TR Daily FCC Affirms Decision to Make Lifeline Violation Info Public
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Monday, April 13, 2020

FCC Affirms Decision to Make Lifeline Violation Info Public

The FCC has rejected a petition from American Broadband & Telecommunications Co. in which it sought reconsideration of an earlier Commission decision that the majority of the information related to the company’s alleged violations of the agency’s Lifeline rules should be made public.

The FCC found in October 2018 that American Broadband had sought and improperly received “millions of dollars of Lifeline support” for ineligible end-users (TR Daily, Oct. 23, 2018).

American Broadband had sought confidential treatment of the information, but in the notice of apparent liability (NAL) proposing a forfeiture of more than $63 million, the FCC denied the majority of the company’s requests to withhold its materials from the public, the FCC recalled in an order adopted April 8 and released today in File EB-IHD-17-00023554.

However, because at the time American Broadband still had the right to seek reconsideration and then to appeal, the FCC redacted “significant portions of the text of the NAL.”

In its November 2018 petition for reconsideration, American Broadband “again did not identify with particularity the information set forth in the NAL for which it sought confidential treatment, arguing that doing so would be too burdensome, but asserted that either all or a ‘significant portion’ of the materials it had submitted during the investigation should be afforded confidential treatment (and it did not identify which materials fell within that category),” the FCC said in the reconsideration order.

The FCC noted that “a recent Supreme Court decision overrules our conclusion in the NAL that the information submitted by American Broadband was subject to mandatory disclosure under the FOIA [Freedom of Information Act]. … [O]n June 24, 2019, the Supreme Court in ‘Food Marketing Institute v. Argus Leader Media,’ overturning longstanding lower court precedent, held that the definition of ‘confidential’ under Exemption 4 of the FOIA did not include a requirement that release of the information would result in substantial harm to the competitive position of the entity submitting the information. The Court also held that information qualifies as ‘confidential’ under Exemption 4 ‘[a]t least where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy.’ Accordingly, we no longer find that the information for which American Broadband seeks confidential treatment is subject to mandatory release under the FOIA.”

However, the FCC pointed out that some of the information in question is publicly available elsewhere and that “[n]othing in the Supreme Court’s decision in ‘Food Marketing Institute’ affects our authority to release confidential information when, after balancing the factors favoring disclosure and non-disclosure, we find it in the public interest to do so.”

It said that releasing the information would further transparency in, and thus increase public confidence in, the Lifeline program.

The FCC said that “any harm to American Broadband that might result from making public most of the information originally redacted from the NAL is slight. Once a company or person is identified as an alleged wrongdoer—and American Broadband does not argue that its identity or the nature of the allegations against it should be kept confidential—any additional reputational harm that would result from publishing the details of the alleged wrongdoing would ordinarily be slight.”

Specifically, it said that “American Broadband has not shown that the public release of the following information would cause it competitive or any other substantial harm and that release would at most cause a small amount of additional ‘customer disgruntlement’ or reputational harm: the characterization of the enrollment activities at issue made by American Broadband staff (but not the details of that enrollment strategy); the name of the bank where American Broadband has accounts; the names of American Broadband’s senior officers; the names of other American Broadband employees who either engaged in allegedly fraudulent activities, supervised those employees, or investigated allegations of fraud; the steps American Broadband took in investigating activities it suspected were fraudulent; discussions about how fraudulent activities might have occurred; the general terms of American Broadband’s agreements with the people or companies who sold its service, including the type of compensation (but not including the rate of compensation); the activities American Broadband generally engaged in to ensure the claims it submitted to USAC [Universal Service Administrative Co.] for Lifeline service were valid, including training; discussions within American Broadband about those activities; and the amounts of funds the president of American Broadband took from the company for personal use and the purposes for which those funds were used.”

The FCC said that despite the somewhat greater sensitivity of the following data, “the potential for harm from release of the information is still relatively small, and the public interest in releasing it outweighs the interest American Broadband has in not releasing it: the number of apparently ineligible enrollments and the extent of the allegedly fraudulent activities that occurred at American Broadband; the details of the steps American Broadband took in discovering and attempting to remediate the problems it discovered; and the views of American Broadband’s employees regarding these issues.”

However, it said it would continue to redact from the public version of the NAL “the names of American Broadband’s purported customers and the associated addresses. We find that making public the specific names of purported subscribers would add little to the public’s understanding of our decision, and that any such interest is outweighed by the purported subscribers’ privacy interests.”

In a separate statement, Commissioner Geoffrey Starks said, “For too long, many parties facing investigation by the Commission’s Enforcement Bureau have asserted overbroad—and sometimes plainly frivolous—confidentiality claims. These tactics hamstring our ability to vindicate the public interest and deter wrongdoing, and they make it impossible for people outside the Commission to understand the key facts of each case. I am pleased to support this Order on Reconsideration, which makes public important details about American Broadband’s apparent violations of our rules governing the Lifeline program.”

He added, “This is not the first time that I have raised this issue and commended it to the Commission’s attention. As I emphasized in my statement on our recent Notices of Apparent Liability regarding apparently improper uses of customer location data by four major wireless carriers, ‘we must begin resolving such requests [for confidentiality] immediately upon receipt.’ I will, therefore, continue to encourage the Commission to alert parties to overbroad confidentiality requests as soon as Commission staff review the documents. Resolving these issues efficiently can speed our proceedings and conserve valuable Commission resources. And, for parties that continue to stretch out confidentiality rules, today’s Order should be a signal that the Commission will strictly and fairly apply the process for handling confidentiality designations set out in Section 0.459 of our rules.” —Lynn Stanton, [email protected]

MainStory: FederalNews FCC UniversalServiceLifeline

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