§ 54.320   Compliance and recordkeeping for the high-cost program.

   (a) Eligible telecommunications carriers authorized to receive
   universal service high-cost support are subject to random compliance
   audits and other investigations to ensure compliance with program rules
   and orders.

   (b) All eligible telecommunications carriers shall retain all records
   required to demonstrate to auditors that the support received was
   consistent with the universal service high-cost program rules. This
   documentation must be maintained for at least ten years from the
   receipt of funding. All such documents shall be made available upon
   request to the Commission and any of its Bureaus or Offices, the
   Administrator, and their respective auditors.

   (c) Eligible telecommunications carriers authorized to receive
   high-cost support that fail to comply with public interest obligations
   or any other terms and conditions may be subject to further action,
   including the Commission's existing enforcement procedures and
   penalties, reductions in support amounts, potential revocation of ETC
   designation, and suspension or debarment pursuant to § 54.8.

   (d) Eligible telecommunications carriers subject to defined build-out
   milestones must notify the Commission and USAC, and the relevant state,
   U.S. Territory, or Tribal government, if applicable, within 10 business
   days after the applicable deadline if they have failed to meet a
   build-out milestone.

   (1) Interim build-out milestones. Upon notification that an eligible
   telecommunications carrier has defaulted on an interim build-out
   milestone after it has begun receiving high-cost support, the Wireline
   Competition Bureau will issue a letter evidencing the default. The
   issuance of this letter shall initiate reporting obligations and
   withholding of a percentage of the eligible telecommunication carrier's
   total monthly high-cost support, if applicable, starting the month
   following the issuance of the letter:

   (i) Tier 1. If an eligible telecommunications carrier has a compliance
   gap of at least five percent but less than 15 percent of the number of
   locations that the eligible telecommunications carrier is required to
   have built out to by the interim milestone, the Wireline Competition
   Bureau will issue a letter to that effect. Starting three months after
   the issuance of this letter, the eligible telecommunications carrier
   will be required to file a report every three months identifying the
   geocoded locations to which the eligible telecommunications carrier has
   newly deployed facilities capable of delivering broadband meeting the
   requisite requirements with Connect America support in the previous
   quarter. Eligible telecommunications carriers that do not file these
   quarterly reports on time will be subject to support reductions as
   specified in § 54.313(j). The eligible telecommunications carrier must
   continue to file quarterly reports until the eligible
   telecommunications carrier reports that it has reduced the compliance
   gap to less than five percent of the required number of locations for
   that interim milestone and the Wireline Competition Bureau issues a
   letter to that effect.

   (ii) Tier 2. If an eligible telecommunications carrier has a compliance
   gap of at least 15 percent but less than 25 percent of the number of
   locations that the eligible telecommunications carrier is required to
   have built out to by the interim milestone, USAC will withhold 15
   percent of the eligible telecommunications carrier's monthly support
   for that state and the eligible telecommunications carrier will be
   required to file quarterly reports. Once the eligible
   telecommunications carrier has reported that it has reduced the
   compliance gap to less than 15 percent of the required number of
   locations for that interim milestone for that state, the Wireline
   Competition Bureau will issue a letter to that effect, USAC will stop
   withholding support, and the eligible telecommunications carrier will
   receive all of the support that had been withheld. The eligible
   telecommunications carrier will then move to Tier 1 status.

   (iii) Tier 3. If an eligible telecommunications carrier has a
   compliance gap of at least 25 percent but less than 50 percent of the
   number of locations that the eligible telecommunications carrier is
   required to have built out to by the interim milestone, USAC will
   withhold 25 percent of the eligible telecommunications carrier's
   monthly support for that state and the eligible telecommunications
   carrier will be required to file quarterly reports. Once the eligible
   telecommunications carrier has reported that it has reduced the
   compliance gap to less than 25 percent of the required number of
   locations for that interim milestone for that state, the Wireline
   Competition Bureau will issue a letter to that effect, the eligible
   telecommunications carrier will move to Tier 2 status.

   (iv) Tier 4. If an eligible telecommunications carrier has a compliance
   gap of 50 percent or more of the number of locations that the eligible
   telecommunications carrier is required to have built out to by the
   interim milestone:

   (A) USAC will withhold 50 percent of the eligible telecommunications
   carrier's monthly support for that state, and the eligible
   telecommunications carrier will be required to file quarterly reports.
   As with the other tiers, as the eligible telecommunications carrier
   reports that it has lessened the extent of its non-compliance, and the
   Wireline Competition Bureau issues a letter to that effect, it will
   move down the tiers until it reaches Tier 1 (or no longer is out of
   compliance with the relevant interim milestone).

   (B) If after having 50 percent of its support withheld for six months
   the eligible telecommunications carrier has not reported that it is
   eligible for Tier 3 status (or one of the other lower tiers), USAC will
   withhold 100 percent of the eligible telecommunications carrier's
   monthly support and will commence a recovery action for a percentage of
   support that is equal to the eligible telecommunications carrier's
   compliance gap plus 10 percent of the ETC's support that has been
   disbursed to that date.

   (v) If at any point during the support term, the eligible
   telecommunications carrier reports that it is eligible for Tier 1
   status, it will have its support fully restored, USAC will repay any
   funds that were recovered or withheld, and it will move to Tier 1
   status.

   (2) Final build-out milestone. Upon notification that the eligible
   telecommunications carrier has not met a final build-out milestone, the
   eligible telecommunications carrier will have twelve months from the
   date of the final build-out milestone deadline to come into full
   compliance with this milestone. If the eligible telecommunications
   carrier does not report that it has come into full compliance with this
   milestone within twelve months, the Wireline Competition Bureau will
   issue a letter to this effect. USAC will then recover the percentage of
   support that is equal to 1.89 times the average amount of support per
   location received in the state over the six-year term for the relevant
   number of locations plus 10 percent of the eligible telecommunications
   carrier's total Phase II support over the six-year term for that state.

   (3) Compliance reviews. If subsequent to the eligible
   telecommunications carrier's support term, USAC determines in the
   course of a compliance review that the eligible telecommunications
   carrier does not have sufficient evidence to demonstrate that it has
   built out to all of the locations required by the final build-out
   milestone, USAC shall recover a percentage of support from the eligible
   telecommunications carrier as specified in paragraph (d)(2) of this
   section.

   [ 76 FR 73876 , Nov. 29, 2011, as amended at  80 FR 4478 , Jan. 27, 2015]

   Effective Date Note: At  80 FR 4478 , Jan. 27, 2015, § 54.320 was amended
   by adding paragraph (d). This paragraph contains information collection
   and recordkeeping requirements and will not become effective until
   approval has been given by the Office of Management and Budget.

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Subpart E—Universal Service Support for Low-Income Consumers

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54.400   Terms and definitions.

   As used in this subpart, the following terms shall be defined as
   follows:

   (a) Qualifying low-income consumer. A “qualifying low-income consumer”
   is a consumer who meets the qualifications for Lifeline, as specified
   in § 54.409.

   (b) Toll blocking service. “Toll blocking service” is a service
   provided by an eligible telecommunications carrier that lets
   subscribers elect not to allow the completion of outgoing toll calls
   from their telecommunications channel.

   (c) Toll control service. “Toll control service” is a service provided
   by an eligible telecommunications carrier that allows subscribers to
   specify a certain amount of toll usage that may be incurred on their
   telecommunications channel per month or per billing cycle.

   (d) Toll limitation service. “Toll limitation service” denotes either
   toll blocking service or toll control service for eligible
   telecommunications carriers that are incapable of providing both
   services. For eligible telecommunications carriers that are capable of
   providing both services, “toll limitation service” denotes both toll
   blocking service and toll control service.

   (e) Eligible resident of Tribal lands. An “eligible resident of Tribal
   lands” is a “qualifying low-income consumer,” as defined in paragraph
   (a) of this section, living on Tribal lands. For purposes of this
   subpart, “Tribal lands” include any federally recognized Indian tribe's
   reservation, pueblo, or colony, including former reservations in
   Oklahoma; Alaska Native regions established pursuant to the Alaska
   Native Claims Settlement Act (85 Stat. 688); Indian allotments;
   Hawaiian Home Lands—areas held in trust for Native Hawaiians by the
   state of Hawaii, pursuant to the Hawaiian Homes Commission Act, 1920
   July 9, 1921, 42 Stat. 108, et. seq., as amended; and any land
   designated as such by the Commission for purposes of this subpart
   pursuant to the designation process in § 54.412.

   (f) Income. “Income” means gross income as defined under section 61 of
   the Internal Revenue Code, 26 U.S.C. 61, for all members of the
   household. This means all income actually received by all members of
   the household from whatever source derived, unless specifically
   excluded by the Internal Revenue Code, Part III of Title 26, 26 U.S.C.
   101 et seq.

   (g) Duplicative support. “Duplicative support” exists when a Lifeline
   subscriber is receiving two or more Lifeline services concurrently or
   two or more subscribers in a household are receiving Lifeline services
   or Tribal Link Up support concurrently.

   (h) Household. A “household” is any individual or group of individuals
   who are living together at the same address as one economic unit. A
   household may include related and unrelated persons. An “economic unit”
   consists of all adult individuals contributing to and sharing in the
   income and expenses of a household. An adult is any person eighteen
   years or older. If an adult has no or minimal income, and lives with
   someone who provides financial support to him/her, both people shall be
   considered part of the same household. Children under the age of
   eighteen living with their parents or guardians are considered to be
   part of the same household as their parents or guardians.

   (i) National Lifeline Accountability Database or Database. The
   “National Lifeline Accountability Database” or “Database” is an
   electronic system, with associated functions, processes, policies and
   procedures, to facilitate the detection and elimination of duplicative
   support, as directed by the Commission.

   (j) Qualifying assistance program. A “qualifying assistance program”
   means any of the federal or Tribal assistance programs the
   participation in which, pursuant to § 54.409(a) or (b), qualifies a
   consumer for Lifeline service, including Medicaid; Supplemental
   Nutrition Assistance Program; Supplemental Security Income; Federal
   Public Housing Assistance; Veterans and Survivors Pension Benefit;
   Bureau of Indian Affairs general assistance; Tribally administered
   Temporary Assistance for Needy Families (Tribal TANF); Head Start (only
   those households meeting its income qualifying standard); or the Food
   Distribution Program on Indian Reservations (FDPIR).

   (k) Direct service. As used in this subpart, direct service means the
   provision of service directly to the qualifying low-income consumer.

   (l) Broadband Internet access service. “Broadband Internet access
   service” is defined as a mass-market retail service by wire or radio
   that provides the capability to transmit data to and receive data from
   all or substantially all Internet endpoints, including any capabilities
   that are incidental to and enable the operation of the communications
   service, but excluding dial-up service.

   (m) Voice telephony service. “Voice telephony service” is defined as
   voice grade access to the public switched network or its functional
   equivalent; minutes of use for local service provided at no additional
   charge to end users; access to the emergency services provided by local
   government or other public safety organizations, such as 911 and
   enhanced 911, to the extent the local government in an eligible
   carrier's service area has implemented 911 or enhanced 911 systems; and
   toll limitation services to qualifying low-income consumers as provided
   in subpart E of this part.

   (n) Supported services. Voice Telephony services and broadband Internet
   access services are supported services for the Lifeline program.

   (o) National Lifeline Eligibility Verifier. The “National Lifeline
   Eligibility Verifier” or “National Verifier” is an electronic and
   manual system with associated functions, processes, policies and
   procedures, to facilitate the determination of consumer eligibility for
   the Lifeline program, as directed by the Commission.

   [ 77 FR 12966 , Mar. 2, 2012, as amended at  80 FR 40935 , July 14, 2015;
    81 FR 33089 , May 24, 2016]

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