VI. Third-Party Administrator

In the OIR that initiated this proceeding, we ask parties to comment on whether we should designate a single entity as certifying agent, or if each carrier should serve as certifying agent for its customers. The FCC grants the states latitude in how their programs are administered:

...states that operate their own Lifeline/Link-Up programs should maintain the flexibility to develop their own certification procedures... and to determine the certifying entity, whether it is a state agency or an ETC.²⁰

We believe that our proposal to have a TPA administer the program is consistent with the FCC's requirements stated above, since the TPA would be under the direction of a state agency, namely the Commission.

We first need to explore the option of having the ETCs assume the certification/verification function. Most ETCs²¹ in California are parties to this proceeding, and they are outspoken in their unwillingness to assume that function. The ETCs express strong support for use of a TPA.

Having a third party to administer the certification and verification process has wide support among the parties. The exceptions were Blue Casa, Fones4All, La Curacao and LIF that express a desire for carriers to perform the function.

Parties point to the benefits of using a TPA, namely, standardization of the document review and information-handling policies. Another administrative benefit is that with a single centralized agency, a subscriber could move within California, change telephone carriers, and not have to reapply for the discount. TURN sees this as an important consideration since anecdotal evidence demonstrates low income customers tend to be more transient and move more frequently.²²

A third party will be more capable of ensuring privacy and security of the data. This will limit the number of eyes to view the sensitive material. TURN, and SBC see this as a key consideration in the era of increased identity theft. SBC stresses that confidential information the TPA has should not be shared with carriers. The TPA can be restricted to informing the carriers whether the customer meets ULTS eligibility requirements. NECA states that an experienced TPA would have developed mechanisms to safeguard proprietary information and ensure that data accumulated from individuals and entities is protected from unauthorized disclosure. Such measures should include physical security and data access controls, signed non-disclosure agreements, employee education, and a business continuity plan.

Surewest and the Small LECs point out that the TPA will be required to understand and authenticate a variety of different documents reflecting income levels. The TPA could develop a high level of expertise in reviewing income information. Carriers have neither the resources nor the institutional expertise to fulfill this role. Surewest/Small LECs and Cox point out that if each carrier does the work of certification/verification, carriers would be forced to devote significant time to training employees in addition to the increased amount of time dedicated to determining eligibility. Those expenses in personnel and training would be duplicated by each carrier in California, unnecessarily inflating the size of the ULTS program budget. Having a centralized TPA would likely reduce administrative costs of the program.

As NECA points out, single TPA would greatly simplify the Commission's oversight and monitoring responsibilities.

LIF expresses concern that the TPA will not reach out to the immigrant populations. We remind LIF that the TPA is not charged with outreach for the program. That is the purview of the marketing and outreach contractor, in conjunction with CBOs. Those entities will continue their outreach to the immigrant and disabled and other low-income communities, and CBOs will be an extraordinarily valuable resource in disseminating information about how to apply for the ULTS program.

We find that having a centralized TPA will ensure consistency in review of documents and assure privacy of personal documents. It will also be more cost effective than having 40 different carriers all performing the same function. With a single data base, customers will be able to move from one carrier to another, or to another area of the state, and not have to go through the eligibility process again.

In its comments on the DD, SBC mentions that ULTS customers who reside on federally recognized tribal lands are eligible for "enhanced" discounts under FCC rules. In order to obtain these additional discounts, the tribal resident must complete a self-certification form and identify, under penalty of perjury, the federally recognized reservation upon which he resides. To date, carriers have administered this "enhanced" tribal program in conjunction with the regular ULTS self-certification process. SBC suggests that the TPA is the best candidate for administering all additional certification procedures imposed on tribal residents. We disagree. The TPA does not need the information on the reservation where the customer resides, only the ETC needs that information. Therefore, that information will continue to be collected by the ETCs.

A. Cost of Establishing TPA

SBC believes a single TPA is much more cost effective than reimbursing costs for each individual carrier, and states that the ongoing administrative costs of the individual carriers will be reduced by having the TPA manage the state's entire certification and verification process. Cox, Surewest and the Small LECs agree that having a TPA would likely reduce administrative costs of the program.

Fones4All has a different opinion. Fones4All expresses concern that a TPA will be unduly expensive and needlessly add an additional level of bureaucracy to the ULTS program infrastructure. Fones4All adds that it makes no sense to assume such costs, particularly when the state's budget is under increasing pressure. However, as various parties point out, the state is going to pay to have the certification/verification process done, either by the carriers themselves or by a TPA.

We find that having a TPA handle the certification/verification process for all carriers will be more cost-effective. We do not agree that that approach will be more costly. As TURN/NCLC states in their Reply Comments, when redundant costs of ETC-administered programs are taken into consideration, especially in light of customers who move and/or change service providers within California, use of a third-party verifier will actually have the result of reducing costs. There will also be economies of scale in training the employees who need to review the incoming documents.

In response to comments by various parties, we clarify that the cost of establishing a TPA will come from the ULTS surcharge revenues. This is consistent with the way the program is handled today, namely the individual carriers can apply for reimbursement of most program administration costs through the Fund.

B. Safeguarding Customer Information

Privacy of customer information is a key concern of the parties.²³

TURN/NCLC point out that a recent study by Michigan State University indicates that 50-70% of all instances of identify theft are perpetrated by dishonest employees who have access to personal information.²⁴

TURN/NCLC also indicated that the Privacy Rights Clearinghouse (PRC), a nonprofit organization that educates consumers about privacy issues, has been contacted by California consumers whose personal information was misused by a phone company customer service representative or whose personal information was given to an outside party. TURN/NCLC say that the Privacy Rights Clearinghouse has the understanding that many carriers provide a preliminary probation period for new hires before conducting background checks.

For these reasons, TURN/NCLC recommend using a TPA to implement certification and verification for the ULTS program. The TPA should be required to conduct employee background checks before allowing access to personal information. Further, the data provided should not be used for marketing additional services. TURN/NCLC state that the PRC recommends a number of conditions be imposed on the amount of information a potential participant is required to provide to any certifying entity.

We are concerned that program participants' personal information be kept confidential and intend to establish mechanisms to safeguard personal information handled by the TPA. However, other parties have not had an opportunity to consider and comment on the extensive list of requirements in the TURN/NCLC Reply Comments. We will have the TD address this issue further in the April workshop. The information gathered will enable TD to set up the proper framework to ensure the confidentiality of customers' personal information. TD shall incorporate the safeguards it believes to be appropriate into its bid document.

C. Web-Based System

In their opening comments, both DRA and SBC propose that the Commission adopt a web-based system. SBC states that verifying exclusively through the use of mailers may exclude a number of persons who are not capable of completing forms or mailing letters due to physical disabilities or other challenges. Therefore, SBC recommends that a select population who are unable to conveniently verify their ongoing eligibility by mail, such as the disabled and visually-impaired, be given the option of self-certifying over the internet.

No party opposes the web-based system, although some parties (ORA, TURN/NCLC, Surewest, and the Small LECs) propose addressing the idea further in workshops. We see a web-based system as desirable as one alternative for all customers who are applying for ULTS based on program eligibility. With program-based eligibility, the participant does not need to provide papers documenting income or program involvement so that form of certification would lend itself to an internet application. The internet access would be an alternative to completion of paper documents, which would then be mailed to the TPA. This would give participants two avenues for demonstrating program-based eligibility to the TPA.

The web-based alternative is not viable for those customers that are applying using the income-based criteria, since those customers need to provide the TPA with copies of their income documentation. That process would have to be conducted by mail.

In addition, the web-based system could be used for the annual verification process, again to complement a paper system. The annual verification process lends itself to an internet-based system, since all participants would self-certify their continued eligibility, and no income documents would be submitted as part of that process. This would facilitate the process for participants, provide updated and accurate information with less administrative and logistical complexity.

We will require that the TPA establish a web-based system, and to assist the disabled population in accessing the system we will require that the web-based system be accessible to screen-reading software. However, we will defer to workshops the details as to how that web-based system should be structured. DRA mentions some issues that face disabled consumers; parties should take those, and other issues into account in their workshop discussions. We will finalize the parameters of the web-based system in a subsequent Commission decision.

D. The Role of CBOs

A number of parties urge the Commission to craft a role for CBOs in the certification/verification process. TURN and LIF propose that local CBOs be permitted to certify the customers unable to document their income. LIF urges the Commission to subcontract with CBOs who have gained the trust and confidence of the minority language communities. LIF references the CARE program where the CBOs are paid a small "capitation" fee for each eligible enrollment.

SBC states that it is imperative that the scope of CBOs' participation be strictly defined by the Commission to avoid unnecessary expenditures to the program and disruptions to the TPA's overall administration of the certification and verification processes.

Verizon expresses concern that having the CBOs assigned a role in the certification process could potentially result in a dozen different certification agents which would make consistency in the verification process much more difficult and weaken administrative controls over the program.

ORA welcomes the assistance of CBOs and even state and local service agencies to assist potential ULTS participants in filling out applications, but ORA sees those applications as going to a central certifying agent on behalf of applicants.

DRA focuses on how CBOs could assist the disabled community in completing the necessary paperwork. DRA points out that people with mental disabilities or developmental disabilities may not be able to complete complex forms and find appropriate income documentation independently. Similarly, people with limited mobility may need assistance with paperwork. DRA asserts that personal assistance must be available in the local communities. DRA suggests that local in-person assistance can be provided by existing CBOs, such as Independent Living Centers (ILCs). ILCs are community-based non-profit corporations that are designated by the California Department of Rehabilitation to assist people of all ages with any disability in leading more independent and productive lives. California has 29 such centers with 52 locations to service consumers across the state.²⁵ DRA says that in order to provide assistance to people with disabilities who need accommodation in the application process for ULTS, personnel at the ILCs would need to be properly trained by the TPA as to the necessary documentation that must be obtained, and compensation must be provided to the ILCs to allow their staff to take on this additional responsibility.

SBC points out that CBOs already work with a third party vendor to market ULTS. These organizations have been trained on the mechanics of this program and have substantial experience educating the public on its benefits. SBC sees CBOs, because of their background, as the best candidates for performing further outreach efforts in relation to ULTS' new procedures. Accordingly, SBC recommends expanding CBOs' roles to include promotion of ULTS' new certification and verification process, in cooperation with the TPA.

SBC states that all certification and verification of customer eligibility must remain within the TPA's control. Otherwise the program may face duplicative costs and conflicting results. In its Reply Comments, Cox expresses concern that having CBOs handle the certification/verification process might not meet the FCC's requirements.

While we believe there is a role for CBOs in the certification/verification process, we will have a single entity-the TPA--to be responsible for the certification and verification process. The proposal put forth by LIF in its Comments, and supported by TURN/NCLC is as follows:

The Commission should allow flexibility in its approach to verification to permit community based organizations in whom language minority communities and immigrants without documentation have trust and confidence to fill out necessary ULTS paperwork, with the CBO verifying on behalf of the applicant his/her income based on check stubs/social security receipts etc... The CBO partners, many of whom have expertise in dealing with this population, should be given latitude in determining what would constitute acceptable income documentation for persons in a cash economy. (LIF Opening Comments at 13.)

We do not believe that having CBOs perform this function would meet the FCC's requirement. FCC Rule 54.410(b)(i) requires that the TPA, acting on behalf of ETCs, must certify that the consumer has presented documentation of his/her income. In the description cited above, the CBO, which has little or no income data to rely on, must accept the person's word as to his/her income. In other words, we are back to a system to self-certification, with a CBO attesting to that self certification, and the FCC is clear that self-certification is no longer permissible.

TURN/NCLC suggests the Commission could perform random audits of participant CBOs as a means of reducing the risks of fraud and abuse, but if there is no paper trail to document customers' income, there is no way to audit the CBO's performance.

While we are not allowing CBOs to verify customers' income, we recognize that CBOs are uniquely qualified to assist consumers to understand the paperwork and use of the web-based system to seek certification.

In its Opening Comments, SBC indicates that it enrolls 100,000 ULTS customers each month. The total for the year would be in the neighborhood of 1.2 million, and that does not include other carriers. Any sort of capitation program in which CBOs would be compensated for assisting program participants in completing their paperwork is potentially cost prohibitive. We will not compensate CBOs a capitation fee for signing up program participants.

However, we do see that CBOs currently involved in our ULTS outreach program are uniquely qualified to reach target populations. We intend to work with the ULTS marketing vendor and the CBOs it has under contract to assist in education of the process for signing up for ULTS. Also, TD should consider expanding the next fiscal year's marketing efforts to include additional CBOs that serve the disabled communities, as long as this is not in conflict of the terms and conditions of the contract. We see the CBO involvement as a key element to the success of this new ULTS certification system. The CBOs can assist in educating as to the methods of certification available, the types of income documentation required, and the specific programs that can be used to establish eligibility. They will be trained in the forms used and use of the web-based system through their contracts with the marketing vendor. In this way, we will be able to target certain hard-to-reach communities, the immigrant population, those with limited English skills, and the disabled.

SBC, Surewest and the Small LECs indicate that the ULTS marketing vendor is in a good position to perform some or all of the duties of the proposed TPA. We see that there could potentially be overlap between the marketing and outreach process and this certification/verification process. The current contract with the marketing contractor and the call center are still in effect. Under state contracting rules, we do not have the option of simply adding additional functions to a contract. We anticipate that we will go out to bid to obtain the TPA. However, we recognize that there could be economies of scale in having the functions combined so we authorize the TD to combine the contracts for marketing and outreach, the call center, and/or the third-party administrator for certification/verification at some point in the future if TD deems it to be cost effective to do so.

E. Exchange of Information Between the TPA and Carriers

Surewest, the Small LECs and Cox all ask how the TPA will notify the carrier when customers' paperwork has been approved and customers may be enrolled in the ULTS program. Verizon suggests that the process should be mechanized to the extent possible because it is crucial that communication of eligibility between the TPA and carriers be efficient and timely. Verizon anticipates that the volume of transactions for certifications, verification and termination will be high. Based on the statistics that SBC provided in its Comments, we concur that the volume will be significant, and we need to take that into account in designing our program. We will direct the TPA to develop a mechanized process for the exchange of information with carriers. TD shall include that requirement in its bid document.

In its comments on the DD, SBC urges the Commission to direct the TPA to work jointly with carriers when designing the mechanized interface. SBC also asks that carriers be given as much time as possible to commence preparations on their end of the TPA's mechanized process. It would be too cumbersome for the TPA to work with a large group of carriers to develop its interface. However, we will have TD ensure that the TPA gets interface specifications to the carriers in a timely fashion so that they have adequate time to implement them.

With a mechanized system in place, we will be able to get consumers enrolled in the program more quickly. However, due to our concerns about maintaining the privacy of customers' personal information, carriers should not be allowed access to personal information about the customer, other than the information they need, e.g., the customer's address, to enroll the customer in the ULTS program.

We anticipate that all the carriers, and CBOs involved in ULTS program outreach, will have copies of the form to be completed by the potential ULTS customer. Those forms will be mailed to the TPA, to an address shown on the form itself. We anticipate that those forms should be available in a variety of languages, and we defer to the TD-led workshop, to develop a list of the languages. We are also mindful of DRA's comments regarding the need for specially designed forms to meet the needs of the disabled. We will require that any necessary forms, along with any accompanying written materials, be made available in an accessible format We will defer to the workshop participants to assist TD in development of the necessary forms.

At the same time, we have adopted a web-based system for enrollment, and that would be available to customers applying on the basis of program-based criteria.

Any additional implementation details should be addressed in the upcoming workshop.