Idaho Public Utilities Commission

Case No. TFW-T-09-01, Order No. 32463

Notice of Proposed Settlement

February 29, 2012

Contact: Gene Fadness (208) 334-0339, 890-2712

PUC staff, TracFone propose settlement to ETC denial

The Idaho Public Utilities Commission is taking comment through March 9 on a proposed settlement to a longstanding dispute between regulators and TracFone Wireless, Inc.

In March 2010, TracFone, a prepaid wireless service provider, filed an application seeking commission designation as an Eligible Telecommunications Carrier in Idaho. ETC status would qualify TracFone to receive money from federal and state low-income assistance programs. The commission denied the company’s request due primarily to TracFone’s belief that its customers are not required to pay an assessment to the ldaho Telephone Service Assistance Fund (ITSAP) or its federal counterpart, Lifeline.

The assistance programs allow telephone customers who meet state Health and Welfare Department guidelines to receive discounts that help to ensure they have access to local dial-tone service for medical and other emergencies. The program is funded by a monthly charge of 6 cents per line for each Idaho residential, business and wireless customer. The revenue from that charge and the federal Lifeline funds provide for a discount of up to about $12.75 per month for qualifying participants.

TracFone claims it cannot assess its customers the surcharge because it offers its service through pre-paid airtime cards available at third-party outlets (e.g. Wal-Mart, Target, Best Buy, etc.) rather than billing its customers, which would be the mechanism for collecting the surcharge. TracFone also said it would not contribute to Idaho’s Emergency-911 fund for primarily the same reasons. Not doing so is a violation of the Idaho Emergency Communications Act, the commission ruled.

After the commission denied TracFone’s petition for reconsideration, TracFone appealed to the state Supreme Court. Since the appeal, TracFone and commission staff engaged in settlement discussions. Under the proposed settlement, TracFone agrees to contribute to the Lifeline fund retroactive to January 1, 2011. TracFone also agrees to file a Declaratory Judgment Action in state district court requesting a determination as to whether it must pay into the E-911 fund. If the court determines TracFone is subject of E-911 fees, it will reimburse the Idaho Emergency Communications Commission past due funds dating from Jan. 1, 2011. If TracFone appeals an adverse district court decision, the PUC may then revoke TracFone’s ETC status.

The Idaho Telecom Alliance and CTC Telecom (doing business as Snake River PCS) both intervened in the case in opposition to TracFone’s ETC designation.

TracFone already offers pre-paid wireless service in Idaho, but sought ETC designation so it could provide service to low-income customers under the name SafeLink Wireless. Qualifying customers would receive a free handset and up to 250 minutes of free time. For use beyond 250 minutes, customers would purchase a pre-paid card at 10 cents per minute. SafeLink offers service to low-income, low-volume users and transient users who either choose not to enter into long-term service commitments or are unable to meet the credit requirements necessary to obtain service from other carriers.

In previous rulings, the commission said the fact that TracFone does not bill its customers does not justify violating Idaho statutes that require all telecommunications providers to contribute to E-911 and Lifeline. “TracFone has elected to pursue a business model that makes the collection of the fees more challenging than a more typical telecommunications provider ....” the commission said. However, the commission said “TracFone’s selection of a business model does not render the relevant statutes inapplicable.” The commission claimed that TracFone’s own testimony indicated the wireless provider has the ability to track the usage rate of its customers and calculate the amount that would be due in low-income and E-911 surcharges.

TracFone argued that denial of its application would be a “disservice” to low-income households in Idaho.

Comments on the proposed settlement are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions About a Case." Fill in the case number (TFW-T-09-01) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.

The commission’s order, along with other documents related to this case, can be accessed on the commission’s Website. Click on the telephone icon, then on “Open Telecom Cases,” and scroll down to the above case number.

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