0819_ss_PartA_020411

3060-0819

February 2011

SUPPORTING STATEMENT

This submission is being made pursuant to 44 U.S.C. 3507. This submission is being made in advance of the expiration of the previous OMB approval in order to revise the Annual Certification and Verification Letter used by Eligible Telecommunications Carriers (ETCs). The submission also is being made to provide notice that the low-income requirements that have been contained in the OMB-approved 3060-1112 information collection that are applicable to, and consistent with, this collection are merged into this collection. As such, those low-income requirements will no longer be necessary in the 3060-1112 information collection. The incorporation of the low-income requirements from the 3060-1112 collection is being made as a step towards making that collection obsolete and removing it from the OMB inventory.

1. Justification:

. Circumstances that make collection necessary. On November 8, 1996, the Federal-State Joint Board on Universal Service (Joint Board) released a Recommended Decision in which it made recommendations to assist and counsel the Commission in the creation of effective universal service support mechanisms that would ensure that the goals of affordable, quality service and access to advance services are met by means that enhance competition. On November 18, 1996, the Commission’s Common Carrier Bureau (now known as the Wireline Competition Bureau) released a Public Notice (DA 96-1891) seeking public comment on the issues addressed in and the recommendations made by the Joint Board in the Recommended Decision. On May 8, 1997, the Commission adopted rules establishing, among other things, that eligible telecommunications carriers offering Lifeline/Link Up programs to qualifying low-income customers may receive reimbursement from the federal universal service support mechanism.

On December 21, 2000, the Commission requested the Joint Board to review the Lifeline and Link Up program for all low-income customers. The Joint Board issued its Recommended Decision on April 2, 2003. In its Recommended Decision, the Joint Board recommended several changes to improve the effectiveness of the low-income support mechanism. The Commission sought comment on the Joint Board’s Recommended Decision regarding modifications to the Lifeline and Link Up program in a Notice of Proposed Rulemaking (NPRM) released on June 9, 2003.

In its 2004 Report and Order and Further Notice of Proposed Rulemaking (Lifeline Order), the Commission directed ETCs to certify that their Lifeline/ Link Up subscribers are eligible for enrollment in the program. States that operate their own Lifeline/Link Up programs may develop their own certification procedures (referred to as non-federal default states). For those states governed by the federal default Lifeline and Link Up rules, consumers must provide documentation of income eligibility at enrollment (referred to as federal default sates). Additionally, an officer of the ETC enrolling the consumer in Lifeline/Link Up must certify, under penalty of perjury, that the ETC has procedures in place to review income documentation and that, to the best of his or her knowledge, the company was presented with documentation that the consumer’s household income is at or below 135% of the Federal Poverty Guidelines (FPG). Certification procedures for program-based qualification require consumers to self-certify, under penalty of perjury, that he/she participates in at least one of the qualification programs enumerated in 47 C.F.R. § 54.410.

ETCs also must verify their subscribers' continued eligibility for Lifeline service. States that administer their own Lifeline/Link Up programs may implement their own verification procedures to validate consumers’ continued eligibility. In states that follow the federal default Lifeline and Link Up rules, ETCs must verify annually the continued eligibility of a statistically valid sample of their Lifeline subscribers. Subscribers who are subject to this verification and qualify under program-based eligibility criteria must prove their continued eligibility by presenting in person or sending a copy of their Medicaid card or other Lifeline-qualifying public assistance card and self-certifying, under penalty of perjury, that they continue to participate in the Lifeline-qualifying public assistance program. Subscribers who are subject to this verification and qualify under the income-based eligibility criteria must prove their continued eligibility by presenting current income documentation. These subscribers must also self-certify, under penalty of perjury, the number of individuals in their household and that the documentation presented accurately represents their annual household income. An officer of the ETC must certify, under penalty of perjury, that the ETC has income verification procedures in place and that, to the best of his or her knowledge, the company was presented with corroborating documentation. The ETC must retain these records for at least three years.

The Lifeline Order also requires ETCs to submit to the Universal Service Administrative Company (USAC or Administrator) proof that they certified that their Lifeline subscribers are eligible for Lifeline, and proof that they verified their subscribers' continued eligibility for Lifeline. Prior to 2009, USAC provided sample certification and verification letters on its website to assist ETCs in complying with the certification and verification requirements. The Annual Lifeline Certification and Verification Letter has been standardized since 2009, and is being revised in this submission. Specifically, the Certification and Verification Letter will be updated with an additional check box to accommodate wireless ETCs serving non-federal default states that do not assert jurisdiction over wireless ETCs. Additionally, a column will be added so that carriers may distinguish between “Non-Responding Customers” and “Customers Found to be Ineligible” in their reports.

Section 54.707 authorizes audits of contributors and carriers by the Administrator. To that end, relevant data must be available to yield evaluative results. The collection of information associated with the certification and verification procedures for Lifeline/Link Up provides relevant data. In that connection, we require ETCs in federal default states to retain subscribers’ self-certifications of eligibility, including self-certifications that income documentation accurately reflects household income, for as long as the subscriber receives Lifeline service from that ETC or until the ETC is audited by the Administrator. Similarly, all ETCs are required to maintain records to document compliance with all Commission and state requirements governing the Lifeline/Link Up programs for the three preceding calendar years and provide that documentation to the Commission or Administrator upon request. Also, ETCs must obtain certifications from the non-ETC reseller that it is complying with the Commission’s Lifeline and Link Up requirements, including the applicable federal or state certification and verification procedures.

Generally, consumers apply for Lifeline and Link Up support through their local telephone company. ETCs that have provided eligible consumers with Lifeline discounts file the Lifeline and Link Up Worksheet (Form 497) with USAC to receive Low Income Program support that reimburses them for providing service at discounted rates.

On August 29, 2007, the Commission released the 2007 Comprehensive Review of the Universal Service Fund Management, Administration and Oversight, WC Docket Nos. 05-195, 02-60, 03-109 and CC Docket Nos. 96-45, 02-6, 97-21, FCC 07-150 (Comprehensive Review Order). In the Comprehensive Review Order, the Commission took several steps to further safeguard the Universal Service Fund from waste, fraud, and abuse, including imposing document retention rules on all universal service programs and program contributors. One rule change extended the time period for service providers to retain a record verifying the eligibility of a recipient for the program by an additional three years. Therefore, such records must be kept as long as the recipient continues to receive supported service and three years after the subscriber terminates service. Although these requirements are part of this currently approved collection, we note that these requirements also are contained within the OMB-approved 3060-1112 information collection. In an effort to avoid duplication, we propose to merge the low income information collection requirements contained in 3060-1112 into this collection.

Statutory authority is contained in sections 1, 4(i), 201-205, 214, 254, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 1, 4(i), 201-205, 214, 254, 403.

As noted on the OMB Form 83i, this information collection affects individuals or households, and thus, there are impacts under the Privacy Act. However, the information that is related to individuals or households is collected by a third party, the ETC. The FCC has no direct involvement in the collection of this information on individuals or households, although the Commission does require the ETC to abide by the requirements of 47 U.S.C. section 222 of the Communications Act of 1934, as amended, which states that:

"(a) In General.-- Every telecommunications carrier has a duty to protect the confidentiality of proprietary information of, and relating to, other telecommunications carriers, equipment manufacturers, and customers, including telecommunication carriers reselling telecommunications services provided by a telecommunications carrier."

In section 222(h)(1)(A), the Act defines customer proprietary network information as

"(A) information that relates to the quantity, technical configuration, type, destination, location, and amount of use of a telecommunications service subscribed to by any customer of a telecommunications carrier, and that is made available to the carrier by the customer solely by virtue of the carrier-customer relationship…."

The Commission believes, therefore, that 47 U.S.C. section 222 provides sufficient safeguards to protect the information on individuals or households that the ETC collects as part of its responsibilities. Because the FCC has no direct involvement in the collection of this information, the Commission is not required to complete a privacy impact assessment.

. Use of information. All the requirements contained herein are necessary to implement the congressional mandate for universal service. These reporting and recordkeeping requirements are necessary to verify that particular carriers and other respondents are eligible to receive universal service support.

. Technological collection techniques. The Form 497 will be available via the Administrator’s website (www.universalservice.org). The Administrator will mail copies of the Form 497 to companies unable to access the website. Respondents may submit completed forms either electronically or by mail.

. Efforts to identify duplication. The Commission determined that there are similar low-income related requirements enumerated in the OMB-approved 3060-1112 information collection. In order to avoid duplication, the Commission is merging the requirements from the 3060-1112 collection with the instant data collection. The Commission is using already-established reporting and recordkeeping requirements to satisfy certain statutory directives and eligibility criteria.

. Impact on small entities. The collections of information may affect small entities as well as large entities. In conformance with the Paperwork Reduction Act of 1995, the Commission is making an effort to minimize the burden on all respondents, regardless of size. The Commission has limited the information requirements to those which are necessary to verify eligibility for low income support and compliance with the low income program.

. Consequences if information is not collected. Failing to collect the information would prevent the Commission from implementing section 254 of the Act and may make it difficult for the Commission to ensure that only eligible entities receive universal service support.

. Special circumstances. We do not foresee any special circumstances that would cause an information collection to be conducted under extraordinary circumstances.

. Federal Register notice; efforts to consult with persons outside the Commission. Pursuant to 5 CFR section 1320.8(d), the Commission published a 60 day notice in the Federal Register to solicit public comment on November 12, 2010. See 75 FR 69440. No comments were received.

. Payments or gifts to respondents. The Commission does not anticipate providing any payment or gift to respondents.

. Assurances of confidentiality. The Commission is not requesting the respondents submit confidential information to the Commission. If the Commission requests information that the respondents believe is confidential, respondents may request confidential treatment of such information under section 0.459 of the Commission’s rules.

. Questions of a sensitive nature. There are no questions of a sensitive nature with respect to the information collected described herein.

. Estimates of the hour burden of the collection to respondents. The following represents the hour burden on the collections of information:

a. Form 497:

(1) Number of respondents: Approximately 1,400 ETCs.

(2) Frequency of response: Monthly and on occasion reporting requirements. However, applicants are encouraged to make the actual filing quarterly. Each quarter, carriers submit three separate worksheets (i.e., one worksheet for each month within the quarter). Each carrier must report its Lifeline and Link Up costs in November to receive low income support during the last quarter. (1,400 carriers x 12 submissions x 1.5 hours each = 25,200 hours). The number of hours required to complete the Form 497 has decreased since the last submission based on current information from the Administrator.

(3) Annual hour burden per respondent: 18 hours annually (1.5 hours per month) to report all of the Lifeline and Link Up Information. The total annual reporting burden is (1,400 carriers x 12 submissions x 1.5 hours each) = 25,200 hours.

(4) Total estimate of annualized cost to respondents for the burdens for collection of information: $1,008,000.

(5) Explanation of calculation: We estimate that it will take 1,400 carriers approximately 1.5 hours to compile the required Lifeline and Link Up information monthly. 1,400 (number of respondents) x 12 (number of submissions required) x 1.5 (hours to prepare report) x $40 per hour (including administrative staff time and overhead) = $1,008,000.

b. Certification of income eligibility upon enrollment:

(1) Number of respondents: ETCs in federal default states are required to keep one certification per subscriber who qualifies for the Lifeline/Link Up program based on income criteria. Approximately 250,000 subscribers are located in federal default states. The number of subscribers in federal default states has increased since the last submission based on current information from the Administrator.

ETCs in all states must annually file one company certification with USAC, demonstrating their compliance with certification and verification requirements. There are approximately 1,400 ETCs to whom the collection requirements apply.

We estimate that there are 250,000 subscribers + 1,400 ETCs = 251,400 respondents.

(2) Frequency of response: Annually and on occasion. Lifeline/Link Up subscribers are required to certify their eligibility at their initial enrollment. Specifically, certification procedures require ETCs to collect a self-certification from the Lifeline/Link Up applicant (subscriber) at the time of enrollment. Annually, ETCs with income-qualifying subscribers to Lifeline/Link Up must submit to USAC one self-certification concerning the company’s compliance with certification and verification rules.

(3) Annual hour burden per respondent: Although we do not design a means for the ETC to gather the required documentation for income-based eligibility upon enrollment in the Lifeline/Link Up program, we believe the easiest and most time-efficient method would be for ETCs to require the enrolling subscriber to read and sign a preprinted certification. We estimate that it will take Lifeline/Link Up subscribers .08 hours (approximately 5 minutes) to read and sign a certification (250,000 subscribers x .08 hours = 20,000 hours). Similarly, we estimate that the ETC officer will take no longer than .08 hours (approximately 5 minutes) to sign the company’s self-certification, which has been added to the Form 497. The self-certification will state that the ETC is complying with the relevant Commission or state rules concerning review of documentation and maintenance of records. (1,400 ETCs x .08 hours = 112 hours). Therefore, the total annual burden hours is 20,112 hours (20,000 + 112 hours = 20,112 hours).

(4) Total estimate of annualized cost to respondents for the burden for collection of information: $24,480.

(5) Explanation of calculation: In federal default states, approximately 250,000 subscribers participate in the Lifeline program based on the income eligibility criteria. We estimate that enrolling subscribers will spend .08 hours (approximately 5 minutes) reading and signing the required certification provided by the ETC. We also estimate that it will cost approximately $1.00 per hour to complete. 250,000 subscribers (number of respondents) x 1 (number of submissions required) x .08 (hours to read and sign certifications) x $1 per hour = $20,000. In addition, approximately 1,400 ETCs will take .08 hours (approximately 5 minutes) to certify company compliance with the relevant federal or state regulations. We estimate that it will cost $40 per hour for administrative staff time and overhead. 1,400 (number of respondents) x 1 (number of submissions) x .08 hours (hours to prepare certification) x $40 (administrative staff time and overhead) = $4,480. Total = $20,000 + $4,480 = $24,480.

c. Verification of continued eligibility:

(1) Number of respondents: There will be between 10,250 and 49,000 ETCs and subscribers. The numbers of both ETCs and subscribers have increased since the last submission based on current information provided by USAC and the formula used to determine the number of Lifeline subscribers that ETCs are required to survey.

Annually, states must verify the continued eligibility of existing Lifeline customers. The Annual Lifeline Certification and Verification Letter is available on USAC’s website. ETCs in federal default states are required to annually certify to USAC that a statistically valid sample of subscribers continue to qualify. Using OMB-mandated values, the Lifeline Order specifies the number of subscribers that will constitute a statistically valid sample. States with their own Lifeline programs may design their own verification programs. States are permitted to impose the verification duties on ETCs or retain the verification duties within the state government.

ETCs in federal default states must collect certifications from a statistically valid sample of their participants. The actual number of subscribers constituting a statistically valid sample is determined based on the formula established in the Lifeline Order. For every 1,000 subscribers receiving Lifeline support, an ETC must survey between 41 and 196 subscribers to verify that they continue to be eligible. The formula uses a proportion based on the number of ineligible subscribers determined in the previous year, with a ceiling on the percentage that must be sampled. Thus, the sample size for 1,000 subscribers ranges between 41 and 196 subscribers.

We estimate that there will be approximately 250,000 subscribers receiving Lifeline support in federal default states. On average, the range of respondents is between 41 and 196 per 1000 subscribers. This yields a sample size ranging from 10,250 (250,000 divided by 1,000 x 41) to 49,000 (250,000 divided by 1,000 x 196).

(2) Frequency of response: Annual reporting requirement. For verification requirements, ETCs must collect certifications from participants (subscribers) using income- and program-based criteria to participate in the Lifeline program.

(3) Annual hour burden per respondent: Under our rules, ETCs in federal default states are required to survey a statistically valid sample of their eligible subscribers to determine continued eligibility. From this sample of subscribers, ETCs must obtain from the sampled subscriber a self-certification of eligibility and review (but not retain) documentation proving continued eligibility. We estimate that reading and signing the self-certification and showing a qualifying document will take approximately .25 hours (approximately 15 minutes). Burden hours will range between 2,562.5 hours (10,250 subscribers x .25 hours) and 12,250 hours (49,000 subscribers x .25 hours). Similarly, we estimate that the ETC officer will take no longer than .08 hours (approximately 5 minutes) to sign the Form 497 (1,400 x .08 hours = 112 hours). Total burden would range between 2,674.5 hours (2,562.5 + 112 = 2,674.5 hours) and 12,362 hours (12,250 + 112 = 12,362 hours).

(4) Total estimate of annualized cost to respondents for the burden for collection of information: We estimate that the total cost to respondents will be between $5,300 and $8,400.

(5) Explanation of calculation: The Lifeline Order provides a formula for determining what constitutes a statistically valid sample of Lifeline subscribers to verify continued eligibility. For every 1,000 subscribers, the formula yields a sample size ranging from 41 to 196 subscribers.

We estimate that a range between 10,250 Lifeline subscribers (250,000 divided by 1,000 x 41) and 49,000 Lifeline subscribers (250,000 subscribers divided by 1,000 x 196 subscribers) will be required to verify continued eligibility. Thus, the annualized cost for subscribers would be between $820 and $3,920 [between 10,250 subscribers (number of respondents x 1 (number of submissions required) x .08 (hours to prepare certifications x $1 per hour = $820 and 49,000 subscribers (number of respondents) x 1 (number of submissions required) x .08 (hours to prepare certifications) x $1 per hour = $3,920 ].

In addition, approximately 1,400 ETCs will take .08 hours (approximately 5 minutes) to certify compliance with federal regulations. We estimate that it will cost $40 per hour for administrative staff time and overhead. 1,400 (number of respondents) x 1 (number of submissions) x .08 (hours to prepare certification) x $40 (administrative staff time and overhead) = $4,480.

d. 47 C.F.R. § 54.417 – Lifeline recordkeeping.

(1) Number of Respondents: Approximately 1,400 ETCs.

(2) Frequency of Response: Annually (recordkeeping). Each ETC must keep records verifying the eligibility of a recipient of low income support for as long as the recipient continues to receive supported service and three years after service is terminated. Additionally, each ETC must retain the FCC Form 497 for five years.

(3) Annual hour burden per respondent: 1 hour annually to maintain records. The total annual reporting burden is 1,400 hours.

(4) Total estimate of annualized cost to respondents for the hour burdens for collection of information: $56,000.

(5) Explanation of calculation: We estimate that it will take 1,400 ETCs approximately 1 hour to maintain the records. 1,400 (number of respondents) x 1 (number of submissions required) x 1 hour x $40 per hour (including administrative staff time and overhead) = $ 56,000.

Total annual burden hours for items a - d: 25,200 + 20,112 + 2,674.5 + 1,400 = 49,386 hours.

13. Estimates of the cost burden of the collection to respondents.

(1) Total capital start-up costs component annualized over its expected useful life: $0. The collections will not require the purchase of additional equipment.

(2) Total operation and maintenance and purchase of services component: $0. The collections will not result in operating or maintenance expenses.

14. Estimates of the cost burden to the Commission. There will be minimal costs to the Commission because the information is collected by the Administrator.

15. Program changes or adjustments. The public burden for the collections contained herein is 49,386 burden hours which resulted in a decrease of 12,402 burden hours since the last submission. The adjustment is due to modified estimates in items a, b, c, and d based on current information provided by the Administrator.

16. Collections of information whose results will be published. This information may be made public through reports from the universal service Administrator for the Commission, although the Commission does not have specific plans for doing so this time.

17. Display of expiration date for OMB approval of information collection. The Commission seeks continued approval not to display the expiration date of OMB approval on the form. Display of the expiration date would not be in the public interest because we would have to destroy all unused forms displaying an expiration date and have to update the electronic copy. This would constitute waste and would not be cost effective.

18. Exceptions to the certification statement for Paperwork Reduction Act submissions (Item 19 of OMB Form 83-I).

There are no exceptions to the Certification Statement.

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