Impact of Changes to the Federal Lifeline Program

1. Impact of Changes to the Federal Lifeline Program June 26, 2012 Trent Harkrader, Chief Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission

2. Highlights of Lifeline Reform Order • Lifeline Reform Order & Further Notice of Proposed Rulemaking, adopted January 31, 2012 and released February 6, 2012 • Uniform Eligibility (effective June 1, 2012) • 135% or below of federal poverty guidelines OR • Participate in at least one federal assistance program (e.g., Medicaid, Food Stamps, Free School Lunch, etc.) • States are permitted to add additional eligibility criteria based on income • Initial Enrollment & Annual Re-Certification Procedures (effective June 1, 2012) • One-per-household rule (effective June 1, 2012) • Household defined as an “economic unit” • “Economic unit consists of all adult individuals contributing to and sharing in the income and expenses of a household” • National Lifeline Accountability Database to prevent duplicates • Broadband Pilot 2

3. Highlights of Lifeline Reform Order (continued) • Elimination of Link Up on non-Tribal Lands (effective April 2, 2012) • Non-Usage (effective May 1, 2012) • Flat Rate Reimbursement (effective April but temporary waiver until August) • Three-Month Transition to Payments Based on Actuals (July-October 2012) • Conditional Forbearance from Facilities Requirement

4. Lifeline Order Implementation • Flat Rate Support • May 1, 2012 Public Notice: For service provided April 1-July 31, ETCs may seek support under either the previous Tiers 1-3 structure or the new $9.25 flat-rate support amount but all ETCs must use existing Form 497. For service provided on August 1, 2012 and thereafter all ETCs must utilize the revised FCC Form 497 and seek the $9.25 flat-rate support. • OMB-Approved Form 497 to be posted on USAC’s site in July • Duplicates Database Implementation • In-Depth Data Validations (IDVs) to Check for Duplicates • Consumer Education & Outreach • Public Service Announcements & Lifeline Guide • Coordinating with Lifeline Across America Working Group (NARUC, NASUCA) • Waiver Orders (USTelecom, CA, OR, CO, DC) • Three-Month Transition to Payments Based on Actuals • ETC advisory on USAC’s website about identifying SACs to transition between July-October

5. Broadband Adoption Lifeline Pilot Program • Public Notice Launching Broadband Adoption Lifeline Pilot Program (April 30, 2012) • Webinar on Project Design (May 14, 2012) • Applications Due July 2, 2012 • Overview of Broadband Pilot • Allocates $25 million derived from savings from other reforms • Purpose of Pilot is to test the necessary amount and length of broadband support • 18 Month Pilot (3 months to implement back-office functions, 12 months of subsidized broadband service and 3 months to finalize data collection and analysis) • Support will go to ETCs for either stand alone or bundled broadband service and preference will be given to ETCs who partner with third parties that have existing adoption programs in place (e.g., BTOP/BIP grantees) • Preference will be given to projects that offer at least speeds of 4Mbps/1Mbps • Projects should address other challenges to broadband adoption, including the cost of devices and digital literacy training • ETCs are expected to participate in data collection; • Order encourages use of control/treatment groups to enable Commission to gather high-quality diverse data to determine effective approaches to structure future Lifeline program • Order directs Bureau to select a small number of projects, and at least one Pilot will be selected on Tribal lands 5

6. Lifeline Order Implementation—Compliance Plans • An ETC seeking to avail itself of the conditional grant of forbearance from the facilities requirement must submit a compliance plan with the Commission • If not yet designated by a state, ETC must have compliance plan approved by the Wireline Competition Bureau prior to being designated • February 29, 2012 Public Notice Provides Guidance for Submission of Compliance Plans • Wireline Competition Bureau has approved 6 Compliance Plans post Lifeline Order • FCC Compliance Plan web page: http://www.fcc.gov/encyclopedia/lifeline-compliance-plans-etc-petitions

7. Further Notice of Proposed Rulemaking • FNRPM seeks comment on: • Eligibility Database • Adding Women, Infants, and Children Program to Eligibility Criteria • Establishing Eligibility for Homeless Veterans • Using Universal Service Funds to Support Digital Literacy • Limits on Resale of Lifeline Supported Service • Lifeline Support Amount for Voice Service • Tribal Lands Lifeline and Link Up Support • Mandatory Application of Lifeline Discount to Bundled Service Offerings • “Own Facilities” Requirements of Section 214(e)(1)(A) of Act • ETC Requirements Going Forward • Record Retention Requirements • Comments & Replies Filed 7