[Federal Register: December 15, 2003 (Volume 68, Number 240)]
[Proposed Rules]
[Page 69641-69647]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de03-26]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket No. 96-45; FCC 03-249]
Federal-State Joint Board on Universal Service
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Commission seeks comment to further
develop the record on specific issues that relate to the rate review
and expanded State certification process recommended by the Joint
Board. The Commission also seeks comment on a proposal to further
encourage States to preserve and advance universal service by making
available additional targeted Federal support for high-cost wire
centers in states that implement explicit universal service mechanisms.
DATES: Comments are due on or before January 14, 2004. Reply comments
are due on or before February 13, 2004. Written comments on the
proposed information collection(s) must be submitted by the public,
Office of Management and Budget OMB), and other interested parties on
or before February 13, 2004.
ADDRESSES: All filings must be sent to the Commission's Secretary,
Marlene H. Dortch, Office of the Secretary, Federal Communications
Commission, 445 12th Street, SW., Washington, DC 20554. In addition to
filing comments with the Secretary, a copy of any Paperwork Reduction
Act (PRA) comments on the information collection(s) contained herein
should be submitted to Judith B. Herman, Federal Communications
Commission, Room 1-C804, 445 12th Street, SW., Washington, DC 20554, or via the Internet to Judith-B.Herman@fcc.gov, and to Kim A. Johnson, OMB
Desk Officer, Room 10236 NEOB, 725 17th Street, NW., Washington, DC 20503, or via the Internet to Kim_A._Johnson@omb.eop.gov or by fax to
202-395-5167. Parties should also send three paper copies of their
filings to Sheryl Todd, Telecommunications Access Policy Division,
Wireline Competition Bureau, Federal Communications Commission, 445
Twelfth Street, SW., Room 5-B540, Washington, DC 20554. See
SUPPLEMENTARY INFORMATION for further filing instructions.
FOR FURTHER INFORMATION CONTACT: Jennifer Schneider, Attorney, Wireline
Competition Bureau, Telecommunications Access Policy Division, (202)
418-7400. For additional information concerning the information
collection(s) contained in this document, contact Judith B. Herman at 202-418-0214, or via the Internet at Judith-B.Heman@fc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Further Notice of Proposed Rulemaking in CC Docket No. 96-45 released
on October 27, 2003. A companion Order on Remand and Memorandum Opinion
and Order was also released in CC Docket No. 96-45 on October 27, 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 Twelfth Street, SW., Washington, DC 20554 or at http://www.fcc.gov/wcb/universal_service/highcost.html
.
This Further Notice of Proposed Rulemaking (FNPRM) contains
proposed information collection(s) subject to the Paperwork Reduction
Act of 1995 (PRA). It has been submitted to the Office of Management
and Budget (OMB) for review under the PRA. OMB, the general public, and
other Federal agencies are invited to comment on the proposed
information collections contained in this proceeding.
Paperwork Reduction Act
The FNPRM contained proposed information collections. The
Commission, as part of its continuing effort to reduce paperwork
burdens, invites the general public and the Office of Management and
Budget (OMB) to comment on the information collection(s) contained in
this FNPRM, as required by the Paperwork Reduction Act (PRA) of 1995,
Public Law 104-13. Public and agency comments on the proposed
information collections discussed in this Further Notice of Proposed
Rulemaking are due on or before February 13, 2004. PRA comments should
address: (a) Whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and
[[Page 69642]]
clarity of the information collected; and (d) ways to minimize the
burden of the collection of information on the respondents, including
the use of automated collection techniques or other forms of
information technology.
OMB Control Number: 3060-XXXX.
Title: Certification Letter Accounting for Receipt of Federal
Support--CC Docket Nos. 96-45 and 96-262.
Form No.: N/A.
Type of Review: New collection.
Respondents: Business or other for-profit; not for profit
institutions.
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Number of Frequency of Total annual
Title respondents response burden
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1. Collection of Additional Rate Data........................... 52 1 52
Total Annual Burden: 52
Total Annual Costs: $0
2. Procedures for Filing And Processing any State Requests for 1 4 1
further Federal Action.........................................
Total Annual Burden: 4
Total Annual Costs: $0
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Grand Total Annual Burden: 52 + 4 = 56.
Needs and Uses: In the Further Notice of Proposed Rulemaking, we
seek further comment on issues related to the rate review and expanded
certification process that we adopt in the Companion Remand Order. The
Commission seeks comment on whether it should require States to file,
in connection with their reasonable comparability certifications,
additional data that might enhance the Commission's ability to assess
the non-rural mechanism and State actions to achieve comparability of
urban and rural rates, including business rate data, rate data for non-
rural areas served by non-rural carriers, and rate data from States
that would not otherwise be required to file data under the rules we
adopt in the Companion Remand Order. The Commission also seeks comment
on how to treat any State requests for further Federal action,
including procedures for States to submit any such requests, required
showings by requesting States, and how to calculate any additional
targeted Federal support. The additional rate data, along with the
expanded certifications filed by all States, will aid the Commission in
its review of rate comparability nationwide. Further, the information
that State commissions will file to support requests for further
Federal action will enable the Commission to determine if action is
necessary.
I. Further Notice of Proposed Rulemaking
1. In this Further Notice of Proposed Rulemaking (FNPRM), we seek
further comment on issues related to the rate review and expanded
certification process that we adopt in the Companion Remand Order.
First, we seek comment on whether we should require States to file, in
connection with their reasonable comparability certifications,
additional data that might enhance the Commission's ability to assess
the non-rural mechanism and State actions to achieve comparability of
urban and rural rates, including business rate data, rate data for non-
rural areas served by non-rural carriers, and rate data from States
that would not otherwise be required to file data under the rules we
adopt in the Companion Remand Order. Second, we seek comment on the
role of calling scopes in the rate review process. Third, we seek
comment on how to treat any State requests for further Federal action,
including procedures for States to submit any such requests, required
showings by requesting States, and how to calculate any additional
targeted Federal support. In addition, we propose a method for
calculating additional targeted Federal support on a wire-center basis
using forward-looking model cost estimates. Finally, we seek comment on
a proposal to further encourage States to advance the Act's universal
service goals by making available additional targeted Federal support
to States that implement explicit universal service mechanisms, without
regard to their achievement of rate comparability.
A. Collection of Additional Rate Data
2. We seek comment on whether all States should submit rate data to
the Commission in connection with the rate review and expanded
certification process, in order to establish a more complete picture of
State efforts to achieve rate comparability. In the Companion Remand
Order, we adopt rules that require a State to file, in connection with
its expanded certification, rate data for rural areas served by non-
rural carriers only if its rural rates exceed the nationwide urban rate
benchmark or if it certifies that its rural rates are not reasonably
comparable to urban rates nationwide, despite being within the safe
harbor established by the nationwide urban rate benchmark. These data,
along with the expanded certifications filed by all States, will aid
the Commission in its review of the reasonable comparability of rural
and urban rates nationwide. We seek comment on whether collecting
additional rate data from a larger number of States, either on a
mandatory or voluntary basis, would provide the Commission with a
better basis for its review. To what extent would collecting additional
rate data from all States improve the Commission's ability to assess
the reasonable comparability of rural and urban rates nationwide
through the rate review and expanded certification process? To what
extent would the availability of this additional rate data improve the
ability of each State to analyze its own rate comparability issues? To
what extent would the availability of this additional rate data improve
the ability of other interested parties to monitor the reasonable
comparability of rural and urban rates nationwide? We anticipate that
each State will have assembled much of the additional data in the
course of performing its rate review. Would it be unduly burdensome if
all States were to file such data?
3. We seek comment on whether we should require States to file data
related to business rates, in addition to residential rates. A
meaningful comparison of rates across different States may necessarily
include business rates in addition to residential rates. For example,
because Wyoming, unlike many other States, has rebalanced its single-
line business rates to levels equivalent to residential rates,
Wyoming's residential rates no longer rely on implicit support flows
from its business rates, and its business customers pay lower rates
than they would in a State that relied on such implicit support flows.
Collecting data only on residential rates, therefore, may not permit
the Commission to identify the specific nature of any problems with
reasonable comparability. Would collecting data on business rates
provide
[[Page 69643]]
the Commission with a more useful picture of the local rates charged in
rural areas? Would requiring States to file business rate data unduly
increase the administrative burdens on States associated with the rate
review and expanded certification process? Is there any reason why the
Commission should or should not concentrate solely on residential rates
in assessing the state of rate comparability nationwide?
4. We also seek comment on whether we should collect data related
to rates in non-rural areas served by non-rural carriers. While the
rules we adopt today will result in the collection of some data
regarding the rates in rural areas served by non-rural carriers,
collecting non-rural rate data would provide the Commission with more
complete data. To what extent would collecting rate information for
non-rural areas in addition to rural areas provide the Commission with
useful data to assess the reasonable comparability of rural and non-
rural rates nationwide? To what extent would the collection of such
data permit the Commission to assess the reason for high rural rates?
For example, if a State's rates in areas other than rural areas were
also above the benchmark, would it indicate that an adjustment to the
Federal support mechanism was warranted? To what extent would
collecting non-rural rate information aid the Commission in assessing
whether States are fulfilling their obligations to promote the Act's
goals? To what extent would requiring States to file non-rural rate
data unduly increase the administrative burdens on the States
associated with the rate review process?
5. With additional rate data, should states be required to file
information annually related to their efforts to advance universal
service by adopting explicit universal service mechanisms, such as the
establishment of explicit State universal service funds? To what extent
would such information aid the Commission in assessing the sources of
any problems with rate comparability to determine whether additional
actions are necessary at the Federal level? If we conclude that such
information should be collected, what specific information should each
State be required to file? For example, should each State be required
to file data related to the existence and size of any explicit
universal service support mechanisms established in the State? Should
States be required to identify implicit support flows in the rate
structure, including implicit support flowing from business line rates
to residential line rates, from geographically averaged rates, and from
intrastate access charges? Commenters should identify any other
information related to the establishment of explicit universal service
policies that would assist the Commission in refining our comprehensive
plan for supporting universal service in high-cost areas over time.
B. Calling Scopes
6. We seek comment on the role of calling scopes in the rate review
process. The foregoing Order permits a State to consider the calling
scopes available in rural areas served by non-rural carriers when
reviewing whether rates in those areas are comparable to urban rates
nationwide. Calling scopes are not included in the rate template,
however, and States need not consider them if they choose to certify
based on the safe harbor. To what extent should States be encouraged to
consider the calling scopes available in rural areas served by non-
rural carriers in assessing rate comparability? Should the Commission
incorporate calling scopes into the safe harbor? If so, how would the
Commission do so? To what extent would consideration of calling scopes
increase the burdens associated with the rate review process?
Commenters should describe in detail any proposed methodologies for
normalizing the impact of calling scopes on rates. Alternatively,
should the Commission provide States with additional guidance as to how
calling scopes may be factored into their rate comparability analyses,
if States decide that this is appropriate? What data would be useful
for analyzing the calling scopes available in rural and urban areas?
C. Procedures for Filing and Processing Any State Requests for Further
Federal Action
7. Consistent with the Joint Board's recommendation, we recognize
that the procedures for filing and reviewing State requests for further
Federal action should be as specific and predictable as possible, while
also providing the necessary flexibility for each State to demonstrate
the unique circumstances involved in its request. We also note that the
Joint Board did not recommend a specific method for calculating any
additional targeted Federal support, if necessary, and the present
record does not provide an adequate basis for us to determine an
appropriate method. Accordingly, we seek comment below on several
interrelated issues. First, we seek comment on the timing of State
requests for further Federal action. Second, we seek comment on the
showing that a State should be required to make in order to demonstrate
a need for further Federal action. Third, we seek comment on the types
of further Federal action that may be provided to requesting States if
the Commission determines that further Federal action is necessary in a
particular instance, including possible methods of calculating any
additional targeted Federal support.
1. Timing of Requests for Further Federal Action
8. The Joint Board recommended that the Commission develop exact
procedures to be used in the filing and processing of requests for
further Federal action. We propose that a State should be permitted to
make a request for further Federal action only concurrently with the
filing of its expanded certification regarding the comparability of its
rural rates in areas served by non-rural carriers. We anticipate that
any State request for further Federal action will arise from the State
rate review process and the expanded certification, and any State
requests for further Federal action are likely to rely on the same
data. Therefore, we believe that requiring the filing of any State
requests at the time of the expanded certification will promote
administrative simplicity. We seek comment on this proposal.
9. We also seek comment on how frequently a State should be
required to seek further Federal action if the State's request is
granted the first time. Should a State be required to seek further
Federal action every year? Should further Federal action be provided
for a specified period of years? If so, should that period be dependent
on the specific circumstances of a particular request?
2. Required Showings
10. We seek comment on the showings that a State should be required
to make in support of a request for further Federal action, in the
interest of making the process as specific and predictable as possible.
The Joint Board's Recommended Decision suggests that two showings
should be required: (1) A demonstration that rural rates in non-rural
carrier service areas in the State are not reasonably comparable to
urban rates nationwide, including an analysis of the rates in the basic
service template and other relevant factors; and (2) a demonstration
that the State has taken all reasonable actions to achieve reasonable
comparability of its rural rates to urban rates nationwide, including
an explanation of how the requesting State has used any Federal support
currently received to achieve comparable rates and whether it has
implemented a State universal service fund. We propose that these
showings
[[Page 69644]]
should be required in support of a State's request for further Federal
action. We further propose that each State should bear the
responsibility of fully explaining the basis for each element of its
showing. As discussed in the Companion Remand Order, each State has
rate-setting jurisdiction and primary responsibility for ensuring rate
comparability within its border and, therefore, is in the best position
to explain any problems it may have in achieving rate comparability and
the actions it has taken to address those problems. In addition to
these showings, are there any additional types of showings that a State
should be required to make in support of a request for further Federal
action? Should different showings be required for different types of
further Federal action (e.g., Commission action to address calling
areas or quality of service where the State lacks jurisdiction)?
11. We also seek comment on what a State should be required to show
to satisfy the first element of the Joint Board's recommended test, a
demonstration that rural rates within the State are not reasonably
comparable to urban rates nationwide. In making the required showing,
to what extent should a State be permitted to rely on the presumption
created by the nationwide urban rate benchmark? Should the Commission
consider residential and business rates or only residential rates? What
weight, relative to the presumption created by the rate benchmark,
should the Commission accord additional non-rate factors that the State
contends are relevant in determining whether rural rates in a State are
reasonably comparable to urban rates nationwide?
12. Consistent with the Joint Board's recommendation, we also seek
comment on what State actions should be considered reasonable and,
therefore, necessary to support a request for further Federal action
for purposes of the second element of the Joint Board's recommended
showing. In particular, we seek comment on the extent to which States
must reform their universal service support mechanisms in order to be
able to demonstrate that they have taken all reasonably possible
actions to achieve rate comparability. In this regard, we note that the
Act strongly favors explicit support mechanisms, which are less
vulnerable to erosion in competitive markets than implicit support
mechanisms. Although States are not required to adopt explicit
mechanisms to support universal service, we propose that a State that
has not done so cannot be deemed to have taken all reasonably possible
steps to support rate comparability within the State, the requirement
recommended by the Joint Board. We seek comment on this proposal.
13. We further propose that, in order to enable the Commission to
determine whether a State has made its universal service mechanisms
explicit, a State requesting further Federal action should be required
to explain the extent to which it has made its universal service
mechanisms explicit, and file supporting data, including rate data for
residential and business lines in rural and urban areas served by non-
rural carriers. We seek comment on these proposals. We also seek
comment on the extent of reform that should be required for further
Federal action. Some commenters argue that it is necessary for States
to rebalance their residential and business rates in order to eliminate
implicit support flows. For example, Wyoming has rebalanced its
residential and business rates, while other States have not rebalanced
rates. As a result, Wyoming's residential rates presumably will be
higher than a State with comparable resources that has chosen to
maintain implicit support flows through higher business rates. Should
the rebalancing of residential and business rates be required in
support of a request for further Federal action?
3. Types of Further Federal Action
14. We seek comment on the types of further Federal action that
should be available to a requesting State if the Commission determines
that further Federal action is appropriate. The Joint Board recommended
that further Federal action could include additional targeted Federal
support, as well as Commission action to address scope of local calling
areas or quality of service where the State commission lacked the
authority to do so. Are there any other types of further Federal action
that the Commission should consider in addition to the Joint Board's
recommendations? Should the Commission specify in advance all possible
forms of further Federal action, or, in light of the Joint Board's
recommendation that the Commission provide maximum flexibility for
States, should the Commission retain the ability to develop additional
types of further Federal action in response to the specific
circumstances underlying a particular State's request? Are there any
reasons that the Commission should not consider making certain types of
Federal action available on request?
15. We propose that any additional targeted Federal support should
equal a set percentage of estimated forward-looking wire-center costs
in excess of two standard deviations above the average cost per line.
We believe that a method for calculating any additional targeted
Federal support based on forward-looking wire-center cost estimates
would be specific and predictable, and provide consistency with the
non-rural support mechanism, which also uses model cost estimates to
calculate and target support. We also believe that such a method would
provide a fair and equitable means of determining any additional
targeted Federal support and avoid inappropriate incentives that might
be created if we were to base any additional targeted Federal support
on rate levels in a particular area. Furthermore, a forward-looking
cost estimate-based method would permit any additional support to be
targeted specifically to high-cost wire-centers, consistent with the
Joint Board's recommendation. We seek comments on this proposal. Is
there another proposed method that, based on some measure other than
forward-looking cost estimates, would provide a more appropriate basis
for calculating any additional targeted Federal support? If so, a
commenter should describe the method with specificity and provide any
relevant supporting data. If any commenters contend that a rate-based
method would be more appropriate, they should support their contentions
with a detailed explanation of how rate-based support would be
calculated under their proposal and any relevant supporting data.
16. To determine any additional targeted Federal support based on
forward-looking cost estimates, we propose that any additional Federal
support should be provided to wire centers in qualifying States with
costs per line exceeding a benchmark of two standard deviations from
the average cost per line among all non-rural carrier wire centers
nationwide. Based on recent forward-looking high-cost model results, a
wire center with per-line costs that are two standard deviations above
the average wire center would have an average cost per line of $40.85,
or 189 percent of the nationwide average cost per line. Wire centers
with costs per line exceeding the proposed nationwide average cost per
loop would be very high cost wire centers in which it is likely to be
more difficult to achieve rate comparability, despite otherwise
sufficient State resources and Federal support. Because most States
have wire centers that exceed two standard deviations from the national
average wire center cost per line, we believe that this benchmark would
provide an effective means of calculating any
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additional targeted Federal support for any qualifying State in a
specific, predictable and consistent manner. We seek comment on this
proposed method for calculating additional targeted Federal support. Is
two standard deviations an appropriate threshold for this purpose?
17. We also propose that any additional targeted Federal support
for eligible wire centers in qualifying States should be calculated as
a set percentage of costs in excess of the benchmark. For example, if
the Commission were to set the percentage at 5 percent of costs in
excess of two standard deviations above the average and Wyoming were to
qualify for additional targeted Federal support, it would be eligible
for approximately $546,000. If the Commission were to set the
percentage at 25 percent of costs in excess of two standard deviations
above the average and Wyoming were to qualify, it would be eligible for
approximately $2,731,000 in additional targeted Federal support.
18. We believe that this proposal is consistent with the current
and past methodologies for determining high-cost support for non-rural
carriers and would provide meaningful support to assist States in
resolving any rate comparability issues that combined Federal and State
action have failed to resolve. Under the non-rural support mechanism, a
non-rural carrier in a State with an average cost per loop for areas
served by non-rural carriers that exceeds the cost benchmark of two
standard deviations above the average is eligible for support for 76
percent of its costs in excess of the benchmark. This percentage
represents an estimate of the costs above the benchmark that are
assigned to the intrastate jurisdiction. Because any additional
targeted Federal support would supplement the non-rural support
mechanism in order to address exceptional problems, we do not believe
that it would be necessary that such support be provided for the same
percentage of costs in excess of the benchmark as covered by the non-
rural support mechanism. We seek comment on what percentage of costs in
excess of the benchmark should be supported for purposes of additional
targeted Federal support. Is there another proposed method of
calculating any additional targeted Federal support based on forward-
looking cost estimates that would better address the purpose for which
the support would be intended?
D. Additional Inducements for State Action
19. Finally, we seek comment on whether we should make additional
targeted Federal support available for high-cost wire centers in States
that implement explicit universal service mechanisms. The purpose of
this proposal is to create a positive incentive for States to reform
their implicit universal service mechanisms. Under this proposal, as
discussed below, any additional targeted Federal support would be
determined using a methodology similar to that proposed above in
connection with State requests for further Federal action. Unlike State
requests for further Federal action, States would not be required to
demonstrate that combined State and Federal efforts had failed to
achieve rate comparability.
20. As discussed, section 254 states a clear preference for
explicit, rather than implicit, support, but the 1996 Act does not
require States to adopt explicit universal service support mechanisms.
In the foregoing Order, therefore, we decline to adopt measures to
require or induce all States to immediately remove implicit subsidies
from intrastate rates through substantial increases in Federal support.
Nevertheless, we agree with commenters that States should be encouraged
to replace implicit support with explicit support mechanisms that will
be sustainable in a competitive environment. To what extent should the
Commission encourage States to replace their implicit universal service
support mechanisms with explicit mechanisms? We seek comment on whether
the Commission has an interest, other than the aspirational provisions
of the Act, in States' decisions to adopt explicit mechanisms or to
rely on implicit support flows. How do State universal service
mechanisms, explicit and implicit, interact with the Federal universal
service support mechanisms? We note that some States have made progress
in making explicit their universal service support mechanisms. Can we
expect States to adopt, in advance of or concurrently with the local
development of competition, reforms that will reduce the vulnerability
of the States' universal service mechanisms to competition? If States
have not yet taken action to adopt explicit universal service
mechanisms, can we assume that they will do so?
21. We seek comment on whether providing additional targeted
Federal support to States that replace implicit universal service
mechanisms with explicit universal service mechanisms would be an
appropriate means of inducing reforms of State universal service
support mechanisms. The availability of additional targeted Federal
support would provide each State with a direct incentive to make its
universal service support mechanisms explicit, rather than implicit.
This method of inducement would pose less risk to our universal service
goals than conditioning receipt of existing non-rural high-cost support
on State action. Moreover, providing States that implement universal
service reforms with additional targeted Federal support might mitigate
possible transitional issues associated with the replacement of
implicit support with explicit support and encourage States to adopt a
long-term approach to universal service. To what extent are there
transitional issues associated with moving from implicit support
mechanisms to explicit support mechanisms? If such transitional issues
are a significant deterrent to State adoption of universal service
reforms, should any additional targeted Federal support be limited for
the period of time during which the transition takes place? If
commenters contend that another form of inducement would be better
suited for achieving the Commission's goals, the commenters should
provide a detailed explanation of their inducement.
22. We further propose that any additional targeted Federal support
that is provided to induce States to adopt explicit universal service
mechanisms should be based on forward-looking wire-center cost
estimates. Basing any additional targeted Federal support on forward-
looking cost estimates will make such support specific and predictable,
consistent with the Act, and would target the support to high-cost
areas, which may ease a State's implementation of explicit universal
service mechanisms. Similar to the additional targeted Federal support
proposed above with respect to State requests for further Federal
action to achieve rate comparability, we propose that any additional
targeted Federal support provided for inducement purposes should be
calculated based on a percentage of forward-looking costs in excess of
a particular threshold for high-cost wire centers.
23. Specifically, we propose that, if a State meets the necessary
conditions, it should receive additional targeted Federal support equal
to a specific percentage of costs in excess of two standard deviations
above the average cost wire center. We seek comment on this proposed
method of calculating additional targeted Federal support for
inducement purposes. We specifically seek comment on the appropriate
percentage of costs in excess of the threshold that we should support
with additional targeted Federal support. We note that 48 States and
Puerto Rico would have at least one wire center with costs per loop
above the benchmark of
[[Page 69646]]
the average cost per loop plus two standard deviations. We estimate
that if the support amount were set at 10 percent of costs exceeding
the proposed high-cost wire center benchmark, the 48 States and Puerto
Rico would be eligible to receive a total of approximately $116 million
if they met the conditions for additional targeted Federal support, in
addition to the support provided under the rules we adopt today.
24. Would the proposed methodology provide significant inducement
to each State to reform its universal service mechanisms? Would the
benefits of inducing State action to reform State universal service
mechanisms outweigh the cost of the additional contributions to the
universal service fund that this additional targeted Federal support
could entail? Commenters should address how this proposal relates to
the Act's requirement that universal service should be sufficient to
achieve the Act's goals and, specifically, that sufficiency requires
that support should not exceed the amount necessary to achieve the
Act's goals.
25. We also seek comment on what showings a State should be
required to make in order to receive any additional targeted Federal
support, if such an inducement mechanism were adopted. Above, we seek
comment on what showings a State must make in support of a request for
further Federal action, in addition to showing the failure to achieve
rate comparability. To what extent should the showings that a State is
required to make in order to receive additional targeted Federal
support for inducement purposes differ from the showings the State
should be required to make in order to demonstrate that it has taken
all reasonably possible actions to achieve rate comparability? Should a
State be required to show that it has established an explicit support
mechanism of a particular size relative to the number of lines in the
State or some other measure? Should a State be required to demonstrate
that it has rebalanced its residential and business rates? Should a
State be required to demonstrate that it has eliminated geographic rate
averaging through implicit support flows? Are there any specific
actions reasonably calculated to eliminate or reduce implicit support
in intrastate rates that a State should be required to show?
II. Procedural Matters
A. Initial Regulatory Flexibility Act Analysis
26. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission has prepared this Initial Regulatory
Flexibility Analysis (IRFA) of the possible significant economic impact
on small entities of policies and rules proposed in this Further Notice
of Proposed Rulemaking. Written public comments are requested on this
IRFA. Comments must be identified as responses to the IRFA and must be
filed by the deadlines for comments on the FNPRM. The Commission will
send a copy of this FNPRM, including this IRFA, to the Chief Counsel of
Advocacy of the Small Business Administration (SBA). In addition, the
FNPRM and IRFA (or summaries thereof) will be published in the Federal
Register.
1. Need for and Objectives of the Proposed Rules
27. Consistent with the Tenth Circuit's remand of the Ninth Report
and Order, 64 FR 67416, December 1, 1999, and the recommendations of
the Federal-State Joint Board on Universal Service (Joint Board), we
modify the high-cost universal service support mechanism for non-rural
carriers and adopt measures to induce States to ensure reasonable
comparability of rural and urban rates in areas served by non-rural
carriers in the Companion Remand Order. As discussed, the FNPRM is
necessary to develop the record on specific issues that relate to the
rate review and expanded State certification process recommended by the
Joint Board. The rate review and expanded State certification process
will fulfill the requirement of the Tenth Circuit remand by inducing
State action to ensure that rates in rural and high-cost areas served
by non-rural carriers are reasonably comparable to urban rates
nationwide in compliance with section 254(b) of the Act.
28. First, in this FNPRM, we seek comment on whether we should
require States to file, in connection with their reasonable
comparability certifications, additional data that might enhance the
Commission's ability to assess the non-rural mechanism and State
actions to achieve comparability of urban and rural rates, including
business rate data, urban rate data, and rate data from States that
would not otherwise be required to file data under the rules we adopt.
Second, we seek comment on the role of calling scopes in the rate
review process. Third, we seek comment on how to treat any State
requests for further Federal action, including procedures for States to
submit any such requests; how to review required showings by requesting
States; and how to calculate any additional targeted Federal support.
In addition, we propose a method for calculating additional targeted
Federal support on a wire-center basis using forward-looking model cost
estimates. Finally, we also seek comment on a proposal to further
encourage States to advance the Act's universal service goals by making
available additional targeted Federal support to States that implement
explicit universal service mechanisms, without regard to their
achievement of rate comparability.
2. Legal Basis
29. The legal basis as proposed for this FNPRM is contained in
sections 4(i), 4(j), 201-205, 218-220, 254, 403 and 410 of the
Communications Act of 1934, as amended.
3. Description and Estimate of the Number of Small Entities To Which
the Proposed Rules Will Apply
30. The RFA directs agencies to provide a description of, and,
where feasible, an estimate of the number of small entities that may be
affected by the rules adopted herein. The RFA generally defines the
term ``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act, unless the Commission has developed one or more definitions that
are appropriate to its activities. Under the Small Business Act, a
``small business concern'' is one that: (1) Is independently owned and
operated; (2) is not dominant in its field of operation; and (3) meets
any additional criteria established by the Small Business
Administration (SBA).
31. We have described in detail, in the Companion Order in the
Final Regulatory Flexibility Analysis, the categories of entities that
may be directly affected by any rules or proposals adopted in our
efforts to reform the universal service contribution system. For this
Initial Regulatory Flexibility Analysis, we hereby incorporate those
entity descriptions by reference.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
32. Should the Commission decide that modifications must be made to
the rate review and expanded certification process implemented, the
associated rule changes will only modify the reporting requirements of
the State commissions. Based on our review of the process, such State
reporting requirements have no direct effect on the Federal reporting
and recordkeeping
[[Page 69647]]
requirements of telecommunications service providers regulated under
the Communications Act, including any small business entities directly
affected by the Order. No questions posed in the FNPRM consider any
changes to the rules that would directly impose additional reporting,
recordkeeping, and other compliance requirements on small business
entities.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
33. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): (1)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
34. The Commission does not foresee that any modifications to the
rate review and expanded certification process resulting from this
FNPRM will have a direct impact on any small business entities.
Furthermore, based on the current data, we do not believe that the
result in any area of the proposals under consideration will have a
differential impact on small entities. In this FNPRM, however, the
commenters may present the Commission with various proposals that may
have varying impacts on small businesses. We seek comment on whether
any proposals, if implemented, may result in an unfair burden. If there
is such an unfair burden, we seek comment on how best to mitigate or
eliminate it, as appropriate.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
35. None.
B. Initial Paperwork Reduction Act of 1995 Analysis
36. This FNPRM contained proposed information collections. The
Commission, as part of its continuing effort to reduce paperwork
burdens, invites the general public and the Office of Management and
Budget (OMB) to comment on the information collections contained in
this FNPRM, as required by the Paperwork Reduction Act (PRA) of 1995,
Public Law 104-13. Public and agency comments are due February 13,
2004. It will be submitted to the Office of Management and Budget (OMB)
for review under the PRA. PRA comments should address: (a) Whether the
proposed collection of information is necessary for the proper
performance of the functions of the Commission, including whether the
information shall have practical utility; (b) the accuracy of the
Commission's burden estimates; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology.
C. Comment Filing Procedures
37. We invite comment on the issues and questions set forth in the
FNPRM and Initial Regulatory Flexibility Analysis contained herein.
Pursuant to applicable procedures set forth in Sec. Sec. 1.415 and
1.419 of the Commission's rules, interested parties may file comments
on or before January 14, 2004, and reply comments on or before February
13, 2004. All filings should refer to CC Docket No. 96-45. Comments may
be filed using the Commission's Electronic Comment Filing System (ECFS)
or by filing paper copies.
38. Comments filed through the ECFS can be sent as an electronic
file via the Internet to http://www.fcc.gov/e-file/ecfs.html.
Generally, only one copy of an electronic submission must be filed. If
multiple docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of
the comments to each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, commenters should
include their full name, U.S. Postal Service mailing address, and the
applicable docket or rulemaking number. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and
should include the following words in the body of the message, ``get
form .'' A sample form and directions
will be sent in reply.
39. Parties who choose to file by paper must file an original and
four copies of each filing. If more than one docket or rulemaking
number appears in the caption of this proceeding, commenters must
submit two additional copies for each additional docket or rulemaking
number. Filings can be sent by hand or messenger delivery, by
commercial overnight courier, or by first-class or overnight U.S.
Postal Service mail (although we continue to experience delays in
receiving U.S. Postal Service mail). The Commission's contractor,
Natek, Inc., will receive hand-delivered or messenger-delivered paper
filings for the Commission's Secretary at 236 Massachusetts Avenue,
NE., Suite 110, Washington, DC 20002. The filing hours at this location
are 8 a.m. to 7 p.m. All hand deliveries must be held together with
rubber bands or fasteners. Any envelopes must be disposed of before
entering the building. Commercial overnight mail (other than U.S.
Postal Service Express Mail and Priority Mail) must be sent to 9300
East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service
first-class mail, Express Mail, and Priority Mail should be addressed
to 445 12th Street, SW., Washington, DC 20554. All filings must be
addressed to the Commission's Secretary, Marlene H. Dortch, Office of
the Secretary, Federal Communications Commission.
40. Parties also must send three paper copies of their filing to
Sheryl Todd, Telecommunications Access Policy Division, Wireline
Competition Bureau, Federal Communications Commission, 445 12th Street,
SW., Room 5-B540, Washington, DC 20554. In addition, commenters must
send diskette copies to the Commission's copy contractor, Qualex
International, Portals II, 445 12th Street, SW., Room CY-B402,
Washington, DC 20054.
III. Ordering Clauses
41. Pursuant to the authority contained in sections 1, 4(i), 4(j),
201-205, 214, 218-220, 254, and 403 of the Communications Act of 1934,
as amended, this Further Notice of Proposed Rulemaking is adopted.
42. The Commission's Consumer and Governmental Affairs Bureau,
Reference Information Center, shall send a copy of this Further Notice
of Proposed Rulemaking, including the Final Regulatory Flexibility
Analysis and Initial Regulatory Flexibility Analysis, to the Chief
Counsel for Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 54
Reporting and recordkeeping requirements, Telecommunications,
Telephone.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-30827 Filed 12-12-03; 8:45 am]
BILLING CODE 6712-01-P