TracFone, Consumer Groups Seek Overturn of Alabama Rule Requiring Lifeline Subscribers to Pay 911 Fees
Alabama’s state 911 service fee rose Friday from $1.60 to $1.75 per month for all wireless and wireline customers. Opponents have decried that, because the Alabama 911 Board requires the estimated 200,000 consumers in the state who use the FCC low-income Lifeline program to pay those fees. Lifeline provider TracFone and a coalition of seven groups have been trying to get the Lifeline subscriber rule removed from the 911 fee base, saying Alabama is the only state to require Lifeline subscribers to pay a 911 fee. The Alabama 911 Board adopted the rule last year, effective Dec. 31, requiring eligible telecom carriers (ETCs) to collect the fee from Lifeline subscribers, saying requiring those subscribers to pay the fee made it “more equitable” and better aligned it with state law (http://bit.ly/1qNUuAS).
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The coalition, including the National Consumers League and the National Grange, sent a letter in late July to Gov. Robert Bentley, a Republican, urging him to overrule the 911 board and exempt Lifeline subscribers from paying the fees. The 911 board “imposed a punitive phone tax targeting the poorest of its poor residents,” with the raised $1.75 monthly fee representing an “exorbitant 19 percent tax” on the $9.25 monthly Lifeline subsidy, they said in the letter. Bentley’s office hadn’t responded, a National Grange spokeswoman said. The office didn’t comment.
Alabama 911 Board Executive Director Jason Jackson told us the board needed to raise the 911 fee to $1.75 to generate the anticipated $105 million it will cost during the current fiscal year to pay for 911 personnel, infrastructure, equipment and other costs. The 911 board is the sole funder for the state’s 88 city and county 911 systems, and the 911 fee is its only state funding source, he said.
The groups told Bentley the 911 board’s rule change was unprecedented, citing opinions from attorneys general in Rhode Island (http://bit.ly/1u4YTgg), South Carolina (http://bit.ly/1of8Jqo) and Tennessee (http://1.usa.gov/1xHgqv8) that recommended Lifeline subscribers remain exempt from paying 911 taxes. The Tennessee opinion, which Rhode Island and South Carolina cited, said it would “seem peculiar for persons who are supplied a free phone to be subjected to a monthly service charge.” The Ohio General Assembly passed a bill last year prohibiting its 911 boards from requiring Lifeline subscribers to pay 911 service fees (http://1.usa.gov/UG4blY). California’s state and local 911 boards also don’t require Lifeline subscribers to pay 911 service fees, said Christine Mailloux, The Utility Reform Network (TURN) staff attorney, in an interview.
States handle Lifeline subscribers’ eligibility for 911 fees in different ways, said an industry lawyer who has handled Lifeline issues for telcos and not involved in the disputes in Alabama. “Some states that don’t mention it anywhere in their statutes, like Alabama.” Some states “specifically exempt Lifeline, like California,” the lawyer said. The Delaware State Legislature also recently passed a law exempting Lifeline subscribers from the state’s 911 fee, the lawyer said.
The public policy consensus has generally been that Lifeline subscribers are exempt from “most, if not all” service fees, Mailloux told us. “We think it’s unfortunate that a state is going to look at these Lifeline customers and believe they should shoulder some of the burden,” she said. “Yes, they benefit from the 911 system, but the public policy behind the Lifeline program is that you want to keep those bills as low as possible so that these customers remain on the system and can call 911 if they have an emergency. If you're going to load surcharges onto these customers, they may not stay on the system.”
TracFone, which acts as a Lifeline ETC in Alabama through its SafeLink subsidiary, said in a lawsuit filed in January in a state circuit court in Montgomery that the court should overturn the board rule because it exceeded its statutory authority on applying the 911 fee. Alabama law requires carriers to apply the fee to customers who buy a service, but since “SafeLink customers do not ‘purchase’ a voice communication service as required by the definition of subscriber,” they shouldn’t be required to pay the charge, said the suit.
The 911 board subsequently filed a counterclaim against TracFone, claiming it was one of only two ETCs in the state that hadn’t been paying the 911 fee for its Lifeline connections. The board also filed a claim against Sprint, the other ETC it claimed wasn’t paying the 911 fee for Lifeline connections. Jackson declined to comment on the TracFone lawsuit or its counterclaims, saying the board acted within the bounds of state law in requiring Lifeline subscribers to pay the 911 fee. Sprint and TracFone, along with CTIA, had publicly opposed the board’s adoption of the rule. Sprint and TracFone had no comment.
CTIA referred us to comments it filed when the board was considering the rule, in which CTIA said the rule would be “inconsistent with the Legislature’s intent and the Federal Communications Commission’s view on the affordability of Lifeline wireless service. Implementation of the proposed rules could drive down participation in the Lifeline program and impose a greater tax burden on those Lifeline participants who truly need the service.”