NOTICES

Lifeline and Link-Up Programs

[35 Pa.B. 1852]

Public Meeting held
March 3, 2005

Commissioners Present: Wendell F. Holland, Chairperson; Robert K. Bloom, Vice Chairperson; Kim Pizzingrilli, Statement follows

Lifeline and Link-Up Programs; Doc. No. M-00051871

Tentative Order

By the Commission:

   By this Tentative Order, we adopt the National School Lunch Program and income-based criterion at or below 135% of the Federal Poverty Guidelines as eligibility criteria for Pennsylvania's Lifeline 150 and Link-Up programs in order to make our programs consistent with the Federal Communication Commission's default Lifeline/Link-Up programs, as announced on April 29, 2004, Report and Order and Further Notice of Proposed Rulemaking In the Matter of Lifeline and Link-Up, at CC Docket No. 04-87, WC Docket No. 03-109. Notice is hereby given by the Commission that the action discussed herein is preliminary in nature and will become final in accordance with law after 30 days of the date of publication of this Tentative Order in the Pennsylvania Bulletin unless comments are received.

Procedural History

   In 1984, the FCC established a Lifeline program to promote universal telephone service by providing low-income consumers with discounts on the monthly cost of dial tone service. By 1987, the FCC implemented Link-Up America (Link-Up) to help low-income households pay phone connection charges. With the passage of the Telecommunications Act of 1996 (TA-96), the FCC expanded its rules¹ so that Lifeline service could be provided to low-income consumers in every state regardless of whether a state provided support; under the amended rules, telephone companies designated as eligible telecommunications carriers (ETCs) would provide Lifeline service to eligible consumers (ETCs receive federal universal service funding).

   Until November 30, 2004, the effective date of Act 183,² all local exchange carriers (LECs) operating in the Commonwealth were required to provide Lifeline service and to have a Lifeline plan and rates filed in their tariff. On June 28, 1994, the Commission first ordered Bell Atlantic--Pennsylvania, Inc. (BA-PA) (now Verizon PA), to submit for approval a revenue-neutral Lifeline program and a Universal Telephone Assistance Program (UTAP). On August 3, 1995, the Commission granted BA-PA's petition and ratified a Lifeline Settlement Agreement.³ BA-PA's Lifeline program was implemented in 1996 and was the first such program in the Commonwealth. In 1997, BA-PA revised its Lifeline program in Docket No. R-00974153, Order entered November 21, 1997, so Lifeline customers had a choice in local service options. The order also increased the customer discount. Additionally, BA-PA requested that the Commission designate BA-PA as an ETC so that it could receive federal Universal Service Fund (USF) support. Given the federal initiative, the Commission subsequently, at I-00940035, on July 31, 1997, directed each LEC to file a Lifeline plan to become effective January 1, 1998. On September 30, 1997 the Pennsylvania Telephone Association (PTA) filed a petition for the Approval of Lifeline Service Plan on behalf of its member companies. The PTA companies' Lifeline eligibility requirements mirrored the BA-PA plan except that the BA-PA Lifeline program provided Lifeline customers with a larger credit for monthly service. By Order entered November 21, 1997⁴ the Commission approved the PTA plans which led to the implementation of the statewide Lifeline program.

   Lifeline programs were addressed in the Global Order.⁵ Three orders approving the later-filed Lifeline/Link-Up tariffs of BA-PA, GTE North, and the PTA, respectively, were addressed at the Global Order dockets and were entered August 17, 2000.⁶ These orders approved the tariff filings and defined the program eligibility requirements further by adding the State Blind Pension program and the Temporary Assistance for Needy Families Program (TANF) to the list of eligible social assistance programs.

   Pennsylvania's telephone current Universal Service Programs are as follows:

   Lifeline--Verizon PA⁷ and Verizon North are the only companies offering this. It provides qualified customers with a credit (currently between $9.28 and $11.88)⁸ towards their basic monthly phone charges with the option of choosing either the local area standard usage service or the local area unlimited usage service. Eligible customers may qualify if they have incomes at or below 100% Federal Poverty Income Level Guidelines (FPG) or receive General Assistance (GA), Supplemental Security Income (SSI), or Temporary Assistance for Needy Families (TANF). This program did not permit customers to subscribe to Call Waiting or other optional services. However, customers were permitted to subscribe to Call Trace Service at regular cost under special circumstances.

   ^§Lifeline 150--All LECs operating in Pennsylvania carry Lifeline 150 in their tariffs. It provides qualified customers with a credit (currently a maximum of $7.25)⁹ towards their basic monthly phone charges with the option of choosing either the local area standard usage service or the local area unlimited usage service. Eligible customers may qualify if they have incomes at or below 150% of the FPG and participate in certain assistance programs.¹⁰ Further, a customer was restricted to one line with either local area standard usage package or local area unlimited usage package, and one optional service such as Call Waiting, Caller ID, home voice mail, etc., at regular charges.

   On April 29, 2004, the FCC released a Report and Order and Further Notice of Proposed Rulemaking In the Matter of Lifeline and Link-Up, at CC Docket No. 04-87, WC Docket No. 03-109. The FCC modified its rules (most of which became effective July 22, 2004), so as to increase the national telephone penetration rate above the current level of 94.7% and make phone service affordable to more low-income households. The order expanded the federal default eligibility criteria so as to include an income-based criterion of 135% of the Federal Poverty Guidelines (FPG)¹¹ and added the National School Lunch Program's free lunch program (NSL)¹² as a qualifying social assistance program. In prior years, consumers whose state followed the federal program had to participate in one of the qualifying programs to qualify for Lifeline. Now low-income consumers can qualify based on household income alone. Thus, more households nationwide arguably could qualify for the federal default program.

   In order to combat fraud, the FCC added a proof of eligibility provision that places an additional administrative requirement on the LECs to get their customers to certify in writing, under oath, that they meet the eligibility requirements for household income and participation in qualifying social assistance programs.

   On September 3, 2004, this Commission entered a Tentative Opinion and Order at Docket No. P-00951005,¹³ that addressed the Settlement Agreement and Further Settlement Agreement regarding the Petition of the Frontier Companies for approval under Chapter 30 of the Public Utility Code for Approval of an Alternative Regulation and Network Modernization Plan (September 3, 2004 Order). The September 3, 2004 Order modified one aspect of the Further Settlement Agreement by rejecting the provision allowing customers who receive the Lifeline discount to purchase up to two vertical services on the basis that it was inconsistent with the Commission's conclusion in the Global Order on this issue. Ordering Paragraph No. 8 of the September 3, 2004 Order also directed Commission staff to submit a recommendation to the Commission within 60 days of the entry date of that Order regarding how the Pennsylvania Lifeline program should be structured as a result of the recent FCC Lifeline Order.

   On November 19, 2004, Pennsylvania's legislature passed House Bill 30--an amended version of the original Chapter 30 provisions concerning the regulation of the telecommunications industry. The Governor signed House Bill 30 into law as Act 183, with an effective date of December 1, 2004. Act 183 includes significant changes to Pennsylvania's universal service programs. Specifically, the provisions outlined in Section 3019(F) state the following:

§ 3019(F) Lifeline Service.--

(1)  All eligible telecommunications carriers certificated to provide local exchange telecommunications service shall provide lifeline service to all eligible telecommunications customers who subscribe to such service.

(2)  All eligible telecommunications customers who subscribe to lifeline service shall be permitted to subscribe to any number of other eligible telecommunications carrier telecommunications services at the tariffed rates for such services.

(3)  Whenever a prospective customer seeks to subscribe to local exchange telecommunications service from an eligible telecommunications carrier, the carrier shall explicitly advise the customer of the availability of lifeline service and shall make reasonable efforts where appropriate to determine whether the customer qualifies for such service and, if so, whether the customer wishes to subscribe to the service.

(4)  Eligible telecommunications carriers shall inform existing customers of the availability of lifeline service twice annually by bill insert or message. The notice shall be conspicuous and shall provide appropriate eligibility, benefits and contact information for customers who wish to learn of the lifeline service subscription requirements.

(5)  When a person enrolls in a low-income program administered by the department of public welfare that qualifies the person for lifeline service, the department of public welfare shall automatically notify that person at the time of enrollment of his or her eligibility for lifeline service. This notification also shall provide information about lifeline service including a telephone number of and lifeline subscription form for the person's current eligible telecommunications carrier or, if the person does not have telephone service, telephone numbers of eligible telecommunications carriers serving the person's area, which the person can call to obtain lifeline service. Eligible telecommunications carriers shall provide the department of public welfare with lifeline service descriptions and subscription forms, contact telephone numbers, and a listing of the geographic area or areas they serve, for use by the department of public welfare in providing the notifications required by this paragraph.

(6)  No eligible telecommunications carrier shall be required to provide after the effective date of this section any new lifeline service discount that is not fully subsidized by the federal universal service fund.

Discussion

   A Secretarial letter was issued on September 1, 2004, asking jurisdictional LECs questions about Lifeline service and the impact of the FCC rules. Approximately 42 LECs as well as representatives from the Office of Consumer Advocate (OCA), Community Justice Project in Pittsburgh, Pennsylvania Utility Law Project (PULP) and the AARP replied. After review of the arguments of the parties and the FCC orders, the Commission believes, given the enactment of Act 183 and new FCC mandates, the time has come to revise our Lifeline and Link-Up programs.

The Impact of Act 183

   Section 3019(F)(1) requires all ETCs¹⁴ to provide lifeline service to all eligible customers. The Commission's Global Order required all LECs (including non-ETCs) to file Lifeline tariffs and provide this service to eligible customers. The current pool of ETCs consists of all 37 ILECs and three CLECs (MCI Metro Access Transmission Services, Service Electric Telephone, Inc., and RCN Telecom Services of Pa., Inc.) and one wireless company (Nextel Partners, Inc.). In accordance with Section 3019(F)(1), CLECs that are not ETCs are no longer required to provide Lifeline service. The FCC does not permit pure CLEC resellers to seek ETC status. However, these companies are permitted to offer Lifeline by purchasing a discounted Lifeline service from an ILEC such as Verizon. CLECs that are facilities-based may seek ETC status from this Commission. Non-ETC CLECs¹⁵ reported that 587 of their customers received Lifeline 150 service in 2003. As of December 31, 2003 the non-ETC CLECs had 489 Lifeline customers still enrolled in the Lifeline 150 program. The majority of these Lifeline customers were divided between two large CLECs, Comcast (329) and CTSI (140). The remaining 20 Lifeline customers were split among four smaller CLECs.

   Therefore, the Commission encourages all CLECs to continue offering Lifeline and Link-Up services and to revise their Lifeline offering to comply with the expanded program set forth in this Order. As per the Global Order, Verizon will continue to provide CLEC resellers discounted rates for Lifeline services. This means that CLEC resellers may continue to provide Lifeline and Link-Up services. The Commission also encourages facilities-based CLECs to seek ETC status so they may provide Lifeline and Link-Up services and be reimbursed from the federal universal service fund. CLECs that choose to remove Lifeline and/or Link-Up provisions from their tariffs shall be required to provide their customers with notice. This notice will advise customers that the CLEC will no longer offer Lifeline or Link-Up service. In addition the notice will provide customers with details on how to migrate their local service to an ETC LEC operating in the same area.

   Companies' outreach efforts have generally been limited to sending out an annual bill insert, providing information in their directories, and in some cases, developing their own Lifeline brochures. Generally, Act 183 directs ETCs to expand their outreach efforts. Section 3019(F)(4) states that ETCs shall inform existing customers of the availability of Lifeline service twice annually by bill insert or message. Under Section 3019(F)(3) whenever a prospective customer seeks to subscribe to local exchange telecommunications service from an ETC, the carrier shall explicitly advise the customer of the availability of Lifeline service and shall make reasonable efforts where appropriate to determine whether the customer qualifies for such service and, if so, whether the customer wishes to subscribe to the service. Automatic notification is also discussed in Act 183. Section 3019(F)(5), states that the DPW shall automatically notify people about Lifeline service when they enroll for qualifying low income programs administered by DPW.

   Pennsylvania's current Lifeline 150 program restricts the purchase of vertical services to one service. Under Section 3019(F)(2) of Act 183, ''[a]ll eligible telecommunications customers who subscribe to lifeline service shall be permitted to subscribe to any number of other eligible telecommunications carrier telecommunications services at the tariffed rates for such services.'' Therefore, the prior restriction to one vertical service is now lifted, and there are no restrictions on the number of vertical services a Lifeline customer can choose.

Default vs. Non-Default State

   At the time the Global Order was drafted in September 1999, the Commission determined Pennsylvania was a ''default'' state based on the language then present in 47 CFR § 54.409 of the FCC's regulations. In 1999, Section 54.409(b) stated:

To qualify to receive Lifeline in states that do not provide state Lifeline support, a consumer must participate in one of the following programs: Medicaid; food stamps; Supplemental Security Income; federal public housing assistance; or Low-Income Home Energy Assistance Program.

Now, the same Section 54.409(b) states:

To qualify to receive Lifeline service in a state that does not mandate state Lifeline support, a consumer must participate in one of the following federal assistance programs: Medicaid; food stamps; Supplemental Security Income; federal public housing assistance; and Low-Income Home Energy Assistance program.

   In 1999, we viewed our state as a default state for the Lifeline 150 program because Pennsylvania did not provide any funding for the program and we did not require LECs to provide additional support for this program. The Commission viewed the Lifeline 150 as a separate program that would be totally funded by federal support. At that time, we did not believe that contributions from BA-PA for its Lifeline 100 program would be viewed by the FCC as state contribution for the Lifeline 150 program. Therefore, Lifeline 150 customers could not qualify based on income alone and would have to participate in qualifying assistance programs.

   The companies also viewed Pennsylvania as a default state in 1999 as this is evidenced in the Replies of PTA, BA-PA, and GTE North (now known as Verizon North) to the exceptions of OCA regarding these three Lifeline Compliance Tariffs filed on or about November 30, 1999. At that time BA-PA stated,

The Commission's requirement that Lifeline recipients participate in one of the enumerated programs is completely consistent with the FCC's requirements for receiving federal universal service support for eligible Lifeline customers . . . . The OCA's interpretation--that Lifeline eligibility can be met through income alone--is flatly inconsistent with the FCC's regulations, and could jeopardize BA-PA's ability to obtain federal universal service fund reimbursement for the Lifeline 150 program.¹⁶

   Further evidence that BA-PA once viewed Pennsylvania as a default state was their petition to the FCC for a waiver of one of FCC's rule Section 54.409(b) to permit BA-PA to use Pennsylvania Department of Public Welfare (DPW) database to verify the eligibility of Lifeline subscribers.¹⁷ This petition was granted by the FCC on December 27, 2000. In its order approving the petition, the FCC stated:

Option 2 [Lifeline 150] expands eligibility for support to all subscribers with incomes at or below 150% of the federal poverty level and permits those customers to add vertical services. Because the program is funded entirely from federal support, Commission rules require Bell Atlantic to obtain written certifications of eligibility from subscribers to Lifeline Option 2.

Bell Atlantic seeks a waiver of the written certification requirement for subscribers of the Lifeline Option 2 who are listed in the Pennsylvania DPW database. It asks that, given its four years of successful experience with the DPW database, it be allowed to continue to rely on that database when the database indicates that a customer is eligible for Lifeline Option 2 [Lifeline 150]. Bell Atlantic agrees that if its waiver request is granted, it will continue to require the written certification specified in Section 54.409(b) of the rules where consumers qualify for the program based on their enrollment in the federal public housing assistance or Low-Income Home Energy Assistance programs, because data about participation in those programs is not contained in the DPW database.

We find that Bell Atlantic has demonstrated that good cause exists to waive section 54.409(b) of the Commission's rules.¹⁸

   However, despite the prior FCC order, Pennsylvania was not listed as a default state in the FCC's Appendix G of the FCC Lifeline Order. Appendix G listed 16 states that are considered to be default states, following the FCC's rules. Arguably then, we are a non-default state. Commission staff was told by the FCC that Appendix G is not necessarily up to date or accurate, but at the same time, there was no dollar contribution amount threshold requirement before a state could be classified as non-default. In Pennsylvania, only Verizon North and Verizon PA are required to provide support to the Lifeline program (Lifeline 100 only). None of the LECs who offer Lifeline 150 are required to provide support for this program. Still, this seems to be enough to now satisfy the FCC's definition that a state that mandates support for a Lifeline program and that contributions other than Federal monies are being made. Further, a representative from the Universal Service Administration Company (USAC) represented that we were a non-default state and OCA as well as the LECs participating in staff's Lifeline survey all argued that Pennsylvania is a non-default state.

   In light of the previous, it appears that the fact that Verizon is mandated to contribute to its Lifeline programs qualifies Pennsylvania as a ''non-default'' state according to the FCC rules. The significance of being a non-default state is that the Commission or the state legislature can establish rules specific to Pennsylvania and address any issues that may be unique to the Commonwealth.

   Pennsylvania is a ''state that mandates state Lifeline support'' based on the support provided by BA-PA for the Verizon Lifeline 100 program. Universal service goals are furthered even though the state Lifeline support does not apply to all Pennsylvania Lifeline programs. Thus, the Commission has some flexibility pursuant to Section 54.409(a) of the FCC's Lifeline regulations to establish eligibility criteria so long as they are ''narrowly targeted qualification criteria that are based solely on income or factors directly related to income.'' 47 CFR § 54.409(a). As the FCC explained, this flexibility allows states such as Pennsylvania ''to consider federal and state-specific public assistance programs with high rates of participation among low-income consumers in the state.'' FCC Lifeline Order par. 5.

Lifeline Program Take Rates

   Consumer advocates, staff, and our state legislature¹⁹ have all expressed concern about the low levels of participation in Pennsylvania's Lifeline programs. As shown on the chart below, Pennsylvania's customer participation has grown since 2000. Even so, the penetration rates for these programs have been disappointing given the number of eligible consumers and the amount of money Pennsylvania ratepayers²⁰ contribute to the USF. According to the Office of Consumer Advocate and the DPW, there are over a million people who participate in Medicaid living in Pennsylvania. For August 2004, the DPW reports the unduplicated number of persons eligible for Medical Assistance totaled 1,713,023. Medical Assistance Eligibility Statistics, August 2004.²¹

End of Year Lifeline Enrollment 2000-2003
Major Telephone Companies²²

Company	2000	2001	2002	2003
ALLTEL	1,356	3,388	3,902	4,106
Comcast	NA	NA	NA	329
Commonwealth	694	997	1,195	1,485
MCI Local	45	163	434	555
United	1,083	1,334	1,563	1,913
Verizon North*	3,070	3,794	6,890	6,763
Verizon PA*	46,459	68,630	95,969	118,000
Total *	52,707	78,306	109,953	134,138

*Includes Lifeline and Lifeline 150
N/A not available

Adding the non-major LECs' end-of-year enrollment figures to the major LECs' subtotal of 134,138 yields a total Lifeline enrollment total of about 137,000. Assuming a maximum of 1.7 million households eligible, this calculates the take rate to be possibly as low as 8%.

   According to the FCC, Pennsylvania's take rate is 16.2% compared to the nationwide take rate of 33.7%.²³ We have seen an enrollment increase since the Global Order from approximately 35,000 Lifeline customers in September 1999 to 137,000 as of December 31, 2003, but we are still very short of enrolling all consumers who could benefit from the Lifeline credit. If other states act to add the new income-based eligibility criteria of 135% of FPG, to remain unchanged in our policy may result in Pennsylvania incurring increased federal USF responsibility (as the size of the Fund increases) with no improvement in the percentage returned to the Commonwealth in terms of federal USF low-income support.

Pennsylvania is a Net-Contributor to the Universal Service Fund

   We are concerned that in 2003, Pennsylvania received $13.6 million in low income support yet our ratepayers contributed over $126,408,000 of which approximately $24 million went towards the low-income federal USF.²⁴ Thus, Pennsylvania is a net-contributor regarding the low-income portion of the federal USF. Last year approximately $10 million dollars collected here through federal USF charges were not used by our Lifeline customers, but rather this was used by other states' low-income programs. This disparity will only widen as a result of the recent FCC rules changes unless the Commission follows the FCC's lead and broadens its Lifeline 150 eligibility criteria in addition to removing the vertical services restriction barrier to enrollment. The Commission recognizes that in a pooled fund, such as the federal USF, not all states can be net recipients. However, increasing Pennsylvania's participation levels will allow more dollars to remain within the state.

Examination of Other States

   An examination of other states similar to Pennsylvania shows that Florida's Public Service Commission recently recognized that even though it is not a default state, ''it is in Florida's best interest to also adopt this criterion.'' In re: Adoption of the National School Lunch Program and an income-based criterion at or below 135% of the Federal Poverty Guidelines as eligibility criteria for the Lifeline and Link-Up programs, Notice of Proposed Agency Action Order Expanding Lifeline Eligibility at 4, Docket No. 040604-TL (Fl.PSC Aug. 10, 2004) (Florida PSC Order). As the Florida PSC stated, ''[w]e are concerned that if we do not adopt the 135% criterion for all ETCs, it could result in compounding Florida's status as a net contributor into the USF Low Income Support Mechanism and keep some consumers that would otherwise be eligible out of the program.'' Florida PSC Order at 4-5. Like Pennsylvania, Florida's LECs already used TANF as an eligibility criterion. Florida PAA Order at 1.

   In 2003, Kansas (another non-default state) decided to enroll low-income consumers with incomes at or below 150% of FPG. Kansas also enrolls consumers in Lifeline based on eligibility for the Free School Lunch Program. See In Re: Investigation into the Lifeline Service Program and Methods to Ensure Awareness of the Program, Docket No. 00-GIMT-910-GIT, Order (KS, SCC, Jan. 21, 2003).

   As stated previously, we are still a long way from enrolling all consumers who could benefit from the Lifeline credit, and failing to modify our policy may result in Pennsylvania incurring more of the federal USF debt as other states act to add the new income-based eligibility criteria of 135% of FPG. The FCC has already stated that they have weighed the impact on the federal USF if all states added the new income-based eligibility criteria of 135% of FPG and found that the benefits of ''adding new low-income subscribers and retaining existing subscribers outweigh the potential increased costs.'' FCC Lifeline Order, par. 12.

   Even though many LECs said that they were unclear whether enrollment in Lifeline service would increase should Pennsylvania make these changes to its Lifeline program, we may logically deduce from the factual information that is currently available to the Commission that the proposed changes would in no way result in lowered enrollment, and could, in fact, result in significant increases in enrollment.

   Many consumers in Pennsylvania could be benefiting from the Lifeline/Link-Up credit but are not because they do not qualify under the current two-prong test, or possibly because of lack of awareness of the availability of the program. The Commission believes it is likely that the addition of household participation in NSL as a Lifeline eligibility criterion may increase Lifeline enrollment in Pennsylvania even though the FCC noted that statistics are not available that translate into the number of NSL recipients into a household count. Therefore, the Commission believes it should expand the Lifeline 150 program to include NSL and change the 150% ''and'' requirement to 135% ''or.'' We would lose no current enrolled customers and would be on more even footing with other states. This change could boost enrollment figures.

   The Commission notes that some additional administrative costs may be incurred by LECs in order to implement revisions allowing NSL and income as eligibility factors, but the benefits to Pennsylvanians outweigh this burden.

Increasing Subscriber Line Charges

   The federal USF low-income program is designed to help the low-income consumers' bills remain affordable as the FCC continues to raise the Subscriber Line Charge (SLC), which currently is capped at $6.50 line-item charge on all monthly phone bills. If our program eligibility is more restrictive than the federal rules, and the SLC continues to increase, we may be doing a disservice to Pennsylvanian low-income ratepayers.

Certification Requirements

   Even though we are a non-default state and do not have to enforce the FCC's new Section 54.409(d) certification requirements, the parties are invited to comment on how to proceed with this issue. The responses we received when this was suggested to our jurisdictional LECs were varied. Some LECs annually monitor eligibility, some semi-annually. Verizon was not specific about how frequently, but does verify eligibility when its customers transfer service from one location to another.

Notification Requirements

   Section 3019(f)(4) requires ETCs to inform existing customers of the availability of Lifeline service twice annually by bill insert or message. The notice must be conspicuous and must provide appropriate eligibility, benefits and contact information for customers who wish to learn of the Lifeline service subscription requirements. 66 Pa.C.S. § 3019(f)(4). In keeping with tradition, we will direct our Bureau of Consumer Services to work with the Pennsylvania Telephone Association to develop biannual Lifeline bill inserts or bill messages that are written consistent with the Commission's plain language policy guidelines at 52 Pa. Code § 69.251.

Conclusion

   In the Global Order, the Commission implicitly recognized that those eligibility criteria that the FCC has identified as appropriate for use by those states that do not mandate state Lifeline support in 47 CFR Section 54.409(b) also, prima facie, meet the narrowly targeted, income-based test of Section 54.409(a). Thus, in the Global Order and subsequent orders approving compliance filings, the Commission did not limit eligibility criteria strictly to those set forth in Section 54.409(b) of the FCC's Lifeline regulations. Instead, the Commission required LEC to add those criteria ''to broaden eligibility requirements.'' In re Nextlink, Inc., 93 Pa.P.U.C. 172, 244 (Sept. 30, 1999). As a result of the Global Order, LEC expanded the list of eligibility criteria from the narrow list of Temporary Assistance for Needy Families (TANF), General Assistance (GA), Supplemental Security Income (SSI) and State Blind Pension (Verizon only) to include Medicaid, Food Stamps, Low Income Home Energy Assistance Program (LIHEAP), and federal public housing assistance. See, e.g., Pa. PUC v. Pa. Telephone Ass'n, Docket No. P-00991648, P-00991649, Order at 2, 5 (Aug. 17, 2000) (PTA Lifeline Order). Pa.P.U.C v. Bell Atlantic-Pennsylvania, Inc. Docket No. P-00991648, P-00991649) (BA-PA Lifeline Order).

   The Commission shall again broaden the Lifeline eligibility criteria to benefit low-income Pennsylvania telephone consumers. As the FCC stated in its April 2004 Order, ''we believe there is more we can do to make telephone service affordable for more low-income households.'' FCC Lifeline Order. In Pennsylvania 1,842,724 children were enrolled in the National School Lunch Program as of October, 2004. Of that number, 498,604 were eligible to participate in the NSL free lunch program.²⁵ Upon adoption of the NSL program, we will coordinate with the Pennsylvania Department of Education, and Department of Public Welfare, and other organizations to incorporate the program into Pennsylvania's current Lifeline and Link-Up outreach initiatives. Adding the NSL program will benefit Pennsylvania by increasing the number of eligible consumers for the Lifeline and Link-Up programs. We hereby adopt the NSL program for purposes of determining eligibility in the Lifeline and Link-Up programs in Pennsylvania. Accordingly, the Commission will expand the eligibility criteria to include the National School Lunch Free Lunch program (NSL), and a separate income-based eligibility criterion of 135% of FPG. While the proposed changes might increase administrative costs to the ETCs administering the programs, the proposal is consistent with FCC standards.

   For ease in comparison, the following is a table comparison between the old and new FCC Lifeline program rules, and the Commission's current Lifeline 150 program and the regime established under the instant Tentative Order.

Telephone Universal Service Program Eligibility Requirements

Old FCC Lifeline Program	PA PUC Lifeline 150 Program	New FCC	Tentative Order and Act 183
Medicaid	Medicaid	Medicaid	Medicaid
Federal Public Housing Assistance (Section 8 )	Federal Public Housing Assistance (Section 8 )	Federal Public Housing Assistance (Section 8 )	Federal Public Housing Assistance (Section 8 )
Low-Income Home Energy Assistance Program (LIHEAP)	Low-Income Home Energy Assistance Program (LIHEAP)	Low-Income Home Energy Assistance Program (LIHEAP)	Low-Income Home Energy Assistance Program (LIHEAP)
Supplemental Security Income (SSI)	Supplemental Security Income (SSI)	Supplemental Security Income (SSI)	Supplemental Security Income (SSI)
Food Stamps	Food Stamps	Food Stamps	Food Stamps
	Temporary Assistance to Needy Families (TANF)	Temporary Assistance to Needy Families (TANF)	Temporary Assistance to Needy Families (TANF)
	State Blind Pension*		State Blind Pension*
	General Assistance		General Assistance
		National School Lunch Program	National School Lunch Program
No separate income requirement	AND Income at or below 150% of the Federal Poverty Guidelines	OR income at or below 135% of the Federal Poverty Guidelines	OR income at or below 135% of the Federal Poverty Guidelines
No restriction on vertical services	Only allowed one vertical service	No restriction on vertical services	No restriction on vertical services
* Only Verizon North and Verizon PA.

   Lifeline enrollment in Pennsylvania will tend to increase if the Commission requires all Pennsylvania LECs to modify their existing Lifeline 150 programs in two ways:

   1)  Change the current eligibility limitation from the conjunctive ''and income at or below 150% of FPG'' to a new disjunctive eligibility criterion so Lifeline eligibility may be determined based on participation in a public benefit program ''or income at or below 135% FPG.''

   2)  Add participation in the National School Lunch free lunch program (NSL) as an additional program-based eligibility criterion.

Therefore,

   It Is Ordered That:

   1.  The current income limitation in the Lifeline 150 programs of ''and income at or below 150% of Federal Poverty Guidelines'' is hereby amended to a new separate eligibility criterion so Lifeline eligibility may be determined based on participation in a public benefit program ''or income at or below 135% of Federal Poverty Guidelines.''

   2.  We hereby adopt the National School Lunch free lunch program (NSL) for purposes of determining eligibility in the Lifeline and Link-Up programs in Pennsylvania.

   3.  In the event this Tentative Order becomes final, in accordance with 66 Pa.C.S. § 3019(F)(1), ETCs are directed to file tariff revisions within 30 days to: (1) change the current income limitation in the Lifeline 150 programs of ''and income at or below 150% of Federal Poverty Guidelines'' to a new separate eligibility criterion so Lifeline eligibility may be determined based on participation in a public benefit program ''or income at or below 135% of Federal Poverty Guidelines''; and (2) add the National School Lunch free lunch program (NSL) for purposes of determining eligibility in the Lifeline and Link-Up programs in Pennsylvania.

   4.  In accordance with 66 Pa.C.S. § 3019(F)(2), all ETCs shall permit customers who subscribe to Lifeline service to subscribe to any number of other telecommunications services including vertical services at the tariffed rates for such services.

   5.  In accordance with 66 Pa.C.S. § 3019(F)(3), each ETC in the Commonwealth shall explicitly advise the customer of the availability of lifeline service and shall make reasonable efforts where appropriate to determine whether the customer qualifies for such service and, if so, whether the customer wishes to subscribe to the service.

   6.  The Bureau of Consumer Services work with the Pennsylvania Telephone Association to develop biannual Lifeline bill inserts or bill messages that are written consistent with the Commission's plain language policy guidelines at 52 Pa. Code § 69.251.

   7.  LECs offering Lifeline and Link Up services are directed to recertify their Lifeline customers on at least an annual basis.

   8.  Any non-ETC CLECs that choose to remove Lifeline and/or Link-Up provisions from their tariffs shall be required to provide their customers with 60 days notice of the type described herein. which has been reviewed and approved by the Commission's Bureau of Consumer Services.

   9.  Comments to this Tentative Order shall be filed within 30 days of the date the Tentative Order is published in the Pennsylvania Bulletin.

   10.  If no adverse comments are filed to this Tentative Order by the end of the 30-day period, this Tentative Order shall become a Final Order by operation of law.

   11.  All LECs operating in Pennsylvania, the Pennsylvania Telephone Association, Nextel Partners, Inc., Office of Consumer Advocate, Department of Public Welfare, Pennsylvania Utility Law Project and AARP shall be served with a copy of this Tentative Order.

   12.  A copy of this Tentative Order shall be published in the Pennsylvania Bulletin.

JAMES J. MCNULTY,   
Secretary

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   ¹ Federal-State Board on Universal Service, (FCC May 8, 1997) CC Docket No. 96-45, FCC 97-157.

   ² Act 183 of 2004 is the new Chapter 30 to Title 66 of Pennsylvania Consolidated Statutes. House Bill 30 (P.N. 4778) was signed into law by the Governor on November 30, 2004, and became effective immediately.

   ³ Pennsylvania Public Utility Commission v. Bell Atlantic--Pennsylvania, Inc., P-00930715, P-00950958, entered August 4, 1995.

   ⁴ Petition of the Pennsylvania Telephone Association Lifeline Service Plan at Docket Nos. I-00940035, P-00971274, Order entered November 21, 1997.

   ⁵ Joint Petition of Nextlink Pennsylvania, Inc., et al. and Joint Petition of Bell Atlantic Pennsylvania, Inc., et al., P-00991648 and P-00991649, September 30, 1999 (Global Order).

   ⁶ Pennsylvania PUC v. Bell Atlantic-Pennsylvania, Inc., Pennsylvania PUC v. Pennsylvania Telephone Association, Pennsylvania PUC v. GTE North Incorporated, P-00991648, P-00991649, August 17, 2000.

   ⁷ Verizon PA also offers eligible Lifeline customers and qualified Lifeline applicants (with a pre-existing basic service arrearage) financial assistance to restore their basic telephone service through its Universal Telephone Assistance Program (UTAP). The Salvation Army manages UTAP and distributes funds to qualified customers and Lifeline applicants.

   ⁸ Verizon PA and Verizon North Lifeline credit is a monthly amount equal to their federal subscriber line charge of $6.38 plus $2.90 discount off the monthly density cell rate and $2.60 discount off the local usage package option (where applicable).

   ⁹ Verizon PA and Verizon North Lifeline 150 credit is a monthly amount equal to their federal subscriber line charge of $6.38 plus $1.00 discount off the monthly density cell rate and $0.75 discount off the local usage package option (where applicable). Lifeline 150 for all other ILECs is each company's federal subscriber line charge, currently capped at $6.50 plus $1.75. CLECs provide similar Lifeline credit amounts, regardless of whether or not they designate a federal subscriber line charge on customer bills.

   ¹⁰ These social assistance programs include: General Assistance (GA), Supplemental Security Income (SSI), and Temporary Assistance for Needy Families (TANF), Food Stamps, Low Income Home Energy Assistance Program (LIHEAP), Medicaid, and Federal Public Housing Assistance. Verizon also includes State Blind Pension as an eligible program.

   ¹¹ At or below 135% of the FPG is $24,840 for a family of four.

   ¹² To be eligible for the NSL free lunch program, a consumer's household income must be at or below 130% of the FPG, which is currently $23,920 for a family of four. 2003 FPG, 68 Fed. Reg. at 6456-58. In addition, children are automatically eligible to participate in the NSL free lunch program if their household receives Food Stamps, benefits under the Food Distribution Program on Indian Reservations or, in most cases, benefits under the TANF program. http://www.fns.usda.gov/cnd/About/faqs.htm.

   ¹³ The Tentative Opinion and Order became final in accordance with Ordering Paragraph No. 6 that stated: ''That if none of the Parties object to the modifications to the Settlement Agreement and Further Settlement Agreement, within the time specified in Ordering Paragraph No. 3 of this Tentative Order, then it is further ordered that this Tentative Opinion and Order shall become final, and a Secretarial Letter shall be issued to that effect, without further action by the Commission.'' All of the Parties subsequently notified the Commission that they do not object to Settlement and Further Settlement Agreement as modified by the Tentative Opinion and Order.

   ¹⁴ Act 183 appears to apply only to ETCs. We interpret Chapter 30, specifically Section 3019 to preclude the Commission from continuing to require non-ETC LECs to provide Lifeline/Link-Up programs because the legislature used the specific term, ''ETCs'' instead of ''LECs.'' Therefore, the Commission may reasonably infer using statutory interpretation principles that the use of this explicit term means to the exclusion of all non-ETC LECs.

   ¹⁵ These numbers are based on the 2003 Annual Lifeline Tracking Reports submitted by the following companies: Comcast Phone of Pennsylvania, LLC, CEI Networks, CTSI LLC, IDT Corporation, Penn Telecom, VartecTelecom, Inc., and Z-Tel Communications Inc.

   ¹⁶ Reply of Bell Atlantic--Pennsylvania To Exceptions of the Office of Consumer Advocate to Lifeline Compliance Tariff, June 12, 2000, pp. 3-4.

   ¹⁷ See Bell Atlantic--Pennsylvania, Inc., Petition for Waiver of Section 54.409(b) of the Commission's rules and Regulations, filed December 22, 1999.

   ¹⁸ In the Matter of Federal-State Joint Board On Universal Service, Bell Atlantic Pennsylvania, Inc., Petition for Waiver of Section 54.409(b) of the Commission's Rules and Regulations, CC Docket No. 96-45, December 27, 2000, pp. 2-3.

   ¹⁹ House Bill 2571, Introduced by State Representative Veon.

   ²⁰ Some LECs and IXCs collect federal universal service funding as a line item on their monthly bills.

   ²¹ While the Commission is not completely certain how 1.7 million Medicaid participants translates into number of households which participate in Medicaid, we believe it is likely there are significantly more than 137,000 households that would be considered Medicaid-participating households.

   ²² These are LECs with 50,000 or more residential customers. Comcast does not have ETC status.

   ²³ FCC Report, April 29, 2004, FCC 04-87, Table 1.A, Baseline Lifeline Subscription Information (Year 2002).

   ²⁴ FCC Federal-State Joint Board Universal Service Monitoring Report, CC Docket No. 98-202, Table No. 2.4 (rel. Oct. 2004). This table states Pennsylvania received $13.6 million in low income support. The Commission estimates Pennsylvania ratepayers contributed $24 million based on the most recent data staff could obtain, from the Universal Service Administrative Company Annual Report of 2002 based upon 2001 data. The Commission also notes that Pennsylvania received a total of $126,408,000 from the USF in 2001 for the four programs including: 1) low-income, 2) high cost support; 3) Schools and libraries; and 4) rural health care. However, our ratepayers consistently year after year contribute more than what is returned through the USF.

   ²⁵ National School Lunch Program Approved Free and Reduced Applications, Building Data Report for October 2004 Children Eligible, October, 2004, Sandy Souder, Administrator, National School Lunch Program.

Statement of Commissioner Kim Pizzingrilli

   Today, the Commission tentatively revises its Lifeline and Link-Up policy to be consistent with new federal¹ and state law.² Lifeline was established by the Federal Communications Commission (FCC) in 1984 to promote universal telephone service by providing low-income consumers with discounts on the monthly cost of dial tone service. By 1987, the FCC implemented Link-Up America to help low income households pay telephone connection charges. In Pennsylvania, Lifeline was first offered by Verizon Pennsylvania in 1995 and by all local exchange telecommunication companies (LECs) in 1998.³

   Act 183 of 2004 became effective December 1, 2004 as the new Chapter 30 to Title 66 of the Pennsylvania Consolidated Statutes. Section 3019(f) requires all ''eligible telecommunications carriers'' (ETCs) to provide Lifeline service. 66 Pa.C.S. § 3019(f). An ETC is defined by the statute as ''a carrier designated by the Pennsylvania Public Utility Commission pursuant to 47 CFR § 54.201 . . . or successor regulation, as eligible to receive support from the Federal Universal Service Fund.'' 66 Pa.C.S. § 3012. Prior to this legislation, each local exchange carrier (LEC) was required to file a Lifeline plan regardless of ETC status. Pursuant to federal law, only those LECs designated as ETCs receive federal universal service funding to support their programs.⁴ In Pennsylvania, there are currently 40 LECs and one wireless company certified as ETCs. There are other non-ETC LECs that are currently providing Lifeline service to customers.

   The Tentative Order strongly encourages these non-ETC LECs to continue to offer Lifeline and Link-Up Service and to revise their offerings to comply with the expanded program set forth in the Order. However, our Tentative Order ultimately concludes that pursuant to Act 183 non-ETC LECs are no longer required to provide Lifeline service to customers. I am concerned about how this will impact Lifeline consumers of non-ETC LECs especially in light of the stated policy of Act 183 to ''maintain universal telecommunications service at affordable rates . . . .'' 66 Pa.C.S. § 3011. I would encourage interested parties to file comments to the Tentative Order offering recommendations as to how the Commission can appropriately address this issue.

   Also, for those LECs which have not been certified as ETCs, the FCC this week announced the adoption of new measures addressing the requirements that telecommunications carriers must meet to receive this designation.⁵ I would encourage all non-ETC LECs in the Commonwealth to consider seeking this designation so that consumers can continue to receive the benefits of Lifeline and Link-Up services.

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   ¹ The Federal Communications Commission took action in April 2004 to modify its rules ''to improve the effectiveness of the low-income support mechanism, which ensures that quality telecommunications services are available to low-income consumers at just, reasonable, and affordable rates.'' In the Matter of Lifeline and Link-Up, Report and Order and Further Notice of Proposed Rulemaking, WC Docket No. 03-109, FCC 04-87 (rel. April 29, 2004), 69 Fed. Reg. 34590 (June 22, 2004).

   ² Effective December 1, 2004, Act of 2004, P. L. 1398, No. 183 (Act 183) became the new Chapter 30 to Title 66 of the Pennsylvania Consolidated Statutes.

   ³ Pennsylvania Public Utility Commission v. Bell Atlantic--Pennsylvania, Inc., P-00930715, P-0095098, entered August 4, 1995.

   ⁴ See 47 U.S.C. § 254(e) and 47 U.S.C. § 214(e)

   ⁵ See FCC Adopts Additional Requirements for Eligible Telecommunications Carrier Proceedings, News Release dated February 28, 2005, Report and Order (FCC 05-46)

[Pa.B. Doc. No. 05-527. Filed for public inspection March 18, 2005, 9:00 a.m.]

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