Tag: USAC

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Regulation - What is it Good For?

Small ISPs and the ACP

I’ve recently talked to several small ISPs who are having trouble navigating the FCC’s Affordable Care Program (ACP). These ISPs are wondering if they should drop their participation. This is the program that gives a $30 monthly discount to customers who enroll in the plan through their ISP. The program is administered by USAC which also administers the various Universal Service Fund programs.

The stories I’ve heard from these ISPs show that the program is challenging to use and slow to reimburse ISPs. There is no one major specific complaint about the administration of the program but a string of problems. Consider some of the following (and the list of complaints is much longer):

  • The rules are overly complex. As an example, an ISP must have different staff assigned to four functions – an Administrator, Operations, Analyst, and Agent. It turns out that various tasks can only be performed by one of these positions – something not explained in the rules.
  • There doesn’t seem to be any training available to ISPs joining the program. Instead, ISPs have to wade through the 166-page FCC rulemaking that created the ACP program. The FCC says there have been over 700 training sessions for people on how to enroll new end-user customers, but the ISPs I talked to couldn’t find any online resources for explaining the program from the ISP perspective – no videos or no frequently asked questions helping ISPs figuring out how to get reimbursed from the program. .
  • The ACP system returns unhelpful error messages when something doesn’t work. A common error message is “Your user name doesn’t seem to exist” which is returned for a variety of online problems encountered by people who are logged into the system and clearly have valid user IDs. Error messages for any online system ought to be worded to tell a user what they did wrong. For example, an error message that says, “This function can only be done by an Analyst” would help an ISP figure out the problem.
  • There is a hotline for ISPs, but unfortunately, the folks manning the hotline can’t answer even basic questions about the online system and refer a caller to the written rules. It’s obvious that the people answering the calls have never navigated through the system.
  • One ISP had been in the system for a while and found out it wouldn’t be paid for the discounts given to customers since the ISP hadn’t submitted a customer’s last four digits of a social security number. This doesn’t make sense since the FCC had ruled that the SSN is not needed to enroll a customer – the ACP rules allow for numerous other forms of identification. Customers didn’t need to input an SSN number to join the ACP, and the ISP never asked for them. They are now wondering if they will ever get reimbursed for these claims.
  • There is a disconnect between customer approval and the ISP portal. Customers are told through the customer portal that they are successfully enrolled in the ACP program, but when an ISP asks for reimbursement, it is often told that it must provide more identification to get reimbursed. In this situation, the customer is already getting the discount while the ISP is not yet eligible for reimbursement and will end up eating the customer discount.

Overall, these ISPs told me that navigating the system and the rules is a major disincentive for them to participate in the ACP.

Why are these kinds of issues problematic for smaller ISPs? Bigger ISPs can assign a team to a program like this and give them enough time to figure out the nuances. Small ISPs have tiny staffs, particularly in the backoffice. Small ISPs can’t devote the many hours and days needed to solve the ACP puzzle. The small ISPs I’ve heard from are wondering why they are even bothering with ACP. The program is not bringing new customers but mostly is giving discounts to existing customers. There is no reimbursement for the hours the ISPs spend learning the system or navigating it each month. After all of the hassle, the ISPs are not receiving full reimbursement in every case, and even when they do, the payments are slow. ISPs have also heard through the grapevine that they will eventually be audited to make sure there is no fraud – anybody who has been through this kind of audit shudders at the idea.

Everything I read says that most of the discounts for ACP are being claimed by cellular resellers and not facility-based ISPs. I don’t know if that is finally changing, but if this isn’t made easier for ISPs, it’s likely that many ISPs will drop out or stop accepting additional ACP customers. The final issue ISPs worry about is that the program is only funded for perhaps two more years. They worry about the impact on their business if the program ends abruptly.

To be fair, any new online system has bugs. But ACP was launched in January and replaced the similar EBB program. We are now far past the initial launch window, and nobody seems to be working to make the system usable. The FCC wants to brag about how well ACP is doing, but they need to put some effort into making this worth the effort for ISPs.

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Regulation - What is it Good For?

AT&T Withdraws from Lifeline Program

In March the Public Utility Commission of Ohio allowed AT&T to withdraw from the federal Lifeline program. This is a program that let’s qualified low-income homes get a monthly discount of $9.25 from either their landline telephone or their broadband connection – only one discount per home. AT&T successfully withdrew from Lifeline in Illinois in 2018 and in twelve other states in 2017.

AT&T apparently hasn’t been advertising or pushing the potential discount since they only had 7,300 homes in the state on the Lifeline program. The Communications Workers of America say there are almost 1.6 million households in Ohio that qualify for the discount – although not all of them are served by AT&T.

You might think that AT&T supports Lifeline by looking at their web site. However, clicking through to Ohio notifies customers that the discount will end in June and provides customers a list of other companies that might offer them the discount.

The Lifeline program started in 1985, and at the time the amount of discount was a significant savings for customers. Because of inflation the $9.25 discount represents a far smaller portion of a today’s monthly telecommunications bill.

Participation in the Lifeline program has dropped significantly in the past few years, as has the way the fund is being used. The following revenue numbers come from the 2018 annual report from USAC – the entity that operates the Lifeline Fund. I extraopolated out the number of participants at $9.25 per month.

2016 2018
Telephone $1,477,548,000 $312,300,000
Bundle $25,554,000 $293,707,000
Broadband $18,610,000 $536,424,000
Total $1,521,712,000 $1,142,431,000
Participants        13,700,000        10,250,000

Since 2016 there are 2.5 million fewer participants in the plan – many certainly due to carriers like AT&T withdrawing from the plan. The USAC numbers show a big shift since 2016 of participants applying the discount to their broadband bill rather than to landline telephone or cellphone bill.

The Lifeline Program was in the news recently when the FCC Inspector General issued a fraud advisory that says there are a lot of duplicate names requesting Lifeline and a number of deceased people still getting the discount. Chairman Ajit Pai immediately issued a statement saying that the program needs to be cleaned up.

Fraud has always been a concern in the program. However, it’s a little odd for the FCC to be complaining about fraud today since they are in the process of taking over validation of Lifeline subscribers. Eligibility to participate in Lifeline was previously the responsibility of the states, but in June, 2018 USAC launched the National Verifier, a database that lists everybody eligible to receive a Lifeline credit. As of the end of last year, the federal verifier was active in 18 states, with the remaining states and territories joining the program this year. It seems odd to be yelling about problems of the older state programs when the FCC has already implemented a solution that they believe will solve most of the fraud issues.

I published a blog several days ago saying how regulators are letting the public down. It’s mystifying to me why the Ohio PUC and so many other states are letting AT&T out of the Lifeline program. The Lifeline Fund reimburses AT&T for every discount given to customers, so there is zero net cost to AT&T to participate in the plan. With the new National Verifier, AT&T takes no role in enrolling customers, who must enter through the national Verifier portal. I don’t know why regulators don’t insist that AT&T and every other company that sells residential telephone and broadband be required to participate in the program.

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Regulation - What is it Good For?

AT&T Phasing out Lifeline?

A lot of homes still rely on the FCC’s Lifeline program to get a discount on their telecom bills. The program is funded through the Universal Service Fund and administered through USAC. The lifeline program provides a $9.25 discount per household that can be applied to landline telephone, cellular telephone or landline data – assuming customers use a provider that participates in the Lifeline program.

AT&T still touts that they participate in the Lifeline program, but numerous customers around the country received notifications this year notifying them that they were no longer eligible for the Lifeline program. This particular notification was from a customer in Houston, Texas. If you visit the USAC website and look for Lifeline providers in Houston, AT&T is the only company that is listed for landline service. There are numerous cellular providers listed in Houston, but AT&T is not among them.

People might wonder why landline Lifeline is still important. Landline penetration rates are reported each year by the Center for Disease Control. (CDC). They track landline and cellular penetration rates through a huge annual survey that studies the topic to understand how the medical community can communicate best with the public during a medical emergency. They reported last year that the nationwide landline penetration rate was at 45% of households – a number far greater than many people would guess.

I hadn’t looked at residential phone rates in a while and just looked at AT&T’s residential rates. In case you haven’t looked at landline rates, they are not cheap. AT&T has three packages: Complete Choice comes with Caller ID and 9 other features (not including Voice Mail) for $40 per month. Complete Choice Basic is a basic line plus Caller ID and Call Waiting for $36. A basic phone line with no features is $28 per month. None of these prices include taxes and fees that add at least another $10 per month. None of these packages includes long distance. AT&T offers lower rates for those that bundle telephone with Internet or cable TV (although they are actively knocking people off their TV product).

In Texas, AT&T mitigated the Lifeline discontinuation notices somewhat by offering discounts of between $8 and $12 per month for qualifying customers who will sign a term contract, and who know to ask for the discount. But since this wasn’t widely advertised there is a good chance that few people asked for the discount. Discount plans like this also come and go and there is no guarantee of this discount surviving into the future.

I can’t see that there are any penalties for AT&T no longer offering Lifeline. There was a time when the big telcos had to participate in the program, but as state Commissions have deregulated telephone service any such requirement probably no longer applies.

What’s shameful about this is that I am sure that any AT&T executive will say that the company supports the Lifeline program. It certainly says so on their website. Both the AT&T and the USAC website imply that customers in Texas can still enroll in Lifeline, but numerous reports on complaint sites show this not to be the case. Perhaps a really persistent customer can still fight through the customer service gauntlet to get the Lifeline discount, but many customers report they’ve lost the discount.

What’s also disturbing about this is that AT&T doesn’t even have to go through the process of qualifying customers for Lifeline eligibility. In Texas customers must certify eligibility by going through the Public Utility Commission. The big telcos complained in the past that certifying customers was expensive and exposed them to liability if they granted eligibility to unqualified households. But Texas and a number of other states took over the certification process, meaning the telcos have little cost or liability for participating in the program, since USAC reimburses them for discount granted to customers. Why would a big telco stop giving the discounts when it costs them so little?

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Regulation - What is it Good For?

Libraries in the Digital Age

Today’s blog was inspired by reading Libraries: Broadband Leaders of the 21st Century by Craig Settles, a well-known broadband advocate. As someone who hasn’t been to a library for many years his paper surprised me with the number of different ways that libraries are engaged in broadband today.

Probably the best known role of libraries is as a source of broadband for those who don’t have access anywhere else. Libraries today offer broadband at computers as well as WiFi for patrons to use on their own devices. A recent FCC report noted that in most cities anywhere from 15% to 25% of citizens don’t have broadband at home, and for many of them the library is a place they can get access to the web.  This access lets kids do homework, provides job training for those looking to change careers and gives access to government web sites that are increasingly moving input to social systems on-line.

But many libraries go a lot farther. For instance, there are libraries today that are lending mobile hot spots to enable people to have internet access outside the library for a few hours at a time. Many libraries are at the center of efforts to improve digital literacy and they have programs to train people in computer skills and to help them accomplish needed tasks on the web. Many library systems also have training programs in advanced computer skills like coding.

Libraries everywhere want larger faster broadband connections. In many communities the libraries get the same speeds of broadband that are available at homes. And while having a 100 Mbps connection sounds fast, when that much bandwidth is divvied up among a hundred patrons it slows to a crawl. And sadly, there are still a lot of libraries across the country that are served by only T1s or slow DSL connections.

The White House announced a goal in 2013 in the ConnectED initiative to get at least 100 Mbps connection to schools and libraries within five years, with the ultimate goal being gigabit bandwidth. And there has been a lot of progress, but the most recent FCC Broadband Progress Report says that 41% of schools and libraries still don’t have 100 Mbps connections.

Libraries can get assistance to build broadband facilities using the Schools and Libraries portion of the Universal Service Fund, and which is generally referred to as the E-rate program. This fund can be used to subsidize the monthly broadband bills, but can also be used for physical parts of the network like fiber to connect library branches or WiFi systems within a library.

Some communities have been able to really leverage E-rate funding by tying their schools and libraries together into an integrated network and by using libraries to meet educational goals of the schools. It’s generally easier to get funding for schools compared to libraries, but by networking them together you can bring some of that funding in to help improve the libraries and to make them an integral part of the education complex. This leverage can be expanded to be even stronger by linking networks to hospitals and leveraging funding available to improve broadband for healthcare.

Settles makes a case for allowing libraries to participate in the upcoming Lifeline program that will provide $10 monthly subsidies for broadband for qualifying low-income homes. Since libraries are the source of broadband for many low-income people an argument can be made that spending that subsidy at a library can benefit more people than spending it at one home. It’s an interesting concept and would take action by the FCC or USAC, the entity that administers the Universal Service Fund.

Since most cities are still far away from a time when there will be affordable broadband available to everybody, the libraries are likely to continue to be an important part of the broadband solution for most communities. It’s important for library administrators to understand the options available to them to maximize the funding they can get to provide public broadband. Papers like the one written by Settles are an important step in that process.

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Regulation - What is it Good For?

Regulatory Shorts for April 2016

Here are a few things of interest happening in the regulatory world:

Copper Retirement. The FCC’s new copper retirement rules went into effect on March 24. The rules require that any telco tearing down copper must give residential customers 90 days notice and business customers 180 days notice.

While this rule very well might be aimed at Verizon who has been retiring copper with short customer notices, it applies to everybody. This is something that anybody replacing a copper network with a fiber network needs to be aware of. Verizon has been forcing customers to abandon the copper, and that act requires this same notice.

Appeals of USAC Rulings. The FCC recently decided that anybody who wants to appeal a ruling from USAC must formally first appeal the process at USAC and can then only bring the issue to the FCC after losing that appeal.

This is an interesting ruling and probably speaks to the volume of complaints the FCC has been getting about USAC. As telephone landlines have been falling the revenues that feed the Universal Service Fund have been decreasing. USAC has made up shortfalls by constantly raising the USF surcharge, which is now up to an 18.2% surcharge on interstate revenues, and back in 2010 was only 12%.

But USAC has also been getting more aggressive in defining the items to which the surcharges apply and have made retroactive rulings against a number of carriers on various issues. With this new process a carrier will have to go through the USAC formal process before starting any complaint at the FCC, which will greatly increase the time during they might be liable for disputed retroactive surcharges.

Broadband Labels. The FCC has unveiled their suggested labels where carriers can report facts about broadband such as cost, price, speeds, latency, etc. The labels look surprisingly like food labels. It’s often been impossible for customers to find a lot of the information that the FCC wants reported to customers.

No company is required to use the suggested FCC format, although a number of large companies like Verizon, Google and CenturyLink had input into creating the format. For now only large carriers with more than 100,000 broadband customers are required to report this information to customers. But small companies that have a superior broadband product compared to your competition ought to strongly consider doing this anyway. I also strongly recommend you look closely at the labels issued in your areas by large competitors to make sure they are being truthful.

Cancelling Service On-line. There is currently a bill in the California legislature that requires any company that sells services on-line to also allow customers to disconnect services on-line. There are companies like Comcast who are notorious for making it difficult to disconnect without going through a long spiel from a service rep.

The process of making it hard to disconnect started with AOL who was infamous in the day for making it extremely hard to drop their dial-up service. But many other ISPs have started win-back programs that make customers tell the company why they want to disconnect while also listening to a host of special offers trying to get the customer to stay.

While currently this is only proposed in California, we’ve often seen that ideas from California, New York and Illinois often make their way to many other states within a few years.

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Regulation - What is it Good For? The Industry Uncategorized

Lifeline Accountability

USAC, the group that administers the Universal Service Funds, has started testing a program that is designed to stop people from requesting multiple subsidies from the Lifeline program.

The lifeline program provides a discount of $9.95 from telephone bills for low-income consumers. A consumer is eligible for Lifeline if they a earn less than 135% of the federal poverty level or if somebody in the household participates in any of a number of assistance programs such as Medicaid, Food Stamps, Section 8 housing, low income home-energy assistance, Head Start and various tribal and state programs.

The way this works is that the telephone company providing the service gives the discount to the consumer and then collects the funds from USAC out of the Universal Service Fund.

A consumer can elect to get the discount from either a home telephone or a cellular phone account, but cannot collect from both. Apparently there is a lot of concern in Washington that people are collecting the discounts for both a landline and a cell phone, because the FCC has instructed USAC to put together a program to make certain that people don’t collect multiple benefits.

And so USAC is currently implementing the National Lifeline Accountability Database (NLAD). Carriers who participate in the lifeline program are required to input data about each lifeline customer including the last four digits of their social security number or their tribal ID and their date of birth. The carrier also has to provide the full address for each customer and this address will then be verified by USAC using the USPS database of valid addresses. Expect big problems in this area because rural addresses are often very erratic in the USPS databases.

As you might imagine, many carriers don’t ask for things like the date of birth when somebody gets telephone service, so they are now scrambling to get the needed information from their customers.

States are being added to the NLAD in groups. The first group of states now entering data includes Arkansas, Maryland, Louisiana, Oklahoma and Washington. Already some states have opted out of the NLAD database including Puerto Rico, Oregon, Texas, California and Vermont. Those states are going to have to come up with some version of this database of their own or else carriers in those states will lose Lifeline funding.

There is no fee to use the database, but use of it is mandatory if a carrier wants to collect from the Lifeline fund. The real cost is in the effort of each carrier to implement and keep this database current – another unfunded mandate.

I suppose that this process will turn up some cheaters and they will be asked to pare back to just one Lifeline subsidy. But one has to wonder how many customers might have been given the discount by multiple carriers without even knowing that this is not allowed? And one might suspect that there are somewhat shady carriers who are collecting the payments from the Lifeline fund without giving the discount to a customer, or possibly even having a customer. I would not be surprised to find some carriers collecting Lifeline for customers who died years ago.

I hope the FCC publishes the result of what they find through this database. As much as I hate waste and fraud, one has to wonder of the cost of implementing this kind of red-tape process is worth it compared to any savings that will be achieved through eliminating duplicate payments. These kind of processes end up becoming permanent new requirements for carriers and make it just that much harder to do business.

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