and eligibility across the states, territories, Tribal Nations, and eligibility portals, the National Verifier will maintain information on acceptable documentation types and will provide guidance about the types of documentation that are acceptable for establishing identity and eligibility for the Lifeline program. We also delegate to the Bureau to work with USAC to develop new forms, update or revise current forms, and/or retire forms if the Bureau believes it appropriate and necessary to aid program administration and to facilitate the implementation of the National Verifier.

129.

Document and Data Retention by the National Verifier.

The National Verifier will retain eligibility information collected as a result of the eligibility determination process. Lifeline providers will not be required to retain eligibility documentation for subscribers who have been determined eligible by the National Verifier. However, current Lifeline program rules regarding record retention of eligibility documentation will remain in effect for Lifeline providers who have determined the eligibility of a current subscriber when enrolling that subscriber, as this is necessary for Lifeline program evaluations and audits.

130.

Comprehensive Help Desk.

The National Verifier will have a help desk equipped to handle inquiries from all stakeholders, including subscribers, Lifeline providers, states, and aggregators. At a minimum, the help desk will have the ability to interact with stakeholders in multiple languages and for specified time periods.

131.

Training and User Support.

We direct USAC to develop and implement a training plan and ongoing National Verifier user support strategy. The training should include, but not be limited to, training for USAC and National Verifier personnel, training for Lifeline providers and states, and outreach packets for state PUCs and PSCs for subscribers and aggregators. We direct USAC to develop on-going training and user plans for all the stakeholders as needed.

132.

Security and Privacy of the National Verifier.

We direct USAC, working with OMD and its Office of the Chief Information Officer (OCIO), to ensure that the National Verifier will incorporate robust privacy and data security best practices in its creation and operation of the National Verifier. USAC must ensure that the National Verifier complies with all applicable laws and Federal government guidance on privacy and security and other applicable technology requirements such as those enacted by the Federal Information Security Management Act (FISMA), National Institute of Standards and Technology (NIST) publications, and the Privacy Act. As USAC seeks vendors to build the National Verifier, it should require that potential vendors demonstrate and incorporate in their proposals principles, including but not limited to, privacy-by-design and security-by-design principles for the National Verifier. Potential vendors must also include statements that allow sharing their proposals with USAC and the Commission for review and discussion prior to beginning the work. Any vendor selected must commit to abiding by the principles described here and must build and operate the National Verifier using agile development methodologies. We recognize that privacy and data security best practices change over time, so we direct USAC to ensure that the National Verifier's privacy and data security practices remain consistent with Federal government guidance, legal requirements and best practices, and to hire a third-party firm to independently audit and verify the National Verifier's compliance with these policies annually and provide recommendations based on any audit findings. USAC should report to the Commission annually the results of this third-party audit and verification, as well as its efforts to ensure compliance with regards to its privacy and data security practices. (USAC may incorporate this annual reporting requirement on privacy and data security practices in the

National Verifier Annual Report

).

133. The National Verifier must follow the NIST guidance for secure, encrypted methods for obtaining, transmitting, storing, and disposal of consumer and provider information. The National Verifier should also follow NIST guidance for firewalls, boundary protections, protective naming conventions, and adoption of strong user authentication requirements and usage restrictions to protect the confidentiality of consumer and provider information. (In discussing the privacy of consumer information, we do not limit it to active subscribers. The Verifier must also protect information gathered from applicants to the Lifeline program, whether unsuccessful or successful, and past subscribers.) We further direct USAC to ensure that, per NIST guidance, access to consumer and provider data is limited and subject to secure authentication systems for Verifier personnel, (The personnel for the Verifier, include but are not limited to, personnel at USAC, personnel at an entity procured by USAC to execute the functions of the Verifier, or personnel procured by USAC to support any of the functions of the National Verifier) for service providers and for other users who will have access to consumer or provider data in the possession or control of the National Verifier. We also direct USAC, per NIST guidance, to ensure that Verifier personnel working with consumer or provider data held by the National Verifier receive USAC's yearly rules of behavior, regular privacy and data security training. (We expect that USAC annually will update its rules of behavior as needed.) USAC must maintain records of the trainings and attendees. We further direct USAC, per NIST guidance, to ensure that the National Verifier limit its data collection to information it needs to perform its functions as National Verifier, and to promptly and securely dispose of data that it no longer needs. We direct USAC, in accordance with NIST 800-53 (The NIST 800-53 is a security publication

issued by NIST) to ensure that the National Verifier program has all of the necessary documentation and verification of authority to operate, yearly updates, continuous monitoring, plans of actions and milestones (POAMS) (These are required by NIST) and proper continuity and disaster recovery plans. The National Verifier must have subscriber notification procedures in the event of breach that are compliant with Department of Homeland Security (DHS) and OMB guidance. All these efforts and other guidance on privacy and security as FISMA NIST Publications, and the Privacy Act should be independently audited and verified by a third party, hired by USAC to assess its annual compliance with these policies annually as well as provide recommendations based on any audit findings. USAC must also provide the Commission with assistance and documentation should any of the above items or aspects of the National Verifier relate to audits or investigations of the Commission's compliance with federal laws and regulations.

134.

Reporting and Internal Controls Component.

The National Verifier will include a component responsible for coordinating with USAC on audits of internal controls to ensure consistency with the Lifeline program rules, for conducting surveys to ensure satisfaction in the performance of National Verifier personnel, and for producing reports to Lifeline providers, USAC, and the Commission. With respect to the reports to the Commission, the National Verifier must also produce reports necessary to ensure the Commission's compliance with federal rules and regulations pursuant to direction from the Bureau and OMD. The reporting capabilities will include the use of data analytics and fraud prevention software to help detect fraud before improper payments are made to Lifeline providers. In the event of data and security breaches, it will inform USAC and the Commission, and carry out the process of subscriber notification. We direct the Bureau to work with USAC and determine the appropriate reports to be incorporated into the National Verifier.

135.

Internal Controls and Procedures Manual.

We also direct USAC to create written procedures for the National Verifier, including but not limited to, procedures for all functions, processes, quality control standards, and internal controls. Subject to Bureau and OMD approval, USAC should use Government Accountability Office's (GAO) Green Book to serve as a guide to developing internal controls for the National Verifier.

136.

Unforeseen Circumstances and Clarifications.

Given the complex nature of the National Verifier and the importance of developing it in an efficient and timely manner, as stated above, the Commission delegates to the Bureau the role of providing USAC with any needed clarifications or interpretations of the Commission's orders for all aspects of the National Verifier, including but not limited to development, design, and maintenance of the National Verifier. Further, the Bureau may provide guidance to USAC concerning the National Verifier in the event of unforeseen circumstances. Any such guidance must be in line with the intentions of the Commission's orders for the National Verifier.

137.

National Verifier Procurement and Funding.

We direct USAC, working with the Bureau and OMD, to use efficient and cost effective means to manage the funding and procurement of the National Verifier. USAC will be primarily responsible for the procurement of both the human resources and the technological components of the National Verifier with oversight from the Bureau and OMD. (USAC has already obtained information from entities via its RFI issued in 2015). USAC may also propose to the Bureau and OMD to manage certain activities in-house, if most cost effective. We direct USAC to prepare a procurement plan for the National Verifier for review by the Bureau and OMD. We direct USAC to incorporate, as feasible, into the National Verifier contract requirements, payment terms and conditions that reasonably reduce the risks inherent in the ambitious task of developing the National Verifier and that incent timely completion of tasks while also considering cost considerations. USAC may also as part of developing and maintaining the National Verifier, procure from other entities (including other government entities), access to or connection with databases and systems if USAC determines this is the most reasonable approach, taking into consideration cost and other factors, to achieve the objectives of the National Verifier. In the event of disagreement, the Bureau and OMD will provide USAC with a final determination. The USF will fund the development and ongoing maintenance of the National Verifier, including all procurement of the various components, testing environment, and its ongoing activities.

138.

Stakeholder Engagement.

We direct USAC, working with the Bureau, to develop a plan to allow for meaningful collaboration from potential users on the administrative aspects of implementation of the National Verifier. We expect that potential users, such as service providers, states, Tribal Nations, and others, who may have valuable recommendations on a variety of implementation areas, including but not limited to, best practices for IT requirements, efficient interface for electronic and manual eligibility pathways, effective payment pathways, and effective communication strategies for consumer beneficiaries. We therefore encourage USAC to create a stakeholder committee to advise USAC on the “Draft National Verifier Plan” (described below). After such collaborative efforts conclude, USAC shall incorporate stakeholder input and recommendations into its “Draft National Verifier Plan”, which it submits to the Bureau. The Bureau shall determine the appropriate path forward after balancing factors, such as but not limited to, cost, administrative efficiency, and ease of use. Overall, we believe that the National Verifier system that is developed with a high degree of collaborative input from users will best advance our goals.

139.

Implementation Timeline and Transition.

Implementation of the National Verifier is a considerable undertaking and will require significant resources from both the Commission and USAC. We here establish milestones to chart the implementation of the National Verifier. If USAC determines that additional time is necessary, it will inform the Bureau and OMD and request a reasonable extension.

140. Before December 1, 2016, USAC shall submit to the Bureau and OMD the “Draft National Verifier Plan” as the first implementation milestone. This plan will comprehensively describe the National Verifier to be developed and implemented. The plan will also set out a proposed strategy, estimated timeline, and estimated budget for progressively deploying each part of the National Verifier. As part of the strategy, this plan will explain in detail how USAC expects to procure services for the National Verifier, to partner with states, and to incorporate other federal databases and systems into the National Verifier. The Bureau and OMD will work with USAC to make any necessary revisions, and will approve the revised “National Verifier Plan.” (While the National Verifier Plan is the official vehicle for approving the planned details of the National Verifier, USAC from the effective date of this order may begin taking actions in preparation for

developing and implementing the National Verifier).

141. After approval of the National Verifier Plan, on or before July 31 and January 31 of each year until the National Verifier implementation is complete, USAC will submit to the Bureau and OMD a National Verifier Implementation Update. This document will provide regular information to the Bureau and OMD on progress toward the approved National Verifier Plan.

142. Given the complexity of the National Verifier and wide variety of databases and systems to which the National Verifier may connect, we provide flexibility in how and when USAC chooses to incorporate such systems. We require the NLAD opt-out states to provide existing subscriber information to USAC by December 1, 2016, and ongoing thereafter, including any information regarding services that Lifeline subscribers subscribe to as described further below. (These states include California, Texas, Oregon, and Vermont.

See

Section III. E.2.c.ii. (Increasing Competition for Lifeline Consumers, ETCs that are not Lifeline-Only)). We set as an expectation that USAC will deploy the National Verifier in at least 5 states by December 31, 2017. We further expect that between January 1, 2018 and December 31, 2018 the National Verifier will be deployed in an additional 20 states. By December 31, 2019, we expect Lifeline eligibility will be determined in all states and territories using the National Verifier. We also expect that USAC may require testing and trials of the National Verifier prior to deployment and we allow this with the approval of the Bureau.

143.

National Verifier Deployment and Notification Responsibilities.

Because deploying the National Verifier in a state means the Lifeline eligibility responsibilities will be transitioned from ETCs or state administrators to the National Verifier, the deployment must be carefully managed and progressively achieved. When USAC is ready to deploy the National Verifier in a particular state, USAC must inform the Bureau of its deployment and transition plans in that state, in addition to providing sufficient advance notice to the Lifeline providers, state administrators and all other participants. This process will allow for a transparent, progressive and staggered roll-out of the National Verifier across the nation while retaining the Commission's

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