DATE:	June 30, 2010
TO:	Office of Commission Clerk (Cole)
FROM:	Division of Regulatory Analysis (Polk, Casey, Fogleman) Office of the General Counsel (Murphy)
RE:	Docket No. 090510-TP – Petition for Designation as Eligible Telecommunications Carrier (ETC) by T-Mobile South, LLC.
AGENDA:	07/13/10 – Regular Agenda – Proposed Agency Action - Interested Persons May Participate
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			New Commissioner 1
CRITICAL DATES:			None
SPECIAL INSTRUCTIONS:			This recommendation should immediately follow the recommendation in Docket No. 090507-TP.
FILE NAME AND LOCATION:			S:\PSC\RAD\WP\090510.RCM.07-13-10.DOC

 

 Case Background

T-Mobile South LLC (T-Mobile or Company) is a Commercial Mobile Radio Service (CMRS) provider licensed by the Federal Communications Commission (FCC) to provide service in the Jacksonville, Tampa-St. Petersburg-Orlando, Miami-Fort Lauderdale, and New Orleans-Baton Rouge Major Trading Areas.  On November 12, 2009, T-Mobile filed a petition requesting designation as an Eligible Telecommunications Carrier (ETC) in the rural areas of CenturyLink, Frontier, Indiantown, NEFCOM, TDS, Smart City, and Windstream in order to be eligible to receive high-cost and low-income federal universal service support.

In a separate filing made on November 10, 2009, T-Mobile filed a petition requesting designation as an ETC in the non-rural areas of BellSouth/AT&T (AT&T) and Verizon Florida (Verizon) [1]

            T-Mobile filed separate rural and non-rural petitions for ETC status due to the public interest standards for ETC designations.  Historically, public interest standards for ETC designation are higher in rural areas.  Since ETCs in rural areas can seek high-cost funding from the Federal Universal Service Fund (USF) as they can in non-rural areas, states may consider matters such as the level of federal high-cost per-line support to be received by ETCs.  Public interest determinations could be different depending on the specific characteristics of the proposed service area, or whether the area is served by a rural or non-rural carrier.  T-Mobile is a facilities-based wireless telecommunications carrier with its own switching, transport, cell sites, and associated telecommunications facilities in its proposed designated ETC service area.

 

This docket addresses T-Mobile’s petition for ETC status in the rural wire centers of CenturyLink, Frontier, Indiantown, NEFCOM, TDS, Smart City, and Windstream, identified in Attachment A for the purpose of receiving federal universal service support.  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 CMRS providers as 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, the Florida Legislature has granted the FPSC limited authority over CMRS providers for those matters specifically authorized by federal law.  Therefore, pursuant to §214(e)(2) of the Telecommunications Act of 1996, which authorizes states to designate ETC carriers, the FPSC has jurisdiction over CMRS providers for the purpose of considering ETC petitions.

 

 

Discussion of Issues

Issue 1: 

 Should T-Mobile be granted eligible telecommunications carrier status in certain rural telephone company study areas located entirely in T-Mobile's licensed area in the state of Florida?

Recommendation: 

 Yes.  Staff recommends that T-Mobile’s petition for ETC designation in the rural wire centers of CenturyLink, Frontier, Indiantown, NEFCOM, TDS, Smart City, and Windstream, identified in Attachment A of this recommendation, be granted.  If the Commission approves T-Mobile for ETC status, staff will review T-Mobile’s commitment to Florida’s Lifeline program during T-Mobile’s annual certification for High-Cost Universal Service Funds.  (Polk, Casey, Fogelman)

Staff Analysis: 

 Pursuant

 to FCC rules and governing statutes, the state commissions have the 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)(2) 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.”  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 addresses a state commission’s responsibilities related to an ETC designation:[3]  

 

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 nine services identified in 47 C.F.R. 54.101.  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 C.F.R. 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

 

            On March 17, 2005, the FCC issued Order No. FCC 05-46 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.

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

Staff has reviewed T-Mobile’s petition for designation as an ETC in certain rural areas in Florida, as well as additional documents filed with the FPSC.  Staff has verified that T-Mobile has complied with the above requirements to be eligible as an ETC in Florida.  T-Mobile has also demonstrated its ability to provide the nine services identified in 47 C.F.R. 54.101 using its own facilities.

Public Interest Determinations

            Under Section 214 of the Act, the FCC and state commissions must determine that granting 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 for the public interest tests in Section 214 or Section 254.  Before designating a carrier as an ETC for an area served by a rural telephone company, the FPSC must make an affirmative determination that such designation is in the public interest, in accordance with Section 214(e)(2).

            When determining whether it is in the public interest to grant T-Mobile ETC designation in rural telephone company areas, three factors are reviewed: A Cost-Benefit Analysis, The Potential for Creamskimming, and Impact on  the USF.[4]

            Cost-Benefit Analysis    

 

            Staff considers and balances the factors listed below as part of its overall analysis regarding whether the designation of an ETC will serve the public interest. In determining whether an ETC has satisfied these criteria, the burden of proof is upon the ETC applicant.

 

            (1) Consumer Choice: The benefits of increased consumer choice are taken into account when conducting a public interest analysis.  In particular, granting an ETC designation may serve the public interest by providing a choice of service offerings in rural and high-cost areas.  The value of increased competition, by itself, is unlikely to satisfy the public interest test.

 

            (2) Advantages and Disadvantages of Particular Service Offering: Staff also considers the particular advantages and disadvantages of an ETC’s service offering.  For instance, staff has examined the benefits of mobility that wireless carriers provide in geographically isolated areas, the possibility that an ETC designation will allow customers to be subject to fewer toll charges, and the potential for customers to obtain services comparable to those provided in urban areas, such as voicemail, numeric paging, call forwarding, three-way calling, call waiting, and other premium services. Staff also examines the disadvantages such as dropped call rates and poor coverage.

 

T-Mobile’s Lifeline offering includes the following components:

 

·      Lifeline customers will receive a discounted or free handset based upon the contract term and type of phone;

·      Lifeline customers will be provided with 145 whenever minutes, 500 night minutes, and 500 weekend minutes per month for $6.49 per month ($19.99 plan with $13.50 Lifeline discount applied);

·      Minutes will not be rolled over from month to month;

·      Lifeline customers must sign a contract with a term of one or two years if they wish to obtain a new discounted handset.  If a Lifeline customer does not wish to obtain a discounted handset, the customer need not sign a contract to obtain service;

Participants will pay a one-time $17.50 service activation fee (half of the standard $35 customer activation fee).  Based on the Cost-Benefit analysis of T-Mobile’s Lifeline offering, staff believes it would be in the public interest to grant T-Mobile ETC status in the requested areas.

 

            Potential for Creamskimming

            Rural creamskimming occurs when competitors seek to serve only the low-cost, high revenue customers in a rural telephone company’s study area.  Generally, a request for ETC designation for an area less than the entire study area of a rural telephone company might raise concerns that the petitioner intends to creamskim in the rural study area.  In this case, however, T-Mobile commits to provide universal service throughout its licensed service area.  It therefore does not appear that T-Mobile is deliberately seeking to enter only certain portions of these companies’ study areas in order to creamskim.

 

            Impact on Universal Service Funds

            The USF programs, which are administered by Universal Service Administrative Company (USAC), ensure that consumers in all regions of the nation have access to telecommunications services that are reasonably comparable to those services provided in urban areas and at rates reasonably comparable to those charged in urban areas.  Without high-cost support, residents of some areas of the country would have to pay significantly more for telephone services than those living in other areas.   Factors such as low-density terrain and small populations, resulting in the high fixed costs of building and operating a telecom network spread over only a few customers may cause telephone service to be cost prohibitive.

 

According to the petition, T-Mobile is seeking federal high-cost support in rural service areas located within its licensed service area in the state to expand its coverage to include unserved or underserved areas, to increase the service quality and reliability of its network, and to speed the delivery of advanced wireless services to the citizens of rural Florida. 

 

A major concern of the FCC and this Commission, especially in recent years, is the rapid growth of monies needed to support the various universal service programs.[5]  On May 1, 2008, the FCC released an order adopting an interim, emergency cap on the amount of universal service high-cost support that competitive ETCs may receive.  Specifically, as of the effective date of this Interim Cap Order,[6] total annual competitive ETC support in each state is capped at the level of support that all competitive ETCs in that state were eligible to receive during March 2008, on an annualized basis.  The Interim Cap Order became effective on August 1, 2008.  Because the FCC placed a cap on the annual competitive ETC support, designation of T-Mobile as an ETC will not increase the size of the Federal Universal Service Fund.

 

            Historically, competitive wireless ETCs in Florida, which receive high-cost monies from the USF, have reported poor Lifeline enrollment numbers.[7]  In its petition, T-Mobile provided a sample of its Lifeline advertising for North Carolina, a state in which it has received ETC status.  Staff checked the USAC database to determine the amount of high-cost USF monies T-Mobile received in North Carolina and the amount of low-income reimbursement it received for providing Lifeline service.  In 2009, T-Mobile received $856,721 in High-Cost funds from the USF while receiving $11 per month reimbursement for providing Lifeline service in North Carolina.  The $11 Lifeline reimbursement per month translates into one Lifeline customer in North Carolina. 

 

            T-Mobile has also received ETC designation in Puerto Rico. For 2009, T-Mobile received $14,479,632 in high-cost funds from the USF while receiving between $22,961 and $23,879 per month reimbursement for providing Lifeline service in Puerto Rico.  That translates into between 2,296 and 2,387 Lifeline customers per month.  If the Commission approves T-Mobile for ETC status, staff will review T-Mobile’s commitment to Florida’s Lifeline program during T-Mobile’s annual certification for High-Cost Universal Service Funds.

 

Additional ETC Requirements

            Transitional Lifeline

            Transitional Lifeline requires that ETCs offer discounted residential basic local telecommunications service at 70 percent of the residential local telecommunication service rate for any Lifeline subscriber who no longer qualifies for Lifeline.  A Lifeline subscriber who requests such service receives the discounted price for a period of one year after the date the subscriber ceases to be qualified for Lifeline.  To comply with the requirement of Transitional Lifeline, T-Mobile stated that it will provide a 30 percent monthly discount off its non-discounted Lifeline rate plan for 12 months to customers no longer qualifying for Lifeline. 

            Lifeline Advertising

 

T-Mobile states it 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.[8]  T-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.  T-Mobile will coordinate its efforts with public and private assistance agencies to ensure the availability of Lifeline services reaches the broadest audience possible.  T-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.  Finally, T-Mobile will promote its Lifeline offerings to its existing customers, many of whom will qualify for Lifeline, through emails and text messaging campaigns.

            Facilities Requirement

            In accordance with 47 C.F.R. 54.201(d)(1), a company must offer the services that are supported by the federal universal support mechanisms either using its own facilities or a combination of its own facilities and resale of another carrier’s services.  T-Mobile is a facilities-based wireless telecommunications carrier with its own switching, transport, cell sites, and associated telecommunications facilities in its proposed designated ETC service area.  T-Mobile intends to use its own facilities to meet its universal service obligations.  As an ETC, T-Mobile asserts it will use universal service support to support and enhance its network facilities in its proposed designated rural service area.

             

Conclusion 

 

            T-Mobile states that it will pass through all applicable state and federal service discounts and mandated service support to its Lifeline and Link-Up customers, thus reducing the price of access to telecommunications services for its Lifeline and Link-Up customers in Florida.            T-Mobile asserts it is able to provide all services and functionalities supported by the universal service program, detailed in CFR Section 54.101(a).  T-Mobile has signed an applicant certification attesting that it will follow all Florida Statutes, Florida Administrative Rules, Florida PSC Orders, FCC rules, and FCC Orders regarding Universal Service, ETCs, Link-Up and Lifeline, and the provision of toll limitation service. (See Attachment B certification).  T-Mobile also understands that the FPSC has the authority to both grant and revoke ETC designation if T-Mobile is non-compliant.

 

            Based on staff’s review, along with T-Mobile’s commitment to abide by both state and federal rules and procedures, staff believes that T-Mobile’s petition to be designated as an ETC is in the public interest and should be approved.  Upon  a decision by the Commission, staff will continue the necessary oversight to ensure that T-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.  Therefore, staff recommends that T-Mobile’s petition for ETC designation in the rural wire centers of CenturyLink, Frontier, Indiantown, NEFCOM, TDS, Smart City, and Windstream, identified in Attachment A of this recommendation, be granted.   If the Commission approves T-Mobile for ETC status, staff will review T-Mobile’s commitment to Florida’s Lifeline program during T-Mobile’s annual certification for High-Cost Universal Service Funds.

  

           

 Should this docket be closed?  

 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. (Murphy)

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.

 

 

Page 5.   Florida Map not shown due to visual clarity of Rural ETC areas