Lifeline Recertification Fraught with Scrambling, NARUC Told

State commissioners are considering adopting a resolution calling for improvements to the Lifeline annual recertification process. The NARUC telecom subcommittee, which consists of PUC staff members, voted unanimously Sunday to approve a draft with only minor language changes. It will advance for consideration before state commissioners, who will also discuss the program in a panel hosted after our deadline Monday. The draft resolution commends the federal agency’s crackdown on fraud and abuse. It “urges the FCC to examine the recertification process to ensure that legitimate eligible consumers continue to receive the benefits,” asks the FCC to collaborate with states to make sure the states and/or the Universal Service Administrative Co. can efficiently administer the recertification process, and asks the FCC to crack down on companies that violate Lifeline rules or commit fraud.

Wireline and wireless providers raced to tell subscribers of the need to recertify in a crunched timeframe last year, company representatives said Sunday. “Some customers were contacted potentially more than 20 times,” said TracFone Regulatory Counsel Stephen Athanson. He described “repeated contacts through a broad spectrum of channels,” such as phone calls, emails, text messages and direct mailings over the final six months of 2012: “I think the sense of urgency with which we pursued this project paid off in the end.” TracFone retained about 85 percent of its subscribers as listed last June, he added.

"Many people just missed” the deadline, said CenturyLink Director-Regulatory Operations Loretta Huff, describing big losses in subscribership among Lifeline customers. About half of the telco’s Lifeline subscribers didn’t even return a form, and many returned forms with errors, she said. The telco had to coordinate how to manage recertification for the more than 400,000 Lifeline subscribers it had across its 37-state territory, she said. The implementation process was “complex,” she said. “I believe that’s the appropriate, public word for it.” Often states had their own rules the company had to manage, with some misaligned with the federal reform and unable to change until their next legislative session, she said. “Just too little time was given to implement the changes.”

"I winced,” said FCC Wireline Associate Bureau Chief Trent Harkrader when hearing TracFone may have contacted some subscribers 20 times. “That’s not what I want. … It takes a toll on the company, it takes a toll on the consumers.” The process should be easier, he said. “We knew non-response was going to be a big issue, but what the commission felt was that this is going to be a government benefit.” But Lifeline had required “dire fixing,” he said: “We're not done yet.” He emphasized the FCC’s work on an eligibility database, which has “proven to be thorny because, among other things, we are dealing with our fellow government agencies,” he said, declining to give a timeline. Nationally, the recertification process has cost the program about a third of its subscribers, with the “measurable drop” hitting in February, Harkrader said. FCC officials “share the concern” of others and don’t want to “throw the baby out with the bathwater” in reforming the program, he said.

CenturyLink dealt with much customer confusion, Huff said, with many recertification forms coming back invalid. A subscriber might say, “You really rejected it because I only initialed 10 of the 11 spots?” according to Huff. She described the telco’s efforts of reminders and auto-dialers to alert customers, and said the process will be refined this year. “But the implementation was rushed and quite painful for everyone that was involved,” she added. “Everyone suffered a bit last year.” FCC waivers also concern CenturyLink, which has some customers unable to receive benefits while waiting for such waivers, she said. The telco supports the need for reform and considered the fund growth unsustainable, she said, saying it was “clearly” driven by the wireless side.

The National Association of State Utility Consumer Advocates wants subscribers to receive a telephone contact from companies trying to recertify, said Thomas Dixon, a financial analyst for the Colorado Office of Consumer Counsel. The challenge is reaching these consumers, he said, saying the call should not be from an 800 number. He throws out many bill inserts he receives, as might many Lifeline subscribers with mailed reminders, he said. The recertification process “clearly created a problem for our constituency, particularly our low-income constituency,” he said. He described disappointment at seeing people use the de-enrollment numbers to suggest the program has more fraud and abuse than is warranted.

Incentives and procedures differ for wireless and wireline companies, speakers said. Athanson said TracFone has engaged in annual verification procedures for four years already, which helped. He admitted to some “chaotic” implementation, however, outlining steps to help and calling state databases “very important” for recertification. “Quite frankly, they're different business models, and that played out,” said Sean Carroll, hearing officer for the Massachusetts Department of Telecommunications and Cable, of wireline and wireless companies. Massachusetts had over 330,000 Lifeline subscribers reviewed last year, and 109,380 -- about 33 percent -- were de-enrolled, with 92 percent of those de-enrollments due to no response from the subscribers, he said. Department analysis showed wireline-eligible telecom carriers had a 53 percent de-enrollment rate and wireless had a 29 percent rate, he said. The business model for wireless is better for making Lifeline work, Dixon said, urging companies to look at what TracFone has been doing to retain its subscribers.