The Indiana Utility Regulatory Commission (IURC) is continuing its investigation into TerraCom Inc., a provider of phones for low-income users to ensure that the company is meeting state regulations.
On Monday, the IURC held a hearing where commissioners asked representatives of TerraCom questions about its rapid expansion in an effort to make sure the company is in line with state regulations.
During the hearing, Dale Schmick, TerraCom’s chief operating officer, took questions from IURC commissioners.
Commissioner Larry Landis noted that TerraCom had submitted written information about its operations to the commission.
“However, the information submitted has not explained why TerraCom has experienced such explosive growth in the state of Indiana,” Landis said. “Our goal is to determine whether TerraCom’s growth is within the requirements of the regulations.”
Schmick said the company is simply using a “market model” and that its early success enabled it to “scale processes and build processes,” which has led to faster growth.
Oklahoma based TerraCom has built one of the fastest growing telecommunications networks in Indiana. By this summer, the company had set up more than 30,000 accounts within a year.
TerraCom is one of nine companies in Indiana approved to offer products through the federally subsidized Lifeline program, which connects low-income families with access to mobile phones. Those phones are often called “Obamaphones,” since the Lifeline program was launched during President Barack Obama’s administration.
TerraCom started operating in Indiana in June 2012 and has received $250,000 to $300,000 per month from the Lifeline program to provide cheap phone plans to low-income customers.
However, TerraCom attracted the attention of the Federal Communications Commission, the IURC and the attorney general’s office due to its rapid growth, the sudden firing of 700 of its sales employees in July and a Scripps National Investigation which found that the personal information of some TerraCom customers has been available online.
The IURC has been holding hearings with TerraCom officials since this summer, and has been particularly watchful, especially after it was revealed that the company gave phones to ineligible people in Oklahoma and received $416,000 that it was forced to repay.
At the hearing, Landis asked Schmick if TerraCom officials provide the oversight needed to ensure that agents contracted with the company (who are not employees) were following state regulations.
“We have employees on the ground who shadow the agents, to make sure they are representing what TerraCom wants them to represent,” Schmick said.
Commissioner Carolene Mays had questions about allegations that TerraCom had “phones delivered to vacant addresses”, or that duplicate phones were sent to customers, in order to gain more funding from the Lifeline program.
“Our company has demonstrated that we have had no duplicates, and following a similar investigation in Oklahoma, we were applauded by the commission in that state for how transparent we were,” Schmick said.
Schmick added that TerraCom has instructed employees to be careful to ensure that only qualified Hoosiers are receiving Lifeline phones, and has implemented new security measures to prevent any future breach of customer information.
The IURC is the state’s governing body that regulates the rates and services of utilities. It is a fact-finding body formed to ensure that utilities and telecommunications companies are meeting state regulations designed to protect the interests of citizens.
