Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554
In the Matter of ) ) Bridging the Digital Divide for Low-Income ) WC Docket No. 17-287 Consumers ) ) Lifeline and Link Up Reform and Modernization ) WC Docket No. 11-42
Telecommunications Carriers Eligible for Universal ) WC Docket No. 09-197 Service Support ) )
To: The Commission
EXPEDITED PETITION FOR RECONSIDERATION OR, IN THE ALTERNATIVE, WAIVER OF TRUCONNECT
Wilkinson Barker Knauer, LLP 1800 M Street, NW Suite 800N Washington, DC 20036 202.783.4141
Counsel to Telscape Communications, Inc. dba TruConnect and Sage Telecom Communications, LLC
January 27, 2020
TABLE OF CONTENTS
I. Introduction and Summary ...... 2 II. The Costs of the Prohibition on Commissions Far Outweigh the Benefits ...... 4 A. The Costs of the Prohibition on Commissions Are Significant But Ignored in the Lifeline Fifth Report and Order ...... 5 B. The Purported Benefits of the Prohibition on Commissions Are, At Best, Speculative ...... 6 III. The Prohibition on Commissions Conflicts with State Law ...... 8 IV. There Are Better Means of Achieving the Commission’s Goals ...... 10 A. Evaluate the Effectiveness of the National Lifeline Eligibility Verifier Before Assessing Whether Additional Regulation is Necessary ...... 10 B. Implement a 60-Day Port Freeze ...... 11 V. Rescind New Section 54.406(b) Before It Becomes Effective On February 25, 2020 ...... 13 VI. In The Alternative, TruConnect Requests A Nine-Month Extension of the Effective Date or a Waiver Of New Section 54.406(b) ...... 13 VII. Conclusion ...... 15
Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554
In the Matter of ) ) Bridging the Digital Divide for Low-Income ) WC Docket No. 17-287 Consumers ) ) Lifeline and Link Up Reform and Modernization ) WC Docket No. 11-42
Telecommunications Carriers Eligible for Universal ) WC Docket No. 09-197 Service Support ) )
To: The Commission
EXPEDITED PETITION FOR RECONSIDERATION OR, IN THE ALTERNATIVE, WAIVER OF TRUCONNECT
Telscape Communications, Inc. dba TruConnect and Sage Telecom Communications,
LLC (collectively, TruConnect) requests, pursuant to Section 1.429 of the Commission’s Rules,1
that the Commission reconsider its decision to prohibit eligible telecommunications carriers
(ETCs) from paying “commissions” to Lifeline enrollment representatives and rescind new
section 54.406(b) before it becomes effective on February 25, 2020.2 In the alternative,
1 47 C.F.R. § 1.429. To the extent this petition relies on facts or arguments not previously presented to the Commission, grant of the petition is proper because “consideration of the facts or arguments relied on is required in the public interest.” 47 C.F.R. § 1.429(b)(3). It is well established that the Commission’s rules of procedure “contain a catch-all provision that allows the Commission to reconsider its decision de novo even if no new material is presented.” North Am. Telecommunications Ass’n. v. FCC, 772 F.2d 1282, 1286 (7th Cir. 1985). The Commission has done so in this very docket. See Lifeline and Link Up Reform and Modernization et al., WC Docket No. 11-42 et al., Second Further Notice of Proposed Rulemaking, Order on Reconsideration, Second Report and Order, and Memorandum Opinion and Order, 30 FCC Rcd 7818, 7894 ¶ 230 (2015).
2 Bridging the Digital Divide for Low-Income Consumers; Lifeline and Link Up Reform and Modernization; Telecommunications Carriers Eligible for Universal Service Support, Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration, and Further
TruConnect requests a nine-month extension of the effective date or, pursuant to section 1.3 of
the Commission’s Rules,3 a nine-month waiver of new section 54.406(b).
I. INTRODUCTION AND SUMMARY
In the Lifeline Fifth Report and Order, the Commission adopted a number of regulatory
reforms intended to, among other things, “improv[e] the Lifeline program’s enrollment and recertification procedures to prevent waste, fraud, and abuse in the program.”4 TruConnect has
been an industry leader in self-regulation, an advocate for program reforms, and a staunch
defender of the integrity of the Lifeline program. As such, TruConnect fully supports the
Commission’s efforts in this regard. TruConnect and carriers like TruConnect that have business
models with a strong focus on Lifeline customers highly value obtaining and retaining Lifeline
customers, and invest significant resources into providing top-of-the-line plans and devices to attract these customers.5 TruConnect has been and continues to be committed to complying with
all the requirements set forth in the Lifeline rules and relevant orders, including detailed and
comprehensive procedures to address customer certification and verification requirements. It
conducts Lifeline-specific training on these procedures for all employees and agents, whether directly or indirectly employed. This emphasis on compliance – shared by other reputable
Lifeline providers – has served TruConnect well: TruConnect has never been the subject of a
notice of apparent liability or an investigation by the Commission or a state commission, and the
Notice of Proposed Rulemaking, FCC 19-111 Appendix A (rel. Nov. 14, 2019) (adopting new section 54.406(b)) (“Lifeline Fifth Report and Order”).
3 47 C.F.R. § 1.3.
4 Lifeline Fifth Report and Order ¶ 67.
5 See Reply Comments of Sage Telecom Communications, LLC, D/B/A TruConnect, WC Docket Nos. 11-42, 09-197, 10-90 at 2-3 (filed Aug. 15, 2019).
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results of TruConnect audits demonstrate their unblemished and stellar record and their
commitment to compliance.6 It is, in short, in the interest of TruConnect and other legitimate
Lifeline providers for the Commission to adopt and strictly enforce rules that allow it to identify
and disbar unscrupulous providers that engage in unfair competition by violating the rules and
abuse the Universal Service Fund (“Fund”).
Unfortunately, the prohibition on commissions adopted in the Lifeline Fifth Report and
Order does not effectively further the Commission’s articulated goals.7 As discussed in greater
detail below, the costs of the prohibition far outweigh its potential benefits, the prohibition
conflicts with state law, and there are other actions the Commission can and should take that will more effectively “improv[e] the Lifeline program’s enrollment and recertification procedures to prevent waste, fraud, and abuse in the program.”8 TruConnect therefore respectfully requests that the Commission reconsider the prohibition on commissions and rescind new section 54.406(b)
before it becomes effective on February 25, 2020. In the alternative, TruConnect requests a nine-
month extension of the effective date or a waiver of the new rule to allow sufficient time for it to
adjust to the significant changes it imposes on Lifeline provider business models.
6 See, e.g., Letter from Steven A. Augustino, Counsel to TruConnect Communications, Inc. to Marlene H. Dortch, Secretary, FCC, WC Docket No. 11-41, Attach. (filed Aug. 29, 2017) (TruConnect Communications, Inc.’s Lifeline Biennial Audit Final Report for 2015).
7 Bridging the Digital Divide for Low Income Consumers, 84 Fed. Reg. 71308, 71328 (Dec. 27, 2019) ( “Effective February 25, 2020, add § 54.406 to read as follows: . . . Prohibition of commissions for enrollment representatives. An eligible telecommunications carrier shall not offer or provide to enrollment representatives or their direct supervisors any commission compensation that is based on the number of consumers who apply for or are enrolled in the Lifeline program with that eligible telecommunications carrier.”).
8 Lifeline Fifth Report and Order ¶ 67.
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II. THE COSTS OF THE PROHIBITION ON COMMISSIONS FAR OUTWEIGH THE BENEFITS
The Lifeline Fifth Report and Order does not contain any effort at a formal, or informal,
assessment of the costs of the prohibition on commissions, and discusses the benefits in only
general terms. This is fundamentally inconsistent with the goal of ensuring that economic
analysis more broadly, and cost-benefit analysis in particular, is employed more systematically in
Commission orders.9 Cost-benefit analysis is critical, as it permits the Commission to
“intelligibly apply” the public interest standard; without it, the Commission is “essentially
putting [a] finger in the wind and making it up as [it] go[es] along,” which “is no basis for
reasoned, evidence-based decision-making by an expert agency.”10 Had the Commission
conducted a rigorous cost-benefit analysis consistent with its existing policies and the Executive
Branch’s executive order regarding burdensome new regulations,11 it would have found that the costs of the prohibition are significant and far outweigh any benefits that are, at best, speculative.
9 See Remarks of Chairman Ajit Pai at the Hudson Institute, Apr. 5, 2017 at 3-4 available at https://docs.fcc.gov/public/attachments/DOC-344248A1.pdf (“Seldom does [the Commission] consider the distributional impact of these costs and benefits. For example, are the costs of a new rule simply too high to be borne by small firms that lack an army of attorneys and accountants to help with regulatory compliance? How will this impact competition or innovation in a market?”); see also Remarks of FCC Commissioner Michael O’Rielly, TPRC 44: Research Conference on Communications, Information, and Internet Policy, Sept. 30, 2016 at 1 (“. . . it is incumbent on every federal agency to determine whether the rules it proposes will result in costs to providers, consumers or society as a whole that outweigh the purported benefits.”).
10 See Establishment of the Office of Economics and Analytics, Order, MD Docket No. 18-3, 33 FCC Rcd 1539, 1548 (2018) (Statement of Chairman Ajit Pai).
11 See generally id.; Exec. Order No. 13771, 82 Fed. Reg. 9339 (Jan. 30, 2017).
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A. The Costs of the Prohibition on Commissions Are Significant But Ignored in the Lifeline Fifth Report and Order
Commissions are a common and accepted form of compensation for sales personnel in the telecommunications industry more broadly.12 And for good reason – a properly designed
commission-based compensation mechanism will drive sales results. In the case of Lifeline
providers, this means that sales personnel are incented to enroll low-income Americans in the
Lifeline program, who otherwise may not be able to “obtain the communications services they need to participate in the digital economy.”13 An analysis conducted by CGM, LLC estimates the
current Lifeline participation rate is only 22 percent,14 which is far from reaching the
Commission’s intended goals, as well as its responsibility to ensure that “[c]onsumers in all regions of the Nation, including low-income consumers . . ., should have access to telecommunications and information services . . . .”15 By prohibiting commissions, the
Commission removes a key tool from the Lifeline providers’ compensation toolbox, which will have the direct result of depressing enrollment in the program. As a result, the neediest of low- income Americans – many Lifeline consumers – will miss out on access to better jobs, healthcare and first responders, and the Commission’s telemedicine and rural broadband initiatives will be
12 See, e.g., SHRM, Designing Compensation Systems for Sales Professionals https://www.shrm.org/resourcesandtools/tools-and- samples/toolkits/pages/designingcompensationsystemsforsalesprofessionals.aspx (“Commissions, bonuses, stock-based plans and prizes are the vehicles employers typically use to incentivize performance of salespersons. . . . Commissions and bonus payments are most common . . .”).
13 Lifeline Fifth Report and Order ¶ 1.
14 See Comments of Sage Telecom Communications, LLC D/B/A TruConnect Opposing USF Budget Cap, WC Docket No. 06-122 at 2 (filed July 29, 2019) (citing data collected from the Universal Service Administrative Company by Lifeline industry consultant CGM, LLC).
15 47 U.S.C. §254(b)(3).
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less successful than they otherwise might be. All of this comes with a price tag – wellness and healthcare, rural unemployment and lack of first responder assistance, which the federal and state governments – that taxpayers cannot afford.
In addition to the societal costs, Lifeline providers themselves will incur significant costs
to implement the prohibition. TruConnect estimates that it will spend approximately 200 person-
hours and $250,000 revising employee compensation manuals and individual agreements,
renegotiating vendor agreements, revising its training modules, and otherwise modifying its
systems to implement the prohibition on commissions, not to mention ongoing costs to ensure
compliance with the new rule. Other legitimate Lifeline providers will incur comparable costs.
Taken together, there are significant societal and provider-specific costs that the
Commission failed to consider in the Lifeline Fifth Report and Order. Furthermore, the
Commission’s action violates the stated goals of the Lifeline program.16 It might be acceptable to
impose these costs if the prohibition was clearly going to deliver countervailing benefits. That is
not, however, the case.
B. The Purported Benefits of the Prohibition on Commissions Are, At Best, Speculative
The benefits that the Commission asserts will flow from the prohibition on commissions
are, at best, speculative, and certainly do not outweigh the costs discussed in section A above.
First, it is difficult to see how the prohibition delivers any benefit at all. It is not the case that,
absent newly added section 54.406(b), there is “no specific Commission rule targeting
enrollment representative misbehavior.”17 In fact, the Commission’s rules already prohibit ETCs
16 Id.
17 Lifeline Fifth Report and Order ¶ 69.
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from attempting to enroll ineligible customers in Lifeline,18 and the “Commission has long held
that ETCs are liable for rule violations committed by their agents or representatives.”19 As the
Lifeline Fifth Report and Order well illustrates, the Commission has, in fact, acted consistent
with that general authority.20 The prohibition on commissions therefore provides no additional
protections from the incentive it is putatively intended to address.
There is also, however, no evidence that sales commissions in Lifeline create a harmful
“financial incentive for committing fraudulent activity” that poses a meaningful threat to the
program.21 The Order cites only the 2016 TCM Consent Decree and the 2018 American
Broadband NAL – two items nearly two years apart, one of which has not yet resulted in a
consent decree or a forfeiture.22 These isolated examples are less an indicator of a significant threat than a sign that the Commission’s existing rules are having the desired effect of protecting the Fund.
It also is implausible that a prohibition on sales commissions would deter truly bad actors so as to “prevent improper enrollments before they happen.”23 Individuals or companies that are
18 47 C.F.R. § 54.410(a).
19 Lifeline Fifth Report and Order ¶ 69; see also id. ¶ 77 (“an ETC is liable for the actions of its agents and representatives, and the Commission has the authority to recover improper reimbursements distributed to ETCs. . . .”).
20 See Lifeline Fifth Report and Order ¶ 71 (citing Total Call Mobile, Inc., Order and Consent Decree, 31 FCC Rcd 13204 (EB 2016) (TCM Consent Decree); id. ¶ 77 (citing American Broadband Notice of Apparent Liability for Forfeiture and Order, 33 FCC Rcd 10308 (2018) (American Broadband NAL)).
21 Lifeline Fifth Report and Order ¶ 75.
22 TCM Consent Decree, 31 FCC Rcd 13204; American Broadband NAL, 33 FCC Rcd 10308.
23 Lifeline Fifth Report and Order ¶ 77.
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willing to engage in aggressive and pervasive violation of the Commission’s rules to defraud the
Fund, such as those at TCM or (allegedly) American Broadband, are unlikely to be deterred by
the marginal risk that they will be found liable for paying commissions as part of their overall
scheme.
It is impossible to eliminate every potential incentive that a bad actor may have to engage
in waste, fraud and abuse. The Commission must, therefore, craft rules that effectively balance
the benefits and burdens of regulation. The potential benefit of banning sales commissions is
both de minimis and speculative, while the totality of the harms and costs associated with the
prohibition are real and significant.
III. THE PROHIBITION ON COMMISSIONS CONFLICTS WITH STATE LAW
The prohibition on commissions a particularly intrusive interference in the relationship
between Lifeline providers and their agents and employees, and conflicts with state laws that
promote competition and free enterprise. In California, for example, the freedom to compete is a
fundamental public policy.24 This public policy underlies and is expressed in a single statute –
California Business & Professions Code Section 16600.25
Despite 16600 being facially limited to “contracts,” the California Supreme Court has
held that Section 16600 expresses “a settled policy in favor of open competition,”26 and it has
been applied in a variety of circumstances beyond contracting. As stated by a Court of Appeals decision in 1994, “California courts have consistently declared [Section 16600] an expression of
24 The majority of TruConnect’s Lifeline customers are California residents.
25 Cal. Bus. & Prof. Code, § 16600 (“Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”) (“Section 16600”).
26 Howard v. Babcock, 6 Cal.4th 409, 416 (1993).
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public policy to ensure that every citizen shall retain the right to pursue any lawful employment
and enterprise of their choice.”27 Section 16600 “is not based upon any consideration for the
party against whom the relief is sought, but upon considerations of sound public policy.”28
Indeed, Section 16600 has specifically been applied to prevent a regulatory body from
implementing measures that created a restraint on trade. For example, in McNair v. The National
Collegiate Athletic Association, the Los Angeles Superior Court voided regulations and bylaws
of the NCAA, a sports regulatory body, which had the effect of hindering the mobility of a
former coach and restricted his ability to be employed in his profession at other institutions.29
Although these regulations did not involve a contract with the coach, they nonetheless imposed a
restraint on his ability to fully and lawfully engage in his profession.
Similarly, the prohibition on commissions will directly interfere with the right of
TruConnect and other Lifeline providers to employ a commission-based compensation model that is otherwise lawful under both California and federal labor laws in all respects, as well as the rights of sales agents that are directly and indirectly employed by Lifeline providers, many of which will lose their jobs if the prohibition is implemented.
27 Metro Traffic Control v. Shadow Traffic, 22 Cal.App.4th 853, 859-860 (1994).
28 Pacific Wharf Etc. Co. v. Dredging Co., 184 Cal. 21, 24-25 (1920). In adopting the original version of Section 16600 – Civil Code Section 1673 – the California Commissioners noted that a restraint on trade in violation of 16600 “tends to enforce idleness and deprives the State of the services of its citizens.” Comments to Cal. Civ. Code § 1673. Restricting companies’ ability to reward salespeople for lawful, appropriate sales will have a death knell effect on productivity – “enforc[ing] idleness.” Id.
29 McNair v. The Nat. Collegiate Athletic Ass’n, 2018 WL 6719796 (Final Statement of Decision) (Oct, 9, 2018).
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California courts “have been clear in their expression that section 16600 represents a strong public policy of the state which should not be diluted by judicial fiat.”30 Likewise, the law should not be diluted by regulatory fiat.
IV. THERE ARE BETTER MEANS OF ACHIEVING THE COMMISSION’S GOALS
TruConnect fully supports the Commission’s goal to “improv[e] the Lifeline program’s enrollment and recertification procedures to prevent waste, fraud, and abuse in the program.”31
While the prohibition on commissions does not achieve that aim, the record demonstrates that there are other approaches the Commission can take and has taken to achieve the same goals.
Furthermore, the Commission has alternatives that are less globally harmful to the program’s recipients and its intended goals to provide low-income Americans with affordable access to telecommunications and information services.
A. Evaluate the Effectiveness of the National Lifeline Eligibility Verifier Before Assessing Whether Additional Regulation is Necessary
The Commission rightly notes that the “National Verifier plays an important role in helping to address waste, fraud, and abuse in the program,” but continues with the bare assertion that “we do not believe that it will eliminate the financial incentives for individuals to attempt to defraud the Lifeline program.”32 As discussed above, it is simply impossible to eliminate all waste, fraud, and abuse, and any beneficial impact that the prohibition on commissions may have is speculative at best, and far outweighed by the harm and costs to both Lifeline recipients and the carriers that deliver the intended beneficial services.
30 Edwards v. Arthur Andersen LLP, 44 Cal.4th 937, 949-950 (2008).
31 Lifeline Fifth Report and Order ¶ 67.
32 Id. ¶ 75.
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It is also premature to assess the beneficial impact of the National Verifier to determine
whether further efforts are needed. The National Verifier began its rollout only just over a year
ago and was launched in most states in just the last six months.33 Further, the National Verifier
has not yet been fully implemented, as, among other things, access to federal and state SNAP
and Medicaid databases remains incomplete.34 The Commission should fully implement and
evaluate the effectiveness of the National Verifier before determining whether significant
additional regulations – especially those with enormous costs – are necessary.35
B. Implement a 60-Day Port Freeze
TruConnect previously has suggested that both Lifeline subscribers and program integrity would benefit from a 60-day port freeze.36 A 60-day port-freeze will reduce waste, fraud and abuse because frequent switching, or churning, increases FCC costs for verification of subscribers, makes eligibility verification more difficult, and may encourage fraud.37 The fact
33 National Verifier launch dates are tracked on USAC’s website at https://www.usac.org/lifeline/eligibility/national-verifier/launches/.
34 See Letter from James Bradford Ramsey, NARUC General Counsel, to Marlene H. Dortch, Secretary, FCC, WC Docket Nos. 17-287, 11-42, 09-197, and 10-90 at 6-7 (filed Sept. 5, 2019) (“In States where the USAC has hard launched without having gained access to major federal or state benefits program databases the efficiency and effectiveness of the National Verifier is undermined”); letter from John J. Heitmann, Counsel to the National Lifeline Association and Q Link Wireless LLC, to Marlene H. Dortch, Secretary, FCC, WC Docket Nos. 17-287, 11-42, 09- 197, and 10-90 Attach. at 3-5 (filed Aug. 29, 2019).
35 See Comments of Missouri Public Service Commission at 2 (“[t]his proposal seems well intentioned but perhaps unnecessary once the National Verifier is fully implemented. . . .”).
36 Letter from Judson H. Hill, Esq., Advisor to TruConnect and Sage, to Marlene H. Dortch, Secretary, FCC, WC Docket Nos. 17-287, 11-42, 09-197, 18-213 at 3 (filed Oct. 4, 2018) (“TruConnect Oct. 4, 2018 Ex Parte”); Letter from Judson H. Hill, Esq., Advisor to TruConnect and Sage, to Marlene H. Dortch, Secretary, FCC, WC Docket Nos. 17-287, 11-42, 09-197, 18- 213 at 2 (filed Mar. 2, 2019) (“TruConnect Mar. 2, 2019 Ex Parte”).
37 TruConnect Mar. 2, 2019 Ex Parte at 2.
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that Lifeline customers can churn without limitation can disguise inappropriate actions by
providers; it also gives unscrupulous sales agents the ability to rapidly and sequentially enroll a single customer with multiple Lifeline providers to earn unwarranted commissions and unscrupulous Lifeline-eligible customers the ability to rapidly and sequentially switch providers in order to harvest and sell devices.
The impact that the Commission’s short-lived port freeze had in California directly illustrates the point. The 2016 Lifeline Modernization Order established Lifeline benefit port freezes of 12 months for data services and 60 days for voice services.38 These port freezes were
in place in California for nine months – from July 1, 2017 to March 19, 2018.39 An analysis by
CGM, LLC shows that the monthly churn rate for Lifeline subscribers in California during that
time dropped precipitously – by approximately 50%. This striking reduction in monthly churn
indicates that a port freeze addresses both the incentive and the ability of unscrupulous actors
across the entire program to engage in waste, fraud and abuse, achieving the Commission’s
stated goals and delivering the desired benefits without any of the countervailing costs.
Indeed, a 60-day port freeze offers the added benefit of providing regulatory certainty and
economic stability for Lifeline providers, which provides incentives to expand the scope and
38 Lifeline and Link Up Reform and Modernization et al., WC Docket No. 11-42 et al., Third Report and Order, Further Report and Order, and Order on Reconsideration, 31 FCC Rcd 3962, 4105, 4139 ¶ 385, App. A (2016) (2016 Lifeline Order) (adopting 47 C.F.R. § 54.411).
39 Lifeline and Link Up Reform and Modernization, WC Docket No. 11-42, Order, 31 FCC Rcd 12718, 12719 ¶ 3 (WCB 2016) (Granting California a waiver of the port freeze rules until June 1, 2017); Bridging the Digital Divide for Low-Income Consumers et al., Fourth Report and Order, Order on Reconsideration, Memorandum Opinion and Order, Notice of Proposed Rulemaking, and Notice of Inquiry, 32 FCC Rcd 10475, 10487, ¶ 33 (2017) (2017 Lifeline Order and Notice) (eliminating the port freeze for voice and broadband Internet access services found in section 54.411 of the Commission’s rules).
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quality of their service offerings.40 Furthermore, a limited 60-day port freeze is neither restrictive
nor anti-free market. In fact, it may be the single best solution to root out waste, fraud and abuse
by all program participants - providers, salespeople, agents and subscribers.
V. RESCIND NEW SECTION 54.406(b) BEFORE IT BECOMES EFFECTIVE ON FEBRUARY 25, 2020
As discussed in section II.A above, TruConnect and other reputable Lifeline providers are
incurring real and substantial costs to implement the prohibition on commissions. More
importantly, the prohibition on commissions will have an immediate impact on enrollment in the
program, which already suffers from a low participation rate. Consequently, the very people the
program was intended to serve – who require assistance to help them find a job, or to contact
first responders in an emergency, or healthcare providers – will be less likely to be aware of and
obtain that assistance.
Expeditious grant of this petition for reconsideration will minimize the costs that Lifeline
providers will have incurred to implement this unnecessary restriction, and ensure that Lifeline
providers have all of the compensation tools that are utilized throughout the broader
telecommunications industry to facilitate qualifying low-income Americans to obtain the
communications services they need to participate in the digital economy.
VI. IN THE ALTERNATIVE, TRUCONNECT REQUESTS A NINE-MONTH EXTENSION OF THE EFFECTIVE DATE OR A WAIVER OF NEW SECTION 54.406(b)
Alternatively, if the Commission does not grant TruConnect’s petition for reconsideration prior to February 25, 2020, the Commission should reconsider and extend the effective date of the new rule prohibiting sales commissions for a period of not less than nine months. Such an
40 Id.
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extension would at least allow Lifeline providers affected by the new rule more time to modify
their business practices to adjust to the restriction. As discussed above, the Order makes no effort
to assess the costs and burdens of the ban, and thus made no effort to consider the
appropriateness of the thirty-day effective date of the rule. The Commission should therefore
reconsider the effective date and delay the effectiveness of the ban on commissions for at least
nine months.
If the Commission does not grant TruConnect’s petition for reconsideration prior to
February 25, 2020 or extend the effective date as requested above, TruConnect requests a nine-
month waiver of section 54.406(b). The Commission may waive its rules where good cause is
shown.41 Good cause may be found where “particular facts would make strict compliance
inconsistent with the public interest.”42 In particular, waiver of the Commission’s rules is
appropriate where (i) special circumstances warrant a deviation from the general rule, and (ii)
such deviation will serve the public interest.43 The Commission may also “take into account considerations of hardship, equity, or more effective implementation of overall policy.”44 The
Commission has granted waivers in instances where it found that additional time was necessary
for parties to comply effectively with regulatory requirements.45
41 47 CFR § 1.3; Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164 (D.C. Cir. 1990) (Northeast Cellular); WAIT Radio v. FCC, 418 F.2d 1153 (D.C. Cir. 1969) (WAIT Radio).
42 Northeast Cellular, 897 F.2d at 1166; see also ICO Global Communications v. FCC, 428 F.3d 264, 269 (quoting Northeast Cellular); WAIT Radio, 418 F.2d at 1157-59.
43 Northeast Cellular, 897 F.2d at 1166.
44 WAIT Radio, 418 F.2d at 1159.
45 See, e.g., Qwest Corporation Petition for Waiver of Section 36.611 of the Commission’s Rules and Regulations, Order, 18 FCC Rcd 18346, 18347-48 ¶ 5 (WCB 2003).
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A nine-month waiver for TruConnect is warranted because although TruConnect is diligently seeking to prepare for the rule’s effective date, the magnitude of the task simply requires additional time. As discussed above, TruConnect is revising employee compensation manuals and individual agreements, renegotiating vendor agreements, revising its training modules, and otherwise modifying its systems to implement the prohibition on commissions. In addition, it is likely that TruConnect will be forced to terminate its employment of a significant number of sales agents that are currently compensated on a commission basis. The public interest would be best served by ensuring that TruConnect has sufficient time to prepare for the prohibition on commissions, and that affected sales agents are given a reasonable amount of time to seek other employment.
VII. CONCLUSION
As discussed above, the prohibition on commissions adopted in the Lifeline Fifth Report and Order does not effectively further the Commission’s articulated goals nor the program’s intent. The costs of the prohibition far outweigh its potential benefits, the prohibition conflicts with state law, and there are other actions the Commission can take and has taken to more effectively “improv[e] the Lifeline program’s enrollment and recertification procedures to prevent waste, fraud, and abuse in the program.”46 TruConnect therefore respectfully requests that the Commission reconsider the prohibition on commissions and rescind new section
54.406(b) before it becomes effective on February 25, 2020. In the alternative, TruConnect requests a nine-month extension of the effective date or a nine-month waiver of new section
54.406(b).
46 Lifeline Fifth Report and Order ¶ 67.
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Respectfully submitted,
TELSCAPE COMMUNICATIONS, INC. DBA TRUCONNECT AND SAGE TELECOM COMMUNICATIONS, LLC
By: ______
Nicholas G. Alexander L. Charles Keller Wilkinson Barker Knauer, LLP 1800 M Street, NW Suite 800N Washington, DC 20036 202.783.4141
Its Attorneys
January 27, 2020
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