Friday, October 31, 2014

Lifeline Service Should Not Be Subject to State 911 Fees

TracFone Wireless has just filed an “Emergency Petition for an Declaratory Ruling,” asking the FCC to declare that states may not impose 911 taxes and fees on low-income customers who receive TracFone’s Lifeline wireless service at no charge. TracFone wants the FCC to preempt enforcement of such state laws as inconsistent with the Constitution’s Supremacy Clause and the Communications Act.

I’ve argued, on both policy and legal grounds, against the notion that the Commission can or should preempt state bans on municipal provision of broadband services. But, with TracFone’s petition, the Commission has before it what appears to be a good candidate for preemption if it is looking for one.

Putting aside the legal question, which TracFone’s lawyers address in the petition, it seems to me a matter of common sense – or sound policy, if you prefer – that the FCC should not allow states to impose taxes or fees on no-charge Lifeline service that the FCC has sanctioned by rule for the purpose of promoting access to communications services for those who otherwise cannot afford service.

As readers of this space know, I am no fan of FCC regulations and programs that have outlived their usefulness or which no longer serve a purpose in today’s competitive communications environment. But for well over a decade I have been supportive of maintaining an effective, well-run Lifeline program as a safety net to help ensure access to communications services by low-income persons. (I’ve also urged that the FCC take measures to help ensure the program is run, to the extent possible, without fraud and abuse.) 

Here’s the problem: Under Commission rules, eligible carriers like TracFone and others receive $9.25 per month per enrolled Lifeline customer from the FCC’s Universal Service Fund as long as this full amount is passed along to Lifeline subscribers. TracFone provides its qualifying subscribers with no-charge monthly service. This includes a specified amount of airtime minutes. Now, two states, Alabama and Indiana, propose to impose 911 taxes or fees on the Lifeline service. In the case of Alabama, the tax is $1.75 per month. This tax obviously represents a large percentage (19%) of the Lifeline benefit valued at $9.25. While Indiana’s monthly fee of $.50 is less, it is not insignificant.

Imposing 911 taxes and fees on a service provided at no charge to low-income consumers under a federal program intended to enhance their access to communications services seems illogical. One way of the other, whether the state contemplates that the fee will be paid directly by the consumer or by the provider on the consumer’s behalf, the amount of funds available to support Lifeline services is diminished. It is even possible that imposition of such fees may cause providers like TracFone to cease providing Lifeline service in states that impose such fees. This would frustrate the purpose of the federal government’s Lifeline program.

Certainly, provision of E911 service is important and must be supported in one way or another. But the route followed by Alabama and Indiana does not seem like the proper way to go about it. In the interest of achieving the federal objective of the Lifeline program, it would seem to make sense for states to exempt Lifeline service subscribers from responsibility for payment of any 911 fees or taxes.

Unless Alabama and Indiana rescind their requirements for imposing 911 fees on Lifeline service, and other states forbear from adopting such fees, the Commission should take up TracFone’s petition and consider it with dispatch.