Resolution T- 17566
CD/ABA
PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Communications Division / RESOLUTION T- 17566Carrier Oversight & Programs Branch / May 25, 2017
R E S O L U T I O N
Resolution T-17566. Approval of TracFone Wireless, Inc.’s (U-4231-C) Request to Provide Federal Lifeline and California LifeLine Wireless Customers with Handsets Capable of Being Unlocked Without a Hardware Swap.
Summary
By this Resolution, the California Public Utilities Commission approves the request of TracFone Wireless, Inc. (U-4231-C) to issue new models of locked handset devices capable of being unlocked without a hardware swap to eligible Federal Lifeline and California LifeLine wireless customers. In Resolution T-17467, the California Public Utilities Commission directed TracFone Wireless, Inc. to issue only unlocked handsets until it could demonstrate the unlockable feature and to comply with specific reporting requirements. TracFone Wireless, Inc. has met the condition to provide unlocked phones and has demonstrated that customers can unlock the proposed new models of locked handset devices. Approving TracFone Wireless, Inc.’s request is in the public interest because these new handsets will give Lifeline customers access to newer technology, better features, and upgraded hardware and creates parity with Federal Communications Commission requirements.
Background
TracFone Wireless, Inc. (TracFone), doing business as “SafeLink Wireless” for its federal Lifeline and California LifeLine wireless telephone service plans, is a reseller of commercial mobile radio service with corporate offices located at 9700 NW 112th Ave, Miami, FL 33178. Through its arrangements with Verizon Wireless, AT&T Mobility, Sprint Wireless, and T-Mobile, TracFone currently offers discounted wireless service to eligible low-income households throughout these carriers’ service territories in California, excluding federally recognized Tribal lands.
On July 18, 1997, the California Public Utilities Commission (CPUC or Commission) issued TracFone’s predecessor company, Topp Telecom, Wireless Identification Registration number U-4231-C allowing it to operate as a reseller of commercial mobile radio service to the public in California.[1]
On February 3, 2014, TracFone submitted Advice Letter (AL) 3 requesting Eligible Telecommunication Carrier (ETC) designation for the purposes of receiving federal Lifeline support and authorization as a California LifeLine provider offering discounted prepaid wireless telephone service to eligible low-income households throughout California, excluding Tribal lands.[2] The Commission approved Resolution T-17467 on August 13, 2015.[3] In addition, the Commission specifically directed TracFone to comply with short-term reporting requirements relative to a Federal Communications Commission Consent Decree and to issue only unlocked handset devices to qualified Lifeline customers in California until such time that TracFone could demonstrate compliance with federal handset unlocking policies. The Commission directed TracFone to file a Tier 2 advice letter when it could demonstrate that it had unlocked phones ready to issue to new customers.[4]
TracFone filed AL 6 on October 8, 2015, to demonstrate it had unlocked phones available to issue. Commission staff approved the advice letter on December 17, 2015, which allowed TracFone to begin offering both federal and state wireless service to customers in California using the unlocked devices.
Subject of Advice Letter
On January 23, 2017, TracFone submitted AL 14 requesting that the Commission correct terminology in Resolution T-17467 that TracFone alleges creates ambiguity with the use of the term “unlockable” phones. In addition, having demonstrated its established unlocking methods for new models of locked handsets to Commission staff, TracFone requested Commission approval to begin issuing the new handsets which are capable of being unlocked without a hardware swap.
At Communications Division (CD) staff’s request, TracFone submitted AL Supplement 14A on April 10, 2017, which detailed the public interest benefits of issuing the new locked handset models capable of being unlocked without a hardware swap.
Notice/Protests
TracFone served AL 14 via email on all parties on the ETC service list and the advice letter appeared in the Commission’s Daily Calendar on January 26, 2017. No protests were received.
Discussion
FCC Compliance with Unlockable Devices
On June 30, 2015, the Federal Communications Commission (FCC) issued an Order and Consent Decree[5] having found TracFone in violation of handset unlocking provisions for wireless carriers. Consistent with industry practice, the FCC referred directly to the CTIA – The Wireless Association® Consumer Code for Wireless Service (Consumer Code) as “a safe harbor for eligible telecommunications carriers (ETCs) to demonstrate that they have met the standards required to serve as an ETC.”[6] In the TracFone settlement agreement, the FCC resolved the matter of TracFone’s use of locked handsets and established a compliance plan requirement for TracFone with specific reporting obligations scheduled upon the expiration of the Consent Decree.[7]
In response to the locked handset violation, the FCC directed TracFone to provide consumers only phones that can be switched from a locked to unlocked state without replacing the device. Specifically, the FCC stated that “[n]o later than July 1, 2015, TracFone will assist customers, former customers and non-former customers with TracFone handsets that are “capable of being unlocked” by consumers in accordance with the CTIA Consumer Code.”[8] Further, TracFone agreed that all its handsets distributed by December 21, 2016, must be capable of being unlocked.
In Resolution T-17467, the Commission conditionally approved TracFone as an ETC and California LifeLine provider and in Ordering Paragraph 3 specifically directed it to comply with:
…all terms and conditions of the FCC Consent Decree, including 1) providing unlocked phones to non-LifeLine customers, upon request, beginning July 1, 2015, and unlocked phones for LifeLine customers (without a hardware swap) no later than May 1, 2016; and 2) providing a California-specific breakout of its FCC compliance plan, compliance manual, non-conformance reports and compliance reports to the Director of the Communications Division according to the terms and schedule set forth in the FCC Consent Decree. The first report is due 90 days after the effective date of the Consent Decree and every month thereafter, with a final report due upon the expiration of the Consent Decree.[9]
CPUC Compliance with Issuing Unlocked Devices
TracFone contacted CD staff in October 2016 requesting a meeting to discuss demonstrating the established methods that wireless Lifeline customers can use to request unlocking their new program-issued handsets. To certify full compliance with Resolution T-17467, on January 12 and 18, 2017, TracFone met with CD staff, brought new handset models, and explained the online and over-the-phone options to unlock a handset. CD staff followed the customer instructions via the Internet using the SafeLink Wireless website’s on-line instructions to unlock one test device. Staff also completed the over-the-phone directions to unlock a second device while speaking with a SafeLink Wireless customer service representative.
As an additional step to validate the operation, CD staff removed the TracFone subscriber identity module (SIM) cards and inserted alternate SIM cards from another carrier’s device to test the functionality; both phones worked under the other carrier systems. Therefore, the methods for unlocking the separate devices worked successfully in compliance with the FCC’s order and CD staff is satisfied with TracFone’s unlocking procedures. Lifeline customers in California will be able to unlock issued handsets either using the online website method or by phone with a SafeLink Wireless customer service representative.
Public Interest Determination
Lifeline customers must benefit from the changes proposed by TracFone. In AL Supplement 14A, TracFone stated three specific public interest benefits:
§ Customers will receive new model handsets with newer technology and better features, an upgraded screen, and an updated Android operating system version. TracFone expects to provide LTE devices that will deliver faster Internet using these handsets.
§ Unlocked phones provide an easy opportunity for some people to resell devices, essentially scamming the Lifeline program resulting in waste, fraud, and abuse of the subsidized equipment.
§ TracFone can serve its Lifeline customers better by offering an enhanced Android device at a reduced price.
Request to Correct Terminology in T-17467
In AL 14, TracFone requested correcting terminology used in Resolution T-17467, specifically with the terms “unlockable” handsets and “handsets capable of being unlocked.” CD staff does not agree.
In Resolution T-17467, the Commission set parameters for TracFone as a wireless service provider in the federal and state programs to ensure that it remained in compliance performing its ETC obligations, given its past record in California and the FCC’s Consent Decree. Adherence to the CTIA – The Wireless Association® Consumer Code for Wireless Service is an accepted practice by industry wireless carriers because it promotes consumer protection and service quality standards, per the Consent Decree.[10] Committed to those goals and based on CD staff’s recommendation, the Commission directed TracFone in Ordering Paragraph 3 of T-17467 to issue only unlocked handsets to non-Lifeline and LifeLine customers and in line with the schedule of terms and conditions in the Consent Decree, which eventually will expire.[11] Therefore, CD staff recommends leaving language regarding unlockable phones in Resolution T-17467 unchanged.
Commission Requirements
TracFone has submitted its monthly reports of the FCC-required reports with California-specific breakouts as directed in Resolution T-17467.
As of April 11, 2017, TracFone is current with its payments for universal service public purpose surcharges and CPUC User Fees.
Safety Considerations
Issuing new model handsets capable of being unlocked does not adversely affect customer safety: the safety considerations using wireless devices remain unchanged. Given that safety and emergency communications are common concerns for all of California’s wireless customers, CD staff continues to recommend that the Commission require TracFone to fully and clearly inform prospective federal Lifeline and California LifeLine participants that coverage limitations may affect wireless mobile phone service access to E-911 and/or 911 in the event of an emergency. Such disclosures include, but are not limited to, clear statements on marketing materials and conspicuous placement on the public website in the form of information content on webpages, footnotes, and/or listings on a frequently asked questions (FAQ) webpage.
Conclusion and Recommendations
CD staff recommends approval of TracFone’s request to begin issuing new model handsets capable of being unlocked without a hardware swap to federal Lifeline and California LifeLine wireless customers, consistent with the requirements set forth in the FCC’s Consent Decree.
All other conditions and requirements addressed in Resolution T-17467 remain in place until their expiration. Under its authority as a wireless ETC, TracFone must comply with timely remittance of all universal service public purpose surcharges and CPUC User Fees, and must continue to remain in compliance with the federal Lifeline and California LifeLine requirements and rules.
Comments
TracFone asked that corrections to Resolution T-17467 “should take effect immediately and without a comment period.” CPUC Rule of Practice and Procedure 14.6(c)(2) states the Commission may grant a waiver of the 30-day comment period when a resolution or decision grants the relief requested and is an uncontested matter. Specifically, TracFone explained that no protests were filed on the advice letter and it had nearly exhausted its inventory of unlocked phones to issue to new customers.
CD considered TracFone’s special appeal that it is steadily depleting its inventory of unlocked phones as new program participants sign up while awaiting the Commission’s consideration. Therefore, CD recommends a reduced period to receive public comments while expediting the Commission’s consideration of TracFone’s request. In compliance with P.U. Code § 311(g)(2), the Commission emailed a notice letter on May 4, 2017, informing all parties on the ETC service list of its availability, its shortened public comment period of seven (7) days, and its availability at the Commission website www.cpuc.ca.gov. The notice letter also informed parties that the final conformed Resolution adopted by the Commission will be posted and available at this same website.
CD did not receive comments on this Resolution.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. TracFone Wireless Inc., doing business as “SafeLink Wireless,” is a prepaid wireless service provider that resells the services of AT&T Mobility, Sprint, Verizon Wireless and T-Mobile. Its principal offices are located at 9700 NW 112th Ave, Miami, FL 33178.
2. On July 18, 1997, the Commission issued TracFone Wireless’s predecessor company, Topp Telecom, its Wireless Identification Registration number U-4231-C allowing it to operate as a reseller of commercial mobile radio service to the public in California.
3. On February 3, 2014, TracFone Wireless filed Advice Letter 3 requesting Eligible Telecommunications Carrier designation to offer California LifeLine and federal Lifeline prepaid wireless service to eligible low-income households throughout California, excluding Tribal lands.
4. The Commission conditionally approved Resolution T-17467 on August 13, 2015, designating TracFone Wireless, Inc. as an Eligible Telecommunications Carrier and granted it authority to participate as a California LifeLine wireless service provider. The Commission specifically directed TracFone to issue only unlocked phones for its retail and Lifeline wireless customers and to submit monthly reports with California-specific breakouts of its Federal Communications Commission-required reports.
5. On October 8, 2015, TracFone Wireless, Inc. filed Tier 2 Advice Letter 6 to demonstrate that it had unlocked phones available for its California customers.
6. Communications Division approved the Advice Letter 6 on December 17, 2015, which allowed TracFone Wireless, Inc. to begin offering federal Lifeline and California LifeLine wireless service to eligible customers.
7. After successful demonstration to Communications Division staff that its unlocking methods worked on new model handset devices, TracFone Wireless, Inc., submitted Advice Letter 14 on January 23, 2017, requesting correction of terminology language in Resolution T-17467 and requested approval to issue new locked handsets capable of being unlocked without a hardware swap.
8. The public benefits include that customers will receive new handset models with newer technology and better features; unlocked phones provide an easy opportunity for the resale of devices, essentially scamming the Lifeline program and resulting in waste, fraud, and abuse of the subsidized equipment; and, Lifeline customers receive better service using an enhanced Android device at a reduced cost.
9. Communications staff has determined to leave language regarding unlockable phones unchanged in Resolution T-17467.
10. Issuing new locked handset models capable of being unlocked does not pose a safety concern.