The Joplin Globe, Joplin, MO

Business

May 6, 2013

Indiana agency investigating cellphone provider

INDIANAPOLIS — Indiana utility regulators have started an investigation of an Oklahoma-based cellphone company after it set up 30,000 accounts in the state for a federal subsidy program in less than a year.

Indiana Utility Regulatory Commission officials question in documents whether TerraCom LLC might have improperly activated duplicate accounts, the Indianapolis Business Journal reported Monday.

TerraCom, which started doing business in Indiana in June, now receives $250,000 to $300,000 in federal Lifeline reimbursements every month in Indiana, records show. The federal program, which provides inexpensive phone plans to low-income households, had about 90,000 Indiana customers in 2011, at a cost to the federal government of $9.3 million.

TerraCom Chief Operating Officer Dale Schmick said the Oklahoma City company is successfully marketing its service and welcomes the chance to explain itself to Indiana officials.

“Historically, Indiana has had low adoption rates on the Lifeline program,” he said. “This could have contributed to the ramp-up, but we also believe it’s attributable to our experience in bringing service directly to those who need it most.”

The IURC has scheduled a May 30 hearing to discuss TerraCom’s case. Agency spokeswoman Danielle McGrath would not comment on what possible outcomes the company could face.

“We don’t know, and so that’s why the investigation is being opened — to determine what’s going on,” McGrath said. “We have concerns at this point, and we want to gather more information before drawing any conclusions.”

The federal Lifeline program dates to 1985 and provides subsidies averaging $9.25 nationwide toward discount phone service plans.

TerraCom is one of almost 40 taking part in the program in Indiana, with most of them offering only landline connections. Companies as large as AT&T and T-Mobile also receive the subsidies.

To sign up for a Lifeline phone plan, consumers must be at or below 135 percent of the federal poverty level, or about $32,000 for a family of four. Consumers can also qualify through other programs, such as Medicaid or food stamps.

Full-price customers pay an average $2.50 monthly surcharge to the Universal Service Fund, an umbrella program that includes Lifeline and other government aid.

The Federal Communications Commission closed an investigation of TerraCom’s Oklahoma activities in February after the company paid a $416,000 settlement and sister company YourTel, which does not operate in Indiana, paid $600,000.

Investigators found the company was filing for two government reimbursements for individual customers — once for landline accounts and again for wireless accounts, even though rules restrict use to one phone per household.

Company officials said a software malfunction caused the duplicate reimbursements and they were addressing the issue.

 

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