The FCC is getting serious about enforcing the one-per-household rule. It recently proposed nearly $33 million in penalties against just three wireless Lifeline eligible telecommunications service (ETC) carriers. These newest penalties come only a month after the over $14.4 million in proposed penalties against five ETCs that we reported on in October. See October 2, 2013 Regulatory Mix
What did the ETCs do wrong?
In each case, the FCC found the provider knew, or should have known based on internal data, that the consumers were ineligible for Lifeline support because they were already receiving Lifeline service from the provider.
Why did the FCC assess such large penalties?
The FCC used a three-part forfeiture framework that imposes: (1) a base forfeiture of $20,000 for each instance in which an ETC files an FCC Form 497 that includes ineligible subscribers in the line count; (2) a base forfeiture of $5,000 for each ineligible subscriber for whom the ETC requests and/or receives support from the Fund; and (3) an upward adjustment of the base forfeiture equal to three times the reimbursements requested and/or received by the ETC for ineligible subscribers. In addition to these penalties, USAC is directed to recover from each ETC all of the duplicative support received for the affected subscribers.
As an example, the FCC proposed to assess a single ETC over $18 million in penalties, calculated as follows: (1) $380,000 for the submission of 19 FCC Form 497s that included the ineligible intra-company duplicate subscribers in the line counts; (2) $17,445,000 for 3,489 individual intra-company duplicate lines for which the ETC requested and/or received compensation; and (3) an upward adjustment of $272,814, which is three times the amount of support ($90,938) the ETC requested and/or received for ineligible consumers.
How did the FCC find out?
The duplicates were detected by USAC during a routine in-depth data validation.
Is this the end now?
Lifeline ETCs should not expect the FCC’s enforcement surge to end here. In its Press Release about the proposed penalties, the FCC said that “numerous additional investigations are ongoing” and that its Inspector General is working on investigations of Lifeline providers “in close coordination with the U.S. Department of Justice.” Moreover, the FCC continues to respond to Congressional inquiries about the so-called “Obamaphones” given away by wireless ETCs as part of their Lifeline offering and likes to demonstrate it is doing something about waste, fraud, and abuse in the program by pointing to aggressive enforcement tactics, including large fines.
What can I do to protect my company?
ETCs should take the FCC’s new Lifeline rules seriously and make sure they have it place policies and procedures to ensure all their subscribers are eligible to receive Lifeline service, that they are only providing Lifeline service to qualified individuals who do not reside in households that already benefit from Lifeline service, and that they have given the required disclosures, obtained the required subscriber certifications, and are maintaining records as required by the FCC’s rules. For a review of these requirements, read the FCC’s Enforcement Advisory .