[Federal Register: August 19, 2003 (Volume 68, Number 160)]
[Rules and Regulations]
[Page 49707-49712]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19au03-12]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket No. 96-45, FCC 03-170]
Federal-State Joint Board on Universal Service
AGENCY: Federal Communications Commission
ACTION: Final rule.
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SUMMARY: In this document, the Commission adopts the Federal-State
Joint Board on Universal Service (Joint Board) recommendation to retain
the existing list of services supported by federal universal service.
The Commission agrees with the Joint Board that, with the possible
exception of equal access, no new service satisfies the statutory
criteria contained in section 254(c) of the Communications Act of 1934,
as amended (``Act'') or should be added to the list of core services.
DATES: Effective September 18, 2003.
FOR FURTHER INFORMATION CONTACT: Elizabeth Yockus, Attorney,
Telecommunications Access Policy Division, Wireline Competition Bureau,
(202) 418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
and Order on Reconsideration in CC Docket No. 96-45 released on July
14, 2003. The full text of this document is available for public
inspection during regular business hours in the FCC Reference Center,
Room CY-A257, 445 12th Street, SW., Washington, DC 20554.
I. Introduction
1. The Commission adopts the Federal-State Joint Board on Universal
Service (Joint Board) recommendation to retain the existing list of
services supported by federal universal service. The Commission agrees
with the Joint Board that, with the possible exception of equal access,
no new service satisfies the statutory criteria contained in section
254(c) of the Communications Act of 1934, as amended (``Act'') or
should be added to the list of core services. The Joint Board was
unable to reach agreement on whether equal access should be added to
the list of supported services and made no recommendation regarding
this service. Because critical arguments in favor of adding equal
access are related to the eligible telecommunications carrier (ETC)
process and calculation of support for competitive ETCs, both of which
are within the scope of the Portability Proceeding, 68 FR 10429 (March
5, 2003), the Commission makes no decision regarding equal access at
this time.
II. Discussion
2. The Commission adopts the Joint Board's recommendation to retain
the existing list of services supported by universal service. The
Commission also agrees with the Joint Board's general conclusion that
no new service satisfies the statutory criteria contained in
[[Page 49708]]
section 254(c) and that the public interest would not be served by
expanding the list of supported services at this time. The Commission
agrees with the Joint Board that the current list of supported services
strikes the right balance between ensuring the availability of
fundamental telecommunications services to all Americans and
maintaining a sustainable universal service fund. In its Recommended
Decision, the Joint Board discussed several specific services and
proposals--advanced or high-speed services, unlimited local usage, soft
dial tone or warm line services, prepaid calling plans, payphone lines,
Braille TTY and two line voice carry over, N11 codes, toll or expanded
area service, modifying voice grade access bandwidth, transport costs,
rural wireless ETC category, and technical and service quality. The
Joint Board was unable to reach agreement, however, on whether to
recommend including equal access in the list of core services. The
Commission makes no decision regarding equal access at this time and
will address it in the context of the Portability Proceeding, 68 FR
10429 (March 5, 2003).
A. Advanced or High-Speed Services
3. Consistent with the Joint Board's Recommended Decision, the
Commission declines to expand the definition of supported services to
include advanced or high-speed services at this time. Although the
Commission agrees with commenters, such as the National
Telecommunications Cooperative (NTCA) and Valor Communications, that
broadband services are becoming increasingly important for consumers in
all regions of the nation, we also agree with the Joint Board and the
vast majority of commenters that high-speed and advanced services
currently do not meet the Act's criteria for inclusion on the list of
supported services.
4. Like the Joint Board, the Commission recognizes that high-speed
and advanced services may enable subscribers to access Internet
resources used for educational, public health, or public safety
purposes. At this time, however, the Commission does not find that
advanced or high-speed services are essential to reaching these
resources. The Commission agrees with the Joint Board and most
commenters that although advanced and high speed services are useful
for educational, public health and public safety purposes, they are not
essential for these purposes as set out by section 254(c).
5. Although telecommunications carriers increasingly are deploying
infrastructure capable of providing advanced and high-speed services,
the Commission agrees with the Joint Board and commenters that advanced
services are not subscribed to by a substantial majority of residential
consumers. In fact, the Commission's own data shows that as of December
31, 2002, there were approximately 17.4 million high-speed lines
serving residential and small business subscribers, which represents 16
percent of all U.S. households. Additionally, according to another
study, only 56.5 percent of all households as of September 2001 had
computers and could even benefit from advanced service offerings.
Furthermore, the Florida Public Service Commission (PSC) states that
there were 18.6 million broadband subscribers at the end of 2002 and,
assuming all of these subscribers are residential, this would represent
only 17 percent of American households.
6. In addition, comments in response to the Notice of Proposed
Rulemaking, 68 FR 12020 (March 13, 2003), like those in response to the
Joint Board's Public Notice, 66 FR 46461 (September 5, 2001), suggest
that adding advanced or high-speed services to the definition of
supported services would be contrary to the public interest due to the
high cost of requiring the deployment of such services. If advanced or
high-speed services were added to the list of supported services, it
could drastically increase the financial burden placed on carriers and,
ultimately, consumers because all eligible telecommunications carriers
would be required to offer such services in order to receive support.
The Commission agrees with the Joint Board that the public interest
would not be served by substantially increasing the support burden by
expanding the definition of universal service to include these
services.
7. Moreover, the Commission agrees with the Joint Board that adding
advanced or high-speed services to the list could jeopardize support
currently provided to some carriers. While many small rural carriers
have made significant progress in deploying broadband infrastructure,
they do not yet offer advanced or high speed services ubiquitously
throughout their service area. This would reduce the number of
providers eligible for universal service support and might reduce
consumer choice in rural and high-cost areas.
8. Although the Commission concludes that advanced or high-speed
services do not satisfy the statutory criteria necessary for inclusion
in the definition of supported services at this time, the Commission
maintains its commitment to ensuring that appropriate policies are in
place to encourage the successful deployment of infrastructure capable
of delivering advanced and high-speed services. Indeed, section 254(b)
of the Act provides that the Joint Board and the Commission shall base
policies for the preservation and advancement of universal service on
several principles, including the ability to access advanced
telecommunications and information services in all regions of the
nation. Accordingly, the Commission continues to support the
Commission's prior conclusion that ``our universal service policies
should not inadvertently create barriers to the provision or access to
advanced services, and * * * that our current universal service system
does not create such barriers.'' Thus, even though advanced services
are not directly supported by federal universal service, ``[Commission]
policies do not impede the deployment of modern plant capable of
providing access to advanced services.'' The Commission recognizes that
the network is an integrated facility that may be used to provide both
supported and non-supported services. The Commission believe that the
our policy of not impeding the deployment of plant capable of providing
access to advanced or high-speed services is fully consistent with the
Congressional goal of ensuring access to advanced telecommunications
and information services throughout the nation.
B. Unlimited Local Usage
9. The Commission adopts the Joint Board recommendation that
unlimited local usage should not be added to the list of supported
services. The Commission agrees with the Joint Board and the vast
majority of the commenters that unlimited local usage is not essential
to education, public health or public safety. The Commission also
agrees with the Joint Board that adding it to the list would not serve
the public interest because it could hinder states' ability to require
local metered pricing for local service. As the Joint Board noted,
states may require or encourage local metered service because it may,
for example, encourage subscribership among low-income or low-volume
users. Adding a national local usage requirement, however, would
preclude this type of experimentation by the states. The Commission
agrees with AT&T that states are in a better position to determine
whether unlimited local usage offerings are beneficial in particular
circumstances. Finally, the Commission note that the Joint Board found
the record to be inadequate to determine whether adoption of such a
[[Page 49709]]
requirement would provide a competitive advantage to wireline carriers,
due to the different cost structures of wireless and wireline
technologies. No party provided additional information to address this
issue in response to the Notice of Proposed Rulemaking. Accordingly,
the Commission concurs with the Joint Board's recommendation regarding
unlimited local usage.
10. The Commission is not persuaded by comments filed by the
National Association of State Utility Consumer Advocates (NASUCA) and
the Montana Universal Service Task Force (MUST) that unlimited local
usage should be added to the list. NASUCA and MUST assert unlimited
local usage should be included in the definition of supported services
simply because it is widely available and subscribed to by a majority
of residential consumers when offered. They believe that concerns
regarding the competitive neutrality of such a requirement should not
outweigh the fact that it is provided to many, if not most, residential
consumers. Both parties, however, fail to consider all of the statutory
criteria. MUST does not consider, much less rebut, the Joint Board's
finding that unlimited local usage is not essential to education,
public health and public safety. Moreover, both NASUCA and MUST fail to
consider that the Joint Board concluded it would preclude state
experimentation with calling plans and, therefore, not serve the public
interest. Based on our consideration of all of the factors,
specifically that it is not essential, that it would not serve the
public interest, and that the Commission have no basis to determine
whether it is competitively neutral, we find that unlimited local usage
should not be added to the list of core services at this time.
C. Soft Dial Tone/Warm Line Service
11. The Commission agrees with the Joint Board that the definition
of the services supported by universal service should not be expanded
to include soft dial tone/warm line service. Soft dial tone/warm line
service enables a consumer without local service to utilize an
otherwise disconnected line to contact emergency services and the local
exchange carrier's central business office. Such services, however, are
not subscribed to by any residential consumers. Additionally, the
Commission finds the record does not contain sufficient information to
indicate that adding soft dial tone/warm line service to the list of
supported services would serve the public interest. In response to the
Notice of Proposed Rulemaking, no commenter provided estimates of the
cost of adding soft dial tone or warm line service to the list of
supported services or addressed in detail the implementation and
administration of such a requirement.
12. Although the Commission agrees with USCCB et al. that soft dial
tone/warm line service can improve the ability of certain low-income
consumers to reach emergency services, we also agree with the Joint
Board that states are in a better position to establish these programs
because states maintain closer ties to local public safety
organizations. The vast majority of commenters support the Joint
Board's recommendation and believe the establishment of soft dial tone
or warm line programs would be better left to the individual states. In
fact, the New York Department of Public Service stated that a national
solution, and the commitment costs that would be incurred, would
conflict with its state program and eliminate the flexibility required
to meet local needs. Accordingly, we adopt the Joint Board's
recommendation that these services not be added to the list of
supported services at this time. However, given the importance of such
services, we do agree with NASUCA that we should continue to monitor
the development of state soft dial tone and warm line programs.
D. Prepaid Calling
13. The Commission agrees with the Joint Board that the services
supported by universal service should not be expanded to include
prepaid services. In response to the Notice of Proposed Rulemaking,
USCCB et al. proposes to add prepaid services generally to the list of
supported services. It argued its proposal--which encompasses wireline
and wireless technologies--meets the section 254(c) criteria and is
competitively neutral.
14. Based on the record before us, USCCB et al.'s proposal does not
appear to meet three of the statutory criteria. First, the record does
not indicate that a substantial majority of residential consumers
subscribe to prepaid services. Although the Commission agree with USCCB
et al. that consumers receive the same telecommunications
functionalities, i.e. voice grade access to the public switched
network, regardless of when they pay for services, pre- and postpaid
services utilize different billing practices. USCCB et al. has failed
to provide any information regarding the number of consumers who select
the prepaid billing option. Second, no party has submitted information
in the record regarding the extent to which wireline and wireless
carriers have billing systems capable of providing prepaid services, so
the record is insufficient to determine whether carriers have deployed
prepaid service billing equipment in their networks.
15. Third, the Commission question whether adding prepaid services
to the list of supported services would be in the public interest. The
record does not contain information about how much it would cost for
carriers that do not already have prepaid functionalities to acquire
such capabilities. Therefore, it is difficult to balance implementation
costs with the potential benefits of increased subscribership. In
addition, NASUCA asserts that because the requirement would apply to
all ETCs, it would require some carriers that serve areas with high
penetration rates to implement billing changes without any significant
benefit. Because the record does not indicate whether wireline carriers
have systems equipped for prepaid plans, the Commission also are
concerned that USCCB et al.'s proposal may place wireline carriers at a
competitive disadvantage vis-[agrave]-vis wireless carriers that may
already offer prepaid plans. NASUCA also points out that prepaid
pricing plans today are often significantly higher than those for post-
paid services, and, therefore, may not be within the financial reach of
some consumers. For these reasons, the Commission conclude that prepaid
services should not be added to the list of supported services.
E. Payphone Lines
16. The Commission agrees with the Joint Board that payphone lines
should not be included in the definition of supported services at this
time. Although payphones play an important role in the public
communications network, the Commission are persuaded by the Joint
Board's finding that payphone lines are not subscribed to by a
substantial majority of residential consumers. In addition, the
Commission agrees with the Joint Board that the record is insufficient
to determine whether adding payphone lines to the list of supported
services would serve the public interest. There is no evidence in the
record that additional federal support for payphone lines in high cost
areas is needed for all payphone lines or would be necessary to ensure
the continued availability of particular payphones. Moreover, including
payphones in the list of core services could reduce the number of
potential competitive providers of the core services because many
competitive LECs and CMRS carriers do not offer payphone service
throughout their
[[Page 49710]]
service areas and would be ineligible for ETC designations. No party
filed comments in response to the Notice of Proposed Rulemaking in
favor of adding payphone lines to the definition of supported services
or supplemented the record analyzed by the Joint Board. Therefore, the
Commission finds the record is insufficient to support the addition of
payphone lines to the list of core services.
F. Braille TTY and Two Line Voice Carry Over
17. The Commission agrees with the Joint Board that the list of
core services should not be expanded to include Braille TTYs and two
line voice carry over (2LVCO). Braille TTYs are equipment used to print
text messages in Braille for people who are deaf-blind, and 2LVCO
allows hearing impaired consumers to read text messages and respond
verbally to a relay operator. 2LVCO is a service that hearing-impaired
consumers provide for themselves by purchasing a special TTY and
combining it with a second line and conference calling. No commenter in
response to the Commission's Notice of Proposed Rulemaking argued in
favor of adding either to the list of supported services.
18. Like the Joint Board, the Commission finds that Braille TTYs,
which are customer premises equipment, are ineligible for universal
service support because section 254(c) expressly limits the definition
of universal service to ``telecommunications services.'' Moreover,
given the lack of information on the costs of implementing the proposal
to make 2LVCO a supported service, the Commission agree with the Joint
Board and finds the record insufficient to add this service to the list
of supported services at this time. The Commission remains committed to
exploring alternative mechanisms to ensure the accessibility of
telecommunications services for persons with disabilities.
G. N11 Codes
19. The Commission adopts the Joint Board's recommendation that N11
codes, with the exception of 911 services, do not meet the statutory
criteria and, therefore, should not be added to the definition of
supported services. N11 codes are abbreviated dialing arrangements of
which the first digit may be any digit other than 0 or 1, and the last
two digits are both 1. These codes are used to enable callers to
complete telephone calls to various services that require the dialing
of a seven or ten digit telephone number. In order for consumers to
access these services using the N11 code, the telephone network must be
pre-programmed to translate the three-digit code into the appropriate
seven or ten-digit telephone number to route the call. The Joint Board
found that N11 codes are not subscribed to by a substantial majority of
residential consumers and are not essential for education, public
health, or public safety because consumers may reach the services by
dialing the seven or ten digit number. In response to the Commission's
Notice of Proposed Rulemaking, no commenter argued in favor of adding
N11 services to the list of supported services. Therefore, the
Commission agree with the Joint Board's recommendation and finds that
N11 services should not be added to the list of supported services.
H. Toll or Expanded Area Service
20. The Commission agrees with the Joint Board that the definition
of supported services should not be expanded to include toll or
expanded area services. The Joint Board found the record insufficient
to warrant addition of toll or expanded area services. Specifically,
the record failed to identify the extent to which limited local calling
areas pose a barrier for certain consumers to reach essential services,
the cost of the remedy and what critical services if any should be
supported. No commenter argued that these services should be added to
the list in response to the Commission's Notice of Proposed Rulemaking
or supplemented the record analyzed by the Joint Board. Therefore, like
the Joint Board, we find the record insufficient to add these services
to the list of supported services at this time.
I. Modifying Voice Grade Access Bandwidth
21. The Commission agrees with the Joint Board that the existing
definition of voice grade access to the Public Switched Telephone
Network (PSTN), which provides for a minimum bandwidth of 300 to 3,000
Hertz, should be retained. Several commenters representing small and
rural LECs, in response to the Joint Board Public Notice, proposed to
modify the definition to 300 to 3,500 Hertz, with the goal of improving
dial-up modem speeds in rural areas. However, the record before the
Joint Board was insufficient to demonstrate that the proposed
modification would actually increase dial-up modem speeds in any areas.
No commenter in response to the Notice of Proposed Rulemaking argued in
favor of this modification or augmented the record on this issue. The
Commission are persuaded by the Joint Board's conclusion that carriers
should not be required to invest additional funds in mature narrowband
technologies, particularly when such access would not be necessarily
result in improved dial-up connection speeds. Moreover, because it is
unclear, based on the record before us, whether carriers have deployed
loops that meet the proposed voice grade bandwidth, the Commission,
like the Joint Board, are concerned that redefining the definition of
voice grade access in this manner could render existing wireline ETCs
ineligible for support and preclude wireless carriers from being
designated ETCs. The Commission agrees with the Joint Board that
redefining voice grade access in this manner would not serve the public
interest.
J. Transport Costs
22. The Commission agrees with the Joint Board that the list of
supported services should not be expanded to include transport costs at
this time. ``Transport costs'' refer to two proposals raised in
response to the Joint Board's Public Notice: first, to modify the
definition of ``access to interexchange service'' to include the use of
transport facilities in insular areas and second, to provide universal
service funding to IXCs in Alaska for transport costs needed to support
56kbps data transmissions. No commenter in response to the Notice of
Proposed Rulemaking argued for the addition of transport costs to the
list of supported services or supplemented the record analyzed by the
Joint Board. Accordingly, the Commission agrees with the Joint Board
and finds that the record is inadequate to determine whether there is
need for such support and what the cost of providing such support would
be. The Commission also agrees with the Joint Board that allowing
funding for transport to enable 56 kbps transmissions would be
inappropriate given the decision not to expand or modify the definition
of voice grade access as described above.
K. Rural Wireless ETC Category
23. The Commission agrees with the Joint Board recommendation that
a new rural wireless ETC category should not be created to enable
wireless carriers to receive support for the implementation of CALEA
and E911 solutions. The Joint Board found that creating different
criteria for a subset of ETCs would be contrary to the intent of
section 214 and may not be competitively neutral. No commenters in
response to the Notice of Proposed Rulemaking disagreed with the Joint
Board's conclusion. Accordingly, the Commission agrees
[[Page 49711]]
with the Joint Board that we should not create a subcategory of ETC for
rural wireless carriers.
L. Technical and Service Quality Standards
24. The Commission agrees with the Joint Board and the vast
majority of commenters that we should not impose technical or service
quality standards as a condition to receive universal service support.
The Commission is not persuaded that there is a need to adopt federal
technical and service quality standards at this time. In response to
the Notice of Proposed Rulemaking, no commenter provided specific
examples of states that lack jurisdiction over certain carriers or
service quality problems that would necessitate a federal standard.
Based on the record before us in this proceeding, the Commission finds
no reason to supplant the states' role of implementing and enforcing
technical and service quality standards.
M. Equal Access
25. The Joint Board was unable to reach agreement on whether equal
access should be added to the list of supported services. Consequently,
the Recommended Decision presented the arguments of the Joint Board
members in favor of and opposed to adding equal access to the
definition of supported services. Comments received in response to the
Notice of Proposed Rulemaking were similarly split.
26. Parties in favor of adding equal access argue all ETCs that
receive high cost support in a particular area should be required to
provide comparable services. Specifically, they argue regulatory parity
requires wireless ETCs to provide equal access, because the majority of
incumbent LEC/ETCs offer it. Additionally, these parties assert that
the current definition of supported services, when combined with the
Commission's policies for calculating competitive ETC high-cost
support, provides advantages to wireless ETCs. Specifically, they
allege wireless ETCs receive a windfall when they receive support based
on the incumbent ETC's costs, as these costs include the cost of
providing equal access, a service not provided by wireless ETCs. The
parties also argue that competition in high-cost areas will be enhanced
with equal access requirements for universal service support, and that
consumers will benefit. Furthermore, they assert that when considering
the totality of the circumstances and the four section 254 criteria for
determining what services should be supported, equal access should be
added to the list of supported services. Finally, they argue that
section 332(c)(8) of the Act does not prevent the Commission from
requiring CMRS carriers to provide equal access in order to receive
universal service funds. They contend this provision only prevents the
Commission from requiring CMRS carriers to provide equal access as a
general condition of mobile service.
27. Parties in opposition to adding equal access to the list of
supported services assert that the costs of adding equal access to the
list of supported services would hinder competitive ETCs from entering
or continuing to serve some geographic areas. These parties also claim
that the addition to the list of supported services would be
inconsistent with the congressional intent of section 332(c)(8) of the
Act, and would not further the competitive goals of the Act. Finally,
they argue that equal access fails to meet the section 254(c) statutory
criteria.
28. Because critical arguments in favor of adding equal access are
related to the ETC designation process and the calculation of support
for competitive ETCs, both of which are within the scope of the
Portability Proceeding, the Commission makes no decision regarding
equal access at this time. The Commission agrees with commenters like
Verizon Wireless and T-Mobile that some of the arguments raised in
favor of adding equal access are directly related to the methodology
for calculating universal service support provided to competitive ETCs.
Given the scope of the Portability Proceeding, the Commission
believe that a determination regarding equal access would be premature
at this time. For example, if the Commission were to determine that
competitive ETCs' support should be based on their own costs, as
opposed to incumbents', many of the arguments for adding equal access
could be moot. Accordingly, the Commission defers consideration of this
issue pending resolution of the Portability Proceeding.
29. We note that the outcome of the Commission's pending proceeding
examining the rules relating to high-cost universal service support in
competitive areas could potentially impact, among other things, the
support that competitive ETCs may receive in the future. As such, the
Commission recognizes that any grant of competitive ETC status pending
completion of that proceeding will be subject to whatever rules are
established in the future. The Commission intends to proceed as
expeditiously as possible to address the important and comprehensive
issues that are being raised.
III. Procedural Issues
A. Final Regulatory Flexibility Act Analysis
1. Need for, and Objectives of, the Report and Order
30. As required by the Regulatory Flexibility Act (RFA), an Initial
Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice
of Proposed Rulemaking. The Commission sought written public comment on
the proposals in the Notice of Proposed Rulemaking, including comment
on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA)
conforms to the RFA.
31. In this Order, the Commission adopts the Joint Board's
recommendations to retain the existing list of services supported by
universal service. Accordingly, the Commission do not adopt any changes
to our universal service rules or reporting burdens.
2. Summary of Significant Issues Raised by the Public Comments in
Response to the IRFA
32. The Commission did not receive any comments in response to the
IRFA.
3. Description and Estimate of the Number of Small Entities to Which
Rules Will Apply
33. The Commission did not adopt or modify any rules in this Order.
4. Description of Reporting, Recordkeeping, and Other Compliance
Requirements
34. There are no new or changed reporting requirements adopted in
this Order.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternative Considered
35. Because no rules are adopted or modified in this Order, there
are no economic impacts created by this Order.
6. Report to Congress
36. The Commission will send a copy of this Order, including the
FRFA analysis, in a report to be sent to Congress pursuant to the
Congressional Review Act. In addition, the Commission will send a copy
of this Order, including this FRFA analysis, to the Chief Counsel for
Advocacy of the Small Business Administration. A copy of this Order and
FRFA analysis (or summaries thereof) also will be published in the
Federal Register.
B. Paperwork Reduction Act Analysis
37. The action contained herein has been analyzed with respect to
the
[[Page 49712]]
Paperwork Reduction Act of 1995 and found to impose no new or modified
reporting and recordkeeping requirements or burdens on the public.
IV. Ordering Clauses
38. Pursuant to the authority contained in sections 4(i), 4(j),
201-205, 214, 254, and 403 of the Communications Act of 1934, as
amended, this order is adopted.
List of Subjects in 47 CFR Part 54
Communications common carriers, Reporting and recordkeeping
requirements, Telecommunications, Telephone.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-21163 Filed 8-18-03; 8:45 am]
BILLING CODE 6712-01-P