TracFone Wants Rules that Keep Competitors from Getting USF Support, CETCs Argue
A group of small wireless carriers asked the FCC to reject a TracFone petition seeking new rules for eligible telecommunications carriers (ETCs) under the Link-Up program. The Competitive ETC coalition accused TracFone of seeking a competitive advantage. TracFone, which provides pre-paid wireless service, asked the FCC for a ruling that ETCs may not receive support for providing Link-Up benefits unless they routinely charge customers for commencing service, and may not expand services they offer under the program to wireless service without obtaining approval from the proper authority.
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"TracFone is clearly seeking to impose additional, anticompetitive restrictions on receipt of low income USF which would unfairly limit the support that other wireless ETCs can receive,” said the ETC group. “TracFone’s primary focus appears to be to limit Link Up funding to those wireless carriers who may choose to waive their setup fee for customers.” Such limitation “is not in the public interest,” the group said. Customers “will likely be harmed as they must make the choice between paying additional setup charges or declining the service they seek.” The filing was signed by dPi Mobile, Terracom, Midwestern Telecom, Fast Phones, Express Phone Service, Digital Express, Global Connection, Easy Telephone Service, Telecom Service Bureau, Absolute Home Phones and Affordable Phones.
The changes TracFone proposes are “substantial and unwarranted,” said Nexus, an ETC that operates in 20 states. Nexus also alleged that’s TracFone’s main goal is achieving a competitive advantage. “To the extent that [TracFone] is threatened by the fact that other carriers, like Nexus, have found success in serving the low income population, it should formulate an appropriate response in the marketplace with better service, lower prices, or other improvements,” the carrier said. “Not only would a ‘pay to play’ rule have a perverse economic impact on the Low Income program, and most importantly, on low income consumers, it would also create a new restriction on Link Up funding."
"TracFone believes in a level playing field,” Mitchell Brecher, TracFone’s FCC attorney, said Tuesday in response to the criticisms. “Link-Up support should only be available to those ETCs who actually charge their customers fees to cover the costs of connecting the customers to their networks. … Bogus charges which most customers are not required to pay should not be subsidized by contributors to the federal Universal Service Fund.” The FCC can limit growth in the fund by ensuring that only actual connection charges are supported by Link-Up, Brecher said. He noted that the company has 3 million customers who receive support under the program in 30 states. TracFone “only receives Universal Service Fund support for services it actually provides to customers, and believes that all ETCs should only receive support for services actually provided,” he said.
The staff of the Public Utilities Commission of Ohio said in a filing they generally support the curbs on the Link-Up program sought by TracFone. “It is no secret that since wireless carriers began offering Lifeline service, the size of the universal service fund has increased dramatically,” a PUC filing said. “As such, when considering issues involving the universal service fund, including those issues raised in the TracFone petition, key underlying policies, specifically controlling the size of the fund and ensuring against waste, fraud, and abuse of the fund must be taken into account.”