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DATE:

March 25, 2010

TO:

Office of Commission Clerk (Cole)

FROM:

Division of Regulatory Analysis (Beard, Casey)

Office of the General Counsel (Tan)

RE:

Docket No. 090245-TP – Petition for limited designation as eligible telecommunications carrier (ETC) by Virgin Mobile USA, L.P.

AGENDA:

04/06/10Regular Agenda – Proposed Agency Action - Interested Persons May Participate

COMMISSIONERS ASSIGNED:

All Commissioners

PREHEARING OFFICER:

Argenziano

CRITICAL DATES:

None

SPECIAL INSTRUCTIONS:

None

FILE NAME AND LOCATION:

S:\PSC\RAD\WP\090245.RCM.DOC

 

 Case Background

On March 13, 2007, the Florida Public Service Commission (FPSC or Commission) addressed the issue of whether or not the FPSC has jurisdiction to designate commercial mobile radio service (CMRS) providers as eligible telecommunications carriers (ETCs).  By Order No. PSC-07-0288-PAA-TP, issued April 3, 2007, in Docket Nos. 060581-TP and 060582-TP, the FPSC found that with the enactment of Section 364.011, Florida Statutes (F.S.), the Florida Legislature granted the FPSC limited authority over CMRS providers for those matters specifically authorized by federal law.  Therefore, pursuant to Section 214(e)(2) of the Telecommunications Act of 1996 (the Act), which authorizes states to designate ETC carriers, the FPSC has jurisdiction over CMRS providers for the purpose of considering ETC petitions.

 

On April 29, 2009, Virgin Mobile USA, L.P. (Virgin Mobile) filed a petition with the FPSC for limited designation as an ETC to receive universal service Lifeline support in the State of Florida.  Virgin Mobile will not be seeking high-cost funds from the Universal Service Fund (USF).

Virgin Mobile is a non-facilities based Mobile Virtual Network Operator (MVNO) pre-paid telephone service provider.  In 2002, Virgin Mobile was established as a joint venture between Sprint-Nextel and the Virgin Group.  Virgin Mobile was established to focus on the pay-as-you-go or prepaid market.  Sprint-Nextel serves as the backbone for Virgin Mobile’s service, including the network infrastructure and wireless transmission facilities.  Virgin Mobile purchases network services on a wholesale basis at fixed rates.  As a CMRS provider, Virgin Mobile is a pure wireless reseller.

By Order 09-18, released March 5, 2009, the Federal Communications Commission (FCC) designated Virgin Mobile as a limited ETC in New York, North Carolina, Tennessee, and Virginia for the purpose of receiving only Lifeline support from the USF.  Virgin Mobile has pending ETC designation petitions at the FCC for Alabama, Connecticut, Delaware, New Hampshire, and the District of Columbia.  A Virgin Mobile ETC designation petition in Michigan was approved by the Michigan PSC on December 1, 2009.  Virgin Mobile also has pending state applications for ETC status in California and Texas.

In November 2009, Sprint-Nextel completed its acquisition as the new owner of Virgin Mobile.  Virgin Mobile has stated that this acquisition will not affect Virgin Mobile’s application or how the Lifeline program will work.  The Commission has jurisdiction pursuant to Section 214(e)(2) of the Act, Sections 364.10(2) and 364.11, F.S., to address a petition by a CMRS provider seeking designation as an ETC.

 


Discussion of Issues

Issue 1

 Should Virgin Mobile be granted limited ETC status in Florida for the purpose of offering Lifeline discounts to qualifying consumers in Florida?

Recommendation

 Yes. Staff recommends that Virgin Mobile be granted limited ETC designation status in the AT&T, Verizon, and CenturyLink wire centers listed in Attachment B of this recommendation, for the sole purpose of offering Lifeline discounts to qualifying consumers in Florida. Granting of ETC designation should be contingent on Virgin Mobile providing the following:

·                    Certification from every Public Service Answering Point (PSAP)[1] in Florida, confirming that Virgin Mobile provides its customers with access to basic and E911 service;  Virgin Mobile should be allowed to self certify compliance with the 911 and E911 availability if, within 90 days of Virgin Mobile’s request, a PSAP has not provided the certification and the PSAP has not made an affirmative finding that Virgin Mobile does not provide its customers with access to 911 and E911 service within the PSAP’s service area;

 

·                    E911 compliant handsets should be provided to Virgin Mobile’s new Lifeline customers and Virgin Mobile should replace any non-compliant handsets for its existing customers who are approved as Lifeline customers at no charge;

·                    Each Lifeline customer shall receive 200 free anytime minutes each month;

·                    Self-certification of Virgin Mobile Lifeline customers under penalty of perjury once service has been activated.  In addition to the PSC’s annual Lifeline verification eligibility requirement, annual certification verifying that the head of household is only receiving Lifeline discounts from Virgin Mobile;

·                    Tracking of Lifeline customer’s primary residential address and certification that there is only one customer receiving Virgin Mobile Lifeline at each residential address;

·                    Virgin Mobile should deal directly with its customers who do not utilize the Lifeline Automatic Enrollment function, to certify and verify Lifeline eligibility; and

·                    Submission of a quarterly report showing the number of customers who have been deactivated for not having any activity on their phone in a 60-day period, not passing annual verification, and voluntarily being deactivated.

(Beard, Casey)

Staff Analysis

 Under FCC rules, state commissions have primary responsibility to designate providers as ETCs.[2]  Designation as an ETC is required in order for a provider to be eligible to receive monies from the federal USF.  Section 254(e) of the Act provides that “only an eligible telecommunications carrier designated under Section 214(e) shall be eligible to receive specific federal universal service support.”[3]  According to Section 214(e)(1), a common carrier designated as an ETC must offer and advertise the services supported by the federal Universal Service mechanisms throughout a designated service area.

 

ETC Certification Requirements

 

            The Code of Federal Regulations (CFR) addresses a state commission’s responsibilities related to an ETC designation:[4]  

 

Upon request and consistent with the public interest, convenience, and necessity, the state commission may, in the case of an area served by a rural telephone company, and shall, in the case of all other areas, designate more than one common carrier as an eligible telecommunications carrier for a service area designated by the state commission, so long as each additional requesting carrier meets the requirements of paragraph (d) of this section.  Before designating an additional eligible telecommunications carrier for an area served by a rural telephone company, the state commission shall find that the designation is in the public interest.

To qualify as an ETC, a carrier must provide the nine services identified in 47 CFR 54.101 throughout the service area for which designation is received either using its own facilities or a combination of its own facilities and resale of another carrier’s facilities.  The services are:

(1)    Voice grade access to the public switched network  Voice grade access is defined as a functionality that enables a user of telecommunications services to transmit voice communications, including signaling the network that the caller wishes to place a call, and to receive voice communications, including receiving a signal indicating there is an incoming call;

 

(2)    Local Usage Local usage indicates the amount of minutes of use of exchange service, provided free of charge to end users;

 

(3)    Dual-tone multi-frequency signaling or its functional equivalent Dual-tone multi-      frequency ("DTMF") is a method of signaling that facilitates the transportation of signaling through the network, thus shortening call set-up time;

 

(4)    Single-party service or its functional equivalent Single-party service is telecommunications service that permits users to have exclusive use of a wireline subscriber loop or access line for each call placed, or in the case of wireless telecommunications carriers which use spectrum shared among users to provide service, a dedicated message path for the length of a user's particular transmission;

 

(5)  Access to emergency services  Access to emergency services includes access to services, such as 911 and enhanced 911, provided by local governments or other public safety organizations; 

 

(6)  Access to operator services Access to operator services is defined as access to any automatic or live assistance to a consumer to arrange for billing and/or completion of a telephone call;

 

      (7)  Access to interexchange service  Access to interexchange service is defined as the use  of the loop, as well as that portion of the switch that is paid for by the end user, or the        functional equivalent of these network elements in the case of a wireless carrier,      necessary to access an interexchange carrier’s network;

 

      (8)  Access to directory assistance  Access to directory assistance is defined as access to a              service that includes, but is not limited to, making available to customers, upon request,          information contained in directory listings; and

 

(9)   Toll limitation for qualifying low-income consumers  Toll limitation or blocking restricts all direct-dial toll access.

 

In addition to providing the above services, 47 CFR 54.405(b) specifies that ETCs must publicize the availability of Lifeline service in a manner reasonably designed to reach those likely to qualify for the service. 

 

Additional ETC Certification Requirements

            In addition to requiring the above services, the FCC, on March 17, 2005, issued a Report and Order that established additional criteria that all ETC applicants must satisfy in order to be granted ETC status by the FCC.  In this Order, the FCC determined that an ETC applicant must also demonstrate:

 

1)      a commitment and ability to provide the supported services throughout the designated area;

2)      the ability to remain functional in emergency situations;

3)      ability to satisfy consumer protection and service quality standards;

4)      provision of local usage comparable to that offered by the incumbent LEC; and

5)      an acknowledgement that the applicant may be required by the FCC to provide equal access if all other ETCs in the designated service area relinquish their designations pursuant to Section 214(e)(4) of the Act.

 

The FCC encouraged states to also adopt these criteria, and the FPSC has done so in Docket No. 010977-TL, by Order No. PSC-05-0824-TL, issued August 15, 2005.

 

Staff has reviewed Virgin Mobile’s petition for designation as an ETC in Florida, as well as additional documents filed with the FPSC and with the FCC.  Staff has verified that Virgin Mobile has complied with the above requirements to be eligible as an ETC in Florida and Virgin Mobile has demonstrated its ability to provide the nine services identified in 47 CFR 54.101 using resale services.

            In its 1997 Universal Service Order,[5] the FCC found it was appropriate to deny pure resellers designation as an ETC because pure resellers could receive double recovery of universal service support by purchasing wholesale services at a price that includes the universal service support received by the incumbent provider, and also receive reimbursement from the USF.  However, because Virgin Mobile’s CMRS wholesale provider, Sprint Nextel, is not subject to Section 251(c)(4) resale obligations, the resold services do not reflect a reduction in price due to Lifeline support, and double-recovery of low-income funds from the USF would not be possible.

 

Virgin Mobile’s Forbearance Petition

 

On December 5, 2007, Virgin Mobile filed a petition with the FCC, seeking forbearance from the facilities-based requirements in Section 214(e)(1)(A), which requires that a carrier be at least, in part, facilities-based to be eligible for designation as an ETC.  Virgin Mobile stated in its petition that it would meet all ETC obligations, except for the facilities-based requirements. 

By Order 09-18, issued March 5, 2009, in Docket 96-45 (Forbearance Order), the FCC granted Virgin Mobile forbearance from the facilities-based requirement.  The Forbearance Order noted that Virgin Mobile would be a “limited ETC” eligible only for Lifeline support and would be required to conform to all rules applicable to Lifeline. 

The Forbearance Order required that Virgin Mobile file a compliance plan with the FCC stating how it intended to implement the conditions imposed by the Forbearance Order.  The compliance plan, which was filed October 29, 2009, contains a plan outlining the measures it will take to implement the following: (a) providing Lifeline customers with 911 and enhanced 911 (E911) access regardless of activation status or availability of prepaid minutes; (b) providing Lifeline customers with 911 and E911 compliant handsets, and replacing non-compliant handsets at no additional charge; (c) complying with conditions (a) and (b) prior to providing Lifeline service; (d) obtaining certification from each PSAP where Virgin Mobile provides Lifeline service confirming that Virgin Mobile complies with condition (a); (e) requiring its customers to self certify at time of service activation and then annually thereafter that they are the head of household and receive Lifeline-support service only from Virgin Mobile; and (f) establishing safeguards to prevent customers from receiving multiple Virgin Mobile Lifeline subsidies at the same address.  There was a modification to (d) that allows Virgin Mobile to self-certify compliance if within 90 days of Virgin Mobile’s request a PSAP has not provided the certification and the PSAP has not made an affirmative finding that Virgin Mobile does not provide its customers with access to 911 and E911 service within the PSAPs service area.


Public Interest Determinations

 

            Under Section 214 of the Act, the FCC and state commissions must determine that an ETC designation is consistent with the public interest, convenience and necessity for rural areas.  They also must consider whether an ETC designation serves the public interest consistent with Section 254 of the Act.  Congress did not establish specific criteria to be applied under the public interest tests in Sections 214 or 254.  The public interest benefits of a particular ETC designation must be analyzed in a manner that is consistent with the purposes of the Act itself, including the fundamental goals of preserving and advancing universal service; ensuring the availability of quality telecommunications services at just, reasonable, and affordable rates; and promoting the deployment of advanced telecommunications and information services to all regions of the nation, including rural and high-cost areas.[6]  Staff believes that before designating a carrier as an ETC, the FPSC should make an affirmative determination that such designation is in the public interest, regardless of whether the applicant seeks designation in an area served by a rural or non-rural carrier.

 

Virgin Mobile states that approval of its ETC petition would be in the public interest by allowing Virgin Mobile to provide low-income Florida consumers with more affordable and higher quality wireless services.  Many lower-income consumers have not yet reaped the full benefits of the intensely competitive wireless marketplace.  Whether because of financial constraints, poor credit, or intermittent employment, these consumers often lack the countless choices available to most consumers.  Virgin Mobile believes that designating it as an ETC would enable it to expand the availability of affordable telecommunications services to qualifying Florida consumers, which would lead to lower prices and increased consumer choice.  According to Virgin Mobile, designating it as an ETC would further the fundamental goals of universal service policy by broadening the availability of telecommunications services to low-income Florida consumers, whom are the intended beneficiaries of universal service.

 

Virgin Mobile Lifeline Offering

 

            Prior to commencement of service, Virgin Mobile will require applicants to attest and sign under penalty of perjury that they meet the relevant eligibility criteria and that they are head of their household and will be receiving Lifeline-supported service only from Virgin Mobile.  Virgin Mobile’s Lifeline offering includes the following:

 

·        Lifeline-eligible customers will receive a free handset once they are approved for            service in Florida; 

·        Existing Virgin Mobile customers will be permitted to avail themselves of the free           handset offer or continue to use their current handset once approved for Lifeline service;

·        Customers will not be required to enter into a long-term service contract;

·        Customers will automatically receive 200 anytime minutes each month at no charge        (minutes do not rollover if not used);

·        Additional minutes can be purchased through prepaid cards wherever Virgin Mobile      products and services for $0.20 per minute and $0.10 per minute text; and,

·        Voice mail, caller ID, and call waiting will be included.

Virgin Mobile has acknowledged the requirements of the Florida Lifeline program, and it has agreed to adhere to the program which provides qualified customers a total of $13.50 in Lifeline assistance credits consisting of: $6.50 in federal subscriber line charges, $1.75 in federal support for states that have approved the credit, and $1.75 which is a 50% match of federal support for having a state Lifeline program requiring a $3.50 credit under the Florida eligibility criteria.  Virgin Mobile indicates that it will provide the $3.50 credit to qualified clients, advertise the availability of Lifeline, and begin offering these services as soon as possible after meeting any PSAP certification requirements implemented by the FPSC.

Virgin Mobile has also indicated that its accounts with the FCC and the Universal Service Administrative Company (USAC) are current, and it is not aware of any outstanding complaints or violations with either entity.  As part of the petition process, Virgin Mobile has agreed to abide by any applicable Florida Statutes, Florida Administrative rules, and Florida PSC Orders pertaining to the Lifeline program, and commits to use federal universal service support only for the provision of services for which the support is intended. 

 

Lifeline Advertising

 

Virgin Mobile will advertise the availability and rates for the services described above in its Florida service areas using media of general distribution as required by Section 214(e)(1)(B) of the Act.[7]  Virgin Mobile will target locations where consumers receive benefits that make them eligible for Lifeline services, including various state and local social service agencies, to inform customers of the availability of its Lifeline services.  Virgin Mobile will coordinate its efforts with public and private assistance agencies to ensure the availability of Lifeline services reaches the broadest audience possible.  Virgin Mobile also will develop outreach efforts for non-English speakers, and increase awareness of the Lifeline program at existing third-party retail outlets through distribution of brochures.  In addition, Virgin Mobile may market its Lifeline services through its Re*Generation pro-social program, which is a program that connects at-risk youth with young people who want to make a difference through partnerships with innovative not-for-profit organizations.  Finally, Virgin Mobile will promote its Lifeline offerings to its existing customers, many of whom will qualify for Lifeline, through emails and text messaging campaigns.


Transitional Lifeline

To comply with the requirement of Transitional Lifeline,[8] Virgin Mobile stated that it will comply with the requirement of providing a 30 percent monthly discount to customers no longer qualifying for 12 months.  Because of the pay-as-you-go nature of its offering, Virgin Mobile will provide one of two options for transitional Lifeline customers: (a) a 30 percent discount on its standard $0.20 per minute rate or (b) a 30 percent discount on the 200-minute plan at a rate of $10 per month.  In both options (a) and (b) the transition would be for a period of one year on the customer’s handset.

Conclusion

 

Virgin Mobile states it is able to provide all services and functionalities supported by the universal service program, detailed in CFR Section 54.101(a).  Virgin Mobile understands all ETC requirements of the FCC and the FPSC and has agreed to abide by all applicable Florida Statutes, Florida Administrative Rules, and Florida PSC Orders (See Attachment A certification).  Virgin Mobile also understands that the FPSC has the authority to both grant and revoke ETC designation if Virgin Mobile is non-compliant.

Based on staff’s review, along with Virgin Mobile’s commitment to abide by both state and federal rules and procedures, staff believes that Virgin Mobile’s petition to be designated as an ETC is in the public interest and should be approved.  If Virgin Mobile should decide in the future to seek High Cost universal service funds, it should be required to file a petition and make a showing that it would be in the public interest to grant such a request.  Upon a decision by the Commission, staff will continue the necessary oversight to ensure that Virgin Mobile, along with all other ETCs in Florida, are upholding these principles and attaining the goals and objectives of both the state and federal universal service programs. 

Based on the above, staff recommends that Virgin Mobile be granted limited ETC designation status in the AT&T, Verizon, and CenturyLink wire centers listed in Attachment B of this recommendation, for the sole purpose of offering Lifeline discounts to qualifying consumers in Florida.  Granting of ETC designation should be contingent on Virgin Mobile providing the following:

·                    Certification from every PSAP in Florida, confirming that Virgin Mobile provides its customers with access to basic and E911 service;  Virgin Mobile should be allowed to self certify compliance with the 911 and E911 availability if, within 90 days of Virgin Mobile’s request, a PSAP has not provided the certification and the PSAP has not made an affirmative finding that Virgin Mobile does not provide its customers with access to 911 and E911 service within the PSAP’s service area.

 

·                    E911 compliant handsets should be provided to Virgin Mobile’s new customers and Virgin Mobile should replace any non-compliant handsets for its existing customers who are approved as Lifeline customers at no charge;

·                    Each Lifeline customer shall receive 200 free anytime minutes each month;

·                    Self-certification of Virgin Mobile Lifeline customers under penalty of perjury once service has been activated.  In addition to the PSC’s annual Lifeline verification eligibility requirement, annual certification verifying that the head of household is only receiving Lifeline discounts from Virgin Mobile;

·                    Tracking of Lifeline customer’s primary residential address and certification that there is only one customer receiving Virgin Mobile Lifeline at each residential address;

·                    Virgin Mobile should deal directly with its customers who do not utilize the Lifeline Automatic Enrollment function, to certify and verify Lifeline eligibility; and

·                    Submission of a quarterly report showing the number of customers who have been deactivated for not having any activity on their phone in a 60-day period, not passing annual verification, and voluntarily being deactivated.

 


Issue 2

 Should this docket be closed?

Recommendation

 If no person whose substantial interests are affected by the proposed agency action files a protest within 21 days of the issuance of the order, this docket should be closed upon the issuance of a consummating order. (Tan)

Staff Analysis

 At the conclusion of the protest period, if no protest is filed this docket should be closed upon the issuance of a consummating order.



 


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WLBRFLXA

 

 

WLCHFLXA

 

 

WLCRFLXA

 

 

WLHLFLXA

 

 

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WLWDFLXA

 

 

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WPBHFLGA

 

 

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[1] A PSAP is an answering location for 911 calls originating in a given area.  PSAPs are public service agencies such as police, fire, or emergency medical or a common bureau serving a group of such entities.

[2] 47 U.S.C. Section 214(e)(2), 47 CFR Section 54.201(b).

[3] 47 U.S.C. Section 254(e)(2).

[4] 47 CFR Section 54.201(c)

[5] In the matter of Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Order FCC 97-157, Released May 8, 1997.

[6] In the Matter of Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Order FCC 05-46 (¶40), Adopted: February 25, 2005, Released: March 17, 2005.

[7] See 47 U.S.C. Section 214(e)(1)(B)

[8] Transitional Lifeline requires that each local exchange telecommunications company shall offer discounted residential basic local telecommunications service at 70 percent of the residential local telecommunications service rate for any Lifeline subscriber who no longer qualifies for Lifeline.  A Lifeline subscriber who requests such service shall receive the discounted price for a period of one year after the date the subscriber ceases to be qualified for Lifeline.  In no event, shall this preclude the offering of any other discounted services which comply with Sections 364.08, 364.09, and 364.10 F.S., per 364.105 F.S.