Phone company lays off hundreds amid inquiry

Back to TopCommentsE-mailPrintBookmark and Share

A subsidized phone service provider under scrutiny from Indiana regulators is laying off hundreds of salespeople across the country amid inquiries into its sales tactics.

Oklahoma City-based TerraCom Inc., which began operating in Indiana in June 2012, and affiliate YourTel America Inc. have started the process of cutting about 700 salespeople in TerraCom's 23-state service area, the company announced late last week. The process began July 1.

A company representative declined on Monday to release information about employees affected in Indiana.

The move was triggered by a Federal Communications Commission warning issued June 25, reminding providers of the discount phone service program Lifeline that they are liable for any conduct by salespeople that violated FCC rules.

TerraCom and YourTel America began the termination process and are "considering the best business path forward in light of the [FCC's] recent enforcement advisory," said Dale Schmick, chief operating officer of the two firms.

TerraCom and YourTel draw subsidies from the Lifeline program to provide cheap phone plans to low-income customers.

Lifeline provides discounts on basic monthly telephone service to qualifying low-income customers. Applicants must report household incomes at or below 135 percent of the federal poverty level ($32,000 for a family of four), or they need to qualify for food stamps, Medicaid or other federal welfare programs.

All phone customers pay an average of $2.50 per month to the Universal Service Fund, which funnels the money back to the phone providers to reimburse them for offering discounted service.

TerraCom receives $250,000 to $300,000 per month in Lifeline reimbursements for Indiana customers, the Universal Service Fund’s records indicate.

Federal and state regulators have been scrutinizing Lifeline to target waste and fraud.

TerraCom and YourTel America settled for $1 million in February with the Federal Communications Commission, after the FCC claimed they set up multiple Lifeline accounts for individual customers in Oklahoma.

As IBJ reported in May, Indiana utility regulators began asking questions soon after the settlement about how the phone company managed to sign up a massive 30,000 customers in its first six months of business in the state.

At an Indiana Utility Regulatory Commission conference on July 3, TerraCom's Schmick defended the company’s sales methods in Indiana, saying the company recruited so many customers because it has perfected its sales techniques.

Typically, TerraCom’s sales reps set up booths or tents at charity events to hand out marketing material and sign up customers, Schmick told commissioners. Commissioners questioned whether TerraCom was properly screening out all the unqualified applicants before filing the paperwork.

Schmick explained that he is required to sign legal documents for the reimbursements. He would face criminal fraud charges if he knowingly submitted an unqualified Lifeline application, he said.

The FCC issued an enforcement advisory on June 25 regarding the conduct of salespeople and the rules for signing up customers.

"The Enforcement Bureau ... is particularly concerned that some eligible telecommunications carriers are failing to ensure that their agents, contractors and representatives adhere to Lifeline rules," according to the advisory.

Among those regulations, companies must confirm an applicant’s eligibility before activating a Lifeline account, and applicants need to acknowledge that their households do not already have Lifeline accounts.

Companies face up to $1.5 million in fines each time they fail to comply.

In a prepared statement, Schmick said the layoffs beginning July 1 were intended “to ensure continued compliance while we transition to a new business model.”


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. The Affordable Care Act is not the reason for the slow recovery and lack of high paying jobs for low skill workers. This is a trend that has been going since the early 80's. The recovery is real in the sense that GDP has been growing steadily at a rate of roughly 2.5% since the recession ended in late 2009 (newsflash, the stimulus worked) and the unemployment has been steadily dropping. The reason issue we are facing deals with a skills gap (not enough workers with the right credentials / experience) and wage stagnation due to corporate America being focused solely on maximizing profits for shareholders and not caring about the American middle class. Why should they? Multi-billion dollar mutlinational companies keep offshoring their profits in order to avoid paying taxes (which makes our deficit worse) they convince Americans to fight amongst themselves. If you want to create jobs and reduce the deficit, raise the minimum wage and change corporate tax laws. Of course, if you want to continue to belive that tax cuts for wealthy create jobs (which they don't) and allow corporations and the wealthy to continue to make you cover more and more of the costs of maintaining infrastructure, funding the military and other government services, then keep voting Republican. Hopefully someday you wake up and realize what's been going on since Reagan took office.

  2. Helloooooo, my name is Kate. I am so joyous to share this wonderful testimony about what Dr. Osoijiakhena, a great spell caster, did for me and my family. I wedded a year and 6 months ago, we were very happy during this whole period, i really love my husband so so much. I started noticing changes when he started coming home late at night, he stop paying attention to me, i later found out that he was having an affair with another lady, i dont know what she did to get to him but she really got a hold on him. He started spending weekends with her, and threaten for divorce. I was so heart broken and devastated, i spent many night thinking on how to get my husband back. A friend took it upon herself to to introduce me to one Dr. Osoijiakhena, a great spell caster, who once helped her with a spell that reunited her family and helped her husband secure a very prolific job. Though i had my doubts and never believed, but i decided to give it a try because i was helpless. I contacted Dr. Osoijiakhena, the Spell caster, to help me reunite my family by bringing back my husband from that other woman and break whatever hold she had on him. He only just told me that it's a minor issue, once i provide and do everything he will ask me to do, then i will have my family back again. I did everything he required. And he did it!!!!! My husband returned back to me and pleaded for forgiveness, and i also secured a well paid job in a big company, just as the great spell caster, Dr. Osoijiakhena said. I am so so happy to share my testimony on this wall. I am using this medium to tell every one that has same or similar problem to try the great Dr. Osoijiakhena through his mail: drosoijiakhenaspell@gmail.com......he is so real!!!!! He can also help you with: (1) IF YOU WANT YOUR EX GIRL/BOYFRIEND TO RETURN BACK TO YOU (2) IF YOU WANT YOUR HUSBAND/WIFE BACK (3) IF YOU WANT TO BE PROMOTED IN YOUR OFFICE (4) IF YOU WANT YOUR MAN OR WOMAN TO LOVE YOU (5) IF YOU WANT A CHILD (BARREN) (6) IF YOU WANT TO BE RICH/WEALTHY (7) IF YOU WANT YOUR HUSBAND/WIFE TO BE YOURS FOREVER (8) IF YOU'VE BEEN SCAMMED AND WANT YOUR MONEY BACK (9) IF YOU ARE HAVING DELAY IN GETTING MARRIED (10) IF YOU HAVE A COURT CASE AND WANT TO WIN (11) IF YOU'RE A DRUG ADDICT AND YOU WANT TO REALLY STOP (12) IF YOU CANNOT IMPREGNATE A WOMAN (STERILE) (13) ALL TYPES OF DISEASES I advise you to contact the great Dr. Osoijiakhena, the spiritualist for solutions via his email: drosoijiakhenaspell@gmail.com

  3. Sergeant McNally is buried in Cathcart Cemetery on a hill known as McNally%u2019 Hill. The Cemetery is in a natural bushland setting and is very well maintained.The emergency department at Ararat Hospital is known as the John McNally Emergency Department. Cathcart is approx. 4.6 km from Ararat and is approx. 345 m above sea level.

  4. My spring chicken of a Mom is turning 75 years young. She is a big fan of Frankie and I think she would get a big kick out of the film. I wanted to take her to the Broadway play but am priced out. Thanks for your time and consideration. Oh yea, Wildwood! Joie

  5. I thought this company would go bankrupt in 2013/2014. I predicted that four years ago. I was wrong. It will take another couple of years, but they will get there.