FCC 03J-2 Federal Communications Commission 
Before the 
Federal Communications Commission 
Washington, D.C. 20554 
CC Docket No. 96-45 
) 
) 
) 
In the Matter of 
Federal-State Joint Board on Universal 
Service ) 
RECOMMENDED DECISION 
Adopted: March 27, 2003 Released: April 2, 2003 
By the Federal-State Joint Board on Universal Service: 
Chairman Bob Rowe, and Commissioners Lila A. Jaber and Billy Jack Gregg issuing separate 
statements. 
TABLE OF CONTENTS 
Paragraph Number 
I. INTRODUCTION..............................................................................................................1 
II. BACKGROUND................................................................................................................2 
III. DISCUSSION.....................................................................................................................6 
A. Eligibility...............................................................................................................11 
1. Background ..............................................................................................11 
2. Discussion..................................................................................................15 
a. Income-Based Criteria.................................................................15 
b. Program-Based Criteria..............................................................20 
c. 
d. 
National Eligibility Standard for Receipt of Federal 
Support..........................................................................................25 
Duration of an Individuals Eligibility for Lifeline/Link- 
Up ..................................................................................................28 
B. Verification of Eligibility.....................................................................................31 
1. Background ..............................................................................................31 
2. Discussion..................................................................................................32 
C. Outreach ...............................................................................................................47 
1. Background ..............................................................................................47 
2. Discussion..................................................................................................50 
D. Other Issues ..........................................................................................................57 
FCC 03J-2 Federal Communications Commission 
IV. CONCLUSION ................................................................................................................63 
V. RECOMMENDING CLAUSE .......................................................................................64 
APPENDIX A: PARTIES FILING INITIAL COMMENTS 
APPENDIX B: PARTIES FILING REPLY COMMENTS 
APPENDIX C: LIFELINE/LINK-UP STATE SURVEY 
APPENDIX D: ESTIMATED INCOME REQUIREMENTS FOR A HOUSEHOLD AT 
OR BELOW 135% OF THE FEDERAL POVERTY GUIDELINES 
APPENDIX E: LIFELINE/LINK-UP STATE PROCEDURES: EXAMPLES OF STATE 
PROGRAMS SUBMITTED BY COMMENTERS 
APPENDIX F: JOINT BOARD STAFF ANALYSIS OF IMPACT OF ADOPTING AN 
INCOME-BASED CRITERION OF 135% OF FEDERAL POVERTY GUIDELINES 
SEPARATE STATEMENT OF COMMISSIONER BOB ROWE, MONTANA PUBLIC 
SERVICE COMMISSION 
SEPARATE STATEMENT OF COMMISSIONER LILA A. JABER, FLORIDA PUBLIC 
SERVICE COMMISSION 
SEPARATE STATEMENT OF BILLY JACK GREGG, DIRECTOR OF THE 
CONSUMER ADVOCATE DIVISION, PUBLIC SERVICE COMMISSION OF WEST 
VIRGINIA 
2 FCC 03J-2 Federal Communications Commission 
I. INTRODUCTION 
1. In this Recommended Decision, the Federal-State Joint Board on Universal Service 
(Joint Board) provides the Commission its recommendations regarding Lifeline and Link-Up 
(collectively Lifeline/Link-Up), two federal support programs that are used to advance 
universal service and to ensure that quality telecommunications services are available to lowincome 
consumers at just, reasonable, and affordable rates. Since its inception, Lifeline/Link-Up 
has provided support for telephone service to millions of low-income consumers.1 Despite this 
success, the Joint Board believes that the program can be further improved. Therefore, the Joint 
Board recommends that the Commission expand the default federal eligibility criteria to include 
an income-based criterion and additional means-tested programs. In addition, the Joint Board 
recommends that the Commission require states, under certain circumstances, to adopt 
verification procedures. Finally, to more effectively target low-income consumers, the Joint 
Board recommends that the Commission provide outreach guidelines for the Lifeline/Link-Up 
program. The Joint Board believes that the recommendations set forth in this document will 
make the Lifeline/Link-Up program more inclusive and robust, consistent with section 254(b) of 
the Communications Act of 1934, as amended (Act), to meet the twin goals of affordability 
and increased subscribership.2 
II. BACKGROUND 
2. Section 254 of the Act codified the Commissions and states historic commitment to 
advancing the availability of telecommunications services for all Americans. Specifically, 
section 254(b) establishes principles upon which the Joint Board and the Commission shall base 
policies for the preservation and advancement of universal service. These principles state that: 
(1) quality services should be available at just, reasonable, and affordable rates; (2) access to 
advanced telecommunications and information services should be provided in all regions of the 
Nation; (3) consumers in all regions of the Nation, including low-income consumers, should 
have access to telecommunications and information services, that are reasonably comparable to 
those services provided in urban areas and that are available at rates that are reasonably 
comparable to rates charged in urban areas; and (4) there should be specific, predictable and 
sufficient Federal and State mechanisms to preserve and advance universal service.3 
Additionally, section 254(e) states that only eligible telecommunications carriers designated 
pursuant to section 214(e)4 shall be eligible to receive federal universal service support.5 To be 
designated an eligible telecommunications carrier pursuant to section 214(e), a carrier must 
1 See FCC, Trends in Telephone Service Report, Table 7.2, 7.4 (May 2002) (2002 Trends Report) (estimating that 6.2 
million people paid reduced rates under the Lifeline program in 2001 and 12.1 million people paid reduced charges 
under Link-Up since 1987). 
2 47 U.S.C.  254(b). 
3 47 U.S.C.  254(b). 
4 47 U.S.C.  214(e). 
5 47 U.S.C.  254(e). 
3 FCC 03J-2 Federal Communications Commission 
throughout its service area offer the services that are supported by Federal universal service 
support mechanisms under section 254(c).6 Additionally, eligible telecommunications carriers 
must advertise the availability of such services and the charges therefor using media of general 
distribution.7 Carriers have flexibility to determine appropriate outreach methods and materials 
employed, subject to any state requirements. 
3. The Lifeline/Link-Up program is one of several universal service support 
mechanisms.8 Universal service support advances the availability of telecommunications 
services to all consumers, including low-income consumers and those living in rural, insular, and 
high cost areas at rates that are reasonably comparable to those charged in urban areas.9 
Universal service support also promotes the ability of schools, classrooms, libraries and health 
care providers to have access to advanced telecommunications services.10 The Schools and 
Libraries program helps to ensure that the nations classrooms and libraries receive access to the 
vast array of educational resources that are accessible through the telecommunications network. 
The Rural Health Care program helps to link health care providers located in rural areas to urban 
medical centers so that patients living in rural America will have access to the same advanced 
diagnostic and other medical services that are enjoyed in urban communities. 
4. Lifeline provides low-income consumers with monthly discounts on the cost of 
receiving telephone service for a single telephone line in their principal residence.11 Link-Up 
provides low-income consumers with discounts on the initial costs of commencing telephone 
service.12 Recognizing the unique needs and characteristics of the tribal community, enhanced 
Lifeline and Link-Up provides qualifying low-income individuals living on tribal lands with 
additional discounts on the cost of receiving telephone service and the initial costs of 
commencing telephone service.13 
5. On December 21, 2000, the Commission referred low-income support issues to the 
Joint Board.14 In the Referral Order, the Commission requested the Joint Board to undertake a 
6 47 U.S.C.  214(e)(1)(A). 
7 47 U.S.C.  214(e)(1)(B). 
8 The Commission adopted Lifeline/Link-Up prior to passage of the 1996 Act pursuant to its general authority under 
sections 1, 4(i), 201, and 205 of the Act. See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, 
Report and Order, 12 FCC Rcd 8776, 8952-53, para. 329 (1997) (1997 Universal Service Order); 47 U.S.C.  151, 
154(i), 201, 205. 
9 See 47 U.S.C.  254(b)(3). 
10 See 47 U.S.C.  254(b)(6). 
11 See 47 C.F.R.  54.401(a)(2); 1997 Universal Service Order, 12 FCC Rcd at 8957, para. 341. 
12 See 47 C.F.R.  54.411(a)(1). 
13 See 47 C.F.R.  54.405(a)(4), 54.411(a)(3). 
14 See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Order, 15 FCC Rcd 25257 (2000) 
(Referral Order). 
4 FCC 03J-2 Federal Communications Commission 
review of Lifeline and Link-Up service for all low-income customers, including a review of the 
income eligibility criteria.15 In response to the Referral Order, the Joint Board released a 
Public Notice seeking comment on its review of Lifeline and Link Up, including enhanced 
Lifeline and Link Up.16 The Public Notice specifically sought comment on the effectiveness of 
the current rules, possible modifications to the programs, and outreach efforts.17 
III. DISCUSSION 
6. As an initial matter, the Joint Board believes that the Lifeline/Link-Up programs 
generally are effective, and we are confident that the modifications proposed herein will improve 
them even further. As discussed below, on average, Lifeline/Link-Up assistance programs have 
produced increased telephone subscription among low income households, as was our goal. 
Nevertheless, our analysis also reveals that significant differences in low-income telephone 
penetration exist over time and among the states.18 Therefore we also recommend that the 
Commission seek more information as to the reasons for these differences in program 
effectiveness. 
7. The data reviewed by the Joint Board suggests that there may be a strong connection 
between Lifeline/Link-Up assistance and telephone penetration. Between 1984 and 1997, the 
telephone penetration rate for low-income households in states with Lifeline/Link-Up assistance 
increased by an average of 0.5% per year. By comparison, the penetration rate for low-income 
households in states without Lifeline/Link-Up assistance increased by an average of 0.25% per 
year. The Federal-State Joint Boards 1999 Monitoring Report found that the Lifeline program 
has a positive and significant impact on telephone subscribership, implying that increases in the 
Lifeline discount would increase telephone penetration.19 In addition, the Commissions 1997 
Universal Service Order concluded that providing Lifeline support in all states, irrespective of 
state participation, will help increase subscribership in those states that presently do not 
participate in the Lifeline program.20 
8. Additionally, the data reviewed by the Joint Board indicates that, between 1997 and 
2001, the penetration rate for low-income households in states with full Lifeline/Link-Up 
15 Referral Order, 15 FCC Rcd at 25257. 
16 See Federal-State Joint Board on Universal Service Seeks Comment on Review of Lifeline and Link-Up Service for 
All Low-Income Consumers, CC-Docket 96-45, Public Notice, 16 FCC Rcd 18407 (2001) (Public Notice). 
17 See id. at 18409, 18411-14. 
18 For example, between 1997 to 2001, low-income telephone penetration increased by 15.9% in Alaska, but decreased 
by 2.4% in Illinois. See Industry Analysis and Technology Division, Wireline Competition Bureau, Federal 
Communications Commission, Telephone Penetration By Income By State at 9, Table 3 (rel Apr. 2002). 
19 Industry Analysis Division, Common Carrier Bureau, Federal Communications Commission, Federal-State Joint 
Board December 1999 Monitoring Report at 6 - 7 (rel. Feb. 2000), available at 
<http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/Monitor/mrd99-6.pdf>. 
20 1997 Universal Service Order, 12 FCC Rcd 8776, 8963-64, para. 353 (1997). 
5 FCC 03J-2 Federal Communications Commission 
assistance increased by an average of 0.61% per year.21 By comparison, the penetration rate for 
low-income households in states with intermediate Lifeline/Link-Up assistance increased by 
0.29%.22 States with basic Lifeline/Link-Up assistance saw a decrease in penetration rates by an 
average of -0.21% per year.23 Thus, telephone penetration increased at a greater rate, on average, 
for low-income households in those states where the maximum federal support was provided. 
9. Despite significant success of the program in some states, Lifeline/Link-Up continues 
to serve only a small portion of the low-income households in this country. Lifeline/Link-Up 
take rates have been highest in states that provide matching funds and engage in proactive 
targeted efforts such as automatic enrollment, aggressive outreach and intrastate multi-agency 
cooperation. We agree with the vast majority of commenters that the current Lifeline/Link-Up 
program could be further improved, consistent with the statutory principle of affordability and 
the goal to promote universal service by increasing subscribership.24 The Joint Board must also 
ensure that the public interest is served by the efficient use of universal service support. We 
believe that the recommendations outlined in this Recommended Decision will achieve these 
goals. 
10. Generally, the Joint Board recommends that the current program-based default 
federal eligibility criteria should be expanded to include an income-based standard of 135% of 
the Federal Poverty Guidelines (FPG), the Temporary Aid to Needy Families program (TANF), 
and the National School Lunch free lunch program (NSL).25 Although the Joint Board strongly 
encourages the states to adopt these measures, we do not recommend imposing a national 
eligibility standard on states that currently provide Lifeline/Link-Up support. The Joint Board 
also recommends that the Commission require states to adopt verification procedures, under 
21 Industry Analysis Division, Common Carrier Bureau, Federal Communications Commission, Federal-State Joint 
Board October 2002 Monitoring Report, Table 6.4, 6 - 19 (rel. Oct. 2002), available at 
<http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/Monitor/mrs02-0.pdf> (2002 Monitoring 
Report). States with full Lifeline/Link-Up assistance provide sufficient support to get the maximum federal 
matching support. The total federal and state support in these states was $11.35 or more. Id. at 6 - 7. 
22 
2001 Monitoring Report at Table 6.4. States with intermediate Lifeline/Link-Up assistance provide some 
support, but less than enough to qualify for the maximum federal support. The monthly level of support in such 
states was more than $6.10, but less than $11.35. Id. at 6 - 7. 
23 2001 Monitoring Report at Table 6.4. States with basic Lifeline/Link-Up assistance provide no support, but 
receiv[e] the basic federal support of $6.10 per line per month. Id. at 6  7. 
24 47 U.S.C.  254(b). 
25 We note that the recommended modifications to the federal Lifeline/Link-Up program are general in nature and 
not specifically intended to affect consumers living on tribal lands. We note that several commenters who 
specifically addressed tribal needs made generally applicable suggestions, such as adding an income-based criterion 
and requiring more extensive outreach efforts targeting consumers living on tribal lands. See Confederated Tribes of 
the Umatilla Indian Reservation Comments at 1-2 (Umatilla); Gila River Telecommunications, Inc. Comments at 5, 
12-15 (Gila River); Smith Bagley, Inc. Reply Comments at 3-5, 8-9 (Smith Bagley). We propose many of these 
suggestions in this Recommended Decision. 
6 FCC 03J-2 Federal Communications Commission 
certain circumstances, to ensure that consumers receiving benefits are eligible. The Joint Board 
recommends that the Commission issue guidelines on which states and carriers can base their 
outreach practices, in order to more effectively target low-income consumers and increase 
participation in the Lifeline/Link-Up programs. The Joint Board believes that gathering data and 
information about state Lifeline/Link-Up programs will enable the Commission to make more 
informed decisions in any future Lifeline/Link-Up orders. In order to obtain feedback on the 
success of the revised Lifeline/Link-Up program, the Joint Board recommends that the 
Commission adopt a voluntary information collection from the states in its future order adopting 
changes to the Lifeline/Link-Up program. This voluntary survey, as contained in Appendix C, 
would ask states to provide information about any eligibility and verification criteria 
implemented as a result of the Commissions changes to the Lifeline/Link-Up program.26 States 
would provide feedback on whether the changes improved telephone penetration rates, on any 
administrative burdens or inefficiencies the state has experienced, and on suggestions for 
additional changes to the Lifeline/Link-Up program. The Joint Board recommends that the 
Commission make submission of this survey voluntary for states with a due date of one year 
following the effective date of any changes made to the Lifeline/Link-Up program. The Joint 
Board recommends that the Commission seek comment on the surveys format and questions 
asked. 
Eligibility A. 
Background 1. 
11. Currently, Lifeline/Link-Up eligibility is based on participation in means-tested 
programs. In order to be eligible for Lifeline/Link-Up assistance under the default federal 
criteria for states that do not have their own Lifeline/Link-Up program, a consumer must certify, 
under penalty of perjury, that he/she participates in at least one of the following federal 
programs: Medicaid, Food Stamps, Supplemental Security Income (SSI), Federal Public Housing 
Assistance (Section 8), or the Low Income Home Energy Assistance Program (LIHEAP).27 In 
states that have their own Lifeline/Link-Up programs, the consumer must meet the eligibility 
criteria established by the state, consistent with sections 54.409 and 54.415 of the Commissions 
rules, and follow the states certification procedures.28 The current rules allow states that have 
their own programs flexibility in establishing their own eligibility criteria to fit the unique 
characteristics of that state, although some of these states elect to use the federal criteria as their 
default standard.29 
12. In the Twelfth Report and Order,30 the Commission adopted more expansive 
26 See Appendix C. 
27 See 47 C.F.R.  54.409(b), 54.415(b). 
28 See 47 C.F.R.  54.409(a), 54.415(a). 
29 See 47 C.F.R.  54.409(a). 
30 Federal-State Joint Board on Universal Service; Promoting Deployment and Subscribership in Unserved and 
Underserved Areas, Including Tribal and Insular Areas, CC Docket No. 96-45, Twelfth Report and Order, 
(continued....) 
7 FCC 03J-2 Federal Communications Commission 
Lifeline/Link-Up eligibility criteria for low-income consumers living on tribal lands.31 For those 
consumers, the Commission established an enhanced Lifeline/Link-Up program. In order to 
qualify for enhanced Lifeline/Link-Up if the consumer lives in a state that does not have its own 
Lifeline/Link-Up program, the consumer must certify, under penalty of perjury, that he/she 
participates in one of the five programs listed above or any of the following additional federal 
programs: Bureau of Indian Affairs General Assistance, Tribally-Administered Temporary 
Assistance for Needy Families (Tribal TANF), Head Start (only for those meeting its income 
qualifying standard), or the National School Lunch Programs free lunch program.32 In a state 
with its own enhanced Lifeline/Link-Up program, a consumer living on tribal lands may also 
meet the eligibility and certification criteria established by the state.33 But consumers living on 
tribal lands may still receive federal enhanced Lifeline/Link-Up support even if they do not meet 
the states eligibility criteria, as long as they meet the federal default eligibility criteria for the 
enhanced program. 
13. In January 2002, there were an estimated 107 million total households in the U.S.34 
An estimated 17.4 million of these households (or 16.3%) were eligible for Lifeline/Link-Up 
assistance under the current eligibility criteria.35 Based on Universal Service Administrative 
Company (USAC) data,36 an estimated 6.5 million low-income households (or 38% of eligible 
households) actually subscribed to the Lifeline service in 2002.37 USAC also reports that total 
2002 expenditures for Lifeline were $647 million.38 
(...continued from previous page) 
Memorandum Opinion and Order, and Further Notice of Proposed Rulemaking, 15 FCC Rcd 12208 (2000) (Twelfth 
Report and Order). 
31 See Twelfth Report and Order, 15 FCC Rcd at 12215, 12243-49. 
32 See 47 C.F.R.  54.409(c), 54.415(c). 
33 See 47 C.F.R.  54.409(c), 54.415(c). 
34 This estimate was based on March 2000 Current Population Survey of Household data (CPSH data), and adjusted for 
growth. 
35 These figures were based on March 2000 CPSH data and adjusted for growth. See also 
<http://www.lifelinesupport.org>. 
36 USAC is a private, not-for-profit corporation that administers the universal service support mechanisms. 
37 This data represents average quarterly Lifeline subscribers for the first three quarters of 2002 and estimated average 
quarterly Lifeline subscribers for the last quarter of 2002. See Federal Universal Service Support Mechanisms Fund 
Size Projections for the Second Quarter 2003, LI08, available at <http://www.universalservice.org/overview/filings> 
(filed January 31, 2003) (USAC Filing for Second Quarter 2003 Projections); USAC Lifeline Report for the Fourth 
Quarter of 2002 (unpublished report). 
38 This data represents actual reported Lifeline expenditures for the first nine months of 2002 and estimated Lifeline 
expenditures for the last three months of 2002. See USAC Filing for Second Quarter 2003 Projections at LI07; Federal 
Universal Service Support Mechanisms Fund Size Projections for the Fourth Quarter 2002, LI01, available at 
<http://www.universalservice.org/overview/filings> (filed August 2, 2002) (USAC Filing for Fourth Quarter 2002 
Projections). 
8 FCC 03J-2 Federal Communications Commission 
14. In the Public Notice, the Joint Board sought comment on whether an income-based 
standard should replace or be added to the current program-based criteria, and whether to add 
more assistance programs to the current list of default eligibility criteria in order to improve 
Lifeline/Link-Up participation.39 The Joint Board also sought comment on whether the 
Commission should adopt one national standard for purposes of determining eligibility for 
federal support.40 Finally, the Joint Board sought comment on whether the Commission should 
adopt a set duration period of eligibility for Lifeline/Link-Up.41 
Discussion 2. 
Income-Based Criteria a. 
15. The Joint Board recommends that the Commission add an income-based standard to 
the current default federal eligibility criteria. Specifically, the Joint Board recommends that a 
consumer be eligible for Lifeline/Link-Up when the consumers income is at or below 135% of 
the Federal Poverty Guidelines (FPG). The Joint Board finds that adding an income-based 
criterion of 135% of the FPG will increase low-income participation in the Lifeline/Link-Up 
program. This would enable, for example, a family of four whose annual income is at or below 
$24,840 to qualify for Lifeline/Link-Up support.42 We have included in Appendix D estimated 
income requirements for various sizes of households at or below 135% of the FPG.43 We 
estimate that adding an income-based criterion of 135% of the FPG could result in approximately 
one million new Lifeline subscribers. Of these new Lifeline subscribers, we project that 
approximately one quarter would be new subscribers to telephone service. Therefore, in addition 
to putting many low-income subscribers on the network for the first time, this additional criterion 
would also ensure that many other low-income subscribers will be better able to afford to remain 
on the network.44 We believe adding an income-based standard would promote universal service 
by increasing subscribership and overcoming certain barriers to participation, as described 
below. 
39 See Public Notice, 16 FCC Rcd at 18411-12. 
40 See Public Notice, 16 FCC Rcd at 18411. 
41 See Public Notice, 16 FCC Rcd at 18411. 
42 See 2003 Poverty Guidelines for the 48 Contiguous States and the District of Columbia, 68 Fed. Reg. 6456-58 (2003) 
(2003 FPG). 
43 See Appendix D. 
44 See Joint Board Staff Analysis set forth in Appendix F. The staff analysis assumes that all states choose to adopt the 
new federal default income-based standard in accordance with the Joint Boards recommendation that the Commission 
encourage all states to adopt the new recommended federal default criteria. See infra para. 25. Accordingly, the 
estimates presented are likely to represent the upper limit of potential new Lifeline and telephone subscribers and 
estimated impact on the fund. If some states choose not to adopt the federal income-based criteria, the number of 
subscribers would be correspondingly lower. This analysis also assumes the following: states that already have an 
income criterion of 150% of the FPG or higher keep it; the FPG standards remain the same; there are no other changes 
to the Lifeline/Link-Up program or the qualifying Lifeline/Link-Up eligibility programs; and people quickly learn of 
the program change and rapidly act on that information. See Appendix F at 13. 
9 FCC 03J-2 
16. We note that, in the Twelfth Report and Order, the Commission declined to adopt an 
income-based criterion, but promised to further examine this possibility in the future because it 
might reach more low-income consumers, including low-income tribal members, than the 
current method of conditioning eligibility on participation in particular low-income assistance 
programs.45 The overwhelming majority of commenters support adding an income-based 
standard to the current program-based criteria.46 We agree with commenters that adding an 
income-based standard could capture some low-income consumers that are no longer eligible for 
Lifeline/Link-Up because they no longer participate in the qualifying assistance programs.47 In 
1996, Congress passed The Personal Responsibility and Work Opportunity Reconciliation 
Act,48 also known by the acronym PRWORA. PRWORA instituted sweeping changes to 
federal public assistance programs, including time limits and work requirements backed by 
sanctions. Either as a direct or indirect result of PRWORA, participation is decreasing in many 
public assistance programs, including programs used to determine eligibility for Lifeline/Link- 
Up.49 We agree with BellSouth that participation in the very programs that have been used to 
meet the needs-based eligibility requirements for Lifeline and Link-Up have been shrinking as 
one consequence of PRWORA.50 A few commenters state that individuals that are no longer 
eligible to receive welfare benefits are still too poor to afford the cost of local telephone 
46 See Public Utilities Commission of Ohio Comments at 2 (Ohio Commission); National Association of State Utility 
Consumer Advocates Comments at 13-18, 37 (NASUCA); NASUCA Reply Comments at 2-3; Gila River Comments 
at 5; Texas Office of Public Utility Counsel Reply Comments at 1-3 (Texas OPC); United States Conference of 
Catholic Bishops, Alliance for Community Media, Appalachian Peoples Action Coalition, Center for Digital 
Democracy, Consumer Action, Consumer Federation of America, Edgemont Neighborhood Coalition, Migrant Legal 
Action Program Comments at 3-5 (U.S. Catholic Bishops); United States Conference of Catholic Bishops, Alliance for 
Community Media, Appalachian Peoples Action, Consumer Federation of America, Edgemont Neighborhood 
Coalition, Migrant Legal Action Program Reply Comments at 6-7 (U.S. Catholic Bishop); Civil Rights Forum on 
Communication Policy Comments at 8-9 (Civil Rights Forum); Minnesota Department of Commerce Comments at 3 
(Minnesota DOC); BellSouth Corporation Comments at 2 (BellSouth); BellSouth Reply Comments at 1-2; Utility, 
Cable & Telecommunications Committee of the City Council of New Orleans Comments at 3 (New Orleans Council); 
Colorado Department of Human Services, Office of Self-Sufficiency, Colorado Office of Consumer Counsel Reply 
Comments at 3 (Colorado DHS/OCC); Dollar Energy Fund, Inc. Comments at 1 (Dollar Energy Fund); North Dakota 
Comments Public Service Commissioner Susan Wefald at Attachment C (North Dakota Comments Public Service 
Commissioner); Oklahoma Corporation Commission Comments at 3-4 (Oklahoma Commission); Smith Bagley Reply 
Comments at 3-5. 
47 BellSouth Reply Comments at 2; Civil Rights Forum Comments at 8; New Orleans Council Comments at 3; 
NASUCA Comments at 7-10; U.S. Catholic Bishops Comments at 4; U.S. Catholic Bishops Reply Comments at 4-5. 
49 For example, participation decreased in Medicaid from 41.2 million enrollees in fiscal year (FY) 1996 to 40.8 million 
enrollees in FY 1999. See <http://www.cms.hhs.gov>. Participation substantially decreased in Food Stamps from 25.5 
million recipients in FY 1996 to 17.3 million recipients in FY 2001. See <http://www.fns.usda.gov>. 
Federal Communications Commission 
45 Twelfth Report and Order, 15 FCC Rcd at 12247, para. 72. 
48 Pub.L.No. 104-193, 110 Stat. 2105 (Aug. 22, 1996). 
50 BellSouth Comments at 2. Accord NASUCA Comments at 7-10. 
10 FCC 03J-2 Federal Communications Commission 
service.51 In addition, we believe that many otherwise qualified low-income individuals refuse 
to participate in public assistance programs because they wish to avoid the stigma that may be 
associated with such programs.52 In the 1997 Universal Service Order, the Commission 
promised to monitor the impact of PRWORA and revise eligibility criteria if participation in 
Lifeline/Link-Up qualifying programs becomes an unworkable standard.53 Although we have 
not reached an unworkable standard, the Joint Board now believes that decreasing enrollment 
in Lifeline/Link-Up qualifying programs requires revisions to the criteria to avoid reaching such 
a critical point. Therefore, adding an income-based standard could increase subscribership 
among individuals affected by PRWORA or who wish to avoid the stigma commonly associated 
with being on welfare. Moreover, adding an income-based standard should also help ensure that 
low-income subscribers will be better able to afford to remain on the network. Thus, adding this 
standard will further the goals of section 254 and enhance the value of the network.54 
17. We believe that the selection of 135% of the FPG strikes an appropriate balance 
between increasing subscribership and not significantly burdening the universal service support 
mechanism. We also believe that it is in accord with recommendations from commenters, other 
federal welfare programs, and existing state rules. We note that most commenters support 
adoption of an income-based standard ranging from 125% to 150% of the FPG.55 In addition, 
many other federal welfare programs base eligibility on an income-based criterion within that 
range.56 Finally, many state Lifeline/Link-Up programs have an income-based criterion that falls 
within that range.57 Because the Public Notice in this proceeding did not include a specific FPG 
proposal, the Joint Board recommends that the Commission seek additional comment on whether 
51 Civil Rights Forum Comments at 8 ([A]s people have been taken off the welfare rolls and begun to work, many 
[have] incomes at or just above the poverty line and still remain too poor to afford basic telephone service.). Accord 
Colorado DHS/OCC Reply Comments at 3. 
52 New Orleans Council Comments at 3; Oklahoma Commission Comments at 5; U.S. Catholic Bishops Comments at 
19. 
53 1997 Universal Service Order, 12 FCC Rcd at 8974, para. 374. 
54 47 U.S.C.  254. 
55 See, e.g., Civil Rights Forum Comments at 8; Gila River Comments at 5; Minnesota DOC Comments at 3; 
NASUCA Comments at 15-18; Ohio Comments at 2; Texas OPC Reply Comments at 2-3; U.S. Catholic Bishops 
Comments at 4-5. 
56 For example, the following federal programs use an income-based standard as an eligibility criterion: Medicaid 
(income at or below 133% of the FPG), Food Stamps (gross income at or below 130% of the FPG), LIHEAP (income 
at or below 150% of the FPG or 60% of state median income), National School Lunch programs free lunch program 
(income at or below 130% of the FPG). We note that these programs may also use other eligibility criteria. 
57 For example, BellSouth Florida, Sprint Nevada, Tennessee, and Texas have an income-based eligibility criterion of 
125% of the FPG. Idaho, Qwest Oregon, and Qwest Utah have an income-based eligibility criterion of 133% of the 
FPG. Verizon Oregon has an income-based eligibility criterion of 135% of the FPG. Pacific Bell California, Kansas, 
Michigan, Minnesota, Sprint Missouri, Nebraska, Moapa Valley Nevada, Verizon Nevada, Sprint Pennsylvania, and 
Vermont have an income-based eligibility criterion of 150% of the FPG. We note these programs may also use other 
eligibility criteria. 
11 FCC 03J-2 Federal Communications Commission 
135% of the FPG is appropriate or whether a different FPG level should be used for the federal 
default eligibility criteria. 
18. The Joint Board is cognizant that the addition of an income-based standard at 135% 
of the FPG would likely increase the cost of the Lifeline/Link-Up program.58 The Joint Board 
believes, however, that the benefits of adding new and maintaining existing low-income 
households on the network outweigh these potential increased costs.59 We also note that a few 
commenters express concern that adding an income standard may result in fraud because income 
levels may be difficult to determine, audit, and verify. Those concerns are addressed in section 
B of this document, where the Joint Board recommends more stringent verification of eligibility 
when using an income-based standard. 
19. We do not recommend replacing the current default federal eligibility criteria 
altogether with an income-based standard. We believe that replacing the current program-based 
criteria with an income-based standard could cause many current subscribers to become 
ineligible.60 We also find that replacing program-based criteria with income-based criteria could 
be very disruptive to states that utilize the federal default standard to determine eligibility in their 
respective Lifeline/Link-Up programs. If the Commission adds an income-based criterion to the 
federal default criteria, these states can continue to rely on program-based criteria. As the 
Commission found in the 1997 Universal Service Order, the diversity of the qualifying 
programs eligibility criteria ensures that low-income individuals with disparate public assistance 
needs remain eligible for Lifeline/Link-Up support.61 Moreover, program-based criteria are 
easily verified. We also note that commenters overwhelmingly preferred adding an incomebased 
standard rather than replacing the current program-based criteria with an income-based 
standard.62 
58See Appendix F. Although we estimate that increased funding requirements could be over $100 million, we 
recognize that it is difficult to predict with certainty how consumers may behave if program requirements change. 
In addition, the staff analysis assumes that all states choose to adopt the new federal default income-based standard 
in accordance with the Joint Boards recommendation that the Commission encourage all states to adopt the new 
recommended federal default criteria. See infra para. 25. Accordingly, the estimates presented are likely to 
represent the upper limit of the estimated impact on the fund. If some states choose not to adopt the federal incomebased 
criteria, the costs would be correspondingly lower. This analysis also assumes the following: states that 
already have an income criterion of 150% of the FPG or higher keep it; the FPG standards remain the same; there 
are no other changes to the Lifeline/Link-Up program or the qualifying Lifeline/Link-Up eligibility programs, or to 
the TANF and NSL programs that we recommend here; and people quickly learn of the program change and rapidly 
act on that information. See Appendix F at 13. 
59 See generally Appendix F. 
60 See Appendix F at 12, 32 (Table 4.A). 
61 See 1997 Universal Service Order, 12 FCC Rcd at 8974, para. 374. 
62 Numerous commenters supported adding an income-based criterion to the current program-based criteria. See e.g., 
BellSouth Comments at 2; BellSouth Reply Comments at 1-2; Civil Rights Forum Comments at 8-9; Colorado 
DHS/OCC Comments at 3; Dollar Energy Fund Comments at 1; Gila River Comments at 5; Minnesota DOC 
Comments at 3; NASUCA Comments at 14-18, 37; NASUCA Reply Comments at 3; New Orleans Council Comments 
at 3; North Dakota Public Service Commissioner Comments at Attachment C; Ohio Commission Comments at 2; 
(continued....) 
12 FCC 03J-2 Federal Communications Commission 
Program-Based Criteria b. 
20. The Joint Board recommends adding two additional assistance programs to the 
current list of default federal eligibility criteria. Specifically, the Joint Board recommends that 
the Commission add the Temporary Assistance to Needy Families program (TANF)63 and the 
National School Lunch free lunch program (NSL) because we believe these programs will help 
to capture more low-income individuals and, in doing so, increase telephone subscribership 
among low-income households.64 
21. Under the Commissions current rules, Tribal TANF is an eligibility criterion for 
enhanced Lifeline/Link-Up.65 As discussed below, TANF eligibility varies by state. Adding 
TANF to the current list of eligibility criteria would permit more low-income individuals, not 
just those living on tribal lands, to qualify for Lifeline/Link-Up support, thereby increasing 
telephone subscribership. Although 2.1 million families currently participate in TANF,66 we 
cannot project how many additional persons may become eligible for Lifeline/Link-Up if TANF 
is adopted because many low-income households typically participate in more than one 
assistance program once they meet the qualifying criteria. Some people who are enrolled in 
TANF may already be participating in Lifeline/Link-Up through another qualifying assistance 
program. 
22. The Joint Board believes that one benefit of adding TANF to improve telephone 
penetration among low-income subscribers is the broad discretion states are given to establish 
eligibility standards for each states respective TANF program.67 This broad discretion enables 
states to tailor the TANF program to their constituents needs. Another advantage of adding 
TANF is that verification of Lifeline/Link-Up eligibility would simply involve checking TANF 
(...continued from previous page) 
Oklahoma Commission Comments at 3-4; Smith Bagley Reply Comments at 3-5; Texas OPC Reply Comments at 1-3; 
U.S. Catholic Bishops Comments at 4-5; U.S. Catholic Bishop Reply Comments at 6-7. We note that only one 
commenter supported replacement of the current program-based criteria with an income-based standard. See Dollar 
Energy Fund Comments at 1. 
63 TANF replaced the Aid to Families with Dependent Children program (AFDC). TANF is codified at 42 U.S.C.  
600 et seq. 
64 We note that both TANF and NSL are subject to modification, as are all the means-tested programs that comprise 
Lifeline/Link-Ups program-based criteria. 
65 In Tribal TANF, participation is only open to those living on tribal lands, and tribes implement their own TANF 
programs with eligibility criteria and benefits that vary by tribe rather than by state. See 
<http://www.acf.hhs.gov/programs/dts/>. 
66 In fiscal year 2001, there were approximately 2.1 million families receiving TANF support. This includes tribal and 
non-tribal families. See <http://www.acf.hhs.gov/programs/ofa/>. Data for Tribal TANF is incomplete because not all 
tribes reported enrollment data. See <http://www.acf.hhs.gov/programs/dts/>. 
67 We note that flexible state use of TANF funds has led to some controversy. Much of the controversy surrounds state 
partnerships with religious organizations, and the potential use of TANF funds for non-income-based purposes, such as 
preserving marriage and reducing teenage pregnancy rates. 
13 FCC 03J-2 Federal Communications Commission 
program records. Furthermore, commenters suggest that TANF captures many low-income 
households that may not participate in other Lifeline/Link-Up qualifying public-assistance 
programs.68 We note that in the 1997 Universal Service Order, the Commission rejected a 
proposal to add TANFs predecessor, AFDC, to the list of qualifying Lifeline/Link-Up 
programs.69 At the time, the Commission was concerned about the impact of PRWORA on that 
particular program.70 Although the Joint Board agrees that this program has been significantly 
impacted by PRWORA as evidenced by decreased TANF participation rates since fiscal year 
1996, participation rates are still high.71 Furthermore, in the Twelfth Report and Order, the 
Commission extended Lifeline/Link-Up eligibility criteria to include the Tribal TANF program, 
concluding that the household income thresholds for these newly added programs range from 
100-130 percent of the [FPG] and were therefore consistent with the [income thresholds of 
those] programs included in our current federal default list.72 Therefore, we believe that 
extending Lifeline/Link-Up benefits to TANF participants will increase telephone 
subscribership. 
23. The Joint Board also recommends that the Commission add the NSL free lunch 
program.73 Under the Commissions current rules, Tribal NSL is an eligibility criterion for 
enhanced Lifeline/Link-Up on tribal lands.74 To be eligible for NSLs free lunch program, the 
household income must be at or below 130% of the FPG, which is $23,920 for a family of four.75 
The child, not the parent, is the named applicant. Adding NSL to the current list of default 
federal eligibility criteria would permit more low-income individuals, not just those living on 
tribal lands, to qualify for Lifeline/Link-Up support, thereby increasing subscribership. There 
were approximately 16 million children enrolled in NSL in fiscal year 2001.76 As with TANF, 
however, we cannot project how many additional persons may become eligible for Lifeline/Link- 
Up if NSL is adopted because many low-income households typically participate in more than 
one assistance program once they meet the qualifying criteria. We also note that there is no data 
68 See National Consumer Law Center on behalf of Massachusetts Union of Public Housing Tenants Comments at 11- 
12 (NCLC); North Dakota Public Service Commissioner Comments at 3, Attachment C; U.S. Catholic Bishops 
Comments at 18-19. 
69 See 1997 Universal Service Order, 12 FCC Rcd at 8974, para. 374. 
70 See id. 
71 See supra note 61. 
72 Twelfth Report and Order, 15 FCC Rcd at 12245, para. 68. 
73 See <http://www.fns.usda.gov/cnd/lunch/default.htm>. NSL is codified at 42 U.S.C.  1751 et seq. 
74 In Tribal NSL, participation is only open to children living on tribal lands, and children living on tribal lands are 
automatically eligible if they or their household receives assistance under the Food Distribution Program on Indian 
Reservations. See <http://www.fns.usda.gov/cnd/lunch/default.htm >. 
75 See 2003 FPG, 68 Fed.Reg. at 6456-58. 
76 This does not include Tribal NSL, as no tribal enrollment data is currently available. See 
<http://www.fns.usda.gov/cnd/lunch/default.htm>. 
14 FCC 03J-2 Federal Communications Commission 
on the total number of households in which NSL participants reside, because more than one NSL 
participant may reside in a single household. 
24. The Joint Board agrees with the U.S. Catholic Bishops that adding NSL may improve 
telephone penetration among low-income subscribers because it may capture many low-income 
households that may not participate in other Lifeline/Link-Up qualifying public-assistance 
programs.77 Participation in the NSL program is increasing, unlike other assistance programs 
where PRWORA has prompted decreased enrollment.78 Also, adding NSL is consistent with the 
Commissions determination in the Twelfth Report and Order that eligibility for Lifeline/Link- 
Up should be limited to those qualifying for free lunch.79 This captures only the neediest of 
families. Another advantage of adding NSL is that verification of eligibility would simply 
involve checking NSL program records. Accordingly, we believe that adding NSL will help to 
target Lifeline/Link-Up support to the appropriate low-income households. 
National Eligibility Standard for Receipt of Federal Support c. 
25. The Joint Board recommends that the Commission strongly encourage states to 
incorporate the federal eligibility changes into state programs and to implement them 
accordingly. The Joint Board does not recommend, however, that the Commission mandate any 
federal criteria for states because we believe states should maintain the flexibility to respond to 
the needs of their constituents. For example, the Joint Board does not recommend that the 
Commission establish a mandatory national eligibility standard for receipt of federal 
Lifeline/Link-Up funds. A national standard set by the Commission would impose a uniform list 
of eligibility criteria on all states, including those with their own Lifeline/Link-Up programs. 
States would not be free to add or remove eligibility criteria. The Joint Board also does not 
recommend the establishment of a minimum federal floor upon which states would be able to 
expand their own eligibility criteria. A minimum floor set by the Commission would impose a 
uniform list of eligibility criteria on all states, but would leave states free to expand eligibility 
criteria to better target the needs of their constituents. Although the Public Notice sought 
comment on these proposals, at this time, the Joint Board recommends retention of the current 
rules that permit states to establish their own eligibility criteria if they have their own 
Lifeline/Link-Up program.80 
26. Although a national eligibility standard or a minimum federal floor might bring a 
certain level of uniformity among states, we believe, as do many commenters, that, generally, 
states are in a better position than the federal government to target the needs of their own 
77 U.S. Catholic Bishops Comments at 19. 
78 For example, in 1997, there were 15.8 million children enrolled in the NSL free lunch program. In 2001, there were 
16 million children enrolled in the NSL free lunch program. See <http://www.fns.usda.gov/cnd/lunch/default.htm>. 
79 Twelfth Report and Order, 15 FCC Rcd at 12215, 12245. 
80 See Public Notice, 16 FCC Rcd at 18411. 
15 FCC 03J-2 Federal Communications Commission 
consumers.81 As explained above, if a state has its own state Lifeline/Link-Up program, it may 
use its own eligibility criteria. The Joint Board believes that states should continue to have the 
flexibility to permit low-income consumers to receive federal and state Lifeline/Link-Up support 
if the consumer participates in state-administered public assistance programs, such as Alaskas 
Heating Assistance Program,82 in addition to broader-based federal public assistance programs 
such as Food Stamps. For states that choose to adopt an income-based standard, as is 
recommended here for the federal default eligibility criteria, this will also permit the states 
flexibility to tailor that standard to economic variables unique to the states cost of living, per 
capita income, and demographics.83 
27. The recommended modifications to the federal Lifeline/Link-Up eligibility criteria, if 
adopted, will only affect a state that uses the default federal eligibility criteria. This includes 
states that do not have their own Lifeline/Link-Up program, as well as states that have their own 
programs but have chosen to use the federal default eligibility criteria. If the Commission adopts 
these recommendations, a low-income consumer residing in such a state will be eligible to 
receive federal Lifeline/Link-Up support if that consumers income is at or below 135% of the 
FPG, or participates in TANF or NSL, in addition the current default federal eligibility criteria. 
States that have adopted their own Lifeline/Link-Up programs and use their own criteria would 
not be affected by the proposed changes to the federal default eligibility criteria unless they 
choose to adopt such criteria. 
Duration of an Individuals Eligibility for Lifeline/Link-Up d. 
28. The Joint Board recommends retention of the current rule that permits consumers to 
participate in Lifeline only as long as they meet the eligibility criteria. This rule also requires all 
Lifeline subscribers to notify their carriers when the eligibility criteria are no longer met, so that 
only qualifying consumers receive Lifeline support.84 In the Public Notice, the Joint Board 
sought comment on whether Lifeline enrollment should be guaranteed for a specified minimum 
period of time even if a subscriber subsequently becomes ineligible to receive Lifeline benefits.85 
29. Although the Joint Board recommends that consumers be removed from the Lifeline 
program if they no longer meet the eligibility standards, we also believe that consumers should 
be given an opportunity to appeal a finding of ineligibility. We agree with commenters that 
allowing Lifeline benefits to continue prior to a final decision to terminate enrollment may help 
to ensure uninterrupted telephone service necessary for finding and keeping a job, and may help 
81 See BellSouth Reply at 2; People of the State of California, California Public Utilities Commission Comments at 5-6 
(California PUC); Regulatory Commission of Alaska Comments at 2-3 (Alaska Commission); Verizon Telephone 
Companies Reply Comments at 4 (Verizon). 
82 See <www.hss.state.ak.us/dpa/programs/hap.html>. 
83 See BellSouth Reply Comments at 2. 
84 See 47 C.F.R.  54.409(b). 
85 See Public Notice, 16 FCC Rcd at 18411. 
16 FCC 03J-2 Federal Communications Commission 
if a subscribers financial situation temporarily fluctuates.86 Accordingly, we recommend that 
the Commission adopt a federal rule that requires carriers to notify consumers of their impending 
termination of Lifeline benefits, and to implement an appeals process. For example, carriers 
could send a termination of Lifeline benefits notice in a letter separate from the consumers 
monthly bill.87 If a consumer receives such a termination notice, the consumer could have up to 
60 days in which to appeal to their carrier before Lifeline support is discontinued. The 60 day 
time period may ensure that consumers have ample notice to make arrangements to pay the full 
cost of local service, should they wish to continue telephone service, and permit consumers 
ample time to appeal if they believe their Lifeline benefits have been wrongly terminated. We 
recommend that the Commission obtain more information on how such an appeals process could 
work in order to balance the needs of Lifeline recipients with the administrative burden that an 
appeals process may impose on carriers. We recommend an appeals process only in 
circumstances in which the carrier has initiated the termination of benefits. We do not believe 
that an appeals process is necessary where the Lifeline subscriber himself has notified the carrier 
that he is no longer eligible. 
30. Because a specific time period for appealing termination of Lifeline benefits was not 
specified in the Public Notice, we recommend that the Commission obtain more information on 
an appropriate time period for such an appeal. Although the Joint Boards recommendation of a 
federal notice and appeals process will only affect carriers in states that have not adopted their 
own program and in states with their own programs that have adopted the federal default criteria, 
the Joint Board recommends that the Commission encourage all states to require carriers to 
implement termination and appeal procedures. 
Verification of Eligibility B. 
Background 1. 
31. In the Public Notice, the Joint Board sought comment on the efficacy of application, 
certification, and verification procedures, including whether automatic enrollment or other 
verification methods should be adopted.88 Currently, in a state that has instituted its own 
Lifeline/Link-Up program, an individual must follow that states certification procedures, if any, 
in order to enroll in that states Lifeline/Link-Up program. In a state that has not instituted its 
own Lifeline/Link-Up program, an individual must self-certify to his/her carrier, under penalty of 
perjury, that he/she is enrolled in a qualifying assistance program. Certification occurs at the 
time an individual is applying to enroll in Lifeline/Link-Up, while verification occurs on a 
periodic basis after the subscriber has already been certified. There is no current federal 
verification requirement to check on a Lifeline subscribers continued eligibility, although an 
86 See Indiana Utility Regulatory Commission Comments at 6 (Indiana URC); Minnesota DOC Comments at 4; 
Umatilla Comments at 2. 
87 See, e.g., Indiana URC Comments at 6. We note that the Indiana URC suggests that a termination notice could be 
sent either in the form of a bill insert or by direct notification 30 days prior to the date of termination. See Indiana URC 
Comments at 6. 
88 See Public Notice, 16 FCC Rcd at 18412-13. 
17 FCC 03J-2 Federal Communications Commission 
individual is required to notify his/her carrier when he/she no longer meets the eligibility 
standards.89 
Discussion 2. 
32. The Joint Board does not recommend modifying the current certification procedures 
for enrollment using program-based eligibility. The Commission should continue to require selfcertification, 
under penalty of perjury, as the federal default rule, while allowing states the 
necessary flexibility to require more strict measures for certification as they deem appropriate. 
The Joint Board does recommend, however, that consumers eligible for federal or state 
Lifeline/Link-Up support under an income-based criterion should be required to present 
documentation of income eligibility prior to being enrolled in the program. 
33. The Joint Board agrees with commenters that the current federal self-certification 
rules for enrollment should be retained with respect to program-based criteria. We believe that 
the ease of self-certification encourages eligible consumers to participate in Lifeline/Link-Up.90 
The absence of a documentation requirement alleviates the burden on consumers to prove 
eligibility, and eliminates administrative costs associated with certifying documentation, 
ensuring that consumers receive telephone service as soon as possible.91 We also note that 
participation in public assistance programs is easily verified and the record contained no 
evidence of fraud and abuse resulting from the use of self-certification.92 Furthermore, the Joint 
Board believes that the safeguard currently in place, certification under penalty of perjury, serves 
as an effective disincentive to abuse the system.93 
34. The Joint Board does recommend, however, that consumers eligible for federal 
Lifeline/Link-Up support under an income-based criterion be required to present documentation 
of income eligibility before enrolling in Lifeline/Link-Up. The Joint Board is concerned that 
there may be a greater potential for fraud and abuse when an individual self-certifies his/her 
income eligibility than there appears to be when an individual is enrolled in a qualifying program 
because program enrollment is more easily verified. Accordingly, the Joint Board recommends 
that the Commission require all states, including states that use the federal default criteria, to 
adopt certification procedures to document income-based eligibility for Lifeline/Link-Up 
enrollment in order for the carriers in that state to continue to receive federal Lifeline/Link-Up 
support. The Joint Board believes that states should be given the flexibility to determine the 
certification procedures and the carriers should be required to perform the certification. The 
89 47 C.F.R.  54.409(b). 
90 See Oklahoma Commission Comments at 2. 
91 See Indiana URC Comments at 7; NASUCA Comments at 19-21, 23; New Orleans Council Comments at 3-4; 
Western Wireless Corporation Comments at 3 (Western Wireless). 
92 See Colorado DHS/OCC Reply Comments at 5; California PUC Comments at 7; NASUCA Reply Comments at 7-8; 
U.S. Catholic Bishops Comments at 14; U.S. Catholic Bishops Reply Comments at 10-11. 
93 See 47 C.F.R.  54.409(b). 
18 FCC 03J-2 Federal Communications Commission 
Joint Board believes affording states this degree of flexibility will be especially useful for states 
that have differing sources of income data. Such flexibility will also provide multiple means of 
proving income levels by recognizing that no single source of income data would capture all 
consumers eligible for Lifeline/Link-Up. 
35. States could access the documentation via an online database, if available in that 
state, or could require consumers to provide one or more forms of documentation from the 
following list: a tax return from the prior year, a current income statement from an employer or 
a paycheck stub, a Social Security statement of benefits, a Veterans Administration statement of 
benefits, a retirement/pension statement of benefits, an Unemployment/Workmens 
Compensation statement of benefits, a divorce decree or child support document, or other official 
governmental agency documents.94 We note that there are important factors to consider for each 
form of documentation. For example, although tax returns are widely available, they only reflect 
income earned one year ago. As another example, a current income statement from an employer 
or a paycheck stub would be an indicator of current income, but might be incomplete because the 
consumer might have more than one job. States that choose to include these types of 
documentation as acceptable forms of proof of income-eligibility should additionally require 
consumers to certify, under penalty of perjury, that the income identified for eligibility purposes 
includes all income currently being received by all members of the consumers household. 
36. For states that use the federal default criteria or states that do not have jurisdiction 
over carriers, we recommend that the Commission adopt federal default criteria for 
documentation of income eligibility. We recommend that the federal default criteria require 
consumers to provide one or more forms of documentation from the list above, with the 
exception of other official governmental agency documents. We also recommend that the 
federal default criteria also require consumers to certify, under penalty of perjury, that the 
income identified for eligibility purposes includes all income currently being received by all 
members of the consumers household. 
37. The Joint Board also recommends that all states, including states that use the federal 
default criteria, require Lifeline/Link-Up consumers that are qualifying under the income criteria 
to self-certify, under penalty of perjury, the number of individuals in their household. Such a 
measure is required for determining income-eligibility at or below 135% of the FPG, but the 
number of people in a household may not be readily apparent depending on the type of 
documentation presented.95 In addition to documentation, random auditing can also be used as 
an effective method of certifying income eligibility.96 
38. The Joint Board also recommends that the Commission encourage all states, 
including states that use the federal default criteria, to adopt automatic enrollment as a means of 
94 See Minnesota DOC Comments at 4; New Orleans Council Comments at 3-4. 
95 For example, a tax return lists the number of people in a given household, but a current income statement from 
employer or paycheck card does not. 
96 See Colorado DHS/OCC Reply Comments at 6; Missouri Commission Comments at 3; NASUCA Comments at 25; 
Texas OPC Reply Comments at 4; U.S. Catholic Bishops Reply Comments at 12. 
19 FCC 03J-2 Federal Communications Commission 
certifying that consumers are eligible for Lifeline/Link-Up and also to encourage enrollment in 
Lifeline/Link-Up. Automatic enrollment is an electronic interface between a state agency and 
the carrier that allows low-income individuals to automatically enroll in Lifeline/Link-Up 
following enrollment in a qualifying public assistance program. The Joint Board agrees with 
commenters who state that automatic enrollment will increase participation and aid 
administrative efficiency by identifying eligible consumers.97 
39. We believe, as do many commenters, that states who wish to implement automatic 
enrollment procedures should follow the lead of other states with similar procedures in place, 
and treat public assistance enrollment data in a confidential manner. 98 This will alleviate the 
privacy concerns that some commenters raise.99 In addition, consumers should have the 
opportunity to decline enrollment in Lifeline/Link-Up if they choose.100 For example, in the 
Massachusetts automatic enrollment program, households that qualify for LIHEAP must give 
permission to release their personal information before they may be enrolled into Lifeline/Link- 
Up.101 We note that no commenter provided any specific data that demonstrated consumers 
displeasure with automatic enrollment.102 
40. The Joint Board recognizes the additional administrative burden and cost associated 
with implementing automatic enrollment procedures.103 To provide guidance and minimize 
administrative burdens, the Joint Board has included an appendix that lists states that 
commenters have identified as having successfully implemented automatic enrollment 
procedures.104 The appendix describes the automatic enrollment programs of three states as 
examples of different ways that a state can implement such a program.105 
97 See Civil Rights Forum Comments at 3-4; Colorado DHS/OCC Reply Comments at 4; Indiana URC Comments at 7; 
NASUCA Reply Comments at 6; U.S. Catholic Bishops Comments at 16-17. 
98 See NASUCA Comments at 21, n.52 (carriers have generally been able to secure and execute agreements for the 
exchange of sensitive data in states with automatic enrollment procedures); U.S. Catholic Bishops Comments at 16-17; 
U.S. Catholic Bishops Reply Comments at 12, 14-15 (states with automatic enrollment procedures have been 
successful in ensuring confidential treatment of public assistance data). 
99 See BellSouth Comments at 2-3; BellSouth Reply Comments at 3 (stating that the Privacy Act may place some 
constraints on the type of automatic enrollment program that can be implemented); SBC Comments at 5. 
100 See NASUCA Reply Comments at 6. 
101 See NCLC Reply Comments at 5, n.11. 
102 See Beacon Telecommunications Advisors, LLC Comments at 2 (Beacon) (questioning the appropriateness of 
carriers, who are not typically in the position of administering social service programs, verifying the eligibility of 
participants in these programs). 
103 See BellSouth Reply Comments at 3; Verizon Comments at 6-7. 
104 See Appendix E. 
105 See id. 
20 FCC 03J-2 Federal Communications Commission 
41. The Joint Board recommends that the Commission should require all states, 
including those that use the federal default criteria, to establish procedures to verify consumers 
continued eligibility for the program in order for the state to continue to receive federal 
Lifeline/Link-Up support. The Joint Board believes that states should be given the flexibility to 
determine the verification procedures and the carriers should be required to perform the 
verification. This flexibility will permit states to determine what verification procedures best 
accommodate their own Lifeline participants, based on the available resources of carriers and 
state commissions, each states eligibility criteria, and local conditions. As commenters have 
indicated, states have strong incentives to control fraud and prevent abuse in their programs.106 
Prevention of fraud and abuse will maintain the integrity of this universal service support 
mechanism and will help to control costs. 
42. Verification procedures could include random beneficiary audits, periodic submission 
of documents, or annual self-certification.107 States may wish to implement an on-line 
verification database for verification of program-based eligibility and adopt verification 
procedures such as documentation for income-based eligibility.108 The Joint Board strongly 
encourages states to adopt an on-line verification process, where states can obtain and provide 
data to allow carriers real-time access to a database of low-income assistance program 
participants. Numerous commenters support this form of verification as a streamlined process 
for both consumers and carriers.109 Some states already utilize some form of on-line verification 
because it provides quick, easy, and accurate information. On-line verification allows a carrier 
to immediately verify that a consumer receives public assistance, whether or not the consumer is 
a current telephone subscriber.110 An on-line verification database will also inform carriers about 
those customers no longer enrolled in qualifying public assistance programs.111 To assist state 
efforts in determining appropriate verification procedures to ensure continued eligibility, we 
have included an appendix that describes various Lifeline state verification procedures.112 These 
state procedures include on-line verification databases used in Illinois, Minnesota, and an on-line 
verification database used in Tennessee in conjunction with a documentation requirement.113 
106 See BellSouth Reply Comments at 4; Indiana URC Comments at 7; Ohio Commission Comments at 4; Oklahoma 
Commission Comments at 4; Staff of Washington UTC Comments at 2, 4-5. 
107 See Colorado DHS/OCC Reply Comments at 5; NASUCA Comments at 25; Public Service Commission of the 
State of Missouri Comments at 3 (Missouri Commission); Texas OPC Reply Comments at 4; U.S. Catholic Bishops 
Reply Comments at 10-12. 
108 See also Appendix E. 
109 See Colorado DHS/OCC Comments at 6; NASUCA Comments at 22-23; SBC Communications Inc. Comments at 
2 (SBC); Texas OPC Reply Comments at 3; Staff of Washington UTC Comments at 2. 
110 See NASUCA Comments at 23. 
111 See SBC Comments at 6-7. 
112 See Appendix E. 
113 See Appendix E. 
21 FCC 03J-2 Federal Communications Commission 
43. For states that use the federal default criteria or states that do not have jurisdiction 
over carriers, the Joint Board recommends that the Commission adopt federal default criteria for 
verification of program-eligibility. Therefore, we recommend that the Commission adopt the 
following federal default verification procedure. In order to verify a consumers continued 
participation in one of the Lifeline/Link-Up qualifying programs, we recommend that carriers be 
required to send annual verification forms to a certain percentage of Lifeline subscribers or to a 
statistically valid sample of Lifeline subscribers. Subscribers who are subject to this verification 
must prove they are still eligible for Lifeline, by sending a copy of their Medicaid card or other 
Lifeline/Link-Up qualifying public assistance card. If subscribers do not return the form or 
cannot prove they are eligible, the aforementioned appeals process would be triggered permitting 
subscribers 60 days to prove they are once again eligible. We recommend that any fraud 
discovered through this verification process be reported to the Commission. 
44. With regard to verifying income-eligibility, the Joint Board recommends using 
verification methods similar to those recommended for certifying consumer income for initial 
enrollment in the Lifeline/Link-Up program. For states that use the federal default criteria or 
states that do not have jurisdiction over carriers, we recommend that the Commission adopt the 
same federal default verification criteria as for certification of income-eligibility, including selfcertification, 
under penalty of perjury, that the income identified for eligibility purposes includes 
all income currently being received by all members of the consumers household.114 The Joint 
Board also recommends that all states, including states that use the federal default criteria, 
require Lifeline/Link-Up consumers that are qualifying under the income criteria to self-certify, 
under penalty of perjury, the number of individuals in their household. Such a measure is 
required for verifying income-eligibility at or below 135% of the FPG, because the number of 
people in a household may not be readily apparent depending on the type of documentation 
presented.115 
45. We disagree with those commenters who state that verification would be expensive or 
administratively burdensome or that the cost of verification would exceed losses resulting from 
fraud and abuse.116 Nor do we think that it would be unduly burdensome to require states to 
undertake periodic verification of customers eligibility for the Lifeline/Link-Up program.117 
Verification is an effective way to prevent fraud and abuse and ensure that only eligible 
consumers receive benefits. 
46. The Joint Board recommends that states be given one year to implement new 
verification procedures. We recognize that states use a variety of verification procedures and 
may need time to review and evaluate the efficacy of these procedures. Programs such as on-line 
114 See para. 35, supra. 
115 For example, a tax return should list the number of people in a given household, but a current income statement 
from employer or paycheck does not. 
116 See California PUC Comments at 7; Colorado DHS/OCC Reply Comments at 5; Gila River Comments at 8-9; 
Smith Bagley Reply Comments at 5-6; U.S. Catholic Bishops Comments at 14. 
117 See Smith Bagley Reply Comments at 6 (explaining that on tribal lands, customers are spread across a wide area). 
22 FCC 03J-2 Federal Communications Commission 
verification may require extensive coordination between agencies and carriers and may be 
expensive to implement. Some states may not have verification procedures at present and will 
need to determine what type of verification is most effective and allocate resources accordingly. 
The Joint Board also recommends, however, that the Commission seek comment on whether a 
one-year implementation period is appropriate. 
Outreach C. 
1. Background 
47. In the Public Notice, the Joint Board sought comment on whether more extensive 
consumer education and outreach efforts were necessary to increase participation in 
Lifeline/Link-Up.118 In the Public Notice, the Joint Board also invited commenters to describe 
state Lifeline/Link-Up procedures that have been successful at increasing participation in the 
Lifeline/Link-Up program in that state.119 Currently, there are no specific federal outreach 
standards. Eligible telecommunication carriers are, however, required to publicize the 
availability of Lifeline/Link-Up in a manner reasonably designed to reach those likely to qualify 
for the service.120 
48. Effective outreach programs have been shown to improve Lifeline/Link-Up 
participation. According to an August 2000 report by the Telecommunications Industries 
Analysis Project, the Lifeline/Link-Up take rate almost triples from 13.1% to 39.6% when states 
implement outreach initiatives designed to increase telephone penetration and participation.121 
For example, Maine reports that its penetration rate among low-income households increased 
from 90.5% in March 1997 to 97.6% in March 2001 due to its aggressive outreach program, 
which includes coordinating with social service agencies and sending flyers and personal letters 
to eligible customers.122 
49. In July 2002, the Commissions Consumer and Governmental Affairs Bureau (CGB) 
announced the kick-off of Get Connected-Afford-A-Phone, a national campaign designed to 
educate consumers, including tribal consumers, about the Lifeline/Link-Up program.123 CGB 
118 See Public Notice, 16 FCC Rcd at 18413. 
119 See Public Notice, 16 FCC Rcd at 18414. These state procedures are described in detail in Appendix E. 
120 See 47 C.F.R.  54.405(b), 54.411(d). See also Twelfth Report and Order, 15 FCC Rcd at 12250, para. 78 
(amending sections 54.405 and 54.411 of the Commissions rules). 
121 Carol Weinhus, Tom Wilson, Gordon Calaway, et al., Telecommunications Industries Analysis Project, 
Calculations and Sources for Closing the Gap: Universal Service for Low-Income Households, August 1, 2000. 
122 Telephone Penetration Report at table 4 (Ind. Anal. and Tech. Div. rel. Apr. 2002), available at 
<http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/IAD/pntris01.pdf>. 
123 FCC Kicks Off Campaign To Educate Consumers About Phone Service Programs For Low-Income Consumers 
Lifeline and Link-Up Programs Provide Discounted Phone Service To Eligible Consumers, News Release, July 22, 
2002. 
23 FCC 03J-2 Federal Communications Commission 
also engages in extensive outreach to tribal populations for certain federal programs, such as the 
availability of discounts for obtaining wireless licenses on tribal lands, in addition to 
Lifeline/Link-Up benefits. 
2. Discussion 
50. The Joint Board recommends that the Commission provide outreach guidelines to 
states and carriers. The Joint Board agrees with commenters that more vigorous outreach efforts 
are necessary to improve Lifeline/Link-Up subscribership.124 We agree with the majority of 
commenters who believe the Commission should not require specific outreach procedures, but 
should instead provide guidelines for states and carriers so that they can adopt their own specific 
standards and engage in outreach themselves.125 We also recommend that the Commission 
encourage states to establish partnerships with other state agencies and telephone companies in 
order to maximize public awareness and participation in the Lifeline/Link-Up program.126 The 
guidelines would provide states and carriers with examples of how to reach those likely to 
qualify, but would still allow states and carriers to retain authority to determine the most 
appropriate outreach mechanisms for their consumers. 
51. The Joint Board recommends the following guidelines: (1) states and carriers should 
utilize outreach materials and methods designed to reach households that do not currently have 
telephone service; (2) states and carriers should develop outreach advertising that can be read or 
accessed by any sizeable non-English speaking populations within the carriers service area; and 
(3) states and carriers should coordinate their outreach efforts with governmental agencies/tribes 
that administer any of the relevant government assistance programs. These guidelines are 
described in detail in the paragraphs below. An appendix compiling state practices is also 
included in this document.127 State practices include establishing marketing boards to devise 
outreach materials, providing multi-lingual customer support, and implementing innovative tribal 
outreach practices. 
52. The first recommended guideline is that states and carriers should utilize outreach 
materials and methods designed to reach households that do not currently have telephone service. 
124 See Alaska Commission Comments at 6-7; BellSouth Reply Comments at 4-5; Civil Rights Forum Comments at 4; 
Colorado DHS/OCC Comments at 9-10; Colorado DHS/OCC Reply Comments at 6; Dollar Energy Fund Comments at 
2; Indiana URC Comments at 8-9; Katherine Keller Reply Comments at 1-2; Minnesota DOC Comments at 5; New 
Orleans Council Comments at 5; Oklahoma Commission Comments at 5-6; Staff of Washington UTC Comments at 6- 
7; Western Wireless Comments at 4-5. 
125 See AT&T Corp. Comments at 4 (AT&T); BellSouth Comments at 4; BellSouth Reply Comments at 4; California 
PUC Comments at 8-9; Colorado DHS/OCC Comments at 9-10; Colorado DHS/OCC Reply Comments at 6; Florida 
PSC Comments at 8-9; Indiana URC Comments at 8-9; NASUCA Reply Comments 8-9; Texas OPC Reply Comments 
at 6. 
126 See AT&T Comments at 4; BellSouth Comments at 4; BellSouth Reply Comments at 4; California PUC Comments 
at 8-9; Colorado DHS/OCC Comments at 9-10; Colorado DHS/OCC Reply Comments at 6; Florida PSC Comments at 
8-9; Indiana URC Comments at 8-9; NASUCA Reply Comments 8-9; Texas OPC Reply Comments at 6. 
127 See Appendix E. 
24 7. 
Comments at 6-7. 
FCC 03J-2 
States or carriers may wish to send frequent mailings to eligible households in the form of letters 
or brochures.128 Posters could be placed in locations where low-income individuals are likely to 
visit, such as shelters, soup kitchens, and public assistance agencies.129 Commenters suggest 
multi-media outreach approaches such as newspaper advertisements, articles in consumer 
newsletters, press releases, radio commercials, and radio and television public service 
announcements.130 For low-income consumers that live in remote areas, including those living 
on tribal lands, going door-to-door or setting up an information booth at a central location may 
be more suitable outreach methods.131 States and carriers should ensure that outreach materials 
and methods accommodate low-income individuals with sight, hearing, and speech disabilities 
by producing brochures, mailings and posters in Braille, and providing customer service through 
telecommunications relay services (TRS), text telephone (TTY), and speech-to-speech (STS) 
services.132 States and carriers should also take into consideration that some low-income 
consumers may be illiterate or functionally illiterate, and therefore should consider how to 
supplement outreach materials and methods to accommodate those individuals. We note that 
some commenters suggest disseminating Lifeline/Link-Up information over the Internet as a 
means of providing information to low-income individuals.133 The Joint Board believes, 
however, that although websites are helpful in providing information generally, the Internet 
should not be relied on as a primary means of Lifeline/Link-Up outreach because many lowincome 
individuals may lack Internet access.134 We also note that one commenter suggests that 
Lifeline/Link-Up should be prominently advertised in carriers telephone phone books.135 
128 See Colorado DHS/OCC Comments at 9-10; Colorado DHS/OCC Reply Comments at 6; Florida PSC Comments at 
130 Alaska Commission Comments at 6-7; Minnesota DOC Comments at 5; Staff of Washington UTC Comments at 6- 
131 Alaska Commission Comments at 6-7; Smith Bagley Reply Comments at 2, 7-8; Staff of Washington UTC 
132 See Katherine Keller Reply Comments at 1-2. TRS are telephone transmission services that enable individuals 
with a hearing or speech disability to communicate by wire or radio with a hearing individual in a manner that is 
functionally equivalent to the ability of an individual without a hearing or speech disability to communicate over wire 
or radio. Examples of TRS include TTY and STS services. 47 C.F.R.  64.601(7). TTY is a machine that employs 
graphic communication in the transmission of coded signals through a wire or radio communication system. 47 
C.F.R.  64.601(8). STS allows people with speech disabilities to communicate with voice telephone users through 
the use of specially trained [communications assistants (CAs)] who understand the speech patterns of persons with 
disabilities and can repeat the words spoken by that person. 47 C.F.R.  64.601(10). 
133 See Alaska Commission Comments at 6-7; BellSouth Comments at 5; Katherine Keller Reply Comments at 1. 
134 See Civil Rights Forum Comments at 6 (outreach efforts using information on Lifeline/Link-Up on websites are 
insufficient); Oklahoma Commission Comments at 6. Useful website information may include the amount a consumer 
can save on their telephone bill, eligibility requirements, program restrictions, and instructions on how to apply for 
Lifeline/Link-Up. See BellSouth Comments at 5. We note that a lot of this information is currently available at 
<http://www.lifelinesupport.org>. 
Federal Communications Commission 
5; Indiana URC Comments at 8-9; Minnesota DOC Comments at 5. 
129 See Minnesota DOC Comments at 5. 
135 See Katherine Keller Reply Comments at 1. 
25 FCC 03J-2 Federal Communications Commission 
Although this may be effective in reaching some low-income individuals, it will not be effective 
for those without established phone service because carriers only distribute telephone books after 
phone service is established.136 Similarly, states and carriers should not rely on hotlines as a 
primary outreach method because many low-income individuals may not have access to a 
telephone from which to initiate an inquiry on Lifeline/Link-Up benefits.137 
53. The second recommended guideline is that states and carriers should develop 
outreach advertising that can be read or accessed by any sizeable non-English speaking 
populations within the carriers service area. For example, many of the suggestions in the above 
paragraph can be implemented in languages other than English, including mailings, print 
advertisements, radio and television commercials, and posters. States with a large ethnically 
diverse population should have a toll-free call center to answer questions about Lifeline/Link-Up 
in the low-income populations native languages.138 Similarly, enrollment applications should be 
made available in other languages.139 
54. The third recommended guideline is that states and carriers should coordinate their 
outreach efforts with governmental agencies that administer any of the relevant government 
assistance programs.140 Commenters also suggest cooperative outreach efforts with state 
commissions, carriers, social service agencies, community centers, nursing homes, public 
schools, and private organizations that may serve low-income individuals, such as American 
Association for Retired Persons and the United Way.141 Cooperative outreach among those most 
likely to have influential contact with low-income individuals will help to target messages about 
Lifeline/Link-Up to the low-income community.142 For example, state agencies that conduct 
outreach efforts for a states earned income tax credit, an income tax credit for low-income 
working individuals and families, could conduct simultaneous outreach efforts for Lifeline/Link- 
Up. Commenters also suggest that establishing a marketing or consumer advisory board with 
state, carrier, non-profit and consumer representatives may be an effective way of developing 
outreach materials.143 The Joint Board also recommends that states and carriers should also issue 
136 See Civil Rights Forum Comments at 6 (explaining that Lifeline/Link-Up information in telephone books is an 
insufficient outreach effort). 
137 See Alaska Commission Comments at 6-7; Florida PSC Comments at 8-9. 
138 See Civil Rights Forum Comments at 4 (describing Californias toll-free call center which answers questions about 
Lifeline in Spanish, Korean, Laotian, Cambodian, Vietnamese, Tagalog, and Hmong, in addition to English). See also 
Appendix C. 
139 See Minnesota DOC Comments at 5. 
140 See Gila River Comments at 12. 
141 See Alaska Commission Comments at 6-7; BellSouth Comments at 4; BellSouth Reply Comments at 4; Colorado 
DHS/OCC Comments at 9-10; Colorado DHS/OCC Reply Comments at 6; Indiana URC Comments at 8-9. 
142 See Bell South Reply Comments at 4-5. 
143 See California PUC Comments at 8-9; NASUCA Reply Comments at 8-9; Ohio Commission Comments at 5. 
26 FCC 03J-2 Federal Communications Commission 
a joint report to the Commission as to the states outreach practices. 
55. The Joint Board also recommends that the Commission encourage states to utilize 
USAC as a resource for outreach to states and carriers, similar to USACs outreach efforts with 
regard to the Rural Health Care and Schools and Libraries programs. USAC currently engages in 
limited outreach for the Lifeline/Link-Up program. Its primary means of outreach is its website, 
www.lifelinesupport.org, which has information about state Lifeline/Link-Up programs, 
eligibility criteria, and information for carriers. USAC speaks about Lifeline/Link-Up at public 
events such as the National Association of Regulatory Utility Commissioners (NARUC) 
conference and the National Conference of American Indians. USAC distributes letters to 
consumer groups, tribal leaders, and social service organizations to publicize the availability of 
Lifeline/Link-Up and also sends letters to carriers to remind them of their outreach obligations. 
USAC also frequently takes phone calls from consumers and others with questions about the 
Lifeline/Link-Up program. 
56. In addition, the Joint Board recommends that USAC assist in outreach efforts for 
Lifeline/Link-Up similar to what USAC currently does for the Rural Health Care and Schools 
and Libraries Programs. For example, USAC could work with various organizations that have 
contact with low-income individuals, such as state welfare agencies, tribal leaders, places of 
worship, community centers, the National Association for the Advancement of Colored People 
(NAACP), the Urban League, and others, to assist them in marketing the Lifeline/Link-Up 
program to eligible members of their organizations using materials and methods best suited for 
that particular organization. USAC could hold conference calls with these parties to assist them 
with the Lifeline/Link-Up application process or with other concerns they may have, comparable 
to what USAC currently does with both the Rural Health Care and Schools and Libraries 
programs. USAC could also host conferences for these parties, giving them an overview of the 
Lifeline/Link-Up program, updating them on news about the program, and providing them with 
presentations and speakers, in geographically strategic areas. 
Other Issues D. 
57. Commenters proposed several additional changes to the current Lifeline/Link-Up 
program. Some of these suggestions included recommending that the Commission adopt rules: 
(1) governing the disconnection of Lifeline/Link-Up support for failure to pay toll charges; (2) 
imposing additional toll blocking requirements; (3) permitting non-eligible telecommunications 
carriers to receive federal Lifeline/Link-Up support; and (4) restricting the purchase of vertical 
services by Lifeline customers. 
58. NASUCA proposes that the Joint Board recommend rules governing disconnection of 
Lifeline/Link-Up consumers for non-payment of toll charges.144 The Joint Board declines to 
recommend such a rule. We note that, in the 1997 Universal Service Order, the Commission 
adopted the Joint Boards recommendation that carriers should be prohibited from disconnecting 
144 See NASUCA Comments at 32, 36 (suggesting the Commission revisit its earlier position on this matter before it 
was overruled in the 5th Circuit Court). NASUCA and Ohio both support a prohibition on disconnection of local 
service for nonpayment of toll charges. See NASUCA Reply Comments at 9; Ohio Commission Comments at 7. 
27 FCC 03J-2 Federal Communications Commission 
Lifeline consumers local service for nonpayment of toll charges, and adopted section 54.401(b) 
stating that [e]ligible telecommunications carriers may not disconnect Lifeline service for nonpayment 
of toll charges.145 In Texas PUC v. FCC, however, the Fifth Circuit found that the 
Commission lacked jurisdiction to take such actions without additional justification and that the 
Commission had failed to show why allowing states to control disconnections from local 
service would interfere with federal objectives.146 In light of the Fifth Circuits ruling, section 
54.401(b) was repealed in 1999.147 Accordingly, the Joint Board recommends that the 
Commission take no action on disconnection requirements at this time. 
59. Although we decline to make the recommendation proposed by NASUCA regarding 
our earlier position on disconnection for nonpayment of toll charges, the Joint Board does 
acknowledge that carriers often prohibit consumers who have prior outstanding balances for 
local and/or long distance services, but who otherwise qualify for Lifeline/Link-Up, from signing 
up for local telephone service. As a result, these outstanding balances stand as a barrier to 
expanding subscribership among low-income consumers. Therefore, the Joint Board 
recommends that the Commission encourage states to implement rules that require carriers to 
offer Lifeline service to consumers who may have been previously disconnected for unpaid toll 
charges.148 For example, Florida has a provision within its state Lifeline program that requires 
carriers to provide Lifeline even when the consumer has been disconnected for non-payment of 
toll charges.149 The Lifeline service for such a consumer requires the consumer to accept tollblocking 
and to commit to pay back the prior long-distance balance on a monthly basis.150 The 
Joint Board also recommends that the Commission seek comment on whether it would be 
possible to modify the Link-Up program to directly address outstanding balances for local and 
long distance service without conflicting with the Fifth Circuits prior decision. For example, 
one option might be to modify the Link-Up program to include provisions to assist low-income 
consumers in payment of such outstanding balances. 
145 1997 Universal Service Order, 12 FCC Rcd at 8983, para. 390; 47 C.F.R.  54.401(b) (repealed in 1999 and 
reserved). 
146 Texas PUC v. FCC, 183 F.3d 393, 421-425 (5th Cir. 1999) (finding that the Commission had no unambiguous or 
straightforward grant of authority to override the limits set by [section] 2(b) [of the Communications Act of 1934], 
and, accordingly, it has no jurisdiction to adopt the no disconnect rule on the basis of the vague, general language of 
[section] 254(b)(3).). 
147 See Federal State Joint Board on Universal Service Access Charge Reform, Sixteenth Order on Reconsideration, 
CC Docket No. 96-45, Eight Report and Order, CC Docket No. 96-45, Sixth Report and Order, CC Docket No. 96-262, 
15 FCC Rcd 1679, 1693, para. 34 (1999) (repealing, inter alia, section 54.401(b) of the Commissions rules). 
148 Pursuant to the Commissions Link-Up rules, a consumer shall only receive the benefit of the Link-Up program for 
a second or subsequent time for a principal residence that is different from the one where the Link-Up assistance was 
previously provided. See 47 C.F.R.  54.411(c). 
149 See Florida PSC Comments at 4. See also FLA. STAT.  364.604(4) (A billing party shall not disconnect a 
customer's Lifeline local service if the charges, taxes, and fees applicable to basic local exchange telecommunications 
service are paid.). 
150 See id. 
28 FCC 03J-2 Federal Communications Commission 
60. Contrary to the suggestion of the U.S. Catholic Bishops,151 the Joint Board does not 
recommend that the Commission adopt any additional rules governing toll blocking. The U.S. 
Catholic Bishops suggest that the rules be revised to prohibit carriers who do not offer toll 
blocking from requiring deposits from Lifeline/Link-Up customers in order to receive local 
service.152 Currently, the Commissions rules prohibit carriers from requiring a Lifeline/Link-Up 
subscriber to pay a service deposit in order to initiate service if the consumer elects to receive 
toll blocking.153 Carriers may collect service deposits from consumers who do not elect to 
receive toll blocking or if the carrier does not have the technical ability to offer toll blocking.154 
We believe that, at this time, all carriers have the technological capability to offer toll blocking, 
and that therefore this proposal is moot. In addition, the Joint Board recommends that states 
should remain free to decide whether to adopt rules for deposits and/or credit checks of lowincome 
consumers in their respective jurisdictions.155 
61. Contrary to the suggestion of AT&T and NALA/PCA,156 the Joint Board does not 
recommend that telephone companies who are not eligible telecommunications carriers should 
receive federal support for providing Lifeline/Link-Up service. AT&T suggests that the 
Commission allow telephone companies to receive federal Lifeline/Link-Up support when they 
have qualified for state support under parallel state programs.157 NALA/PCA believes that 
allowing resellers who are not eligible telecommunications carriers to receive federal Universal 
Service support will increase competition and choice for low-income consumers.158 The Joint 
Board believes, however, that only eligible telecommunications carriers should receive universal 
service funds, including federal Lifeline/Link-Up support. We note that the Commission found 
in the 1997 Universal Service Order that [although] we have the authority under sections 1, 
4(i), 201, 205 and 254 to extend Lifeline to include carriers other than eligible 
telecommunications carrierswe decline to do so at the present time.159 The Joint Board 
151 See U.S. Catholic Bishops Comments at 25-27; U.S. Catholic Bishops Reply Comments at 17; accord Colorado 
DHS/OCC Comments at 8 (suggesting that toll blocking as a deposit alternative will enable more customers to obtain 
phone service regardless of their credit history). 
152 See U.S. Catholic Bishops Comments at 25-27; U.S. Catholic Bishops Reply Comments at 17. 
153 See 47 C.F.R.  54.401(c). 
154 See id. 
155 See e.g. Minnesota DOC Comments at 5. Minnesota explains that its credit and deposit rules do not require a 
deposit for a customer with good credit. A customer who has not had service disconnected in the last twelve months 
for nonpayment and has not been liable for disconnection for nonpayment is deemed to have good credit. For a 
customer who does not have good credit, a deposit of no more than two months of the gross bill is required but the 
deposit must be refunded after twelve consecutive months of prompt payment. See id. 
156 See AT&T Comments at 2-4; NALA/PCA Comments at 4-5. 
157 See AT&T Comments at 2-4. 
158 See NALA/PCA Comments at 4-5. 
159 1997 Universal Service Order, 12 FCC Rcd at 8971, para. 369. 
29 FCC 03J-2 Federal Communications Commission 
continues to believe that only eligible telecommunications carriers should receive universal 
service funds, including federal Lifeline/Link-Up support. We agree with the Commission that 
a single support mechanism with a single administrator following similar rules will have 
significant advantages in terms of administrative convenience and efficiency.160 Furthermore, 
eligible telecommunications carriers are carriers that agree to certain obligations in order to 
receive universal service support.161 Existing rules ensure that Lifeline/Link-Up funding goes 
only to eligible telecommunications carriers that have committed to these obligations, including 
the provision of supported services in accordance with section 54.101 of the Commissions 
rules.162 Finally, to alleviate concerns that pure resellers may not be able to offer Lifeline service 
to their low-income customers, we note that incumbent LECs are required to offer Lifeline 
service at wholesale rates, pursuant to section 251(c)(4), to those carriers that provide service 
purely by reselling another carriers services, so that these pure resellers can offer Lifeline 
discounts to qualifying low-income consumers.163 
62. Contrary to the suggestion of the Ohio Commission,164 the Joint Board does not 
recommend that the Commission adopt rules prohibiting Lifeline/Link-Up customers from 
purchasing vertical services (e.g., call waiting, call forwarding, voice mail, caller identification). 
The Ohio Commission suggests that the Commission should prohibit a Lifeline/Link-Up 
customer from ordering vertical services and should also prohibit the marketing of vertical 
services to Lifeline/Link-Up customers.165 The Joint Board believes that any restriction on 
vertical services is outside the scope of the Lifeline/Link-Up program, and, in addition, this issue 
may be entirely within the purview of the states.166 The Joint Board recognizes, however, that 
restrictions on the purchase of vertical services may discourage qualified consumers from 
enrolling in the Lifeline/Link-Up program, effectively serving as a barrier to participation.167 
Accordingly, the Joint Board recommends that the Commission encourage states not to adopt 
rules that would restrict Lifeline/Link-Up customers from purchasing vertical services. For the 
same reason, the Joint Board does not recommend imposing restrictions on the marketing of 
vertical services to Lifeline/Link-Up customers. 
160 1997 Universal Service Order, 12 FCC Rcd at 8971, para. 369. 
161 See 47 C.F.R.  54.201(d)(1)-(2). 
162 47 C.F.R.  54.101. 
163 See 1997 Universal Service Order, 12 FCC Rcd at 8972, para. 370. 
164 See Ohio Commission Comments at 6-7. But see NASUCA Reply Comments at 6 (supports prohibiting carriers 
from marketing vertical services to Lifeline/Link-Up customers but believes those customers should not be barred from 
ordering vertical services). 
165 See Ohio Commission Comments at 6-7. 
166 We also note that, as more telecommunications services are sold in bundled form, it may be more difficult to 
maintain a restriction on the purchase of only vertical services. 
167 See Civil Rights Forum Comments at 9 (stating that customers should have choices in their telephone service). 
30 FCC 03J-2 Federal Communications Commission 
IV. CONCLUSION 
63. In conclusion, the Joint Board recommends that the Commission adopt the abovementioned 
modifications to the Lifeline/Link-Up program. Adding an income-based criterion 
and the TANF and NSL programs to the current federal default eligibility criteria will allow the 
Lifeline/Link-Up program to adapt to the changes resulting from PROWRA and otherwise 
address issues associated with receiving public assistance. Adding certification and verification 
requirements will ensure that only eligible low-income individuals receive benefits, thereby 
preventing fraud and abuse. Adopting outreach guidelines will facilitate the marketing of the 
Lifeline/Link-Up program to eligible individuals and increase telephone subscribership among 
low-income households. Finally, issuing a survey form like the one contained in Appendix C, 
will enable the Commission to gather data and information from states regarding the 
administration of Lifeline/Link-Up programs.168 The Joint Board believes that the proposed 
modifications to the Lifeline/Link-Up program will increase Lifeline/Link-Up subscription rates 
and make phone service affordable to more low-income individuals and families. 
V. RECOMMENDING CLAUSE 
64. For the reasons discussed herein, the Federal-State Joint Board on Universal Service, 
pursuant to sections 254 and 410(c) of the Communications Act of 1934, as amended, 47 U.S.C. 
 254, 410(c), recommends that the Commission consider the Joint Boards recommendations 
to modify the federal Lifeline/Link-Up program, including positions relating to state 
Lifeline/Link-Up programs. 
FEDERAL COMMUNICATIONS COMMISSION 
Marlene H. Dortch 
Secretary 
168 See Appendix C. 
31 FCC 03J-2 Federal Communications Commission 
APPENDIX A 
PARTIES FILING INITIAL COMMENTS 
Commenter Abbreviation 
Office of Self-Sufficiency 
American Public Communications Council APCC 
AT&T Corp. AT&T 
Beacon Telecommunications Advisors, LLC Beacon 
BellSouth Corporation BellSouth 
Civil Rights Forum on Communication Policy 
Civil Rights Forum 
Colorado Department of Human Services Colorado DHS/OCC 
Colorado Office of Consumer Counsel 
Dollar Energy Fund 
Florida PSC 
Gila River Telecommunications 
Lake Superior Chippewa Indians 
Minnesota Office of the Attorney General- 
Confederated Tribes of the Umatilla Indian Reservation Umatilla 
Dollar Energy Fund, Inc. 
Florida Public Service Commission 
Gila River Telecommunications, Inc. 
Indiana Utility Regulatory Commission Indiana URC 
Lac du Flambeau Band of Lake Superior 
Chippewa Indians 
Legal Services Advocacy Project LSAP 
Minnesota Department of Commerce Minnesota DOC 
Minnesota Department of Human Services 
Residential and Small Business Utilities Division 
National ALEC Association/Prepaid Communications NALA/PCA 
Association 
National Association of Regulatory Utility Commissioners NARUC 
National Association of State Utility Consumer NASUCA 
Advocates 
National Congress of American Indians 
NCAI 
National Consumer Law Center on behalf of NCLC 
Massachusetts Union of Public Housing Tenants 
North Dakota Public Service Commissioner Susan Wefald North Dakota Public Service 
Commissioner 
Oklahoma Corporation Commission Oklahoma Commission 
People of the State of California 
California PUC 
California Public Utilities Commission 
Public Service Commission of the State of Missouri Missouri Commission 
Public Utilities Commission of Ohio Ohio Commission 
Regulatory Commission of Alaska Alaska Commission 
SBC Communications Inc. SBC 
Sprint Corporation Sprint 
Staff of the Washington Utilities and Transportation Staff of Washington UTC 
Commission 
Tennessee Regulatory Authority Tennessee Regulatory Authority 
32 FCC 03J-2 Federal Communications Commission 
United States Department of Agriculture, USDA FNS 
Food and Nutrition Service 
United States Conference of Catholic Bishops 
U.S. Catholic Bishops 
Alliance for Community Media 
Appalachian Peoples Action Coalition 
Center for Digital Democracy 
Consumer Action 
Consumer Federation of America 
Edgemont Neighborhood Coalition 
Migrant Legal Action Program 
Universal Service Administrative Company USAC 
Utility, Cable & Telecommunications Committee New Orleans Council 
of the City Council of New Orleans 
Verizon Telephone Companies Verizon 
Western Wireless Corporation Western Wireless 
WorldCom, Inc. WorldCom 
33 FCC 03J-2 Federal Communications Commission 
APPENDIX B 
PARTIES FILING REPLY COMMENTS 
Commenter Abbreviation 
BellSouth Corporation BellSouth 
Colorado Department of Human Services Colorado DHS/OCC 
Office of Self-Sufficiency 
Colorado Office of Consumer Counsel 
Katherine Keller 
National Association of State Utility Consumer Advocates NASUCA 
National Consumer Law Center on behalf of NCLC 
Massachusetts Union of Public Housing Tenants 
Smith Bagley, Inc. Smith Bagley 
Texas Office of Public Utility Counsel Texas OPC 
United States Conference of Catholic Bishops U.S. Catholic Bishops 
Alliance for Community Media 
Appalachian Peoples Action 
Consumer Federation of America 
Edgemont Neighborhood Coalition 
Migrant Legal Action Program 
Verizon Telephone Companies Verizon 
34 Federal Communications Commission 
APPENDIX C 
LIFELINE/LINK-UP STATE SURVEY 
1. What changes, if any, has the state implemented in its Lifeline/Link-Up program due to 
changes in the federal Lifeline/Link-Up program? Of those changes, which have been 
most effective in increasing the states telephone penetration rate? 
2. Please provide any additional information the state wishes to submit regarding positive or 
negative results experienced due to adoption of new Lifeline/Link-Up procedures during 
the past 12 months. 
3. Please provide any additional information the state wishes to submit regarding any 
administrative burdens or inefficiencies that the state has experienced due to adoption of 
new Lifeline/Link-Up procedures during the past 12 months. 
4. Describe the states Lifeline/Link-Up eligibility requirements. 
5. Describe the states Lifeline/Link-Up procedures for enrollment and certification, 
including documentation requirements. Do any state agencies qualify applicants for the 
Lifeline/Link-Up program? 
6. Describe the states Lifeline/Link-Up procedures for verification, including 
documentation requirements. If the state plans to implement a verification program, 
please describe. 
7. List suggestions for improvements to the federal Lifeline/Link-Up program. 
8. Does the state require all incumbent LECs to provide Lifeline/Link-Up Service? 
9. Does the state require all competitive LECs to provide Lifeline/Link-Up Service? 
35 
FCC 03J-2 Federal Communications Commission 
APPENDIX D 
ESTIMATED INCOME REQUIREMENTS FOR A HOUSEHOLD AT OR BELOW 
135% OF THE FEDERAL POVERTY GUIDELINES 
Size of 
Family Unit 
1 
2 
3 
4 
5 
6 
7 
8 
For each additional 
person, add 
48 Contiguous 
States and D.C. Alaska Hawaii 
$ 12,123 
16,362 
20,601 
24,840 
29,079 
33,318 
37,557 
41,796 
4,239 
36 
FCC 03J-2 
$15,134 $13,946 
20,439 18,819 
25,745 23,693 
31,050 28,566 
36,356 33,440 
41,661 38,313 
46,967 43,187 
52,272 48,060 
4,874 5,306 FCC 03J-2 Federal Communications Commission 
APPENDIX E 
LIFELINE/LINK-UP STATE PROCEDURES: 
Examples of State Programs Submitted by Commenters 
I. Eligibility 
Paperless Enrollment Application 
A. Self-Certification of Eligibility for Enrollment 
1. California169 
In California, telephone companies must immediately enroll a customer who verbally certifies 
that he or she is eligible to participate in the Lifeline program. The company then sends the 
customer a self-certification form on which the customer affirms in writing that he or she is 
eligible for Lifeline and agrees that the company may verify his or her income. If the customer 
does not return the form within 30 days or if the company determines that the customer is not in 
fact eligible, the customer is removed from the program. 
B. 
Automatic Enrollment 
1. Colorado170 
Colorado has implemented a paperless application process that allows potential recipients, after 
being notified of eligibility, to call their local telephone company to receive the discounts. There 
is no written application. This paperless application process makes it easier for the consumer to 
get the needed assistance and also enables low-income consumers to choose a competitive LEC 
that offers the assistance to eligible subscribers using the same paperless application process as 
the incumbent LEC. There is no paper application to keep track of and transfer from company to 
company. 
C. 
1. Massachusetts171 
In Massachusetts, households that qualify for LIHEAP can voluntarily give their permission, at 
the time of application, for the LIHEAP-administering agency to disclose information to Verizon 
that allows the household to be enrolled in Lifeline. Thus, enrollment is not automatic in the 
sense of being done without the households permission, but it is done electronically in most 
cases. This facilitates enrollment, and the results are evident in the relatively high Lifeline 
subscription rate in Massachusetts. 
169 See NCLC Comments at 5-6. 
170 See Colorado DHS/OCC Comments at 4. 
171 See NCLC Comments at 6. 
37 FCC 03J-2 Federal Communications Commission 
2. New York172 
In New York State, the Public Utility Law Project (PULP) has spent several years working to 
increase participation rates in the Lifeline/Link-Up programs. PULP represents low-income and 
rural consumers in utility, telephone and energy related matters. PULP worked with the New 
York Public Service Commission (NYPSC), the New York Department of Family Assistance 
(NYFDA), and NYNEX (now Verizon) to create an automatic enrollment database. The data 
transferred between the NYDFA and Verizon is confidential and cannot be used by Verizon or 
the state for any reason other than Lifeline assistance. Anytime an individual enrolls for a 
program administered by NYDFA they are automatically enrolled in Lifeline/Link-Up, but are 
also given the option to opt-out of the Lifeline/Link-Up program. Individuals who are not 
Verizon customers but have been identified by NYDFA as being eligible because of enrollment 
in a program administered by NYDFA are notified of their eligibility and given the opportunity 
to request Lifeline service by returning a pre-printed form. This system increased the number of 
people participating in Lifeline from 197,339 in 1987 to 703,001 in 1998. Lifeline consumers 
who have ceased receiving other assistance through NYDFA for four consecutive months are 
removed from Lifeline. 
3. North Dakota173 
In North Dakota, when consumers go to the county office of North Dakota Department of 
Human Services (NDHS) and are determined eligible for any of the qualifying programs in the 
North Dakota Lifeline and Link-Up program, they receive an information sheet about 
Lifeline/Link-Up or enhanced Lifeline/Link-Up. Each qualifying individual receives a 
certificate of eligibility in the mail from NDHS which states that the individual must return this 
certificate to the telephone company in order to receive Lifeline/Link-Up. Once a year, all 
eligible North Dakotans receive a new qualifying certificate from the NDHS. The annual 
mailing of this certificate to eligible parties helps increase participation in Lifeline and Link-Up 
programs by providing an additional opportunity to sign up with the local telephone company. 
Qwest and some other North Dakota companies use a different method of verification. Through 
arrangements with NDHS, these companies receive an annual list of eligible participants to 
verify against their current participation list and delete unqualified participants based on this list. 
Participants with these companies do not need to send in a qualifying certificate annually. 
D. Paper-proof Verification of Continued Eligibility 
1. Tennessee174 
172 See Civil Rights Forum Comments at 3. 
173 See North Dakota Public Service Commissioner Comments at 1. 
174 See Tennessee Regulatory Authority Comments at 11-12. 
38 FCC 03J-2 Federal Communications Commission 
The process used in Tennessee initially requires the applicant requesting Link-Up and Lifeline to 
provide proof of the public assistance program they receive. Proof of benefits may be 
demonstrated by providing a copy of the approval letter to receive Food Stamps, Medicaid or 
TANF from Tennessee Department of Human Services (TDHS) or a copy of the SSI benefit 
letter from the Social Security Administration. 
On-line Verification of Continued Eligibility 
E. 
Illinois175 1. 
In Illinois, carriers can perform on-line verification of a consumers eligibility by obtaining realtime 
access to a database of state low-income assistance program participants. The result is a 
streamlined process for both consumers and carriers. 
2. Minnesota176 
Minnesota verifies the income and/or disability of all applicants. An enrollees continued 
participation in the program is also verified on an annual basis. Minnesota verifies 85% of its 
Telephone Assistance Program participants by the use of computer interfaces with the Minnesota 
Department of Revenue, public assistance databases, and LIHEAP databases. The remainder are 
contacted by mail and asked to provide proof of continuing eligibility. Due to these verification 
procedures, Minnesota is not aware of problems with ineligible or fraudulent individuals being 
enrolled in the Telephone Assistance Program. 
3. Tennessee177 
In Tennessee, Lifeline applicants are required to certify eligibility by presenting documentation 
to their carrier of their participation in Food Stamps, Medicaid, TANF, or SSI. Documentation 
can be demonstrated by a copy of their approval letter to receive benefits through one of those 
programs. Self-certification is not permitted. Once the documentation is received by the carrier, 
the carrier then verifies the accuracy of the documentation with the Tennessee Department of 
Human Services (TDHS) client database. Verification of continued eligibility is also 
accomplished utilizing this electronic system. This has been the most efficient and effective way 
in which to verify and re-verify that a consumer is receiving public assistance. Tennessee 
requires re-verification of consumers on Lifeline no less than twice a year or every six months. 
175 See SBC Comments at 2. 
176 See Minnesota DOC Comments at 4. 
177 See Tennessee Regulatory Authority Comments at 11-12. 
39 FCC 03J-2 Federal Communications Commission 
II. OUTREACH 
A. Multi-Lingual Assistance 
Florida179 
1. California178 
On December 11, 2001, the California PUC approved a one-year, $5 million contract to design 
and implement a competitively neutral public awareness and outreach program in order to 
increase universal Lifeline telephone service subscribership. On the same date, the California 
PUC approved a three-year, $1.5 million contract for a multi-lingual toll-free call center that 
provides customer service information about Lifeline in Spanish, Korean, Laotian, Cambodian, 
Vietnamese, Tagalog and Hmong, as well as English. As a result of Californias outreach 
efforts, Lifeline participation rates have increased from 1,467,859 in 1989 to 3,196,661 in 2000. 
2. 
The Florida Public Service Commission sends eligible Florida consumers a postcard-size flier 
about the Lifeline/Link-Up program. Approximately 35,000 of the fliers, which were written in 
English on one side and Spanish on the other, were mailed to consumers in 2000. 
1. 
3. Minnesota180 
To accommodate the states increasingly diverse community, the Minnesota Department of 
Human Services currently makes Lifeline/Link-Up applications available in Arabic, Hmong, 
Cambodian, Lao, Russian, Somali, Spanish and Vietnamese. 
4. Tennessee181 
The Tennessee Regulatory Authority (TRA) has created four color posters in English and 
Spanish and posted them in locations frequented by low-income individuals, such as health care 
facilities, legal offices, churches, charitable organizations, and Human Services offices. To 
support this campaign, the TRA has established a toll-free hotline. The TRA has produced 
public service announcements for radio and television. 
B. Tribal Outreach 
Arizona and New Mexico182 
178 See Civil Rights Forum Comments at 4; NCLC Comments at 5. 
179 See Florida PSC Comments at 7. 
180 See Minnesota DOC Comments at 5. 
181 See Civil Rights Forum Comments at 5. 
182 See Smith Bagley Reply Comments at 2, 7-8. 
40 FCC 03J-2 Federal Communications Commission 
In Arizona and New Mexico, Smith Bagley, a wireless carrier, conducts intensive advertising 
campaigns on tribal reservations in service areas where they are designated as an eligible 
telecommunications carrier. One of its most successful forms of outreach is its day-long event. 
Smith Bagley moves its storefront into town for a day and hosts a sign-up event where customers 
can learn about wireless service, determine their eligibility for Lifeline/Link-Up, sign up for 
service, have car installations done, obtain training on using a cell phone, and ask Smith 
Bagleys staff any questions they may have about Lifeline/Link-Up or wireless service. This 
unique outreach event has led to an increase of 14,000 new Lifeline subscribers. 
C. Agreement with Carriers 
1. Florida183 
The Florida Public Service Commission (Florida PSC) has recently approved a joint stipulation 
between the Florida Office of Public Counsel and BellSouth that established a Community 
Service Fund for use in educating customers and promoting BellSouths Lifeline/Link-Up 
services. As part of the stipulation, BellSouth agreed to contribute $250,000 in 2002 and 
$150,000 in 2003. 
D. Warm Transfer Line 
1. Florida184 
The Florida PSC has made consumer education about Lifeline a priority. The Florida PSC 
operates an innovative warm transfer line which allows consumers who call the agency with 
Lifeline/Link-Up questions to be automatically transferred to the appropriate eligible 
telecommunications carrier providing phone service in their service area. The warm transfer line 
assures consumers that they will be in touch directly with the company who can initiate the 
service. 
E. Coordination with Organizations and Other Agencies 
1. Florida185 
The Florida PSC also works closely with key state agencies, such as the Florida Department of 
Children and Families (DCF) and Department of Community Affairs, to ensure that the materials 
are received by the target population. For example, the Florida PSC created a postcard-sized 
flier to be sent to eligible Florida consumers using the DCFs mailing lists and mail system. 
Approximately 35,000 of the fliers, which were written in English on one side and Spanish on 
the other, were mailed to consumers in 2000. Finally, the Florida PSC is partnering with the 
183 See Florida PSC Comments at 4. 
184 See Florida PSC Comments at 7. 
185 See Florida PSC Comments at 7. 
41 FCC 03J-2 Federal Communications Commission 
American Association of Retired Persons (AARP), the Florida Association of Counties, and the 
Florida League of Cities to further promote Lifeline/Link-Up. 
Lifeline/Link-Up Seminars F. 
1. Rhode Island186 
In Rhode Island, consumer advocates hold annual forums and conferences, often consisting of 
panels in which local telephone company representatives speak about Lifeline and distribute 
brochures. 
2. Tennessee187 
The Tennessee Regulatory Authority (TRA) has implemented several methods to promote 
Lifeline and Link-Up. It has created a Manager of Consumer Outreach position that concentrates 
on providing consumer information. This Manager conducts three or four Lifeline/Link-Up 
seminars per month at nursing homes across Tennessee. At the seminar, brochures and 
applications are distributed, leading to numerous applications for Lifeline/Link-Up. Brochures 
are also distributed at various public affairs events. 
G. Direct Mailings 
1. Connecticut188 
The Connecticut Department of Social Services works in conjunction with carriers to target 
eligible low-income consumers through the mail. 
2. Idaho189 
The state of Idaho sends flyers and brochures printed by the Idaho Public Utilities Commission 
to eligible state residents. 
3. Maine190 
In late 1999, the Maine State Housing Authority and the Maine Community Action Programs 
jointly carried out two major mass mailings to all eligible LIHEAP recipients notifying those 
186 See Universal Service Administrative Company Comments at 10 (USAC). 
187 See Civil Rights Forum Comments at 5. 
188 See USAC Comments at 14. 
189 See USAC Comments at 14. 
190 See USAC Comments at 9. 
42 FCC 03J-2 Federal Communications Commission 
consumers that they were also eligible for Lifeline. An estimated 134,000 letters and flyers were 
mailed, paid for by the Maine Telecommunications Education Fund. 
4. New York191 
The Public Utility Law Project of New York sends annual personalized letters to all persons 
eligible for Lifeline, informing them about the program. 
5. North Carolina192 
In North Carolina, an ad hoc committee comprised of staff members from the North Carolina 
Utilities Commission, the Attorney Generals Office, major telecommunications industries, and 
social services organizations have made major strides since 1998 in their Lifeline/Link-Up 
outreach efforts with direct mailings and other forms of outreach. Since the committees first 
meeting, 200,000 brochures have been printed and distributed to various organizations across the 
state that works with low-income families. The North Carolina Public Service Commission sent 
notices to everyone in North Carolina who was eligible for the programs. 
6. Tennessee193 
The Tennessee Regulatory Authority (TRA) works with the Tennessee Department of Human 
Services (TDHS) database to determine eligible individuals and then mails Lifeline/Link-Up 
information to those people. 
H. Lifeline/Link-Up Notification on Every Call 
1. Maine194 
Maines public assistance agencies explain the Lifeline/Link-Up program whenever a household 
applies for public assistance and the states telephone companies mention Lifeline/Link-Up 
whenever a customer applies for telephone service. This way, a household can apply for 
Lifeline/Link-Up by phone by simply stating that they receive one of the listed public benefits 
and providing either a social security number or welfare identification number. Maine credits its 
high penetration rates to this combination of innovative outreach and easy application methods. 
I. Tax Break for Lifeline/Link-Up Telephone Companies 
1. North Carolina195 
191 See USAC Comments at 12. 
192 See Civil Rights Forum Comments at 4-5. 
193 See Civil Rights Forum Comments at 5. 
194 See NCLC Comments at 7. 
195 See North Carolina Utilities Commission Comments at 4-5. 
43 FCC 03J-2 Federal Communications Commission 
North Carolina provides for a tax break to Lifeline/Link-Up telephone companies equal to the 
amount of money they are required to contribute for Lifeline/Link-Up. According to FCC data, 
Lifeline enrollment in North Carolina increased from 29,640 in 1998 to 62,475 in 2000. 
J. Lifeline/Link-Up Marketing Board 
California196 
1. 
California created a Lifeline Marketing Board which promotes the Lifeline program beyond the 
typical telephone company policy of including information in their telephone bills. 
196 See Civil Rights Forum Comments at 4-5. 
44 FCC 03J-2 Federal Communications Commission 
Appendix F 
Lifeline Staff Analysis 
Quantifying the effects of adding an 
income criterion to the Lifeline 
eligibility criteria 
A Study for the Federal-State Joint Board on 
Universal Service 
Prepared by Craig Stroup 
Industry Analysis & Technology Division 
Wireline Competition Bureau 
Federal Communications Commission FCC 03J-2 FCC 03J-2 Federal Communications Commission 
Executive Summary 
Lifeline Staff Analysis 
April 2003 
New Lifeline households = New Lifeline-eligible households times predicted Lifeline 
subscription rate among newly-eligible households. 
Additional federal Lifeline expenditures = number of additional households that would take 
Lifeline times the amount of federal expenditures per household that takes Lifeline. 
Introduction 
The Federal-State Joint Board on Universal Service (Joint Board) recommends that the Federal 
Communications Commission (FCC) add a federal default income-based criterion of at least 1.35 
times the Federal Poverty Guidelines . a 1.35 Poverty Level Criterion (PLC). This would 
allow many additional low-income citizens in those states that utilize the federal default criteria 
to take the Lifeline program. The Joint Board also recommends that the FCC encourage all 
states to adopt the recommended federal income-based criteria. 
There is a benefit to increasing the number of participants, and also a cost. The obvious benefit 
would be the increase in the number of telephone subscribers. The cost at the federal level 
would be the additional federal dollars spent on the additional Lifeline enrollees. 
Methodology 
This study uses the economic method of forecasting baseline, change and new policy impact. 
This means that first we estimate the number of Lifeline subscribers and the costs of the program 
to form the baseline, also known as the status quo. Second, we estimate the changes that would 
result from a nationwide implementation of a 1.35 PLC, assuming that all states adopt this 
criterion.1 Third, we add (or apply) the changes to the baseline to the time period when the 
policy is expected to be implemented. This step provides an estimate of the number of Lifeline 
subscribers and costs under the new policy. We have chosen to estimate the baseline and 
changes for 2004 because that is the timeframe in which the proposed changes will likely be 
made. 
This study uses a combination of statistical regression analysis and simple math in a series of 
spreadsheet tables. The following equations form the basic structure of the spreadsheet model. 
1 Some states have a 1.5 PLC. This study assumes that those states with a 1.5 PLC keep it. 
FCC 03J-2 Federal Communications Commission 
In sum, the results of two regression models are used to predict the impact of a policy change, 
and these predictions are applied to the baseline to calculate the new level of Lifeline 
subscription and federal Lifeline expenditures. 
Results 
The results are summarized below: 
Summary information for 2004 if states adopted a 1.35 PLC: 
Additional households that would take Lifeline: 967,000 to 1,136,000 
Of the additional Lifeline subscribers, the number that 
would subscribe to telephone service because of the 1.35 PLC: 259,000 
Of the additional Lifeline subscribers, the number that 
would already have telephone service: 708,000 to 877,000 
Additional federal expenditures in 2004: 
Amount that federal expenditures would increase $105,000,000 to $123,000,000 
Additional federal expenditures per new telephone subscriber: $405 to $475 
2
FCC 03J-2 Federal Communications Commission 
Lifeline Staff Analysis 
Introduction 
States use different criteria for determining whether a household qualifies for Lifeline. Some 
states use the federal eligibility criteria (set by the FCC), which enable households receiving 
Federal Public Housing Assistance (Section 8), Food Stamps, Low-Income Home Energy 
Assistance Program, Medicaid, or Supplemental Security Income to receive Lifeline. Other 
states have set their own criteria. States setting their own criteria often use one or more of the 
programs from the federal criteria and sometimes include one or more of their own state-wide 
programs. Some states also use an income-based criterion, which is based on some multiple of 
the Federal Poverty Guidelines. In all cases, a household need meet only one of a states criteria 
to be eligible for Lifeline. 
The Joint Board recommends that the FCC add an income-based criterion to the federal 
eligibility criteria for Lifeline. The Joint Board also recommends that the income-based criterion 
be set at 1.35 times the Federal Poverty Guidelines. Thus, households with incomes at or below 
1.35 times the Federal Poverty Guidelines would be eligible for Lifeline. 
This study assumes that all states (not just those that currently utilize the federal default criteria) 
add an income-based criterion of at least 1.35 times the Federal Poverty Guidelines (poverty 
level).a 1.35 Poverty Level Criterion (PLC).which would increase the overall number of 
eligible households.2 This would enable additional low-income citizens in many states to take 
the Lifeline program. (Households meeting at least one eligibility criterion are eligible for 
Lifeline, so adding an additional eligibility criterion increases the number of households that are 
eligible for Lifeline.) 
There is a benefit to increasing the number of participants, and also a cost. The obvious benefit 
would be the increase in the number of telephone subscribers. The cost at a federal level would 
be the additional federal dollars spent on the additional Lifeline enrollees. Because the study 
assumes that all states choose to adopt the recommended federal income-based eligibility 
criteria, the estimates presented are likely to represent the upper limit of potential new Lifeline 
and telephone subscribers and estimated impact on the fund. If some states choose not to adopt 
the federal income-based standard, the number of new Lifeline and telephone subscribers, and 
additional cost would be correspondingly lower. 
The relationship between Lifeline eligibility, Lifeline subscribership, and telephone 
subscribership is as follows. A portion of newly-eligible households (because of a 1.35 PLC) 
will take Lifeline service. Of those households that subscribe to Lifeline because of the 1.35 
PLC, a portion will start taking telephone service because they would then qualify for Lifeline. 
The other portion would already have telephone service, and would be taking the Lifeline just 
because they are newly-eligible. See the graphs below. 
2 This study assumes throughout that states with a 1.5 PLC continue to use a 1.5PLC. 
3
17% 
take 
Lifeline 
Households 
that are 
newlyeligible 
for 
Lifeline 
service due to 
83% 
do not 
take 
Lifeline 
a 1.35 PLC 
Federal Communications Commission 
Lifeline Eligibility with a 1.35 PLC, 
households taking Lifeline, and households 
taking telephone service due to a 1.35 PLC 
Currently 
Eligible for 
Lifeline 
Newly-eligible 
for Lifeline due 
to 1.35 PLC 
Eligible 
under 
current 
criteria or 
1.35 PLC 
25% of households that 
take Lifeline service 
were phoneless 
75% of households 
that take Lifeline 
service already had 
phone service 
4 
Households 
that take 
Lifeline 
service due to 
a 1.35 PLC 
FCC 03J-2 
FCC 03J-2 Federal Communications Commission 
Methodology Summary 
This study uses the economic method of forecasting baseline, change and new policy impact. 
This means that first we estimate the number of Lifeline subscribers and the federal expenditures 
of the program to form the baseline numbers. Second, we estimate the changes that would result 
from a nationwide implementation of a 1.35 PLC. Third, we add (or apply) the changes to the 
baseline in the time period when the policy is expected to be implemented. This step provides an 
estimate of the number of Lifeline subscribers and costs under the new policy. 
For the first step, we estimate Lifeline subscribership in Year 2000 and update those estimates 
using data for Year 2002. The 2002 estimates are used as a base from which to forecast 2004 
baseline Lifeline subscribership. We have chosen to estimate the baseline and changes for 2004 
because that is the timeframe in which the proposed changes will be made. 
For the second step, the Year 2000 subscribership estimates are used to predict the change in 
Lifeline subscribership due to a 1.35 PLC. The study uses the plethora of demographic data 
available from the Year 2000 to model the effects that a 1.35 PLC would have had on Lifeline 
subscribership and telephone penetration in 2000. For Lifeline subscribership, a regression 
model is constructed that predicts the increase in Lifeline subscribers as a function of increasing 
multiples of the Federal Poverty Guidelines. For example, the model predicts that if Texas 
which has a 1.25 PLCadopted a 1.35 PLC, Lifeline subscribers in 2004 would increase by 
16,669 to 19,576 (See Table 2.F). For telephone subscribership, a logistic regression is 
constructed that predicts the increase in telephone subscribership as a function of increasing 
multiples of the Federal Poverty Guidelines and other important factors, such as income and 
home ownership. If all states adopt a 1.35 (or higher) PLC for Lifeline, the model predicts that 
259,000 households would take telephone service because of that change. 
In the third step, the estimated additional number of Lifeline subscribers is added to the baseline 
in Year 2004 to get the forecasted number of Lifeline subscribers that would exist in 2004 under 
a nationwide implementation of the new policy. This study forecasts the additional Lifeline 
subscribers that would result from the implementation of a 1.35 PLC (baseline plus change). 
These steps are exhibited in the following graphs. The first graph shows the steps for predicting 
the number of Lifeline subscribers, and the second graph shows the amount of federal Lifeline 
expenditures. 
5
9
8
7
6
5
4
3
2
1
0 
Millions of Lifeline subscribers Millions of dollars 
$1,000 
$900 
$800 
$700 
$600 
$500 
$400 
$300 
$200 
$100 
$0 
A (Baseline) 
1998 
Federal Lifeline Expenditures 
A (Baseline) 
1998 
E (Policy change) 
B (Baseline) 
2000 
Baseline Change due to 1.35 PLC 
6 
C (Baseline) 
D 
(Baseline) 
2002 
Federal Communications Commission 
Lifeline Subscribers 
E (Policy change) 
B (Baseline) 
C 
(Baseline) 
2000 
Baseline Change due to 1.35 PLC 
2002 
F (New level 
with change) 
D 
(Baseline) 
F (New level 
with change) 
FCC 03J-2 
2004 
2004 
FCC 03J-2 Federal Communications Commission 
Modeling Process 
The modeling process is outlined below. The word produce is used below when the FCC did 
not have the actual data, and so the quantities were estimated based on a sound methodology. 
The word forecast is used when data are predicted for a future time period. 
 Create baseline 
o Produce baseline Lifeline subscription rates for 2000. 
o Produce baseline Lifeline subscription rates for 2002. 
o Forecast baseline Lifeline subscription rates for 2004. 
o Forecast baseline federal Lifeline expenditures for 2004. 
 Estimate change from new policy 
o Produce change to Lifeline eligibility resulting from a 1.35 PLC. 
o Forecast change to Lifeline subscription rates in 2000 resulting from a 1.35 PLC. 
o Forecast change to Lifeline subscription rates for 2004. 
o Forecast for Years 2000 and 2004, change to telephone subscribership resulting 
from a 1.35 PLC. 
o Forecast change to federal Lifeline expenditures for 2004. 
 Apply new policy to baseline to compute new level 
o Apply forecasted changes to forecasted baseline to determine the new number of 
Lifeline subscribers in 2004. 
o Apply forecasted changes to forecasted baseline to determine the new federal 
Lifeline expenditures in 2004. 
Methodology Detail 
The above steps will now be discussed in more detail. A series of tables is constructed that show 
the computations for the three steps outlined above. 
This study combines data from three sources: 1) Current Population Survey of Households 
(CPSH) provided by the Bureau of Labor Statistics; 2) the website www.lifelinesupport.org; and 
3) Universal Service Administrative Company (USAC). The CPSH data contain the results from 
over 50,000 households that were surveyed around January 2000. The website 
www.lifelinesupport.org provides the Lifeline eligibility requirements for each state, and 
USACs website provides actual Lifeline subscribers in 2000 and 2002. 
This study uses a combination of statistical regression analysis and simple math in a series of 
spreadsheet tables. Two regression models are constructed. 
 Lifeline Regression Model - A regression analysis model is constructed that correlates 
higher Lifeline subscription rates to the use of higher multiples of the Federal Poverty 
Guidelines for income criteria. Many states have income-based Lifeline eligibility 
criteria, and in general, the states with a higher multiple of the Federal Poverty 
Guidelines have higher Lifeline subscription rates. The results from this model are then 
used to predict the number of households that would take Lifeline in 2000 and 2004 as a 
result of a nationwide implementation of a 1.35 PLC. 
7
FCC 03J-2 Federal Communications Commission 
 Telephone Regression Model - Another regression model, this time a logistic regression, 
is used to predict increased telephone participation that would have resulted in 2000 had a 
1.35 PLC been implemented. This model incorporates several factors, including the 1.35 
PLC, income, and other demographic information. Many states have income-based 
Lifeline eligibility criteria, and in general, the states with a higher multiple of the Federal 
Poverty Guidelines have higher telephone subscription rates. The results from this model 
are then used to determine the number of households that would take telephone service in 
2004 as a result of a nationwide implementation of a 1.35 PLC. 
The spreadsheet tables use a series of equations which simply add or multiply the contents of 
various columns in the table to produce a final column (to the right) which is of the most interest. 
The results of the regression analysis are incorporated into several columns in the tables. The 
following equations are used in the tables: 
 Number of additional households taking Lifeline = number of newly-eligible households 
times the Lifeline subscription rate (the percentage of those households that would take 
Lifeline, which is determined by the Lifeline Regression Model). 
 Additional federal Lifeline expenditures = number of additional households that would 
take Lifeline times the amount of federal expenditures per household that takes Lifeline. 
In sum, the results of two regression models are used to predict the impact of a policy change, 
and these predictions are applied to the baseline to calculate the new level. The data and analysis 
is discussed in more detail below. 
8
FCC 03J-2 Federal Communications Commission 
Step 1: Create Baseline 
The tables in this section examine the number of Lifeline subscribers, the number of 
households that are eligible for Lifeline and the Lifeline subscription rate. Each table reflects 
data for a different year. 
Baseline Lifeline subscription rates for Year 2000. Nationally, 16.3% of households are 
estimated to be eligible for Lifeline. Of these eligible households, an estimated 33.1% subscribe 
to Lifeline. 
The CPSH data contain demographic data from which the eligibility for each household in the 
sample can be determined. So, if a state uses Food Stamps as an eligibility criterion, then those 
households in that state that received Food Stamps are marked as being eligible for Lifeline. 
Each household is analyzed according to its states eligibility criteria, as reported by 
www.lifelinesupport.org.3 Only those households that meet at least one of the eligibility criteria 
are deemed eligible for Lifeline, the rest are deemed ineligible. This is accomplished 
electronically using Visual Basic for Applications for Microsoft Access. From these data, 
statewide estimates for the number of Lifeline eligible households are created. USAC data from 
the Monitoring Report are then used to create the Lifeline subscription rate, which is the 
percentage of eligible households that subscribe to Lifeline. See Table 1.A. 
Baseline Lifeline subscription rates for 2002. Nationally, 16.3% of households are estimated to 
be eligible for Lifeline. Of these households, an estimated 37.5% subscribe to Lifeline. 
USAC Lifeline data from 2002 are used to create a new baseline subscribership rate, using the 
same methodology as for Year 2000 described above. The number of households in each state in 
Year 2002 is forecasted based on the growth rate of households between 1998 and 2000. It is 
assumed that the same percentage of households that qualified for Lifeline in 2000 qualified for 
Lifeline in 2002. See Table 1.B. 
Forecasted Baseline Lifeline subscription rates for 2004. There will be an estimated 110.1 
million households in the Year 2004, and 6.8 million of those households are expected to take 
Lifeline under existing rules. 
The results from the previous tables are used to forecast the number of households, the number 
of Lifeline-eligible households, and the number of Lifeline subscribers in 2004. The number of 
households in 2004 is calculated in the same manner as it was in Table 1.B. The number of 
households qualifying for Lifeline in 2004 (July 1, 2004, to be exact) is simply calculated by 
multiplying the percentage of all households that are eligible for Lifeline in 2000 by the 
forecasted number of households in 2004. This calculation assumes that the same percentage of 
households will qualify for Lifeline in 2004 as did in 2000. The number of households that 
would take Lifeline in 2004 is calculated by multiplying the percentage of eligible households 
that took Lifeline in 2002 by the forecasted number of eligible households in 2004. This 
3 The website was viewed in early 2002. 
9
FCC 03J-2 Federal Communications Commission 
This section quantifies the number of additional households that would become eligible 
calculation assumes that the same percentage of Lifeline-eligible households will take Lifeline in 
2004 as did in 2002. These predictions make two implicit assumptions: the number of 
households in each state increases at a constant rate, and the economy continues to grow at the 
same rate it did in 2002. See Table 1.C. 
Forecasted Baseline federal Lifeline expenditures for 2004. Forecasted federal Lifeline 
expenditures under existing rules in Year 2004 are $709 million. 
The forecasted federal Lifeline expenditures are calculated by multiplying the forecasted number 
of Lifeline subscribers in each state times the expected federal expenditures per line in that state. 
The state-by-state federal expenditures are then summed to form the national total. See Table 
1.D. 
Step 2: Estimate Change from New Policy 
for Lifeline, the number of households that would subscribe to Lifeline, and the number of 
additional households that would subscribe to telephone service due to the implementation of a 
1.35 PLC. (This analysis assumes that states without a PLC for Lifeline and states with a PLC 
below 1.35 adopt a 1.35 PLC. This analysis also assumes that states with a 1.5 PLC keep it.) 
This section then calculates the increased federal Lifeline expenditures resulting from the 
increased number of households taking Lifeline due to the 1.35 PLC. CPSH data are used to 
determine the number of additional households that would become eligible for Lifeline. Two 
regression analyses are used to determine the number of additional households that would 
subscribe to Lifeline and the number of households that would take telephone service due to a 
1.35 PLC. 
Change to Lifeline eligibility in 2000 and 2004 resulting from a 1.35 PLC. We predict that an 
additional 6.1 percent of total households would qualify for Lifeline under the 1.35 PLC, and this 
would qualify an additional 6.6 million households in Year 2004. 
The demographic data from each household in the CPSH data are examined to determine 
whether it would have become eligible for Lifeline with a 1.35 PLC. The estimates from the 
CPSH data are then used to determine the number of households in each state that would become 
eligible for Lifeline with a 1.35 PLC. Table 2.A presents the information for the Year 2000 and 
2.B presents the information for the Year 2004. 
Change to Lifeline subscribership in 2000 resulting from a 1.35 PLC. We predict that states 
without a PLC and states with PLCs at 1.25 or lower would see a significant increase in the 
number of low-income households that take Lifeline if they adopted a 1.35 PLC. Nationwide, 
the number of Lifeline takers would increase between 928,000 to 1,090,000 if all states adopted a 
1.35 PLC. 
Different states have different Lifeline eligibility criteria, so regression analysis can be employed 
to quantify the correlation between the use of a higher multiple of the poverty level (i.e., a higher 
PLC) and the resulting higher Lifeline subscription rate. The Lifeline Regression Model predicts 
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The new levels of subscribership and costs are shown in several tables. First, the new 
increased Lifeline subscribership that would have resulted from a nationwide 1.35 PLC in 2000. 
See Tables 2.C and 2.D. (At the end of this study is a technical appendix that more thoroughly 
discusses the regression analysis used for this model.) Tables 2.E and 2.F show the number of 
additional Lifeline subscribers on a state-by-state basis for 2000 and 2004. 
Forecasted change to telephone subscribership for 2004. We predict that if all states adopted a 
1.35 PLC, 259,000 households that do not have telephone service would take telephone service. 
The Telephone Regression Model uses logistic regression to predict the increased telephone 
subscribership that would have resulted from a nationwide 1.35 PLC in 2000. See Tables 2.G 
and 2.H. (At the end of this study is a technical appendix that more thoroughly discusses the 
logistic regression analysis used for this model.) Table 2.H also uses these results to quantify the 
number of households that would take telephone service in 2000 and 2004 because of a 1.35 
PLC. 
For 2000 and 2004 respectively, Tables 2.I and 2.J. break down the number of new Lifeline 
subscribers into two groups: those that would be taking telephone service because of the 1.35 
PLC, and those that are already had telephone service, and who are subscribing to Lifeline just 
because they would then be eligible for it. 
Change to federal Lifeline expenditures for 2004 is forecasted. We predict that federal Lifeline 
expenditures would increase by $105 million to $123 million if all states implemented a 1.35 
PLC. 
The forecasted change to federal Lifeline expenditures is calculated by multiplying the 
forecasted change to the number of Lifeline subscribers in each state times the expected federal 
expenditures per Lifeline subscribers in that state. The state-by-state change in the amount of 
federal expenditures is then summed to form the national total. See Table 2.K. 
Step 3: Apply New Policy to Baseline to Compute New Level 
total of Lifeline subscribers is calculated, and then the increased federal Lifeline expenditures are 
calculated. 
Forecasted New Policy Levels for Lifeline subscribership in 2004. We predict that if all states 
implement a 1.35 PLC for Lifeline, an estimated 8 million households will subscribe. 
Here the forecasted increase in Lifeline subscribers is added to the forecasted baseline number of 
subscribers to create the new forecasted number of Lifeline subscribers in 2004 with the 1.35 
PLC. See Table 3.A. 
Forecasted New Policy Levels for federal Lifeline expenditures. We predict that if all states 
implement a 1.35 PLC for Lifeline, federal Lifeline expenditures are forecasted to be in the range 
of $814 million to $832 million. 
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Here the forecasted increase in federal Lifeline expenditures is added to the forecasted baseline 
federal Lifeline expenditures to create the new forecasted federal Lifeline expenditures in 2004 
with the 1.35 PLC. See Table 3.B. 
Additional request 
Finally, this study examines, at the Joint Boards request, the effects of replacing the current 
federal default Lifeline eligibility criteria with a single income-based criterion (Table 4.A). For 
administrative ease, the model assumes that all states (even those that do not presently utilize the 
federal default criteria) would adopt a single criterion of 1.35 PLC, except that states with a 1.5 
PLC would keep it. Therefore, these estimates may overstate the results of the policy change. If 
current criteria were replaced with a 1.35 PLC, then some current Lifeline participants would no 
longer be eligible, so there would be decreases in Lifeline subscribership resulting from the 
discontinued criteria. There would also be offsetting increases from the new 1.35 PLC. The net 
impact is that fewer households would take Lifeline if the 1.35 PLC were the only eligibility 
criterion. 
The calculations are as follows. The baseline number of households taking Lifeline is the same 
as calculated above in Section Three. CPSH data are examined to determine the percentage of 
households that would no longer qualify for Lifeline due to the removal of all other eligibility 
criteria. The number of newly-eligible households that would take Lifeline as a result of the 1.35 
PLC criteria change is derived in Section Three. Thus, the new policy level of Lifeline 
subscribers is the baseline number of Lifeline subscribers less those subscribers that could not 
remain due to the change, plus those Lifeline subscribers that would take it because of the 
change. See Table 4.A. 
Other Factors 
This study cannot take several important factors into consideration, such as economic conditions 
and state outreach programs because there are not enough data to do so. Properly accounting for 
a fluctuating economy would require five or more decades of data. The Lifeline program started 
only about 20 years ago, so an analysis incorporating a fluctuating economy is not attempted in 
this study. Further, there are no comprehensive estimates quantifying state spending on outreach 
programs, or the effects the outreach programs have on Lifeline subscribership. 
By not accounting for these factors explicitly, this study assumes that these factors will remain 
constant between 2000 and 2004. Although changes in these factors can affect the forecasted 
baseline number of Lifeline subscribers (and therefore, baseline federal expenditures), those 
factors should have a relatively smaller effect on the forecasted number of households that will 
take Lifeline as a result of a 1.35 PLC. The number of households that would take Lifeline 
because of a 1.35 PLC is about 1/6th of those that already take Lifeline. So, as the economy 
fluctuates, and more or less households take Lifeline, the number of households that would take 
Lifeline due to a 1.35 PLC will go up and down by 1/6th as much as the number of households 
that would take Lifeline based on other eligibility criteria. Thus, the number of households 
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taking Lifeline due to a 1.35 PLC will have 1/36th the variance that the number of households 
taking Lifeline will have.4 
Additional assumptions 
In addition to the factors discussed above, this study makes several assumptions that are 
needed to estimate the impact of the program: 
1) All other Lifeline/Linkup eligibility criteria (and the qualifications for the underlying 
programs) stay constant over time. Aside from the addition of a 1.35 PLC, this model assumes 
that between 2000 and 2004, no other changes are made to the Lifeline/Linkup programs or to 
the programs that are frequently used as qualifying criteria for Lifeline between 2000 and 2004; 
2) Data can be substituted. Several states have a 1.33 PLC in effect. This study treats 
states that have a 1.33 PLC as having a 1.35 PLC. This assumption is reasonable because the 
effects of a 1.33 PLC are statistically indistinguishable from a 1.35 PLC. 
3) Rapid adoption and continuity. This model assumes that all states rapidly adopt a 1.35 
PLC (and that states with a 1.5 PLC keep it). The model also assumes that households rapidly 
learn of the changes to the Lifeline program and expeditiously act on this new information. 
4 See Henry Scheffe, The Analysis of Variance, at 8 (1959). 
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Results 
The results are summarized below: 
Summary information for 2004: 
Household information: 
Forecasted households on Lifeline without 1.35 PLC: 6,827,000 
Forecasted additional households on Lifeline with 1.35 PLC: 967,000 to 1,136,000 
Forecasted households on Lifeline with 1.35 PLC: 7,974,000 to 7,961,000 
Lifeline subscriber information: 
Households that would take telephone service due to the 1.35 PLC: 259,000 
Households taking Lifeline that already have telephone service: 708,000 to 877,000 
Federal Lifeline expenditures: 
Forecasted federal Lifeline expenditures without 1.35 PLC: $709,000,000 
Forecasted amount federal expenditures would increase: $105,000,000 to $123,000,000 
Forecasted federal Lifeline expenditures with 1.35 PLC: $814,000,000 to $832,000,000 
Additional federal expenditures per new telephone subscriber: $405 to $475 
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Technical Appendix 1 
Background information for Table 2.C (Would Lifeline take rates increase 
due to a nationwide implementation of a 1.35 PLC?) 
Below are the two regression results that are used to determine the effect that a 
nationwide implementation of a 1.35 poverty level criterion would have on 
Lifeline subscribership. 
Regression 1  Lifeline specification 1. 
The regression model calculated from the data is 
%HHBelowOnePtFiveTakingLifeline = 
-0.02 + 0.58 x IncElgAbv125 + 1.04 x California + 0.0167 x TotSup. 
Explanation of variables for Lifeline regression specification 1. 
The dependent variable is the number of households taking Lifeline divided by the 
number of households that are at or below 1.5 times the poverty level1 
(%HHBelowOnePtFiveTakingLifeline). For example, Texas had 263,934 Lifeline 
subscribers in 2000, and 1,575,172 households at or below 1.5 times the poverty 
line. The dependent variable data point for Texas therefore equals 0.15 
(=263,934/1,348,089). 
The first Independent Variable is IncEligAbv125. For each state, IncEligAbv125 
equals that states income eligibility level (if it has one) minus 1.25. So, for 
California, which has an income eligibility criterion of 1.5 times the poverty level, 
IncEligAbv125 equals 0.25 (= 1.5  1.25). For states with an income eligibility 
criterion at or below 1.25 times the poverty level, or for states without an income 
criterion, IncEligAbv125 equals 0. So, for Texas, which has an income eligibility 
criterion of 1.25 times the poverty level, IncEligAbv125 equals 0. The coefficient 
on this variable allows us to predict the number of households that would take 
Lifeline if a 1.35 PLC were adopted. 
1 The federal government establishes the poverty level threshold, which is based on the number of people living in the 
household, and whether the household is in the mainland United States, Alaska, or Hawaii. The Current Population 
Survey of Households (CPSH) data conveniently list the poverty level for each family in the family record portion of 
the data. 
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So for Texas, and other states with a 1.25 PLC (and for states without an incomebased 
criterion), the new policy would increase the independent variable from 0.25 
to 0.35, or by 0.1, and the dependent variable would increase 5.8 percentage points. 
The percentage point increase in percentage of households at or below 1.5 times 
the poverty level that take Lifeline because of a 1.35 PLC were implemented 
would be 5.8%. 
= 0.58 * 0.1 = 0.058 or 5.8%. 2 
The second Independent Variable is California. In statistical terms, this is called 
a dummy variable, and equals 1 if the state is California, and is 0 otherwise. A 
dummy variable is often used in regression analysis to quantify specific effects. 
California is the only state using self-certification with an income-based criterion, 
and it appears to have more households taking Lifeline than the CPSH data would 
indicate are eligible for it. Therefore, singling out California with a dummy 
variable to measure a California-specific effect is warranted. 
The variable TotSup is the amount of monthly telephone service support that 
Lifeline subscribers in each state receive (TotSup). The amount of total support 
that households receive varies with the local telephone carrier. For each state, 
TotSup is the amount of support from the largest carrier in that state. For example, 
in Texas, Lifeline subscribers in Southwestern Bell territories pay $11.35 per 
month less for telephone service than regular telephone subscribers. Therefore, the 
TotSup datapoint for Texas is $11.35. The more support that eligible households 
can receive, the more incentive they have to take Lifeline. 
2 The coefficient 0.58 is used to calculate the number of additional households that would take Lifeline with a 1.35 
PLC. It is multiplied by the number of households at or below 1.5 times the poverty level (i.e., from 0.0 to 1.5 times 
the poverty level). Even though those households between 1.35 and 1.5 times the poverty level would not actually 
qualify for Lifeline, the model coefficient is estimated in such a way that a correct prediction is made. 
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Regression 2  Lifeline specification 2. 
%HHBelowOnePtFiveTakingLifeline = 
0.14 + 0.68 x IncElgAbv125 + 1.04 x California 
When comparing the two specifications, this one suggests that more households 
would take Lifeline because the coefficient 0.68 is greater than the 0.58 coefficient 
in Regression 1. So for Texas, and other states with a 1.25 PLC, and for states 
without an income criterion, the percentage point increase in the percentage of 
households at or below 1.5 times the poverty level that would take Lifeline because 
of a 1.35 PLC is 6.8%. 
= 0.68 *x 0.1 = 0.068 or 6.8%. 
Additional information about Lifeline regression specifications 1 and 2: 
Data sources 
The data are from the Current Population Survey of Households (CPSH) (March 
2000 data), the Universal Service Monitoring Report (Oct. 2002) and 
www.lifelinesupport.org. The CPSH data are used to determine the number of 
households at or below 1.5 times the poverty level in each state. The Universal 
Service Monitoring Report was used to determine the number of households on 
Lifeline and the total support (number of dollars) that Lifeline subscribers received 
in each state. The website www.lifelinesupport.org was used to determine which 
states had income criteria for Lifeline, and the multiple of the Federal Poverty 
Guidelines that was required to be eligible for Lifeline in those states. 
Data are aggregated to the state level. 
CPSH has data for thousands of households, including whether the household has 
telephone service or not. If it were possible to do so, it would be best to conduct 
the analysis at the household level to maximize the number of observations and to 
account for several demographic factors. Unfortunately, CPSH data do not report 
whether the household is receiving the Lifeline subsidy. Therefore, individual data 
observations could not directly be used for the estimation. These regressions 
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therefore use data that have been aggregated to the state level. This means there is 
a single data point constructed for each state. The number of Lifeline subscribers 
for each state is available from the Universal Service Monitoring Report, however, 
so the CPSH data are aggregated to the state level. The number of households that 
are at or below 1.5 times the poverty level in a particular state is determined by 
summing the statistical weight of each household at or below 1.5 times the poverty 
level (the statistical weight for each household is determined by the Bureau of 
Labor Statistics), and dividing by 100. (The statistical weights add up to 100 times 
the number of households in the state, so dividing by 100 is a necessary step.) 
Additional information on regression specification 
The dependent variable: %HHBelowOnePtFiveTakingLifeline. 
As mentioned above, the dependent variable is the number of households taking 
Lifeline divided by the number of households that are at or below 1.5 times the 
poverty level. The dependent variable should be a measure of participation rate, 
and this requires a measure of takers and a measure of eligibility. An ideal 
measure would have been the number of households taking Lifeline divided by the 
total number of households that are eligible. Obtaining a measure of number of 
eligible households in each state is not possible, as will be explained below, so a 
surrogate measure number of households that are at or below 1.5 times the 
poverty level is used in its place. As long as the resulting surrogate participation 
rate is consistent across states, and used properly, the resulting analysis is correct. 
The surrogate is necessary because of a measurement problem. There are several 
states where it is difficult to measure the number of households that are eligible for 
Lifeline. This happens most often when states use state-specific programs as 
eligibility criteria. Because the CPSH survey does not ask about every possible 
welfare program, the CPSH data cannot always be used to determine if a 
household is eligible for Lifeline or not. 
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Therefore, an alternative dependent variable was needed. The number of 
households below 1.5 times the poverty level is a reasonable proximate measure of 
support need. So, instead of dividing the number of households taking Lifeline by 
the number of households eligible for Lifeline, the dependent variable in this 
analysis is the number of households taking Lifeline divided by the number of 
households that are at or below 1.5 times the poverty level. The 1.5 times the 
poverty level threshold was chosen because it was the highest poverty level 
criterion used by any state, and it was used by several states. 
The principal independent variable: IncEligAbv125 
As mentioned above, IncEligAbv125 equals that states income eligibility level (if 
it has one) minus 1.25. If the state has no income eligibility criterion, or if it has 
one that is less than 1.25 times the poverty level, then the datapoint equals zero for 
that state. 
The main objective of the regression analysis is to quantify the number of 
additional households that will subscribe to Lifeline with the implementation of an 
income-based eligibility criterion. Generally, states using higher multiples of the 
poverty level as an eligibility criterion have higher Lifeline participation rates than 
states using lower multiples of the poverty level criteria (or states using no income 
based criterion at all). The coefficient on IncEligAbv125 is used to predict the 
number of households that would take Lifeline due to a 1.35 PLC. 
Preliminary modeling indicated that a nationwide implementation of an income 
criterion set at or below 1.25 times the poverty level would not increase the 
number of households taking Lifeline by a statistically significant amount. 
Because some states use lower multiples of the poverty level to determine Lifeline 
eligibility, one would expect that using a higher multiple of the poverty level 
would increase the number of households eligible for Lifeline in those states. 
However, basing this independent variable on lower multiples of the poverty level 
did not produce statistically significant results. 
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Discussion 
Discussion of independent variables: 
California is significant in both regressions (indeed, it was significant for all 
regression specifications in which it is included). 
TotSup is positive, but is not significant. It is nearly significant, however. 
Further, there is strong economic reason to include it, because it measures a 
households incentive to take Lifeline, so it should not be eliminated from the 
model without good reason. 
IncEligAbv125 is significant in both regressions, but the size of the coefficient 
varies, and it is just barely significant (at the 10% level) when TotSup is included. 
Other specifications of the model were run that included whether each state had a 
particular program as an eligibility criteria. Throughout most of the trial 
specifications, the coefficient of IncEligAbv125 ranged between the two values 
presented in this report and remained significant. Therefore, the analyses 
presented in this report are very robust. 
Low-income Home Energy Assistance Program (LIHEAP) 
Other trial variables are tested in the regression analysis, but for the reasons listed 
below, these trials are not adopted. However, when the regression included 
whether the state had energy assistance as a method for qualifying for Lifeline, the 
coefficient on IncEligAbv125 dropped 40% and was not even close to being 
significant. This trial regression model is contrary to sound economics for two 
reasons. 
First, if the results were accurate, it would indicate that there would be no 
significant additional Lifeline subscribership with the implementation of a 1.35 
PLC. This is not plausible, because the logistic regression analysis (see Appendix 
2) indicates that a 1.35 PLC would significantly increase the number of households 
taking telephone service. Because we find strong evidence that a 1.35 PLC would 
increase telephone subscribership, a similar impact on Lifeline subscribership is 
also expected. 
Second, if the coefficient on IncEligAbv125 from the Lifeline Regression were 
plugged into the model, it would indicate that just 10% of those households that 
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would become eligible would take Lifeline service, which seems far too low. 
Currently, over 30% of eligible households take Lifeline service. While the 
percentage of eligible households that would take Lifeline would surely decrease 
as eligibility requirements were eased, there is no reason to believe that it would 
drop by more than 2/3. Thus, adding a variable quantifying whether the state has 
energy assistance as an eligibility requirement leads to results that are not 
consistent with economic theory. That trial regression is therefore not used.3 
Given that the coefficient on IncEligAbv125 ranges between 0.582 and 0.682 in all 
the other trial regressions, that range is used in this study. Table 2.D uses the 
results from the regression analysis to quantify the number of households that 
would take Lifeline as a result of a 1.35 PLC. 
OLS regression was used using the statistical computer program Stata 7.0. The 
regression outputs (below) show the significance of each coefficient. 
3 We note that there is some multicollinearity between the energy assistance variable and TotSup. As a practical 
matter, if energy assistance is included in the regression and TotSup is removed, then the coefficient on IncElgAbv125 
returns to normal levels and is significant. 
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============== Regression output ================== 
. reg %HHBelowOnePtFiveTakingLifeline IncElgAbv125 California TotSup 
Source | SS df MS Number of obs = 51 
-------------+------------------------------ F( 3, 47) = 19.64 
Model | 1.5914109 3 .530470301 Prob > F = 0.0000 
Residual | 1.26974251 47 .027015798 R-squared = 0.5562 
-------------+------------------------------ Adj R-squared = 0.5279 
Total | 2.86115341 50 .057223068 Root MSE = .16436 
------------------------------------------------------------------------------ 
| Coef. Std. Err. t P>|t| [95% Conf. Interval] 
-------------+---------------------------------------------------------------- 
IncElgAbv125 | .5815073 .3422222 1.70 0.096 -.106955 1.26997 
California | 1.040881 .1825073 5.70 0.000 .6737233 1.408038 
TotSup | .0166981 .0102551 1.63 0.110 -.0039326 .0373288 
Constant | -.0220947 .1013846 -0.22 0.828 -.2260543 .1818648 
reg %HHBelowOnePtFiveTakingLifeline IncElgAbv125 California 
Source | SS df MS Number of obs = 51 
-------------+------------------------------ F( 2, 48) = 27.19 
Model | 1.51978515 2 .759892577 Prob > F = 0.0000 
Residual | 1.34136826 48 .027945172 R-squared = 0.5312 
-------------+------------------------------ Adj R-squared = 0.5116 
Total | 2.86115341 50 .057223068 Root MSE = .16717 
------------------------------------------------------------------------------ 
| Coef. Std. Err. t P>|t| [95% Conf. Interval] 
-------------+---------------------------------------------------------------- 
IncElgAbv125 | .682112 .3423391 1.99 0.052 -.006207 1.370431 
California | 1.045145 .1856009 5.63 0.000 .6719696 1.418321 
Constant | .1380132 .0251194 5.49 0.000 .0875073 .1885192 
------------------------------------------------------------------------------ 
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Technical Appendix 2 
Background information for Table 2.G 
(Would a 1.35 PLC for Lifeline increase telephone penetration?) 
Below are the results of two logistic regressions. They show the effects that a 1.35 
PLC for Lifeline has on telephone subscribership. Logistic regression 1 was used 
for the study. Logistic regression 2 tested whether Californias self-certification 
process for income-based eligibility increased telephone penetration among lowincome 
households. 
Logistic regression 1  Telephone Specification 1: 
Y = 1 / (1 + e  [1.09 + 0.189*X1 + -.753* X2 + .728* X3 + .521* X4 + .032* X5 +- 0.326*X6]) 
Explanation of variables for Telephone Specification 1. 
Dependent variable: 
Does the household have telephone service? (Y = H_TELHHD) 
The dependent variable is whether the low-income household has telephone 
service. The data point for a household equals one if the household has telephone 
service, and equals zero otherwise. The dataset is comprised of data from only 
those households with incomes at or below 1.5 times the poverty level. 
Independent variables: 
Is the household in a state with a 1.35 or less restrictive poverty level criterion? 
(X1 = SH135BET) 
If the household is in a state that uses a 1.35 PLC for Lifeline (or if the state uses a 
higher multiple of the poverty level), then SH135BET equals one for that data 
point; otherwise, it equals zero. Because the sample is restricted to only those 
households that are at or below 1.35 times the poverty level, all data points for this 
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variable will be either a 0 or 1. Of these low-income households, 19.1 percent 
live in a state with a 1.35 to 1.5 PLC, and the independent variable SH135BET 
equals 1 for these households. For the other 80.9 percent, the independent variable 
SH135BET value equals 0. 
This is the only independent variable used in the cost/benefit analysis, and 
therefore the accuracy of its coefficient is of most concern. The coefficient on this 
variable (0.189) is later used to quantify the increased probability that a lowincome 
household will take telephone service (or fraction of) as the result of a 1.35 
PLC. 
This quantification is accomplished as follows: When X1 is changed, Y will 
change. For an individual household, the change of X1 from 0 to 1 models the 
effect of implementing a 1.35 PLC for that particular household. When modeling 
the change nationally, X1 is changed from .191 (19.1%, which reflects the fact that 
19.1 percent of the sample households already live in a state with a 1.35 PLC) to 1. 
As a result, Y changes according to Logistic regression 1 above (Y is interpreted as 
a percentageor probabilityof households with telephone subscribership, and 
ranges from 0 to 1). When we change the baseline 19.1 percent of low-income 
households (living in a state with a 1.35 PLC) to the new policy 100.0 percent, 
then predicted telephone subscribership among sample households increases from 
88.3 percent to 89.8 percent. 
Is the household a mobile home? (X2 = MOBHOME) 
If the household is a mobile home, then the MOBHOME equals one for that 
datapoint; otherwise, it equals zero. 
Is the household owned by the householders? (X3 = OWNHOME) 
If the householders own the home themselves, then OWNHOME for that data 
point equals 1; otherwise, it equals zero. 
Percentage of households who lived at that address for at least one year. (X4 = 
PCTONEYEAR) 
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The data points for PCTONEYEAR equal the percentage of the adults in that 
household that have lived at that address for at least one year. 
Total value of household income (X5 = HTOTVAL) 
The data points for each household equal the households entire annual income 
including the value of transfer (e.g., welfare) payments. 
Is someone in the household on food stamps? (X6 = HFOODSP) 
If someone in the household is on food stamps, then HFOODSP equals one for that 
data point; otherwise, it equals zero. 
For the results of this specification, see page 51, below. 
Logistic regression 2  Telephone Specification 2: 
Telephone Specification 2 includes all the variables from specification 1, and 
includes the variable California. 
California. (CALIF) 
If the household is in California, the variable equals one, otherwise, it equals zero. 
For the results of this specification, see page 52, below. 
Additional information about specifications 1 and 2 
Price 
None of the logistic regression specifications include the price of telephone 
service. This is because the price that each household faces is unknown. Different 
carriers offer service at different prices, and even within the same carrier, the price 
of telephone service varies from city to city. Because the carrier that would serve 
each household is unknown, price cannot be included in the logistic regressions. 
Earlier research has shown that omitting the price of telephone service does not 
affect the coefficients of the other variables in this logistic regression. This is 
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because the coefficient on price would be tiny, so any missing variable bias 
would also be tiny.4 
Data sources 
The data in this analysis are from the Current Population Survey of Households 
(CPSH) from March 2000. CPSH data contain information on over 50,000 
households. From these data, the relevant demographic information are extracted 
for analysis, including: 1) whether the household has telephone service, 2) 
households total income (including the value of transfer payments), 3) the poverty 
level for that household (i.e., household earnings divided by state definition of 
poverty-level income), 4) the state the household lives in, 5) whether the household 
dwelling is owned or rented, 6) the number of adult members that live in the 
household for at least one year, 7) the number of adults living in the household, 
and 8) the list of subsidies the household receives, which included Federal Public 
Housing Assistance (Section 8), Food Stamps, LIHEAP, Medicaid, and 
Supplemental Security Income. The CPSH data also includes information on 
whether or not the household has telephone service. 
Household-level data are used 
All the information is available for each household, so the analysis is conducted at 
the household level; aggregating to the state level is unnecessary. 
Logistic regression preferred to standard OLS regression 
Because the dependent variable is binary (a household either has telephone service 
and is thereby assigned a values of one (1), or it does not and is thereby assigned a 
value of 0 (zero), logistic regression analysis is preferred to a Linear Probability 
model using Ordinary Least Squares (OLS). With binary dependent variables, 
4 The formula for calculating the missing variable bias can be found in many textbooks, including William H. Greene, 
Econometric Analysis, at 402 (3rd ed. 1997). Observation of the equation shows that if the missing variable is 
uncorrelated with an independent variable, then the coefficient on that independent variable is unbiased. A regression 
was run to see if telephone prices are correlated with the variable SH135BET. The weighted average price for each of 
the 41 states for which price data are available was created. The variable price was then regressed on the variable 
SH135BET. There was no correlation. (See Industry Analysis and Technology Division, Wireline Competition 
Bureau, Federal Communications Commission, Reference Book, at 7-8 (2002). 
44
FCC 03J-2 Federal Communications Commission 
linear regressions can produce erroneous results, such as a household having more 
than a 100% probability of taking telephone service, or a household having a 
negative probability of taking telephone service. Both of these situations are 
impossible. Logistic regression analysis avoids this problem, and is appropriate for 
measuring saturation concepts such as telephone penetration. The following graph 
illustrates the difference between the two approaches. In the following graph 
(taken from the Internet), linear probability model refers to OLS regression 
results, and Y (ranging from 0 to 1) refers to probability. 5 
Unfortunately, logistic regressions produce coefficients that are more difficult to 
interpret than the coefficients that OLS produces. A few additional computations 
are needed to use the coefficients in the cost-benefit analysis. Therefore, Table 
2.H is created, which uses the coefficients from the logistic regression to determine 
the number of households that would have taken phone service in 2000 and 2004 if 
a 1.35 poverty level criterion were instituted nationally. The number of 
households that would take telephone service because of a 1.35 PLC is then 
compared to the number of households that would take Lifeline in Table 2.I. 
5 For more information on logistic regression analysis, see Damodar Gujarati, Basic Econometrics at 481-491 (2nd ed. 
1998). 
45
FCC 03J-2 Federal Communications Commission 
Quantifying logistic regression coefficients 
In a standard regression analysis, the effect that a change in the independent 
variable has on the dependent variable is relatively easy to measure because it is 
linear. When using standard linear regression, a model is often expressed as 
follows: Y = a + b*X. In this equation, Y represents the dependent variable, a 
represents a constant, and b is the coefficient from the regression which is 
multiplied by the size of the independent variable X. The symbol . is often used 
to represent the change in a variable. 
The change in Y caused by a change in X is then represented like this: 
.Y = b*.X. Thus, the change in Y for a change in an independent variable is 
simply the coefficient on the independent variable times the amount of the change 
in that independent variable. 
Because logistic regression analysis is not linear, however, the above calculation 
cannot be made directly. Instead, two intermediate calculations must be made. 
The first calculation quantifies the dependent variable using the mean values of the 
independent variables. The second calculation quantifies the dependent variable 
using the same means as in the first calculation, except that one of the independent 
variables is set to the new policy level. The second calculation replaces the mean 
of the independent of the variable in question (e.g., a policy variable) with an 
appropriate value representing the change in the variable. If all states adopted a 
1.35 PLC, then the percentage of low income households living in a state with a 
1.35 PLC would move from 19.1% to 100%. So, in this case, the mean of 
SH135BET (which equals 0.191) would be replaced with 1.00. 
For both calculations, Y is calculated by the following equation: 
Y = 1 / (1 + e .[1.09 + 0.189*X1 + -.753* X2 + .728* X3 + .521* X4 + .032* X5 +- 0.326*X6 ]) 
Table 2.H explains the calculations. The coefficient values from the logistic 
regression are in column a. The means of the independent variables are in column 
b. Column c multiplies columns a and b. These products are often called the 
partial effects. The partial effects are then summed to create a Z score. The Z 
score is simply a shorthand way of representing a +b1*x1 + b2*x2 + . When 
evaluating the independent variables at their mean values, the Z score equals 2.025. 
Y (the probability that a household will take telephone service) is then calculated: 
Y = 1/(1+e-z), which equals 88.3%. This means that, nationwide, households with 
46
FCC 03J-2 Federal Communications Commission 
incomes below 1.35 times the poverty level have an 88.3% chance of having 
telephone service. 
The second calculation is identical to the first, with one exception. Instead of 
using the mean value of SH135BET, the mean is replaced by a 1. As discussed 
above, this would be the case if all states have a 1.35 PLC. Just as before, the 
coefficients (column a) are multiplied by the means (column d) to produce the new 
partial effect. Notice that for SH135BET, the mean value of 0.191 was replaced 
with 1.00. The new partial effects are listed in column E. These partial effects are 
then summed to form the new Z score, which equals 2.178. This new Z score is 
then used in the calculation as before: Y= =1/(1+e-z). The new value for Y is 
89.8%. This means that if all states adopted a 1.35 PLC, then 89.8% of households 
with incomes at or below 1.35 times the poverty level would have telephone 
service. This represents a 1.5 percentage point increase (89.8% - 88.3%) in 
telephone subscription rates. 
To determine the number of households in 2004 that would take phone service due 
to a 1.35 PLC, the difference in the Ys (1.5%) is multiplied by the number of 
households that are at or below 1.35 times the poverty level. Projections made 
using the CPSH data indicate that in 2004, there will be 17,433,000 households at 
or below 1.35 times the poverty level. Thus, multiplying 1.5% (which equals 
0.015) times 17,433,000 households equals 259,000 households. Thus, 259,000 
households would take telephone service due to a 1.35 PLC in 2004. 
Restricted use of observations and variables 
The logistic regression analyses uses only selected observations and variables for 
good reason. One reason is to address a specific policy proposal from the Joint 
Board. The Joint Board is recommending using a 1.35 PLC. In order to determine 
how such a plan would affect households at or below 1.35 times the poverty level, 
only those households with incomes at or below 1.35 times the poverty level are 
included in this analysis.6 There are 8,358 usable observations. 
6 Alternatively, the sample could be restricted to households at or below 1.33 times the poverty level because there are 
three states that have a 1.33 PLC. By including households at 1.34 and 1.35 times the poverty level, we are implicitly 
assuming that those households are eligible for Lifeline even though they just miss qualifying for it. On the other hand, 
restricting the sample to households at or below 1.33 times the poverty line would exclude many more households from 
the sample in other states with a 1.5 PLC. It is not clear whether a 1.33 PLC restriction is better than a 1.35 PLC. 
Fortunately, the results are the same in either case. For both models, the coefficient on SH135BET is virtually identical 
with either sample restriction. 
47
FCC 03J-2 Federal Communications Commission 
The number of state specific variables that can be included in the analysis is 
limited because only 8 states have SH135BET equal to one. Therefore, including 
additional state specific variables reduces the accuracy of the coefficient 
SH135BET, the important policy variable used to quantify costs and benefits. 
Discussion of variables in the specifications 
Assumption that effects of a 1.33 PLC are indistinguishable from a 1.35 PLC 
As mentioned earlier, this study assumes that the effects of a 1.33 PLC are 
statistically indistinguishable from a 1.35 PLC. Therefore, SH135BET equals one 
for the states that have 1.33 or 1.5 PLCs. There is no alternative to measuring the 
effect of a 1.35 PLC because no states use a 1.35 PLC. 
Further, the fact that this analysis treats states with a 1.5 PLC the same as states 
with a 1.33 PLC is not problematic. This is because the households in the sample 
are restricted to those that are at or below 1.35 times the poverty level. Thus, all 
the households in the sample will make the same economic choice whether the 
state in which they live has a 1.33 (or 1.35) or 1.50 PLC, because the households 
qualify for Lifeline under either criterion. 
Inclusion of independent variables 
HFOODSP was included because it captures the concept of poverty in a way that 
income alone does not. Participation in the Food Stamps Program is an indicator 
of special household needs. Without a variable like HFOODSP to capture poverty 
in a way that income alone does not, the coefficient on SH135BET is negative and 
insignificant, which is counter to a reasonable economic theory of Lifeline effects. 
CALIFORNIA-Unique Effects. 
The CALIF (California) variable was tested as a separate variable in the second 
logistic regression because it was included in the Lifeline Model. The hypothesis 
is that Californias policy of using self-certification for income-eligibility could 
possibly have a unique impact on telephone subscribership that is different than 
other states. Just as California was singled out in the Lifeline subscribership 
regressions, one might reason that the unique policy of California should also be 
48
FCC 03J-2 Federal Communications Commission 
reflected in the telephone subscribership analysis. The second logistic regression 
examines the effects of accounting for California separately. 
The results indicate that living in California does not have a unique effect on 
telephone subscribership. The second specification shows that the coefficient on 
CALIF is not significant, which suggests that Californias self-certification policy 
does not statistically significantly increase telephone subscribership among 
Californians (compared to other states) with incomes at or below 1.35 times the 
poverty level.7 
The inclusion of the variable California in the logistic regression has a large 
erroneous impact on the primary variable of interest, SH135BET (whether or not 
the household is in a state with at least a 1.35 poverty level criterion). If the 
logistic regression includes the variable California, then the coefficient on 
SH135BET is smaller and not statistically significant.8 If the variable California is 
not included in the logistic regression, then the coefficient on SH135BET is larger 
and statistically significant, as expected. This larger SH135BET coefficient is 
found because the Lifeline program has a somewhat larger impact on low-income 
households in California than in other states. 
Furthermore, including a CALIF variable would compromise statistical accuracy. 
Including the CALIF variable would lower the statistical accuracy of the income 
criterion effect. Half of all households that live in a state with at least a 1.35 
poverty level criterion for Lifeline are in California, so accounting for California 
separately would wrongly remove any influence California observations have on 
the national coefficient for the variable SH135BET. The influence from 
California observations should be included in the coefficient for SH135BET, and 
so the 2nd model excluding the California influence (by including a CALIF 
variable) is not used. 
7 Because California has above-expected Lifeline subscribership, one might expect it to have above-expected telephone 
subscribership among households at or below 1.35 times the poverty level. However, the data does not support this. 
When responding to the CPSH survey, households have no incentive to misreport their income, so those households in 
California that report their income as being below the 1.35 times the poverty line most likely really are below that 
threshold. The result is that California telephone penetration follows that of the other states. 
8 Although the coefficient on SH135BET is still positive, it is not statistically significant. If SH135BET is not 
statistically significant, then it would be difficult to conclude that states having a 1.35 PLC (or less restrictive poverty 
level criterion) have any impact on telephone penetration. 
49
FCC 03J-2 Federal Communications Commission 
Because there is no compelling reason to account for California separately, and 
because the coefficient on the variable California is not significant, households in 
California are not singled out in the analysis by including a separate CALIF 
variable. Thus, the California variable should not be included in the logistic 
regression. 
Total Lifeline support 
The variable Total Lifeline support for the household is not included in the final 
model for two reasons. (See discussion of TotSup from Technical Appendix 1.) 
First, the total support that individuals within a state receive depends on the carrier 
that would potentially serve them. Thus, although the amount of total support from 
the largest carrier in the state was chosen, there would be a large number of 
households for which the variable TotSup would contain the wrong amount of 
support. For the majority of households in the CPSH data, the location of the 
household is unidentifiable, so the carrier that would potentially serve that 
household is also unidentifiable. 
Second, when the variable TotSup was tried in the logistic regression, it proved 
not significant. When TotSup was included, the coefficient on SH135BET was 
smaller, but was still significant. 
The logistic regression was run using the statistical computer program SPSS 
version 10. The regression analysis computer printouts are displayed below: 
50
Percentage 
Correct 
.0 
100.0 
87.1 
FCC 03J-2 
Exp(B) 
.471 
2.072 
1.684 
1.208 
1.000 
.722 
2.978 
Federal Communications Commission 
Percent 
100.0 
.0 
100.0 
.0 
100.0 
df Sig. 
.000 
.000 
.000 
6
6
6 
Nagelkerke 
R Square 
.064 
H_TELHHD 
.00 
.00 
1.00 
0
0 
Predicted 
1.00 
1079 
7279 
df 
1
1
1
1
1
1
1 
S.E. 
.109 
.081 
.077 
.089 
.000 
.072 
.086 
Classification Tablea 
Variables in the Equation 
Wald 
47.273 
81.442 
45.929 
4.523 
30.847 
20.325 
160.887 
MOBHOME 
OWNHOME 
PCTONEYR 
SH135BET 
HTOTVAL 
HFOODSP 
Constant 
a. Variable(s) entered on step 1: MOBHOME, OWNHOME, PCTONEYR, SH135BET, 
HTOTVAL, HFOODSP. 
Logistic Regression 
Case Processing Summary 
Unweighted Casesa 
Selected Cases Included in Analysis 
Missing Cases 
Total 
Unselected Cases 
Total 
N
8358
0 
8358
0 
8358 
a. If weight is in effect, see classification table for the total 
number of cases. 
Omnibus Tests of Model Coefficients 
Step 1 Step 
Block 
Model 
Chi-square 
291.862 
291.862 
291.862 
Model Summary 
Cox & Snell 
R Square 
.034 
Step 
1 
-2 Log 
likelihood 
6138.251 
Step 1 
Observed 
H_TELHHD 
Overall Percentage 
a. The cut value is .500 
Step 
1a 
B 
-.752823 
.728299 
.521155 
.189162 
.000032 
-.326141 
1.091223 
Sig. 
.000 
.000 
.000 
.033 
.000 
.000 
.000 
51
Percentage 
Correct 
.0 
100.0 
87.1 
FCC 03J-2 
Exp(B) 
.473 
2.084 
1.678 
1.087 
1.000 
.724 
1.249 
2.989 
Federal Communications Commission 
Percent 
100.0 
.0 
100.0 
.0 
100.0 
df Sig. 
.000 
.000 
.000 
7
7
7 
Nagelkerke 
R Square 
.064 
H_TELHHD 
.00 
.00 
1.00 
0
0 
Predicted 
1.00 
1079 
7279 
df 
1
1
1
1
1
1
1
1 
S.E. 
.110 
.081 
.077 
.116 
.000 
.072 
.162 
.086 
Classification Tablea 
Variables in the Equation 
Wald 
46.727 
82.599 
45.218 
.520 
29.676 
19.905 
1.887 
161.649 
MOBHOME 
OWNHOME 
PCTONEYR 
SH135BET 
HTOTVAL 
HFOODSP 
CALIF 
Constant 
a. Variable(s) entered on step 1: MOBHOME, OWNHOME, PCTONEYR, SH135BET, 
HTOTVAL, HFOODSP, CALIF. 
Logistic Regression 
Case Processing Summary 
Unweighted Casesa 
Selected Cases Included in Analysis 
Missing Cases 
Total 
Unselected Cases 
Total 
N
8358
0 
8358
0 
8358 
a. If weight is in effect, see classification table for the total 
number of cases. 
Omnibus Tests of Model Coefficients 
Step 1 Step 
Block 
Model 
Chi-square 
293.757 
293.757 
293.757 
Model Summary 
Cox & Snell 
R Square 
.035 
Step 
1 
-2 Log 
likelihood 
6136.356 
Step 1 
Observed 
H_TELHHD 
Overall Percentage 
a. The cut value is .500 
Step 
1a 
B 
-.748590 
.734328 
.517551 
.083355 
.000032 
-.322910 
.222716 
1.095058 
Sig. 
.000 
.000 
.000 
.471 
.000 
.000 
.170 
.000 
52
FCC 03J-2 Federal Communications Commission 
SEPARATE STATEMENT OF 
CHAIRMAN BOB ROWE, MONTANA PUBLIC SERVICE COMMISSION 
I am pleased that the Joint Board gave this referral the same close attention it has 
Re: Federal-State Joint Board on Universal Service, Recommended Decision on Low-Income 
Programs. 
This inquiry developed a wealth of good ideas: Good ideas to increase awareness of 
Lifeline and Link-up; to better match eligibility requirements with need; to increase 
participation; and to lower transaction costs while preserving accountability. Ultimately, all of 
these ideas are intended to ensure that the programs better achieve Congresss goals for them. 
In very many instances, the Joint Board recommends that this compendium of good ideas 
be used by the states to tailor programs most appropriate to their specific circumstances. This is 
very much a prudential, cooperative federalist approach to achieving the programs purposes. 
It encourages state creativity. To succeed, it will require greater effort and engagement from 
many states, including my own. Specifically, it will require close coordination between state 
public utility commissions, state and local human services agencies, the industry, and other 
stakeholders. 
Consistent with cooperative federalism, I hope this recommendation will also stimulate a 
multi-directional dialogue, with states sharing successful strategies, and reporting back through 
some efficient medium on their implementation of this recommendation in ways that will 
provide useful information to the FCC and to others interested. 
afforded the other important issues with which it has recently dealt. 
FCC 03J-2 Federal Communications Commission 
SEPARATE STATEMENT OF 
COMMISSIONER LILA A. JABER, FLORIDA PUBLIC SERVICE COMMISSION 
Re: Federal-State Joint Board on Universal Service, Recommended Decision on Low-Income 
Programs. 
An important aspect of the Federal Communications Commissions (FCC) mission is to 
ensure that telecommunications services are available to all the people of the United States. To 
that end, the Low-Income Program has been designed to assist eligible economically 
disadvantaged households that want, but cannot afford, telephone service by discounting services 
provided by local telephone companies. I believe that this recommended decision, if 
implemented, will improve the effectiveness of the program by addressing issues relating to 
sustainability and accountability. I wish to thank my colleagues on this Joint Board for a 
balanced and well-reasoned recommended decision. 
I am optimistic that this recommended decision will ensure that those customers that need 
assistance will be eligible to receive it by expanding the list of federal eligibility criteria; I 
support their inclusion. The long-term sustainability of the program requires effective 
accountability. Several states have taken such steps to ensure program integrity by utilizing 
automated enrollment procedures both to add eligible households and to remove them when they 
no longer qualify. I am pleased that this recommended decision has been used to highlight 
successful strategies that states may consider implementing to improve participation in the 
program. I am especially encouraged by the recommended decisions proposal that would 
require states to establish a verification plan. While I have doubts about the use of selfcertification 
as a means of verification, I trust that the flexibility recommended for state 
implementation will successfully root out any waste, fraud, and abuse that may exist in the 
program. 
FCC 03J-2 Federal Communications Commission 
SEPARATE STATEMENT OF 
BILLY JACK GREGG, DIRECTOR OF THE CONSUMER ADVOCATE 
DIVISION, PUBLIC SERVICE COMMISSION OF WEST VIRGINIA 
Re: Federal-State Joint Board on Universal Service, Recommended Decision on Low-Income 
Programs. 
According to the Commissions latest report on telephone subscribership, 95.1% of the 
109 million households in the United States have telephone service.1 This is a remarkable 
achievement, but it still falls short of the goal of universal availability and affordability of service 
set forth in the 1996 Telecommunications Act. The fact that 95.1% of homes are connected to 
the telecommunications network means that over 5 million households in our country do not 
have telephone service. Moreover, this number has remained persistent. Since 1990, the overall 
number of households and the percentage of households with telephone service have grown, 
while the number of households without telephone service has continued to range between 4.8 
and 6.4 million.2 
The Joint Board and the Commission took action in 1997 to address the large number of 
unconnected households in our nation by expanding the federal Lifeline and Link-Up programs. 
Since that time 7.4 million households have been added to the telephone network and the 
percentage of households without phone service has dropped.3 Unfortunately, in spite of these 
efforts and the efforts of the individual States, the number of households without phone service 
remains high. 
Poverty is obviously the primary factor limiting the ability of unconnected households to 
join the telephone network. Low-income customers are significantly less likely to have 
telephone service than are other consumers.4 The federal Lifeline and Link-Up programs 
provide numerous options to low-income individuals and families to overcome the cost of 
obtaining and maintaining phone service. The Link-Up program will pay the lions share of 
local connection charges and provides for the waiver of all deposit requirements if a customer 
opts for toll-blocking service. Once a household is connected to the phone system, the Lifeline 
program provides substantial federal discounts off of normal monthly recurring charges, and 
encourages states to add discounts of their own. In some cases, these discounts can represent 
90% of a regular phone bill. However, federal and state programs to assist in the payment of 
phone bills are of no use if a low-income customer cannot get phone service because of an 
outstanding balance for unpaid local and/or long distance service. 
1 Telephone Subscribership in the United States, FCC Wireline Competition Bureau, IAD (Feb. 12, 2003), Table 1, 
http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/IAD/subs0702.pdf. 
2 The number of households without telephone service last topped 6 million in November 2000 and has only dipped 
below 5 million once, in March 2002. Id., Table 1. 
3 Id., Table 1. 
4 The telephone penetration rate in households with annual incomes below $5,000 is 78.9%, rising to 99.3% in 
households with annual incomes above $75,000. Id., Table 4. 
FCC 03J-2 Federal Communications Commission 
I believe a large number of the 5 to 6 million households that do not currently have phone 
service, do indeed want phone service and can afford the discounted Lifeline monthly charges on 
a going-forward basis. However, these customers cannot be connected to the network because 
they have previously had phone service, lost it for non-payment of local and/or long distance 
charges, and cannot afford payment of the unpaid balance. In short, the outstanding balances 
from previous phone service for these low-income customers stand as a barrier to these 
customers reconnecting to the telephone network. 
In taking further action on modifying the Lifeline and Link-Up programs, I urge the 
Commission to solicit data from interested parties to document the number of customers that 
remain disconnected because of prior balances, and the number of qualifying Lifeline and Link- 
Up customers who are precluded from obtaining service because of outstanding balances for 
local and/or long distance service. The Commission should also investigate whether changes can 
be made to the Link-Up program to address these prior balances for local and/or long distance 
service. 5 Such changes could include reconnection upon agreement by the qualifying customer 
to pay off the outstanding balances over a period of months  for example, six months or twelve 
months  in equal monthly payments. In return, the customer would be provided with Lifeline 
service with mandatory toll blocking until the past due balance was paid off. The Commission 
could also invite comment on whether it would be appropriate for the Link-Up program to pay a 
set percentage of the past outstanding balances for local service, and whether such payments 
should be contingent on state matching payments. 
I applaud the work of the States, the Commission and the Joint Board in attempting to 
make the Lifeline and Link-Up programs more effective. I sincerely hope that the 
Recommended Decision which we issue today will move these efforts forward. However, we 
must never lose sight of the fact that our goal is to connect the unconnected and to keep phone 
service affordable for everyone. We must continue to search out and eliminate programmatic 
and structural impediments to greater participation in the telecommunications network by all of 
our citizens. I believe expanding Lifeline and Link-Up assistance to address the issue of past 
balances will go a long way toward eliminating a major hurdle faced by low-income customers 
in attempting to become full participants in our globally connected society. 
5 I recognize that the Fifth Circuit has previously held that a rule prohibiting disconnections of local service for nonpayment 
of long distance bills exceeded the Commissions jurisdiction, absent additional justification. Texas Office of 
Public Utility Counsel v. FCC, 183 F.3d 393, 424 (5th Cir. 1999). The issue I raise now is the different but related issue 
of whether the Commission may properly design a program to assist in reconnecting low-income customers to the 
network. Such a program could involve partnering with States or providing inducements to the States to reconnect 
such customers.