[Federal Register: February 11, 2003 (Volume 68, Number 28)]
[Rules and Regulations]
[Page 6832-6833]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11fe03-11]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170;
FCC 03-20]
Federal-State Joint Board on Universal Service
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Commission reconsiders, on its own
motion, the definition of ``affiliate'' adopted in the recent report
and order and second further notice of proposed rulemaking modifying
rules regarding the assessment and recovery of contributions to the
Federal universal service mechanisms. Specifically, the Commission
concludes that wireless telecommunications providers are affiliated for
purposes of making the single election whether to report actual
interstate telecommunications revenues or use the applicable interim
wireless safe harbor if one entity directly or indirectly controls or
has the power to control another, is directly or indirectly controlled
by another, is directly or indirectly controlled by a third party or
parties that also controls or has the power to control another, or has
an ``identity of interest'' with another contributor. The Commission
also clarifies options for the recovery of universal service
contribution costs by wireless telecommunications providers that choose
to report actual interstate telecommunications revenues based on a
company-specific traffic study.
DATES: Effective February 11, 2003.
FOR FURTHER INFORMATION CONTACT: Diane Law Hsu, Acting Deputy Chief,
Wireline Competition Bureau, Telecommunications Access Policy Division
or Paul Garnett, Attorney, Wireline Competition Bureau,
Telecommunications Access Policy Division, (202) 418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
and Order on Reconsideration in CC Docket Nos. 96-45, 98-171, 90-571,
92-237, 99-200, 95-116, and 98-170 ; FCC 03-20, released on January 30,
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.
I. Introduction
1. In this Order, we reconsider, on our own motion, the definition
of ``affiliate'' adopted in the recent report and order and second
further notice of proposed rulemaking modifying rules regarding the
assessment and recovery of contributions to the Federal universal
service mechanisms. Specifically, we conclude that wireless
telecommunications providers are affiliated for purposes of making the
single election whether to report actual interstate telecommunications
revenues or use the applicable interim wireless safe harbor if one
entity (1) directly or indirectly controls or has the power to control
another, (2) is directly or indirectly controlled by another, (3) is
directly or indirectly controlled by a third party or parties that also
controls or has the power to control another, or (4) has an ``identity
of interest'' with another contributor. We also clarify options for the
recovery of universal service contribution costs by wireless
telecommunications providers that choose to report actual interstate
telecommunications revenues based on a company-specific traffic study.
II. Discussion
2. Definition of Affiliate. In this Order, we reconsider, on our
own motion, the definition of affiliate adopted in the Universal
Service Contribution Methodology Order, 67 FR 79525, December 30, 2002,
for purposes of
[[Page 6833]]
wireless providers making a single election whether to report actual
interstate telecommunications revenues or use the applicable interim
wireless safe harbor. We have become aware that adoption of an
affiliate definition in this context that deems a ten percent interest
as indicative of control would result in companies being required to
make the same election merely because they are related through direct
or indirect minority ownership interests of more than 10 percent. We
understand that such cross-ownership is common in the wireless
telecommunications industry. For example, several major national
wireless telecommunications providers may be ``affiliated'' for
purposes of the definition adopted as a result of greater than ten
percent ownership interests in certain other wireless
telecommunications providers. In short, the definition adopted in the
Universal Service Contribution Methodology Order may force competing
wireless telecommunications providers that are not otherwise under
common control to adopt common universal service revenue reporting
policies.
3. We conclude that revising the definition of affiliate in this
proceeding is necessary to achieve the goals of consistency, equity,
and fairness in reporting revenues for purposes of supporting universal
service. Entities that are not under common control may have different
billing and administrative systems and, consequently, may have
legitimate reasons to make different revenue reporting elections. The
Commission previously adopted rules in the wireless auction context in
order to evaluate affiliations for purposes of determining eligibility
for designated entity status. We conclude a similar approach would be
reasonable for purposes of revenue reporting for universal service. We,
therefore, reconsider on our own motion the definition of ``affiliate''
adopted in the Universal Service Contribution Methodology Order. We now
conclude, consistent with Sec. 1.2110(c)(5) of the Commission's rules,
that wireless telecommunications providers are affiliated for purposes
of making the single election whether to report actual interstate
telecommunications revenues or use the applicable interim wireless safe
harbor for universal service contribution purposes if one entity (1)
directly or indirectly controls or has the power to control another,
(2) is directly or indirectly controlled by another, (3) is directly or
indirectly controlled by a third party or parties that also controls or
has the power to control another, or (4) has an ``identity of
interest'' with another contributor.
4. CMRS Actual Interstate Revenues. We note that some parties have
suggested two different readings of the Commission's universal service
contribution cost recovery limitations for wireless telecommunications
providers that choose to report their actual interstate
telecommunications revenues based on a company-specific traffic study.
Specifically, AT&T and WorldCom read the requirement that
telecommunications carriers cannot mark up the universal service line
item above the relevant contribution factor to mean that wireless
carriers that do not utilize the interim safe harbors must conduct
traffic studies on a customer-by-customer basis when recovering
contribution costs through a line item. CTIA, on the other hand, reads
this requirement to allow wireless carriers that report revenues based
on a company-specific traffic study to use the same company-specific
percentage to determine interstate revenues to compute contribution
recovery line items.
5. We disagree with AT&T and WorldCom's reading of the requirement.
For wireless providers that choose to report their actual interstate
telecommunications revenues based on a company-specific traffic study,
the interstate telecommunications portion of each customer's bill would
equal the company-specific percentage based on its traffic study times
the total telecommunications charges on the bill. Accordingly, if such
providers choose to recover their contributions through a line item,
their line items must not exceed the interstate telecommunications
portion of each customer's bill, as described above, times the
contribution factor. Just as the Commission did not eliminate the
option of reporting actual interstate telecommunications revenues
either through a company-specific traffic study or some other means,
the Commission did not intend to preclude wireless telecommunications
providers from continuing to recover contribution costs in a manner
that is consistent with the way in which companies report revenues to
USAC. We therefore disagree with AT&T and WorldCom that the recovery
limitations adopted in the Universal Service Contribution Order should
be read so narrowly as to require CMRS providers to conduct traffic
studies on a customer-by-customer basis to calculate contribution
recovery line items.
III. Ordering Clause
6. Accordingly, it is ordered, pursuant to sections 1-4, 201-202,
254, and 405 of the Communications Act of 1934, as amended, and Sec.
1.108 of the Commission's rules, this Order and Order on
Reconsideration is adopted.
7. Pursuant to section 553(d)(3) of the Administrative Procedure
Act, this Order and Order on reconsideration shall become effective
upon publication in the Federal Register.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-3337 Filed 2-10-03; 8:45 am]
BILLING CODE 6712-01-P