CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

The experiments will test various factors in encouraging broadband adoption: primarily what discount dollar amount would be most effective, whether it should be a single discount or monthly (and if monthly, how long it should last), and how speed, usage limits, and consumer outreach might affect adoption.

Applications to participate in the Pilot Program are due on or before July 2, 2012. Would-be participants who are not already ETCs must be designated before the application deadline. Participants will likely be selected during the third quarter of 2012. The Pilot Program is anticipated to last about 18 months: three months of provider back office implementation, 12 months of subsidized service, and three months of finalizing and reporting data. For more information, there is a Pilot Program webinar available on the FCC’s website.

Here’s how the program is supposed to work:

Experiment design.  Did you enjoy participating in your high school science fair? Then this program will be right up your alley. ETCs seeking to participate in the Pilot Program must design and submit a project along the lines of a scientific field experiment, including a detailed description of the experimental design and the variables to be tested. As mentioned above, the focus is on learning which discount plans are most effective in promoting broadband adoption and retention, but speeds, usage limits, and the effect of consumer outreach are also of interest. The experimental design should randomize variations on broadband service offerings (e.g., geographic randomization).

Individual applicants are not required to incorporate an extensive number of potential variations of broadband service into their projects; rather, the FCC will create a “portfolio” of projects by selecting multiple projects to test a range of variations in diverse geographic areas (e.g. rural, urban, Tribal). The Bureau encourages ETCs to partner with field experiment experts and third-party organizations working to increase broadband adoption, such as academic researchers, social research organizations, contract-research firms, or non-profit organizations. ETCs are also encouraged to work collaboratively with each other, sharing administrative costs where possible.

Preference. Preference will be given to:

• Projects that include partnerships with non-ETCs that already have existing adoption programs in place to provide digital literacy (such projects may also include a control group that does not receive digital literacy training).
• ŸProjects that also test, with appropriate control groups, whether access to equipment can influence adoption.
• ŸProjects that indicate that their proposed projects promote entrepreneurship and small business, including those businesses that may be socially and economically disadvantaged.
• ŸProjects that demonstrate ability to execute the proposal (in terms of funding and expert and third-party qualifications).
• ŸProjects that demonstrate the value of the data to be collected in credibly addressing questions of interest.

The Bureau will also take into account the aggregate funding amount requested for each pilot project. In addition, it will select at least one pilot project directed at providing support on Tribal lands.

Costs and obligations. Participants in the Pilot Program will have the following minimum obligations during the program period (in addition to conducting the project):

• ŸParticipants must use the funds they receive from USAC to subsidize the discounted services they provide to low-income consumers under the Pilot Program. In other words, if a carrier knocks $10 off a customer’s phone bill, it will be reimbursed $10. Other project-related expenses, however, such as the costs of developing the project design, will not be reimbursed.
• ŸWhat program would be complete without reporting? In this case, participants must submit two types of forms. First, they must submit monthly reimbursement forms to USAC (similar to Lifeline reimbursement) for (1) any monthly discount of broadband service, (2) any applicable discount amount for voice telephony service if the broadband subscriber is also getting Lifeline support, and (3) any non-recurring fees for broadband provided to subscribers under the pilot project.  Second, participants must submit subscriber data on a “Low Income Broadband Pilot Program Reporting Form” to be collected directly by the ETC and submitted to USAC. Alternatively, at the participant’s request on its application, USAC will solicit this information directly from subscribers using an online survey. In either case, ETCs must obtain consent from their subscribers to provide this information before enrolling them in the program. This information will be collected at least twice: once when the subscriber first initiates service and again near the end of the project. The “anonymized” form will call for disclosure of income, age, ethnicity, family size, and details regarding subscriber usage.
• ŸSubscribers should all be enrolled within nine months of the start of the trial period, unless applicants make an upfront case as to why their project should have different timelines.
• ŸParticipants are “strongly encouraged” to file a final report sharing additional information with the Commission about lessons learned from the project, including cost on a per-subscriber basis of converting consumers to broadband. A representative may be asked to present such information at a Commission event.

 The Public Notice lists a number of specific items of information that must be submitted with each application that are not itemized here. Feel free to contact us with any questions.

• The short form deadline for applications is July 11, 2012. This is curiously far in advance of the scheduled September 27 auction date.
• The auction will be a single round, single bid, sealed auction. The bid you make on September 27 is your only bid and it cannot be withdrawn once your bid is final.
• Bidders (other than Indian tribes) must have their high cost ETC designations in hand when they file their short forms. It is not good enough to have a pending application on that date.
• ETCs which only have Lifeline authority are not eligible to participate.
• The FCC has now identified as best it can the areas that are underserved and therefore eligible for build-out funds. Bidders will bid on census tracts identified by the FCC. The winning bidder will be the one which bids the lowest amount to serve the road-miles within that census block. A winner must commit to serving at least 75% of the road-miles. This simplifies the determination of the winner since bidders are bidding against each other for the same defined areas.
• The FCC will begin awarding money starting with the lowest bids per census block and keep going till it is out of the $300 million.
• Winning bidders must submit their entire network design, construction schedule and budget when they submit the “long form” applications ten business days after the winners are announced. Winning bidders will have a very busy couple of weeks to pull that information together.
• Winning bidders must also at the same time put up a letter of credit from a bank guaranteeing their performance of their commitments. Again, this is not much time to get such a letter together.   To further complicate matters, the winning bidder must submit a legal opinion indicating that the letter of credit is free from bankruptcy claims if the bidder goes belly up without meeting its commitments.   The high cost of obtaining what is effectively insurance will have to be built into the bid amount.
• A winning bidder which fails to qualify when it files its long form application will be subject to a penalty equal to 5% of its winning bid.
• Finally, winning bidders must also certify that they can offer service in the areas they have won without the need for further federal funding. This effectively disqualifies them from the Phase II Mobility Funding that is supposed to support service to high cost areas. This seemingly counterproductive element of the Commission’s plan is currently under reconsideration.

While the prospect of free government money is usually attractive, the significant strings which the FCC has attached to this process make the decision to bid on the awards a difficult one. Potential bidders should consider all of the risks as well as the rewards of participating in this program.

One per household.  The R&O/FNPRM codifies the policy that each household gets support for only one phone line, mobile or fixed. (The agency already clarified, back in June 2010, that an individual gets only one Lifeline-supported service.) A “household” is assumed to consist of everyone who lives as a single address (not a P.O. Box), unless the residents self-certify that they are financially independent from each other (for example, unrelated adult roommates). Commenters (including Commissioner Clyburn) have pointed out that this is increasingly out of sync with the way modern families use phones, but the Commission has rejected the extra cost of providing phones to multiple individuals within a single household. For customers who want to show that they are financially independent of their housemates, the FCC has directed the fund administrator, the Universal Service Administrative Company (USAC), to come up with a certification form within 30 days of the publication of the new rules in the Federal Register.

National eligibility standards.  Right now, eligibility for Lifeline varies by state, although the FCC has developed certain “federal default” criteria applicable to the handful of states that have not claimed jurisdiction over Lifeline eligibility.  Based on those federal default criteria, the R&O/FNPRM establishes as uniform national eligibility criteria: (1) household income at or below 135 percent of the Federal Poverty Guidelines; or (2) participation in one of a number of federal assistance programs, such as Medicaid or Food Stamps. The idea is to give uniform opportunities to low income consumers nationwide, make compliance easier for carriers, and make auditing easier for USAC. States must recognize consumer eligibility under the federal rules, but can add other qualifying criteria, such as participation in a state program. 

Clear marketing.  When advertising Lifeline services, ETCs (carriers) must explain in clear, easily-understood language: that the offering is a Lifeline-supported service; that only eligible consumers can enroll; what documentation is necessary; and that the program is limited to one benefit (either wireline or wireless) per household. ETCs must also explain that Lifeline is a government benefit program, and false statements to obtain it may be punishable by fine, imprisonment, or being barred from the program.

Consumer certification.  When enrolling a new Lifeline customer, carriers must obtain a signed (including electronically or by interactive voice response) certification form from the customer. The required certifications include, but are not limited to, confirmation that the customer: understands how the Lifeline program works; is the only person in their household getting service; is eligible for Lifeline; and will let their carrier know if anything changes (within 30 days). Other distinct certifications not itemized here must be included on this form, so carriers should review the requirements carefully.

Annual recertification.  In addition to the initial certification, carriers must recertify the continued eligibility of all of its customers by contacting them for confirmation. This is to be done by checking with an eligibility database, when available. If no such database is available (or if the database does not confirm eligibility), the carrier must contact the customer – in person, in writing, by phone, by text message, by email, or otherwise through the Internet – to confirm his/her continued eligibility. Previously, sampling could be used for this reconfirmation; that is no longer the case. No documentation is required at recertification. Again, there are a number of specific requirements regarding recertification in the order that carriers should review carefully (no, texting “BTW R U still eligible for Lifeline?” is not enough).

Duplicates database.  The R&O/FNPRM establishes a new, nationwide duplicates database that carriers must query before signing up a new Lifeline customer. If that query indicates that the prospective customer is already getting support, the carrier can’t enroll the customer until the customer de-enrolls from the other service. The database will facilitate the transfer of Lifeline benefits from one ETC to another and will keep track of when a query was made and what information was submitted in the query. It will also verify the subscriber’s identification (without which the ETC will not receive reimbursement).

Two sidenotes on the duplicates database: (1) States can opt out of the national duplicates database if they can show that they have established their own state duplicates process at least as robust as the national; and (2) USAC will conduct a “scrubbing” of duplicates once the database has been populated. USAC will notify subscribers if they are receiving duplicate support and help them select a single provider.

Eligibility database.  Lifeline consumers will no longer be able to simply self-certify their eligibility. Instead, the FCC will establish an eligibility database. The database will confirm – at least initially – enrollment in the three most common programs through which consumers qualify for Lifeline (i.e., Medicaid, food stamps, and SSI). Until the database is established (ideally by the end of 2013), ETCs will be required to review documentation from the consumer to verify eligibility. The Commission is still seeking comment on the eligibility database at a fairly high level, including:

• How to encourage state eligibility databases to provide state-specific eligibility data, including potentially conditioning receipt of federal Lifeline funds on the implementation of a state eligibility database;
• Whether to help pay for state eligibility databases;
• What privacy issues are implicated;
• Whether to implement a national eligibility database instead of or in addition to state databases; and
• Whether the eligibility database should be integrated with the duplicates database.

Reporting subscriber data.  Carriers must populate the duplicates database by obtaining and reporting the following information about customers:

• name;
• address;
• phone number;
• date of birth;
• last four digits of the social security number;
• initial and de-enrollment dates;
• the means through which the subscriber qualified for support (e.g., Medicare, income); and
• the amount of Lifeline support received per month for each subscriber.

ETCs will have to provide an initial data dump of subscriber information within 60 days of notice that the database is capable of accepting data. Because many carriers may not be currently collecting all the information required by the database, they must collect such information from both new and existing subscribers (which can be done as part of the annual re-certification described below).

The carrier that gets customer data into the database first is entitled to reimbursement for that customer, regardless of which ETC the consumer signed up with first.

Disenrollment.  If a customer fails to respond to the annual recertification request, or if a carrier otherwise discovers duplicative support or lack of eligibility, the carrier must, after sending notification of impending service termination, disenroll the customer from Lifeline service. Likewise, prepaid ETCs cannot receive Lifeline support for customers who do not activate their service, or who do not use their phones for a consecutive 60-day period.

Carrier certification.  Carriers must certify, annually, that they are in compliance with the Commission’s Lifeline rules when submitting FCC Forms 497 to USAC for reimbursement. As part of this certification, an officer must certify that the carrier has procedures in place to review consumers’ documentation of income- and program-based eligibility and that it has obtained valid certifications forms from each consumer.

Audits.  New Lifeline carriers will be audited within their first year of providing service. Carriers receiving more than $5 million in annual support will be audited biennially.

Enforcement.  Violators of the rules will be notified of the failure to comply and given 30 days to come into compliance. Penalties for violations include: suspension of payments; monetary forfeitures (up to $150,000 per violation or per day of a continuing violation); revocation of authorization to operate as a carrier; and/or revocation of ETC designation.  Also, funds obtained in violation of the rules are subject to recapture by the government.

The measures described above are addressed to fraud, waste and abuse. Beyond those, the Commission took measures to update and simplify the Lifeline system:

Reimbursement.  The R&O/FNPRM replaces the tiered reimbursement system, which was based on incumbent subscriber line charges, with an interim flat rate of $9.25 (except on Tribal lands). Comment is sought on what would be an appropriate permanent flat rate. Reimbursement will also be based on actual subscriber counts, rather than projected subscriber counts. Starting July 1, 2012, to be paid by the end of the month, carriers will have to submit Form 497 by the eighth day of that month. Carriers may also file on a quarterly basis, with a single quarterly payment (rather than separate monthly payments).  Any new or revised Form 497s that may be necessary to reconcile records may be filed within a year of the original due date of the Form 497. 

Phasing out toll limitation support.  Back in the day, a frequent cause of phone service termination was customers’ inability to pay their long distance phone bills. To prevent this, the Commission required ETCs to provide a service that would automatically limit, or block, the amount of long distance charges a customer could receive in one month. Carriers were permitted to claim reimbursement from the FCC for the “incremental costs” of providing the blocking service. Nowadays, however, many service plans don’t distinguish between local and long distance calls, instead charging a set monthly fee for a certain number of minutes. This effectively creates a “toll limitation” service. And the recovery of “incremental costs” has apparently been subject to creative interpretation: carriers were claiming reimbursement for anywhere between $0 and $36 per Lifeline subscriber per month, and were not required to substantiate their claims. So, the R&O/FNPRM requires toll limitation in the future only for old-fashioned service plans that charge separately for long distance calls – capping reimbursement for “incremental costs” at $3/month in 2012, $2/month in 2013, and no reimbursement at all starting in 2014.

Eliminating Link Up.  Another payout historically subject to abuse is the Link Up program, which reimburses carriers for half of their “customary charge” of initiating service, up to $30. (It does not cover the cost of providing a mobile handset). Over time, many carriers’ “customary” service initiation charge migrated to $60, the number that would maximize the Link Up payout. In addition, many carriers were not charging the remaining $30 to their customers. Also, some carriers imposed the initiation charge only on Lifeline customers and not on “regular” customers.  In essence, carriers were simply collecting $30 each time they signed up a Lifeline customer. In response, the Commission is eliminating Link Up altogether, except for Tribal areas. Although the offending practices have been largely associated with wireless competitive carriers, the Link Up phase-out applies to wireline carriers as well.

Support for VoIP.  The R&O/FNPRM incorporates the Connect America Fund order’s “voice telephony” definition of supported service into the Lifeline rules, making IP-enabled VoIP an expressly supported service. Of course, VoIP is increasingly the norm as carriers move from circuit-switched to IP networks.

Support for bundled service plans.  The R&O/FNPRM provides support for voice telephony service even if it’s bundled with broadband, contains optional calling features, or is part of a family shared calling plan. Historically, the FCC’s rules have been silent on this issue, and not all states permit reimbursement for such bundled plans. The new rules do not require carriers to apply Lifeline to any bundled service, although the Commission seeks comment on such a requirement.

The R&O/FNPRM also establishes a Broadband Adoption Pilot Program to assess how Lifeline can best be used to increase broadband adoption among Lifeline-eligible consumers. The Wireline Competition Bureau will solicit applications from ETCs to participate in the Pilot Program. The Bureau will then test various amounts and durations of subsidies, geographic areas, and types of networks/technologies through a number of diverse projects. Carriers who are interested in participating but are not yet designated as ETCs should get their ETC designation applications in ASAP.

The R&O/FNPRM also cleans up some aspects of the ETC designation process for Lifeline-only carriers by:

• formalizing the Commission’s practice of forbearing, for Lifeline-only wireless resellers, from requiring that an ETC have its own facilities. (That practice dates back to the 2005 TracFone order.) This forbearance is subject to certain conditions. The Commission did not address the status of Lifeline-only facilities-based carriers, who may need forbearance from the requirement that their service area completely overlap rural phone company service areas. (Wireless services are generally authorized by county boundaries, while rural phone company service areas are drawn by blindfolded three-year-olds, so they hardly ever match up).
• confirming that carriers can’t get around the TracFone conditions by providing a component service – such as operator, directory, or toll limitation service – over their own switch and then claiming to be “facilities-based.” This is because the new definition of “supported service” is “voice telephony service” as a whole – not its individual components.
• eliminating the requirement that Lifeline-only applicants submit a five-year network improvement plan.
• adding a requirement that Lifeline-only ETCs demonstrate technical and financial capacity to provide the supported service, among other showings.

Lastly, the NPRM portion of the R&O/FNPRM seeks comment on additional issues, including:

• whether universal service support should be used for digital literacy training;
• whether Lifeline support should be limited to ETCs that provide Lifeline service directly to subscribers (rather than wholesale), precluding the flow-through of Lifeline support to resellers;
• whether the Women, Infants, and Children (WIC) program and homeless veterans should be added to the Lifeline eligibility criteria;
• whether the record-keeping requirement for consumer eligibility should be extended to ten years to cover litigation under the False Claims Act.

Comments in response to the NPRM will be due 30 days after publication in the Federal Register; reply comments within 60 days. Check back here for updates.

First, the FCC auction website depicts on a county by county basis the areas where road miles are unserved by 3G or better service. While this map is subject to further refinement based on input from the public, it at least provides a preliminary basis for prospective applicants to identify areas that are eligible for build-out funding.  

 As the Commission reminds interested parties, reverse auction bidders must both (a) be eligible telecommunications carriers (ETCs) and (b) have rights to spectrum in the areas they bid on, so if they don’t have that status now, they need to move quickly on those fronts. The map alerts prospective bidders as to whether this is even something they should be interested in pursuing.

For the auction itself, the FCC proposes to have only a single round. Unlike all other FCC auctions, here participants would have one chance to make one bid, and that’s it.   This encourages parties to make their solitary offer the best one they can reasonably live with. The identities of bidders will also be kept secret (presumably except to the extent necessary to implement the anti-collusion rules). Since there is only one round, though, the secrecy rule is essentially meaningless.

The biggest question mark for the FCC is how to aggregate eligible areas for bidding. This problem has been a perennial one for auctions that cover applicant-defined geographic areas: how do you compare bids from people who are bidding on different areas? The FCC proposes bidder-defined aggregations, predefined aggregations, and a variant of the first option where bidder-defined aggregations can nevertheless be awarded in subsets. The FCC seeks other options as well. 

The bottom line is that any method must allocate the money within the cap of $300 million that the FCC says will be available for this Fund.   This cap indirectly undercuts the FCC’s assertion that no maximum bids are being set; you can bid as high as you want, but if there is insufficient money in the pool to pay you, you aren’t going to win. It remains unclear how the FCC will decide winners if, as it expects, the total bids exceed the cap.

Lastly, the FCC proposes that lucky winners who default on the performance of their obligations after winning the auction not only must pay back the money received from the FCC in full, but must also pay a 10% performance penalty.   The lucky winner’s ability to meet these penalties must be guaranteed by a letter of credit – a feature which has been challenged on reconsideration.

Interested parties have until February 24, 2012 to get their comments in and until March 9 to file replies.

The goal of the programs is to insure that “quality telecommunications services” are available to low-income customers at “reasonable and affordable” rates. To that end, the government does not reimburse the low-income customers directly; rather, it reimburses eligible telecommunications carriers (ETCs) who provide service to low-income customers. The ETCs submit quarterly forms reflecting the extent of low income support they have provided. In 2010, the cost of the Lifeline/Link Up programs was $1.3 billion (roughly five times its 2007 size) – in other words, there’s a serious pot of cash to dip into.

There is no uniform, nation-wide set of standards and procedures by which ETCs identify eligible “low-income” customers. Standards and procedures vary among the various states. In many instances, verifying documentation is not required. The potential for innocent error or less innocent fraud is not insubstantial.

The focal points of the FCC’s Lifeline/Link Up reform efforts described in the NPRM are:

• eliminating fraud, waste and abuse;
• capping the Low Income Fund;
• improving program administration; and
• modernizing Lifeline and Link Up (including reimbursement for broadband, of course).

Out of the hundreds of discrete issues teed up for comment, we have selected a few highlights below.

Fraud, waste and abuse. The FCC is confident that it can reduce fraud, waste, and abuse in the Lifeline and Link Up programs. (It’s so confident, in fact, that it’s already planning a broadband adoption pilot program on which it can spend the money it’s going to save.  See below for more details). To do that, it proposes to eliminate a number of problem areas in the way the programs are implemented. For example, the following would be axed by the Commission:

• Link Up (activation) reimbursement for carriers that do not routinely impose activation charges on all customers within a state;
• Duplicate discounts going to the same household (under the rules, each household may only receive one telephone line, either wireline or wireless). To prevent duplication, the FCC proposes to require carriers to obtain a certification from consumers that there is only one Lifeline service per address;
• Self-certifying for eligibility by consumers (instead, the FCC proposes to require carriers to demand documentation);
• Inadequate verification sampling (the FCC may require larger sample groups or a census of all customers if an initial sample group reveals too many ineligible customers);
• Reimbursement for services unused for 60 days (a particular concern for prepaid services);
• Complete – as opposed to pro rata – reimbursement for subscribers who enroll or disconnect during the month; and
• Toll limitation service reimbursement (obsolete and susceptible to over-reimbursement).

To ensure that eligible telecommunications carriers (ETCs) providing Lifeline are on board with these goals, the FCC proposes a “more rigorous” approach – including more, and more expanded, audits – to the management of the program.

Capping the Low Income Fund. The NPRM seeks comment on various issues relating to capping the size of the Low Income Fund, for example at the 2010 disbursement level.  It recognizes that the Fund already has an ultimate cap in the sense that only a defined population of eligible households may participate, and support is limited to $10 per month per household.

Program administration. The NRPM suggests various ways to improve program administration, such as: 

• Adopting a one-per-residence (i.e., U.S. Postal Service address) eligibility rule;
• Clarifying the eligibility rules for residents of Tribal lands  and proposing eligibility through participation in federal Tribal low income programs;
• Imposing federal baseline eligibility criteria, including perhaps raising the cutoff from 135% of the Federal Poverty Guidelines to 150%;
• Coordinating enrollment with other social service assistance programs;
• Developing a national database to prevent duplicate claims and verify eligibility (anyone who has worked with the FCC’s CORES database will likely be amused at the idea of the FCC creating a database intended to eliminate duplication); and
• Imposing mandatory outreach requirements.

Broadband.  In keeping with its conviction that broadband service should be universally available, the FCC also proposes to extend the Lifeline program to include broadband. It seeks comment on whether a Lifeline discount should be available for any plan that includes a local voice component, including bundled voice and broadband.  It queries further whether broadband itself should be eligible for Lifeline support (note that this is a separate query from whether broadband should be a required supported service) – and, if so, how can broadband costs be integrated into the program in a way that minimizes (if not avoids) additional waste, fraud or inefficiencies?

Demonstrating that even imaginary money can burn a real hole in a governmental pocket, the FCC already has plans for how to spend the cash that it will save. Of course, any actual savings will require, first, that the proposals be adopted and implemented and, second, that those proposals in fact be effective. Apparently taking for granted that all those pieces will fall happily into place, the Commission has its heart set on indulging its compulsion to pocket funds to feed its broadband habit: it plans to set aside its savings to create a pilot broadband program. The pilot program will test different approaches to providing support for broadband to low-income consumers across different geographic areas and demographics. In particular, the Commission is looking to test how much of a factor hardware is in broadband adoption.

Of particular interest to Lifeline carriers. Carriers considering the daunting prospect of applying for Lifeline-only ETC designation through the forbearance process will be cheered that the FCC is considering doing away with the own-facilities and rural areas redefinition requirements. These requirements are designed to prevent cream-skimming in a High Cost context and don’t make sense in a Low Income-only situation. The Commission is considering codifying the conditions that it has been applying to forbearance grants instead. Even more radical, but strangely sensible, is the Commission’s apparent interest in AT&T’s proposal to allow any carrier to provide Lifeline discounts at a flat rate.

However, the Commission somewhat grimly notes that the fact that “numerous carriers are seeking designation as Lifeline-only ETCs . . . suggests that the current structure of the program may present an attractive business opportunity for firms that employ different business models than traditional wireline carriers.” To prevent funds going to carriers rather consumers, the FCC seeks comment on whether there is a more appropriate reimbursement framework than the current four-tier system based on an ILEC’s subscriber line charge. Furthermore, to protect Low Income consumers from receiving less-than-adequate service, the FCC asks if there should be minimum service requirements for prepaid ETCs (or for other carriers), such as a minimum number of monthly minutes.

The design and implementation of modified Lifeline/Link Up programs present problems of immense complexity for the Commission. Besides the enormity of the project – the raw numbers of eligible customers, the multiple mechanisms for determining eligibility, the detailed auditing process already in place – the Commission must also deal with the concept of grafting a new service (broadband) onto the system. Additionally, the underlying business of delivering telecommunications services is itself developing rapidly, creating new and different business models that may or may not be easily integrated into the Commission’s approach either now or in the future. The preferences of the consuming public also come into play. And don’t forget that we’re talking about a pool of funds that already exceeds one billion dollars, a tempting target for less-than-honest entities.

The scope of the NPRM suggests that the Commission recognizes the daunting nature of the challenge it is undertaking. Whether – and if so, when – the Commission will ever be able to claim that it has met that challenge remains to be seen. But at least the FCC has made the first move in its quest.

The NPRM was published in the Federal Register on March 23. Comments on the proposals in the NPRM are currently due to be submitted by April 21, 2011; reply comments on Sections IV, V (Subsection A) and VII (Subsections B and D) are due by May10, 2011. Reply comments on the remaining sections are due by May 25, 2011.