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BEFORE THE CORPORATION COMMISSION OF OKLAHOMA
APPLICATION OF BRANDY L. WREATH, ji.Y' DIRECTOR OF THE PUBLIC
UTILITY DIVISION,,J' OF THE OKLAHOMA CORPORATION
COMMISSION, FOR A SHOW CAUSE HEARING AGAINST TERRACOM, INC.
D/B/A/ TERRACOM WIRELESS
)
)
)
)
)
)
CAUSE NO. PUD 201300020
ORDER NO. 617960
HEARING: November 1, 2013, in Courtroom B 2101 North Lincoln
Boulevard, Oklahoma City, Oklahoma 73105 Before James Myles,
Administrative law Judge
APPEARANCES: Kimberly Prigmore, Deputy General Counsel
representing Public Utility Division of the Oklahoma Corporation
Commission
Marc Edwards, Attorney representing TerraCom, Inc. William L.
Humes and Nicole A. King, Assistant Attorneys
General, Office of Attorney General, State of Oklahoma
FINAL ORDER CLOSING CAUSE
The Corporation Commission of the State of Oklahoma
("Commission") being regularly in session and the undersigned
Commissioners being present and participating, there comes on for
consideration and action the Application of Brandy L. Wreath,
Director of the Public Utility Division, for a Show Cause against
TerraCom, Inc. ("TerraCom"), filed on February 4, 2013. On October
16, 2013, Teena May submitted Pre-filed Direct Testimony on behalf
of the Public Utility Division Staff ("Staff') detailing the
Commission's review of TerraCom Inc. and in support of closing this
cause. On October 25, 2013, the Staff and TerraCom submitted a
Joint Motion to Close Cause, attaching thereto an executed Joint
Stipulation and Settlement Agreement among the parties. On November
1, 2013, the Motion to Close Cause was heard and recommended for
approval by the undersigned Administrative Law Judge ("AU").
SUMMARY OF EVIDENCE
Mark Argenbright on behalf of the Public Utility Division
Staff
Mr. Mark Argenbright testified on behalf of the Staff. The
purpose of his testimony was to support the request by Staff and
TerraCom to close the Cause and to explain and answer questions
regarding the Joint Stipulation and Settlement Agreement. Mr.
Argenbright testified that the stipulation provided for a refund to
the Oklahoma Universal Service Fund ("OUSF") by TerraCom of
$11,132.55 for over-collections during the period May 2011 to
October 2012. Further, Mr. Argenbright testified that TerraCom will
provide reporting of additional revisions to USF reports after the
October 2012 time period as soon as possible. Mr. Argenbright also
stated that the Joint Stipulation contains a determination that
TerraCom is operating in compliance with the applicable Lifeline
rules and regulations and has, and will maintain, adequate
procedures to guard against errors. In the event such errors are
identified, TerraCom has agreed to take appropriate corrective
action. Mr. Argenbright further stated that if the Joint
Stipulation and
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Cause No. PUD 201300020 - TerraCom, Inc. Page 2 of 5 Final Order
Closing Cause
Settlement Agreement is approved by the Commission, TerraCom
will continue to work with Staff to monitor TerraCom's compliance
activities.
Mr. Argenbright also testified it is Staffs opinion that the
Joint Stipulation and Settlement Agreement is fair, just, and
reasonable and in the public interest, and that Staff recommends
the Commission accept the Joint Stipulation and Settlement
Agreement as presented.
Teena May on behalf of the Public Utility Division Staff
Ms. Teena May submitted pre-filed direct testimony on behalf of
the Staff and was called to the witness stand by the AU. The
purpose of her testimony was to explain the process used by the
Staff to review the information provided by TerraCom, describe how
the Staff identified issues and worked with TerraCom to resolve the
same, and support the request by Staff and TerraCom to close this
proceeding.
Ms. May testified that TerraCom was given a wireless eligible
telecommunications carrier ("ETC") designation in Oklahoma pursuant
to Order No. 588940, on August 18, 2011, for the purpose of
providing Lifeline service in Oklahoma. Ms. May also explained that
on November 1, 2012, in Cause No. PUD 201200200, TerraCom's ETC
designation was amended to allow TerraCom to provide Lifeline
service on a resale and facilities based basis.
In explaining the circumstances that led to the filing of this
cause, Ms. May explained that the Staff originally opened Cause No.
PUD 201200186 on August 10, 2012, to review Oklahoma's ETCs'
records to verify and review the eligibility of their subscribers
for Lifeline services. Specifically, Ms. May testified that the
Staff wanted to verify that there were not duplicate, or multiple
Lifeline credits from Oklahoma ETCs, in accordance with Commission
and Federal Communication's Commission ("FCC") rules. In that
cause, several providers, including TerraCom, provided information
of active Lifeline subscribers to Staff. Ms. May explained that
based on that information, and other information obtained from the
Universal Service Administrative Company ("USAC"), Staff identified
five companies, among which was TerraCom, to perform a more
detailed investigation. These more detailed investigations, Ms. May
explained, were done through Show Cause Applications. For TerraCom,
that Show Cause Application is this Cause No. PUD 201300020.
Ms. May testified that the Staff focused its investigation and
review of TerraCom on its billing practices, processes for
identification, and associated corrective in order to identify
TerraCom's internal controls and the procedures by which TerraCom
remedies any identified problems. Ms. May explained that although
TerraCom had a few issues, it had generally already self-reported
these issues and made a robust effort to develop business practices
that protect the public interest and the Federal Lifeline program
funds.
Ms. May explained that TerraCom provided a list of its active
subscribers for the months of November 2012 and February 2013. The
Staff then created a database that allowed the provided information
to analyzed. This information was sorted to identify identical
addresses, the same or similar names, duplicate social security
numbers, and other redundant geographical criteria that could be
easily duplicated. After this analysis was conducted, Ms. May
stated that
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Cause No. PUI) 201300020— TerraCom, Inc. Page 3 of 5 Final Order
Closing Cause
Staff identified 258 subscriber records of TerraCom that merited
further review. Staff was then able to easily audit those
subscribers at the offices of TerraCom because of TerraCom's
cooperation. As a result of the review of the identified 258
subscribers, Ms. May testified that Staff discovered 54 sets of
possible duplicates, of which, 30 had already been identified by
TerraCom through its own internal audit process. Of those 30, 10
were demonstrated to be eligible subscribers. Ultimately, Ms. May
stated that Staff only identified 14 sets of duplicates that
TerraCom had not already identified.
Ms. May also described TerraCom's internal audit process which
is comprised of a dedicated set of employees in their internal
audit department that ensure reporting for fund reimbursements is
appropriate and that internal control systems and processes are
effective. Before TerraCom submits their subscriber data to process
for State and Federal funding, three tiers of team reviews are
conducted that review and audit subscriber information. This
process produces a report of data that has successfully passed
review, and a report of data that failed to pass review. Then, Ms.
May stated, that all of this information is reviewed again by
TerraCom's Internal Audit team. Because TerraCom had previously
identified the majority of the possible duplicates that Staff
identified, Ms. May testified that TerraCom's process achieves the
goal of actively finding and correcting duplicate or otherwise
ineligible subscribers.
It was also discussed by Ms. May that TerraCom quickly
de-enrolls subscribers that are ineligible, and then places them on
an internal list for true-up both with the Federal Universal
Service Fund and the OUSE. Ultimately, this process results in
TerraCom returning the support payments received for a subscriber
that is later found to be ineligible. Ms. May stated that this is
an acceptable process to the Staff. Ms. May also testified that
TerraCom brought its sales force back in-house, which has allowed
for greater internal controls, training, and education over its
sales force that helps prevent duplications or the creation of
ineligible subscriptions.
Ms. May also testified Staff concluded that TerraCom has
responded in a transparent and thorough manner, to multiple
requests for information. TerraCom has provided all the information
that Staff has sought, and the level of cooperation by TerraCom has
helped facilitate the review process in an efficient and effective
manner. TerraCom was proactive in identifying issues both to the
Commission and to the FCC. Ms. May stated that the Staff found
TerraCom had implemented process and controls that have improved
the company's ability to identify duplicates as well as prohibit
future subscriber issues. Based on this review, Ms. May further
testified that Staff 1) ensured that the Oklahoma Lifeline Fund was
made whole for prior errors; 2) thoroughly reviewed the internal
control procedures of TerraCom and; 3) therefore supports closure
of this cause.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. THE COMMISSION FINDS that on February 14, 2013, Brandy L.
Wreath, Director of the Public Utilities Division of the Oklahoma
Corporation Commission filed this Show Cause action, Cause No. PUD
201300020, to investigate the marketing practices of TerraCom and
to also formally review, audit, and analyze the subscription data
of TerraCom to ensure compliance with State and related Federal
regulations.
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Cause No. PUD 201300020— TerraCom, Inc. Page 4 of 6 Final Order
Closing Cause
2. THE COMMISSION FURTHER FINDS that in 2012, TerraCom learned
of a glitch to its internal control systems which resulted in some
undetected duplications, that were self-reported to USAC and then
in turn, the FCC. Accordingly, the FCC initiated an enforcement
action, which resulted in a reimbursement and contribution by
TerraCom to the United States Treasury. TerraCom also initiated
robust revisions of its internal procedures to prevent further
duplications and to ensure compliance with FCC regulations.
3. THE COMMISSION FURTHER FINDS that pursuant to this cause,
Staff audited and thoroughly reviewed the subscriber data of
TerraCom for the months of November 2012 and February of 2013.
Staff identified 54 sets of possible duplicates and 30 of those
possible duplicates had previously been discovered and remedied by
TerraCom.
4. THE COMMISSION FURTHER FINDS that TerraCom has
unintentionally over- collected OUSF Lifeline Funds in the amount
of $11,132.55 for the period of May 2011 through October 2012,
which TerraCom has agreed to and will reimburse to the Commission
at the close of this cause.
5. THE COMMISSION FURTHER FINDS that TerraCom's internal
controls are adequate and help ensure compliance with State and
Federal regulations, and especially guard against duplications.
6. THE COMMISSION FURTHER FINDS that revisions to TerraCom's
marketing practices, such as bringing its sales force back into the
company, provide greater training, control, and management by
TerraCom of its operations, helping ensure compliance with State
and related Federal regulations.
7. THE COMMISSION FURTHER FINDS that TerraCom and Staff entered
into a Joint Stipulation and Settlement Agreement, under which
TerraCom has agreed to reimburse the Oklahoma Lifeline Fund for
duplications and to provide Staff with further updates of its
further internal review and revisions to internal controls. The
terms of the Joint Stipulation and Settlement Agreement are
incorporated herein and have been attached as Attachment 1,
hereto.
8. THE COMMISSION FURTHER FINDS that the Joint Stipulation and
Settlement Agreement should be adopted by the Commission as being
in the public interest and the Joint Motion to Close Cause should
be approved by the Commission.
JURISDICTION
The Commission has jurisdiction over this Cause pursuant to
Article IX, Section 18 of the Oklahoma Constitution, 47 U.S.C. §
151 et seq., and 17 O.S. § 139.105.
ORDER
IT IS THEREFORE, THE ORDER OF THE CORPORATION COMMISSION of the
State of Oklahoma that the Joint Motion To Close Cause filed by
Brandy L. Wreath,, Director of the Public Utility Division and
TerraCom, Inc. be granted, consistent with the findings herein.
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Cause No. PUI) 201300020— TerraCom, Inc. Page 5 of 5 Final Order
Closing Cause
IT IS FURTHER THE ORDER OF THE COMMISSION that the Application
filed herein by Brandy L. Wreath, Director of the Public Utility
Division of the Oklahoma Corporation Commission, Cause No. PUD
201300020, be closed.
IT IS FURTHER THE ORDER OF THE COMMISSION that all findings of
fact and conclusion of law set forth above are hereby adopted by
the Commission.
THIS ORDER SHALL BE EFFECTIVE immediately.
CORPORATION COMMISSION OF OKLAHOMA
PATRICE DOUGW, Clfirman
M BOB ANTHONY, Vice Chafrman
DANA L. MURPHY, Commission
CERTIFICATION
DONE.AND. PERFORMED by the Commissirners participting in he
making of this Order a shownbS' flicir signatures above, this k'-
day of 'jiiou4Cr , 2013
[Seal]
qPEEY LL, Secretary
REPORT OF THE ADMINISTRATIVE LAW JUDGE
The foregoing findings, conclusions and order are the report and
recommendations of the undersigned administrative law judge.
ZQJ—~~ 6>1--7f I ~~ ,)o-v --i 1 2013 L. MYLES Date
Administrative Law Judge
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!ILE I flCT
BEFORE THE CORPORATION COMMISSION OF IUiRIOLK'S OFFICE - OKC
CORPORATION COMMISSION
APPLICATION OF BRANDY L. WREATH, ) OF OKLAHOMA DIRECTOR OF THE
PUBLIC UTILITY DIVISION, ) CAUSE NO. PUD 201300020 OF THE OKLAHOMA
CORPORATION ) COMMISSION, FOR A SHOW CAUSE HEARING ) AGAINST
TERRACOM, INC. D/B/A/ TERRACOM ) WIRELESS )
JOINT MOTION TO CLOSE CAUSE
Brandy L. Wreath, Director of the Public Utility Division of the
Oklahoma Corporation
Commission and TerraCom, Inc. ("TerraCom") hereby submit this
Joint Motion To Close Cause,
requesting that the Oklahoma Corporation Commission issue an
order closing Cause No. PUD
201300020. In support, Brandy L. Wreath and TerraCom state:
1. On February 14, 2013, Brandy L. Wreath, Director of the
Public Utility Division of the
Commission filed this instant case, Cause No. PUD 201300020, to
perform a detailed
investigation of TerraCom's compliance with Lifeline rules and
regulations.
2. The Public Utility Division Staff ("PUD Staff) conducted a
thorough investigation into
TerraCom's Lifeline Services including a review of TerraCom's
internal processes and
assessment of TerraCom's compliance with state and federal
Lifeline regulations. PUD Staff has
further established a plan to continually monitor and ensure
future compliance of TerraCom with
Commission regulations. The results of PUD Staff's investigation
are set forth in the testimony
of Teena May, that was filed in this Cause on October 16,
2013.
3. PUD Staff and TerraCom have entered into a Joint Settlement
Agreement ("Agreement")
related to the issues in Cause No. PUD 201300020, which is
attached hereto as Exhibit A.
4. TerraCom has further agreed to pay the OUSF Lifeline Fund for
the amounts set forth in
the Affidavit of Dale Schmick, and agreed to provide the PUD
Staff with any findings, reports,
and results of revisions TerraCom is making to its internal
processes and procedures that it is
t.4JT "1"
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PUD 201300020
Page 2 of 4 Joint Motion to Close Cause
making to ensure the integrity of the OUSF and Lifeline
services. See Exhibit B.
5. Based upon the PUD Staff's investigation and the attached
exhibits, the parties
respectfully request an Order of the Commission closing Cause
No. PUD 201300020.
Respectfully submitted,
k-,rc 1CmoQ4.. Kimberly Pngmore, OBA # 21781 Deputy General
Counsel Oklahoma Corporation Commission P. 0. Box 52000-2000
Oklahoma City, Oklahoma 73152-2000 Telephone: (405) 521-2308
Facsimile: (405) 521-4150
MARC— €b\JA4LP" Marc Edwards, OBA #10281 PHILLIPS MURRAH, P.C.
Corporate Tower, 13th Floor 101 North Robinson Oklahoma City,
Oklahoma 73102 Telephone: (405)235-4100 Facsimile: (405) 235-4133
ATTORNEYS FOR COX OKLAHOMA TELCOM, L.L.C.
CERTIFICATE OF SERVICE
On this A of October, 2013, a true and correct copy of the
foregoing was mailed, postage prepaid. to:
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PUD 201300020
Page 3 of 4 Joint Motion to Close Cause
William L. Humes, OBA #15264 Nicole A. King, OBA #18246 Office
of Attorney General 313 NE 21 4 Street Oklahoma City, Oklahoma
73105 Bil1.humes(oag.ok.gov NicoIe.King,oag.ok.gov
P\Aw- EA qt
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BEFORE THE CORPORATION COMMISSION OF OKLAHOMA
APPLICATION OF BRANDY L. WREATH, DIRECTOR OF THE PUBLIC UTILITY
DIVISION, OF THE OKLAHOMA CORPORATION COMMISSION, FOR A SHOW CAUSE
HEARING AGAINST TERRACOM, INC. D/B/A/ TERRACOM WIRELESS
)
)
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CAUSE NO. PUD 201300020
JOINT STIPULATION AND SETTLEMENT AGREEMENT
COME NOW the undersigned parties to this proceeding ("the
Stipulating Parties"): the Public Utilities Division Staff ("PUD
Staff") and TerraCom, Inc., ("TerraCom") and present the following
Joint Stipulation and Settlement Agreement ("Agreement") for review
and approval by the Oklahoma Corporation Commission ("Commission")
for the resolution of the issues presented in this proceeding,
Cause No. PUD 201300020 (the "Show Cause"). The Stipulating Parties
represent to the Commission that this Agreement represents a fair,
just and reasonable settlement of the issues contained herein, and
that the terms and conditions are in the public interest. The
Stipulating Parties urge this Commission to issue an order
dismissing the Show Cause and approving this Agreement in its
entirety. It is hereby stipulated and agreed by and among the
Stipulating Parties as follows:
Neither this Stipulation nor any of the provisions hereof shall
become effective unless and until the Commission shall have entered
an order approving, without modification, the terms and provisions
here, without supplemental or additional terms, conditions and
provisions, and thereby dismissing the Show Cause. The provisions
of this Stipulation are intended to relate only to the specific
matters referred to herein, and by and through this Agreement, no
party waives any claim or right which it might otherwise have with
respect to any matters not expressly provided for herein.
Furthermore, no party hereto admits to the correctness or
appropriateness of any of the contentions of another. The
Stipulating Parties state and recognize that the Agreement
represents a negotiated settlement with respect to the issues
presented herein. The Agreement is a balance and compromise of the
positions of each party hereto in consideration for the agreements
and commitments made of the positions of each party hereto and
other parties in connection herewith. Accordingly, the Commission
shall explicitly recognize that the execution of this Agreement by
each party hereto shall not be constructed as agreement or
acquiescence by any one, or all parties to any particular
calculation, adjustment, theory or issue.
Additionally, as a part of the internal review conducted by PUD
Staff in this matter, a thorough and complete analysis was
performed for TerraCom. TerraCom was founded to help low-income
consumers get access to communications services. Accordingly,
TerraCom's customers benefit from the federal Lifeline and the
low-income portion of the Oklahoma Universal Service Fund ("OUSF").
The federal Lifeline rules explicitly require that TerraCom
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PUD 201300020 Joint Stipulation
only provide supported services to one subscriber per household
monitored by internal systems and controls that prevent
duplications and over collections from the federal Lifeline
fund.
In 2012, TerraCom discovered an error in its internal control
system that revealed undetected duplications among a few of its
subscribers. Then, through a collaborative Federal Communications
Commission ("FCC") enforcement action, TerraCom reimbursed the
FCC's Lifeline program in the amount of Four Hundred Two Thousand
Seven Hundred Sixty dollars ($402,760.00) with interest for the
duplicate payments it had received. Additionally, there was a
voluntary contribution of an additional Four Hundred Forty Thousand
dollars ($440,000.00) to the United States Treasury. Further,
TerraCom, throughout its operations, has instituted robust
compliance plans to govern the receipt of its Lifeline funds by
establishing stronger internal procedures that ensure accurate
reporting while also providing training to employees regarding
Lifeline supported services.
During the course of the FCC review, and as analyzed by the PUD
Staff in this Show Cause, it was and has been determined that
TerraCom over collected OUSF Lifeline funds in the amount of
$11,132.55 for the timeframe of May 2011 through October 2012 Thus,
the undersigned parties stipulate and agree to the following:
1. The PUD Staff fully reviewed TerraCom's records and
determined that TerraCom over collected OUSF Lifeline Funds in the
amount of $11,132.55.
2. TerraCom has agreed to fully refund the OUSF Lifeline Funds
in the amount of $11,132.55.
3. The PUD Staff has conducted extensive discovery of TerraCom's
books and records and has concluded that TerraCom is operating in
full compliance with the rules and regulations governing the OUSF
Lifeline Fund and has adequate policies and procedures in place to
guard against errors as well as to make appropriate corrections in
the event errors occur.
4. TerraCom has agreed that post FCC review and revisions,
consistent with the new internal procedures, will be completed as
soon as possible. The Stipulating Parties recognize that these
revisions and amendments to the necessary federal Universal Service
Fund reports is a tedious and labor intensive process of
identifying the months involved and actually preparing the revised
reports for submission to USAC in order to accomplish adjustments
that cover the entire period identified. The Stipulating Parties
agree that TerraCom will provide the PUD Staff with the findings,
reports, and results of the revisions TerraCom is making to the
necessary Universal Service Fund reports consistent with TerraCom's
new audit revisions and internal procedures that TerraCom is
implementing, along with any corresponding adjustments to the
OUSF.
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PUD 201300020 Joint Stipulation
5. The Stipulating Parties agree that the provisions of this
Agreement are the result of extensive consultation and
collaboration, and that the terms and conditions of the Agreement
are interdependent. The Stipulating Parties agree that this
Agreement is in the public interest and, for that reason they have
entered into this Agreement to settle among themselves the issues
in this Agreement. This Agreement shall not constitute nor be cited
as precedent, nor deemed an admission by any Stipulating Party in
any other proceeding, including but not limited to any future OUSF
Lifeline requests or show cause applications, except as necessary
to enforce its terms before the Commission or any court of
competent jurisdiction. The Commission's decision, if it enters an
order consistent with this Agreement and ultimately dismisses this
Show Cause, will be binding as to the matters decided regarding the
issues described in this Agreement, but the decision will not be
binding with respect to similar issues that might arise in other
proceedings. A Stipulating Party's support of this Agreement may
differ from its position of testimony in other causes. To the
extent there is a difference, the Stipulating Parties are not
waiving their positions in other causes. Because this is a
stipulated agreement, the Stipulated Parties are under no
obligation to take the same position as set out in this Stipulation
in other dockets.
Non-Severability
The Stipulating Parties stipulate and agree that the agreements
contained in this Agreement have resulted from negotiations among
the Stipulating Parties and are interrelated and interdependent.
The Stipulating Parties hereto specifically state and recognize
that this Agreement represents a balancing of positions of each of
the Stipulating Parties in connection therewith. Therefore, in the
event that the Commission does not approve and adopt the terms of
this Agreement in total and without modification or condition
(provided, however, that the affected party or parties may consent
to such modification or conditions), this Agreement shall be void
and of no force and effect, and no Stipulating Party shall be bound
by the agreements or provisions contained herein. The Stipulating
Parties agree that neither this Agreement, nor any of the
provisions hereof shall become effective unless and until the
Commission shall have entered an Order approving all of the terms
and provisions as agreed by the parties to this Agreement and such
Order becomes final and this Show Cause likewise dismissed.
WHEREFORE the undersigned Stipulating Parties submit this Joint
Stipulation and Settlement Agreement as their negotiated settlement
of the issues in the above styled cause, and respectfully request
the Commission to approve this Joint Stipulation and Settlement
Agreement without change and issue an Order dismissing this Show
Cause.
3
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PUD 201300020 Joint Stipulation
Maribeth D. Snapp, Telecom Policy Director Public Utility
Divisions, Oklahoma Corporation Commission
Offe Scluniclç Chief Operating Officer TerraCom, Inc.
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BEFORE THE CORPORATION COMMISSION OF OKLAHOMA
APPLICATION OF BRANDY L WREATH, DIRECTOR OF THE PUBLIC UTILITY
DIVISION, OF THE OKLAHOMA CORPORATION COMMISSION, FOR A SHOW CAUSE
HEARING AGAINST TERRACOM, INC. 1)/B/Al TERRACOM WMELESS
)
)
)
)
)
)
CAUSE NO. PUD 201300020
w:i 41i i } ITh Vj #- 'A0 I' STATE OF OKLAHOMA
)
) SS. COUNTY OF OKLAHOMA
)
I, Dale R. Schniick, being of lawful age and having first been
duly sworn upon oath,
state:
1. I am the Chief Operating Officer of TerraCoin, Inc.
("TetzaCom") and YourTel
America, Inc., ("YourTel") (collectively "the Companies') and my
principal office is located at
4011. Memorial Rd., Suite 400, Oklahoma City, Oklahoma
73114.
2. On December 19, 2004, the Oklahoma Corporation Commission
rCommission")
designated YourTel, as an eligible telecommunications carrier
("ETC") to provide wireline
Lifeline and Link Up Service. On August 18, 2011, the Commission
authorized YourTel to
provide wireless Lifeline and Link Up Service.
3. On August 26, 2004, the Commission designated TerraCom as an
FIt to provide
Special Universal Services in Oklahoma through wireline Lifeline
and Link Up Service. On
August 28, 2011, the Commission authorized TerraCom to provide
wireless Lifeline and Link
Up Service in Oklahoma.
4. The Companies were founded to help low-income consumers get
the
communications services they need and deserve. In fact, the
Companies were one of the first to
1 EXHIBIT
B
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use the federal Universal Service Fund to provide consumers with
telecommunication services
at affordable rates. Both TerraCom and YourTel strive to provide
high-quality low-cost services
through an experienced and efficient operation that always has
the customer in mind
5. The Companies' customers benefit from the federal Lifeline
and the low-income
portion of the Oklahoma Universal Service Fund ("OUSF") and, in
the past, from the federal
Link Up, all of which are programs that were designed to ensure
the availability of
telecommunications
for eligible low-income households by providing discounts on
basic
telephone services. federal Lifeline rules establish explicit
requirements that ETCs like
TerraCom and
only provide supported services to one subscriber per household.
To
ensure that restriction, are required to have internal systems
and controls that prevent
duplicate customers and resulting over collection from federal
Lifeline fund.
7. In 2012 TerraCom learned of a glitch in its internal control
systems that revealed
undetected duplicalions among a relatively small number of
subscribers. At about the same time
USAC identified the same issue during an In-Depth Validation
(IDV). USAC reported to the
FCC that it had idtified the duplications and as a consequence
the Companies had
imintvrilionally over collected federal funds for its supported
services.
S. Through an FCC enforcement action, the Companies without
hesitation
reimbursed the FCC's Lifeline program in the amount of
$416,000.00 with interest for the
duplicate payments it had received. Additionally, the Companies
voluntarily contributed an
additional $600,000 to the United States Treasury.
9. In working with the FCC, the Companies have initiated robust
compliance plans
that will govern the receipt of its Lifeline funds by
establishing internal procedures that ensure
accurate reporting while also providing annual training to our
employees regarding Lifeline
supported services and have strengthened an Internal Audit
Department that assures funds
2
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received from the federal Universal Service Fund, and
relevantly, also received from the OUSF
are used and reported appropriately. Subscriber data is analyzed
and reviewed at a minimum of
three times before fihingc are made for reimbursement for
supported services. Duplicate
infcinnation automatically fails our auditing process and even
data that successfully passes our
initial review is still manually analyzed for concerning
patterns and possible duplication issues.
10. The Oklahoma Lifeline Fund is "designed to advance the goals
of universal
service and ensure that low-income residential customers within
the State of Oklahoma.. . are
provided financial assistance in maintaining basic local
exchange telecommunications service."
OAC 165:59-9-1. During the course of the FCC review and audit it
was determined that the
Companies over collected OUSF Lifeline funds in the amount of
$11,132.55 for TerraCom, and
$1,082.25 for YouTel, as set forth in the matrix attached to
this Affidavit as Exhibit 1.
11. The Companies have been engaged in extensive discussion and
collaborative
meetings with the Commission Public Utilities Division Staff to
assist them in maintaining the
integrity of the OUSF Lifeline fund and the services it provides
to low-income Oklahoma
citizens. M such, the Companies are prepared to refund the
amount of its over collection upon
direction and Order of the Commission.
12. Post FCC review and audit revisions, consistent with the new
internal procedures,
will be completed as soon as possible. These revisions and
amendments to the necessary federal
Universal Service Fund reports is a tedious and labor intensive
process of identifying the months
involved and actually preparing the revised reports for
submission to USAC. This is an ongoing
process and, once complete, a copy of the results will be
provided to P1)1) along with any
corresponding adjustments to the OUSF. -~ Z-5- Ar6~schmick~
3
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STATE OF OKLAHOMA ) ) SS.
COUNTY OF OKLAHOMA )
Subscribed and sworn to before me this J_L day of September,
2013.
1U(C
D12014,-) Notary Public
[S E A L] I-I -----
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II PAMELA D. RONEY 1 JJ
Notary Public. Silts of Oklahoma II Commission a 10003362
{!CommIsuion bpk.s April 31.2014
4