[Federal Register: January 11, 2006 (Volume 71, Number 7)]
[Proposed Rules]
[Page 1721-1730]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ja06-14]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket No. 96-45, WC Docket No. 05-337; FCC 05-205]
Federal-State Joint Board on Universal Service; High-Cost
Universal Service Support
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: In this document, the Commission seeks comment on issues
raised by section 254(b) of the Communications Act of 1934, as amended
(the Act) and the United States Court of Appeals for the Tenth
Circuit's (Tenth Circuit) decision in Qwest Corp. v. FCC (Qwest II). We
seek comment on how to reasonably define the statutory terms
``sufficient'' and ``reasonably comparable'' in light of the court's
holding in Qwest II. We also seek comment on the support mechanism for
non-rural carriers, which the Qwest II court invalidated due to the
Commission's reliance on an inadequate interpretation of statutory
principles and failure to explain how a cost-based mechanism would
address problems with rates. We seek comment on a proposal by Puerto
Rico Telephone Company, Inc. (PRTC) that the Commission adopt a non-
rural insular mechanism.
DATES: Comments are due on or before February 10, 2006. Reply comments
are due on or before March 13, 2006.
ADDRESSES: You may submit comments, identified by [CC Docket No. 96-
45], by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
[[Page 1722]]
Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/.
Follow the instructions for submitting comments.
Mail: Sheryl Todd, Wireline Competition Bureau, Telecom
Access Policy Division, 445 12th Street, SW., Washington, DC 20554.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Ted Burmeister, Attorney, (202) 418-
7389 or Katie King, Special Counsel, (202) 418-7491, Wireline
Competition Bureau, Telecommunications Access Policy Division, TTY
(202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking in CC Docket No. 96-45, WC Docket No. 05-337
released on December 9, 2005. 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. In this Notice of Proposed Rulemaking, we seek comment on issues
raised by section 254(b) of the Communications Act of 1934, as amended
(the Act) and the United States Court of Appeals for the Tenth
Circuit's (Tenth Circuit) decision in Qwest Corp. v. FCC (Qwest II).
Specifically, we seek comment on how to reasonably define the statutory
terms ``sufficient'' and ``reasonably comparable'' in light of the
court's holding in Qwest II. The court directed the Commission on
remand to articulate a definition of ``sufficient'' that appropriately
considers the range of principles in section 254 of the Act and to
define ``reasonably comparable'' in a manner that comports with its
duty to preserve and advance universal service. We also seek comment on
the support mechanism for non-rural carriers, which the Qwest II court
invalidated due to the Commission's reliance on an inadequate
interpretation of statutory principles and failure to explain how a
cost-based mechanism would address problems with rates. Finally, we
seek comment on a proposal by Puerto Rico Telephone Company, Inc.
(PRTC) that the Commission adopts a non-rural insular mechanism. PRTC
sought clarification and/or reconsideration of the Order on Remand, 68
FR 69622, December 15, 2003, and requests, among other things, that it
receive support based on its embedded costs. Because granting PRTC's
request would require amendment of the Commission's rules, we will
treat PRTC's Petition as a petition for rulemaking.
A. Ninth Report and Order
2. In the Ninth Report and Order, 64 FR 67416, December 1, 1999,
the Commission established a federal high-cost universal service
support mechanism for non-rural carriers based on forward-looking
economic costs. The non-rural mechanism determines the amount of
federal high-cost support to be provided to non-rural carriers by
comparing the statewide average non-rural, forward-looking cost per
line to a nationwide cost benchmark that was set at 135 percent of the
national average cost per line. Federal support is provided to non-
rural carriers in states with costs that exceed the benchmark. In the
companion Tenth Report and Order, 64 FR 67372, December 1, 1999, the
Commission finalized the computer model platform and adopted model
inputs used to estimate the forward-looking costs of a non-rural
carrier's operations, which are then used to determine support under
the mechanism adopted in the Ninth Report and Order.
B. Qwest I
3. In Qwest I, the Tenth Circuit remanded the Ninth Report and
Order to the Commission for further consideration. On remand, the court
directed the Commission to define more precisely the statutory terms
``sufficient'' and ``reasonably comparable'' and then to assess whether
the non-rural mechanism will be sufficient to achieve the statutory
principle of making rural and urban rates reasonably comparable. In
addition, the court found that the Commission failed to explain how its
135 percent nationwide cost benchmark will help achieve the goal of
reasonable comparability or sufficiency. The court directed the
Commission on remand ``to develop mechanisms to induce adequate state
action'' to preserve and advance universal service. Finally, because
the non-rural mechanism concerns only one piece of universal service
reform, the court stated that it could not properly assess whether the
total level of federal support for universal service was sufficient and
indicated the Commission would have the opportunity on remand to
explain further its complete plan for supporting universal service.
C. Order on Remand
4. In response to the court and the recommendations of the Joint
Board, the Commission modified the high-cost universal service support
mechanism for non-rural carriers and adopted a rate review and expanded
certification process to induce states to ensure reasonable
comparability of rural and urban rates in areas served by non-rural
carriers. The Order on Remand adopted in large part the Joint Board's
recommendations, with certain modifications. In particular, the
Commission defined the statutory terms ``sufficient'' as ``enough
federal support to enable states to achieve reasonable comparability of
rural and urban rates in high-cost areas served by non-rural
carriers,'' and defined ``reasonably comparable'' in terms of a
national urban residential rate benchmark. The Commission also set a
national urban rate benchmark at two standard deviations above the
average urban residential rate in an annual Wireline Competition Bureau
(Bureau) rate survey, and sought comment on specific issues related to
the rate review. In addition, the Commission modified the 135 percent
cost benchmark by adopting a cost benchmark based on two standard
deviations above the national average cost.
D. Qwest II
5. On February 23, 2005, the Tenth Circuit remanded the Order on
Remand to the Commission. The court held that the Commission failed to
reasonably define the terms ``sufficient'' and ``reasonably
comparable.'' The court directed the Commission on remand to articulate
a definition of ``sufficient'' that appropriately considers the range
of principles in section 254 of the Act and to define ``reasonably
comparable'' in a manner that comports with its duty to preserve and
advance universal service. Because the non-rural, high-cost support
mechanism rests on the application of the definition of ``reasonably
comparable'' rates that was invalidated by the court, the court also
deemed the support mechanism invalid. The court also noted that the
Commission based the two standard deviations cost benchmark on a
finding that rates were reasonably comparable, without empirically
demonstrating a relationship between the costs and the rates in the
record. On remand, the court directed the Commission to ``utilize its
unique expertise to craft a support mechanism taking into account all
the factors that Congress identified in
[[Page 1723]]
drafting the Act and its statutory obligation to preserve and advance
universal service.'' The court upheld the Commission's determination
that section 254 of the Act does not require the states to replace
existing implicit subsidies with explicit universal service support
mechanisms. In addition, the court also affirmed that portion of the
Order on Remand requiring states to certify annually that rural rates
within their boundaries are reasonably comparable, or if they are not,
to present an action plan to the Commission.
II. Issues for Comment
6. We seek comment on a number of issues that will enable the
Commission to craft a non-rural high-cost support mechanism consistent
with the court's decision and the statute. Specifically, we seek
comment on: (1) How the Commission should define the statutory term
``sufficient'' to take into account all the principles enumerated in
section 254(b); (2) how the Commission should define ``reasonably
comparable'' under section 254(b)(3), consistent with its concurrent
duties to preserve and advance universal service; (3) how, in light of
the interpretation of the key statutory terms, the Commission should
modify the high-cost funding mechanism for non-rural carriers; and (4)
whether the Commission should adopt a non-rural insular mechanism.
A. Definition of ``Sufficient''
7. In Qwest II, the court directed the Commission to demonstrate
that it has appropriately considered all principles in section 254(b)
of the Act in defining the term ``sufficient.'' In the Order on Remand,
the Commission defined ``sufficient,'' for purposes of the statutory
principle in section 254(b)(3) as applied to the non-rural mechanism,
as enough federal support to enable states to achieve reasonable
comparability of rural and urban rates in high-cost areas served by
non-rural carriers. The court found this definition inadequate. We seek
comment on how the Commission should balance all seven principles in
section 254(b) of the Act in defining the term ``sufficient'' for
purposes of the non-rural high-cost support mechanism. While the court
directed the Commission to consider all the section 254(b) principles
in addition to reasonable comparability in section 254(b)(3), the court
recognized that the Commission could give greater weight to one
principle over another. We seek comment on whether any of the section
254(b) principles conflict with one another and, if so, how to balance
the principles to resolve such conflict. Should the Commission give
greater weight to any particular principle? If so, how would the
Commission justify such an approach? We seek comment on how the
Commission should weigh each principle in relationship to the purposes
of the non-rural high-cost mechanism, and discuss each principle in
turn below.
8. Section 254(b)(1) provides that ``[q]uality services should be
available at just, reasonable, and affordable rates.'' Although the
Commission did not explicitly discuss how the non-rural mechanism helps
to keep rates affordable in the Order on Remand, it has explained in
the past that ``[a] major objective of universal service is to help
ensure affordable access to telecommunications services to consumers
living in areas where the cost of providing such services would
otherwise be prohibitively high.'' We seek comment on whether ensuring
that rates in rural areas are reasonably comparable to rates in urban
areas also ensures that those rates are affordable.
9. We also seek comment on whether we should define the phrase
``affordable rates.'' In the Order on Remand, the Commission declined
to adopt an affordability benchmark for local telephone service,
proposed by SBC, based on the median household income of a particular
geographic area. Although the court did not address this issue
specifically, it was ``troubled by the Commission's seeming suggestion
that other principles, including affordability, do not underlie the
federal non-rural support mechanisms.'' We seek comment on whether we
should reconsider SBC's proposal or any other proposals for defining
affordability in relationship to income. Alternatively, should the
Commission create eligibility requirements based on household income
for non-rural high-cost support? In previously rejecting proposals to
require that states implement such eligibility requirements in
conjunction with non-rural high-cost support, the Commission found that
``section 254(b)(3) reflects a legislative judgment that all Americans,
regardless of income, should have access to the network at reasonably
comparable rates.'' We seek comment on whether defining affordability
in terms of individual household income would be consistent with
section 254(b)(3). We also seek comment from state commissions about
implementation issues that would arise if the Commission were to adopt
any of these approaches to determining affordability. The Commission
previously determined that it was better to address affordability
issues unique to low-income consumers through the federal low-income
programs specifically designed for this purpose rather than through the
high-cost support programs. Is this conclusion still appropriate in
light of Qwest II?
10. In addition, we seek comment on whether we should consider the
burden on universal service contributors when determining whether rates
are affordable. In the Order on Remand, the Commission found that the
principle of sufficiency means that non-rural high-cost support should
be ``only as large as necessary'' to meet the statutory goal. While the
court was not troubled by this language in the abstract, because
excessive subsidization arguably may affect the affordability of
telecommunications services for unsubsidized users, the court found
that the Commission had failed to take into account the full range of
principles by defining sufficiency only in terms of reasonable
comparability. Would it be more appropriate to ground the idea that the
amount of support should only be as large as necessary in the principle
of affordability? We also seek comment on whether the Commission should
define any of the other terms in section 254(b)(1) for purposes of
determining whether non-rural high-cost support is sufficient. For
example, the Commission and the Joint Board previously have interpreted
the term ``quality services'' in this section to mean quality of
service. We seek comment on both this prior interpretation and whether
the Commission should consider quality of service in determining
whether non-rural high-cost support is sufficient.
11. Section 254(b)(2) provides that ``[a]ccess to advanced
telecommunications and information services should be provided in all
regions of the Nation.'' Although advanced telecommunications and
information services currently are not supported by the non-rural high-
cost mechanism, the public switched telephone network is not a single-
use network, and modern network infrastructure can provide access not
only to voice services, but also to data, graphics, video, and other
services. The Commission has found that the use of high-cost support to
invest in infrastructure capable of providing access to advanced
services is not inconsistent with the requirement in section 254(e)
that support be used ``only for the provision, maintenance, and
upgrading of facilities and services for which the support is
intended.'' To what extent should the Commission consider whether non-
rural high-cost support is sufficient to enable carriers to upgrade
networks in their high-cost
[[Page 1724]]
areas so that the networks are capable of providing access to advanced
services?
12. Section 254(b)(3) provides that ``[c]onsumers in all regions of
Nation, including low-income consumers and those in rural, insular, and
high cost areas, should have access to telecommunications and
information services, including interexchange services and advanced
telecommunications and information services, that are reasonably
comparable to those services provided in urban areas and that are
available at rates that are reasonably comparable to rates charged for
similar services in urban areas.'' Although we seek comment below on
the definition of reasonably comparable rates, we seek comment here on
whether we should consider other aspects of this principle in
determining whether non-rural high-cost support is sufficient. For
example, should the Commission consider whether the telecommunications
and information services provided in rural areas are reasonably
comparable to those services provided in urban areas?
13. Section 254(b)(4) provides that ``[a]ll providers of
telecommunications services should make an equitable and
nondiscriminatory contribution to the preservation and advancement of
universal service.'' We note that the Commission is considering
modifications to its current universal service contribution
methodology. A critical component of that inquiry is determining
whether any proposed change meets section 254(d)'s requirement that
providers of ``interstate telecommunications services shall contribute,
on an equitable and nondiscriminatory basis * * *.'' We seek comment on
the extent to which the Commission should consider whether all
providers' contributions are ``equitable and nondiscriminatory'' in
considering whether non-rural high-cost support is sufficient. We seek
comment on whether and why the Commission should apply a different
interpretation to the term ``equitable and nondiscriminatory,'' as
contained in section 254(b)(4), than it applies with respect to that
term as used in section 254(d). We also note that the statute uses the
same terms in section 254(f), which concerns the permissive authority
of states to require telecommunications carriers that provide
intrastate telecommunications services to contribute, in a manner
determined by the state, to state universal service mechanisms. In
Qwest II, the court rejected petitioners' argument that implicit state
subsidies may force some carriers to bear a disproportionate and
inequitable share of the burden in supporting their own high-cost
consumers. Agreeing with the Commission that section 254(f) merely
imposes an obligation on carriers within a state to contribute if the
state establishes universal service programs, the court said that ``it
does not impose a requirement of parity with respect to internal
functioning and the distribution of funds between and among carriers.''
Although the court was interpreting ``equitable and nondiscriminatory''
in section 254(f), does the court's statement shed any light on how
these terms should be interpreted in section 254(b)(4)?
14. Section 254(b)(5) provides that ``[t]here should be specific,
predictable, and sufficient Federal and state mechanisms to preserve
and advance universal service.'' In determining whether non-rural high-
cost support is sufficient, to what extent should the Commission also
determine whether such support is specific and predictable? How should
the terms specific and predictable be defined or interpreted? We also
seek comment on whether the Commission should determine how each
section 254(b) principle advances universal service in light of the
court's direction that the Commission define reasonably comparable
consistent with its duties to preserve and advance universal service.
15. Section 254(b)(6) provides that ``[e]lementary and secondary
schools and classrooms, health care providers, and libraries should
have access to advanced telecommunications services as described in
subsection (h).'' We note that the Commission has established separate
programs to meet this goal. To what extent should the Commission
consider whether non-rural high-cost support helps enable schools,
libraries, and health care providers to have access to advanced
telecommunications services?
16. Section 254(b)(7) provides that the Joint Board and the
Commission may base their policies on additional principles that ``are
necessary and appropriate for the protection of the public interest,
convenience, and necessity and are consistent with [the 1996 Act].''
Pursuant to this section and based on the Joint Board's recommendation,
the Commission established ``competitive neutrality'' as an additional
principle upon which to base policies for the preservation and
advancement of universal service. In determining whether non-rural
high-cost support is sufficient, to what extent should the Commission
determine that such support is competitively neutral? How does the
Commission's prior determination that non-rural high-cost support is
portable affect this analysis?
B. Definition of ``Reasonable Comparability''
17. In Qwest II, the court directed the Commission to define the
term ``reasonably comparable'' in a manner that comports with its
concurrent duties to preserve and advance universal service. In the
Order on Remand, the Commission concluded that the range of variability
of urban rates is an appropriate measure of what should be considered
reasonably comparable rural and urban rates, and defined reasonably
comparable in terms of a national urban rate benchmark. The court
rejected this analysis, finding that ``the Commission erred in
premising its consideration of the term `preserve' on the disparity of
rates existing in 1996 while ignoring its concurrent obligation to
advance universal service, a concept that certainly could include a
narrowing of the existing gap between urban and rural rates.'' We seek
comment on how the Commission should define reasonably comparable rates
in order to preserve and advance universal service. In Qwest II, the
court was concerned that the variance between rural and urban rates was
significant. Upon what rate data should the Commission rely to assess
the extent of the existing variance between rural and urban rates?
Should the Commission gather additional rate data? If so, how and where
should the Commission obtain such data? We invite commenters, including
state commissions, to submit rate data, suggest sources of such data,
and propose methods of collecting and analyzing the data.
18. We seek comment on whether the Commission should compare rural
and urban rates within each state instead of, or in addition to,
comparing rural rates in all states to a national urban rate benchmark.
Would a state-specific urban rate benchmark provide states more
flexibility in designing state rates? For example, while some states
may want to keep local rates in rural areas very low, customers in such
states may have very small calling areas and, consequently, make more
toll calls. Other states may want rural customers to have very large
calling areas so they do not have to make as many intrastate toll
calls, but that may require higher local rates to offset the revenues
the carrier would lose from toll calls. If rural rates in the second
group of states were no higher than urban rates in the state, should
they be considered to be reasonably comparable even though they may be
higher than the rural rates in the first group of states? We seek
[[Page 1725]]
comment, including comment form state commissions, on how the
Commission would determine state-specific rate comparability benchmarks
and how those benchmarks should relate to any national urban rate
benchmark.
19. We seek comment on whether the Commission should continue to
compare rural rates in all states to a single national urban rate
benchmark. If so, which urban rates should the Commission use to
establish the benchmark? How should the Commission interpret the Qwest
II court's rejection of the Commission's reliance on the range of urban
rates? Should the Commission seek to narrow the range of urban rates?
Should the Commission compare rural rates to a national average urban
rate, rather than some benchmark above the average? If the Commission
uses a single national urban rate benchmark, should the Commission
compare rural rates to the lowest urban rate? If the Commission uses
the lowest urban rate as a benchmark, what would be the range of
reasonably comparable rates? For example, should the Commission require
that rural rates in all states be no more than ten percent, or perhaps
twenty-five percent, above the lowest urban rate in the Bureau's annual
rate survey ($15.65 in 2002)? We seek comment on how the Commission
would justify any particular percentage above a benchmark.
20. We seek comment on whether the Commission should continue
defining reasonably comparable rates in terms of local rates only. Most
consumers do not purchase only local service, but purchase bundles of
telecommunications services from one or more providers. Moreover, it
may be that most rural consumers, who typically have smaller calling
areas than urban consumers, purchase more long distance services than
urban consumers. We seek comment on whether the Commission should
consider a broader range of rates in determining whether rates are
reasonably comparable. We also seek comment on whether comparing rates
for packages of services would simplify the task of establishing a
comparability benchmark. For example, if we were to compare what
average consumers pay for a package of services that includes long
distance services, we may not need to adjust local rates to account for
differences in calling scopes between rural and urban areas.
21. We also seek comment on whether defining reasonably comparable
rural and urban rates in terms of consumers' total telephone bills
would be more consistent with our obligation to preserve and advance
universal service than focusing only on local rates. As discussed
above, the principles in section 254(b) provide that consumers in all
regions of the nation should have access to telecommunications and
information services, including advanced services and interexchange
services. The telecommunications marketplace has changed considerably
since the Commission adopted the non-rural mechanism in 1999. Consumers
increasingly are purchasing packages of services that include unlimited
local, regional toll, and long distance calling. If such packages were
unavailable to consumers in rural areas, would their rates be
reasonably comparable if they had very low local rates, but per-minute
toll and long distance charges that exceeded the price of the flat-rate
package? How does a consumer's ability to access the Internet via a
local call or broadband connection affect our analysis? We invite
commenters recommending that the Commission consider packages of
services in determining reasonably comparable rates to submit rate
data, as well as to propose methods of analyzing such data.
C. Funding Mechanisms
22. In this section we seek comment on the non-rural high-cost
support mechanism. The Qwest II court found that the current mechanism
must be invalidated because the mechanism rested on the application of
a definition of ``reasonably comparable'' rates that the court also
invalidated. The court remanded this issue, directing the Commission to
``craft a support mechanism taking into account all the factors that
Congress identified in drafting the Act and [the Commission's]
statutory obligation to preserve and advance universal service.'' We
seek comment regarding how the non-rural support mechanism achieves the
Act's goals and statutory principles, with specific emphasis on the
concerns raised by the court in Qwest II. In light of the Qwest II
court's direction that the Commission provides stronger evidence that
its universal service support mechanisms achieve the Act's rate-related
goals, we seek comment regarding a rate-based universal service support
mechanism. Would a rate-based support mechanism better address the
statutory principles discussed above? Would it be easier to show an
empirical relationship between a rate-based support mechanism and
rates, as the Qwest II court instructs?
23. Rate-Based Support Mechanism. We seek comment regarding how a
rate-based support mechanism would be designed. What data would be
necessary to administer a rate-based mechanism? Should the data be
collected from the state ratemaking authority or from carriers? Would
support simply be provided to areas which experience rates in excess of
a nationwide benchmark? If so, how would the Commission set that
benchmark? What elements should be included in the rate mechanism?
Should the mechanism address residential and business rates, or only
residential rates? Should the mechanism support only the basic rate
elements, or should it include other mandatory fees and taxes? In areas
where the basic calling plans rely heavily on message units, how would
the rate mechanism compare those to the benchmark? As discussed above,
consumers increasingly purchase their basic local service as part of a
bundle of services, including long distance. How, if at all, should a
rate-based mechanism account for bundled services?
24. We note that there are urban and suburban areas that have rates
that would likely exceed any rate benchmark that the Commission would
set. Should the rate mechanism have some means of excluding these
areas, or should the mechanism fund all areas with high rates,
including those with low costs for providing service? Conversely, many
high-cost rural areas currently have lower rates that would likely not
trigger support under a rate benchmark. Should the rate-based mechanism
provide support to these areas? To the extent that these areas
currently have low rates because they receive support under the high-
cost mechanism, should there be a phase-out of high-cost support in
conjunction with the introduction of a rate-based mechanism?
25. If the Commission adopted a rate-based support mechanism, is it
likely that states would change their ratemaking policies? What are the
likely consequences of a rate-based support mechanism on state
ratemaking? Would a rate-based support mechanism have the effect of
promoting rational rate-rebalancing? Would it be necessary for the
Commission to adopt constraints to ensure that states do not set rates
with the purpose of maximizing federal universal service support? How
would the Commission do so, and does it have the authority to do so
under the Act? Also, would a rate-based support mechanism work if a
state were to deregulate its retail rates? What effect would a rate-
based support mechanism have on the size of the universal service fund?
26. Cost-Based Support Mechanism. How does the current mechanism
address the statutory principles
[[Page 1726]]
discussed above? Can the current cost-based support mechanism be used
to achieve the Act's rate-related goals? How are costs related to
rates? Can the current cost-based support be shown empirically to
reduce rates, as directed by the court in Qwest II? What data would be
necessary to make such a demonstration and from what sources would such
data be available? If the current non-rural support mechanism cannot be
shown, empirically, to reduce rates, can another cost-based mechanism
be shown to reduce rates? If not, can any cost-based mechanism address
the concerns expressed by the court in Qwest II? How would a cost-based
mechanism have to be designed to address the court's concerns? Would a
support mechanism based on embedded costs, study area or wire center
average costs, or a different distributive mechanism better achieve the
Act's goals? We seek comment regarding whether the adoption of
additional measures that tie cost-based support to rates would better
enable a cost-based mechanism to address the court's concerns.
27. Other Support Mechanisms. We seek comment generally regarding
whether there are any universal service support mechanisms other than
cost- or rate-based mechanisms (e.g., revenue-based) that would address
the court's concerns. We ask that commenters describe any proposed plan
in detail and explain exactly how the proposal would better address the
Act's goals than other universal service support mechanisms. Commenters
should place specific emphasis on how any plan could be shown
empirically to address the Act's rate-related goals.
28. We specifically ask commenters to address the universal service
aspects of the comprehensive plan proposed by the National Association
of Regulatory Utility Commissioners (NARUC) Task Force in the
Intercarrier Compensation proceeding. In sum, the NARUC Task Force plan
proposes combining the support contained in all of the federal high-
cost support mechanisms and giving the states discretion, within
guidelines set by the Commission, to determine how the support should
be distributed among carriers serving the state.
D. Puerto Rico Telephone Company's Request for an Insular-Specific
Support Mechanism
29. In its Petition and in subsequent filings, PRTC requests high-
cost universal service support through a non-rural insular support
mechanism. Specifically, PRTC requests that, pending the Commission's
comprehensive review of its high-cost support program, the Commission
adopt, on an interim basis, a non-rural insular mechanism based on
embedded costs. PRTC states that this interim mechanism should be
``patterned after, but distinct from,'' the existing mechanism for
rural telephone companies. Thus, PRTC proposes that the Commission
adopt a non-rural insular mechanism based on actual costs, calculated
using Part 36 of the Commission's rules.
30. PRTC claims that high-cost support to Puerto Rico is essential
for maintaining and expanding affordable telephone service in Puerto
Rico. According to PRTC, the penetration rate in Puerto Rico has
increased from 25 percent in the 1970s to over 70 percent in 1996. PRTC
claims, however, that since its high-cost funding began to be reduced
in 2001 pursuant to Commission action, Puerto Rico's previously growing
penetration rate has fallen back to below 70 percent. PRTC asserts that
its low penetration rate is a result of the high cost of providing
service in Puerto Rico. In its Petition, PRTC explains that the need to
have equipment and supplies shipped to the island increases
infrastructure costs and requires that PRTC maintain a larger inventory
of supplies and repair parts than would normally be necessary. PRTC
also argues that it has other challenges which further complicate
operations and increase costs including water-based erosion,
unpredictable terrain, and operating in the Caribbean, which frequently
faces hurricanes and tropical storms. PRTC contends that the cost of
providing service in Puerto Rico is further increased as a result of
providing service to Puerto Rico's sparsely populated mountainous
region in its rural interior. For example, PRTC claims that the cost
per local loop to install wireline service in these areas ranges from
$5,000 to more than $15,000.
31. PRTC argues that section 254(b)(3) of the Act requires the
Commission to address the unique needs of insular areas. Section
254(b)(3) of the Act directs the Commission and the states to devise
methods to ensure that ``[c]onsumers in all regions of the Nation,
including low-income consumers and those in rural, insular, and high
cost areas * * * have access to telecommunications and information
services * * * at rates that are reasonably comparable to rates charged
for similar services in urban areas.'' In its White Paper, PRTC argues
that the reference to ``insular'' in the statute was specifically added
to recognize the unique concerns of these areas. In the Unserved Areas
NPRM, 65 FR 47941, August 4, 2000, which was initiated to examine areas
with low penetration rates, the Commission tentatively concluded that
Puerto Rico, American Samoa, the Commonwealth of the Northern Mariana
Islands (CNMI), Guam, and the U.S. Virgin Islands are properly included
in the definition of insular areas. To date, the Commission has
released an order addressing only the tribal lands issues raised in the
Unserved Areas NPRM. In that order, the Commission stated that it would
continue to examine and address the causes of low subscribership in
other areas and among other populations, especially among low-income
individuals in rural and insular areas. The Commission has yet to
establish a universal service mechanism for insular areas.
32. We tentatively conclude that section 254(b) provides the
Commission with the authority to establish a new interim support
mechanism for non-rural insular areas based on embedded costs. We seek
comment on this tentative conclusion. We agree with PRTC that, through
section 254(b), Congress intended that consumers in insular areas, as
well as in rural and high-cost areas, have access to affordable
telecommunications and information services. We believe that the low
penetration rates in Puerto Rico demonstrate that this goal is not
being met and that the Commission could be doing more to help the
residents of Puerto Rico. Because of the unique challenges in providing
telephone service in Puerto Rico, we believe that a special support
mechanism, in combination with the Commission's low-income program,
will help to combat the problem of low subscribership in Puerto Rico.
The evidence provided by PRTC supports a finding that there appears to
be a correlation between the recent decline in Puerto Rico's
subcribership rates and the reduction of Puerto Rico's high-cost
support. Although we tentatively conclude that an interim insular
mechanism is the appropriate measure to help reverse this trend, we
seek comment on this tentative conclusion in particular and on the
impact of high-cost support on subscribership rates in general. We also
seek comment on how previous Commission decisions affect our tentative
conclusion that we should establish a new interim support mechanism for
non-rural insular areas based on embedded costs.
33. We believe that our tentative conclusion to adopt a non-rural
insular mechanism is appropriate because, as PRTC has explained, newly
available
[[Page 1727]]
universal service funds will enable PRTC to construct new network and
loop infrastructure to unserved areas, update its existing facilities,
improve quality of service, maintain affordable rates, and educate and
solicit potential first-time telephone customers. Moreover, we
tentatively conclude that adopting a non-rural insular mechanism would
have a limited impact on the universal service fund because this
mechanism would only affect carriers operating in the Commonwealth of
Puerto Rico if we adopt the Commission's proposed definition of
``insular areas.'' There would be no need for a rural insular mechanism
because all rural insular carriers already receive rural high cost
support. PRTC is the only incumbent carrier serving a high-cost insular
area that is not currently classified as a rural carrier under the
rural high-cost loop mechanism. Further, while we agree with PRTC that
the impact would be limited because the total cost of the new mechanism
would be less than one percent of the total fund, we invite comment on
the impact the adoption of a non-rural insular mechanism would have on
the universal service fund.
34. Appended to its White Paper, PRTC proposes rules establishing
an insular mechanism based on embedded costs. We seek comment on these
proposed rules and invite commenters to propose other rules that may be
necessary to provide for a non-rural mechanism for insular areas. To
the extent that commenters propose different rules or would propose
modifications to PRTC's proposed rules, we ask that such commenters
provide explanations for their proposals. We also invite commenters to
compare and contrast the proposed insular mechanism with the mechanism
currently in place for rural carriers.
35. We seek comment on whether or how the support already received
by PRTC affects our tentative conclusion to adopt a non-rural insular
mechanism. We also seek comment on how a non-rural insular mechanism in
general would work in conjunction with the Commission's existing high-
cost mechanisms. For example, high-cost loop support for rural carriers
is subject to an indexed cap. Should high-cost loop support provided
under a non-rural insular mechanism be subject to the same or similar
cap? If the same cap is used for both mechanisms, should the cap be
adjusted or should the high-cost loop support fund be rebased to
account for the additional support provided to PRTC?
36. We note that under PRTC's proposed rules for the interim
insular mechanism, federal high-cost funding would be available for
those non-rural insular study areas in which the average unseparated
cost per loop exceeds 115 percent of the national average loop cost.
PRTC proposes that the national average loop cost would be calculated
pursuant to Sec. 36.622(a) of the Commission's rules. Section
36.622(a) states that the national average is equal to the sum of the
loop costs for each study area in the country (as calculated pursuant
to Sec. 36.621(a) of the Commission's rules) divided by the sum of the
working loops reported for each study area in the country. For rural
incumbent LECs, however, Sec. 36.622(a) of the Commission's rules
provides that the national average unseparated loop cost is frozen at
$240 per loop. Considering that Sec. 36.622(a) of the Commission's
rules provides for a separate national average loop cost for rural
carriers, we seek comment on PRTC's proposal which would calculate the
national average loop cost pursuant to Sec. 36.622(a) of the
Commission's rules. If a non-rural insular mechanism is created, would
there be any reason to use the national average loop cost that is used
for rural incumbent LECs, which is frozen at $240 per loop? Also, if
the Commission adopts its tentative conclusion and creates an interim
non-rural insular mechanism, should it impose any conditions on the
disbursement of these funds (e.g., require PRTC to submit and implement
build-out plans to address unserved areas of the island)? In addition,
to what extent should the Commission consider steps taken by the
Telecommunications Regulatory Board of Puerto Rico to achieve rate
comparability as required by the Order on Remand?
37. Finally, if we adopt the tentative conclusion herein, we will
need a definition of ``insular areas.'' In the Unserved Areas NPRM, the
Commission proposed defining ``insular areas'' as ``islands that are
territories or commonwealths of the United States,'' and sought comment
on whether the definition of insular areas should exclude sovereign
nations that are not subject to the laws of the United States. The
Commission tentatively concluded that Puerto Rico, American Samoa, the
Commonwealth of the Northern Mariana Islands (CNMI), Guam, and the U.S.
Virgin Islands are properly included in the definition of insular
areas. We seek to refresh the record initially established in the
Unserved Areas NPRM, and seek comment on the definition of ``insular
areas'' proposed in that proceeding.
III. Procedural Matters
A. Initial Regulatory Flexibility Analysis
38. As required by the Regulatory Flexibility Act of 1980, as
amended, 5 U.S.C. 603, the Commission has prepared an Initial
Regulatory Flexibility Analysis (IRFA) for this NPRM, of the possible
significant economic impact on a substantial number of small entities
by the policies and rules proposed in this NPRM. The IRFA is in the
Appendix. 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 NPRM. The Commission will send a copy of
the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the
Small Business Administration. In addition, the NPRM and IRFA (or
summaries thereof) will be published in the Federal Register.
B. Paperwork Reduction Act Analysis
39. This Notice of Proposed Rulemaking does not contain proposed
information collections subject to the Paperwork Reduction Act of 1995
(PRA), Public Law 104-13. In addition, therefore, it does not contain
any new or modified ``information collection burden for small business
concerns with fewer than 25 employees,'' pursuant to the Small Business
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C.
3506(c)(4).
C. Ex Parte Presentations
40. These matters shall be treated as a ``permit-but-disclose''
proceeding in accordance with the Commission's ex parte rules. Persons
making oral ex parte presentations are reminded that memoranda
summarizing the presentations must contain summaries of the substance
of the presentations and not merely a listing of the subjects
discussed. More than a one or two sentence description of the views and
arguments presented is generally required. Other requirements
pertaining to oral and written presentations are set forth in Sec.
1.1206(b) of the Commission's rules.
D. Comment Filing Procedures
41. Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's
rules, 47 CFR 1.415 and, 1.419, interested parties may file comments on
or before February 10, 2006, and reply comments on or before March 13,
2006. Comments may be filed using: (1) The Commission's Electronic
Comment Filing System (ECFS), (2) the Federal Government's eRulemaking
Portal, or (3) by filing paper copies. See Electronic Filing of
Documents in
[[Page 1728]]
Rulemaking Proceedings, 63 FR 24121, May 1, 1998. Electronic Filers:
Comments may be filed electronically using the Internet by accessing
the ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: http://www.regulations.gov. Filers should follow the
instructions provided on the Web site for submitting comments. For ECFS
filers, if multiple docket or rulemaking numbers appear in the caption
of this proceeding, filers must transmit one electronic copy of the
comments for each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, filers 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,
filers should send an e-mail to ecfs@fcc.gov, and include the following
words in the body of the message, ``get form.'' A sample form and
directions will be sent in response. Paper Filers: 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, filers 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). All filings
must be addressed to the Commission's Secretary, Marlene H. Dortch,
Office of the Secretary, Federal Communications Commission, 445 12th
Street, SW., Washington, DC 20554. The Commission's contractor 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,
Express, and Priority mail should be addressed to 445 12th Street, SW.,
Washington, DC 20554. People with Disabilities: To request materials in
accessible formats for people with disabilities (braille, large print,
electronic files, audio format), send an e-mail to fcc504@fcc.gov or
call the Consumer & Governmental Affairs Bureau at 202-418-0530
(voice), TTY 202-418-0432.
42. In addition, one copy of each pleading must be sent to each of
the following: the Commission's duplicating contractor, Best Copy and
Printing, Inc, 445 12th Street, SW., Room CY-B402, Washington, DC
20554; Web site: http://www.bcpiweb.com; by telephone at 1-800-378-
3160; Sheryl Todd, Telecommunications Access Policy Division, Wireline
Competition Bureau, 445 12th Street, SW., Room 5-B540, Washington, DC
20554; e-mail: sheryl.todd@fcc.gov.
43. Filings and comments are also available for public inspection
and copying during regular business hours at the FCC Reference
Information Center, Portals II, 445 12th Street, SW., Room CY-A257,
Washington, DC 20554. Copies may also be purchased from the
Commission's duplicating contractor, BCPI, 445 12th Street, SW., Room
CY-B402, Washington, DC 20554. Customers may contact BCPI through its
Web site: http://www.bcpiweb.com, by e-mail at fcc@bcpiweb.com, by
telephone at (202) 488-5300 or (800) 378-3160, or by facsimile at (202)
488-5563.
44. For further information regarding this proceeding, contact Ted
Burmeister, Attorney Advisor, Telecommunications Access Policy
Division, Wireline Competition Bureau at (202) 418-7389, or
theodore.burmeister@fcc.gov, or Katie King, Special Counsel,
Telecommunications Access Policy Division, Wireline Competition Bureau,
(202) 418-7491, e-mail: katie.king@fcc.gov.
Initial Regulatory Flexibility Analysis (Notice of Proposed Rulemaking)
45. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission has prepared this present Initial
Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on a substantial number of small entities by the
policies and rules proposed in this Notice of Proposed Rulemaking
(NPRM). 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 NPRM on February 10, 2006. The Commission
will send a copy of the NPRM, including this IRFA, to the Chief Counsel
for Advocacy of the Small Business Administration (SBA). In addition,
the NPRM and IRFA (or summaries thereof) will be published in the
Federal Register.
1. Need for, and Objectives of, the Proposed Rules
46. The Telecommunications Act of 1996 requires that the Commission
establish rules to ``preserve and advance'' universal service. This
NPRM addresses several issues related to universal service support for
non-rural carriers. Seeking, and receiving, comment on these issues is
a necessary step toward the adoption of rules that meet the 1996 Act's
requirements.
47. First, we address issues remanded by the United States Court of
Appeals for the Tenth Circuit for the second time. Specifically, we
contemplate rules regarding how the Commission should define the
statutory term ``sufficient'' to take into account all the principles
enumerated in the statute. Further, we further address how the
Commission should define ``reasonably comparable'' in the context of
section 254(e)(3)'s requirement that consumers in all regions of the
nation should have access to telecommunications and information
services that are ``reasonably comparable to those provided in urban
areas and that are available at rates that are reasonably comparable to
rates charged for similar services in urban areas.'' We also
contemplate whether, in light of the interpretation of the key
statutory terms, the Commission should modify the high-cost funding
mechanism for non-rural carriers by adopting a rate-based support
mechanism, by adjusting the current cost-based support mechanism, or if
some other mechanism would better meet the statutory requirements of
the Act.
48. Second, we address a proposal by Puerto Rico Telephone Company,
Inc. (PRTC) that the Commission create a support mechanism for non-
rural carriers serving insular areas. Currently, non-rural carriers
receive support based on forward-looking economic costs, as estimated
by the High-Cost Model. PRTC proposes that non-rural carriers serving
insular areas receive support based on their embedded (i.e.,
historical) costs, as rural carriers do currently.
2. Legal Basis
49. The legal basis for the NPRM is contained in sections 1, 4, 201
through 205, 214, 254, 303(r), and 403 of the Communications Act of
1934, as amended, 47 U.S.C. 151, 154, 201-205, 214, 254, 303(r), and
403, and Sec. 1.411 of the Commission's rules, 47 CFR 1.411.
[[Page 1729]]
3. Description and Estimate of the Number of Small Entities to Which
Rules May Apply
50. 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 SBA.
51. The Commission has determined that the group of small entities
directly affected by the rules adopted in this NPRM are eligible
telecommunications carriers (ETCs) providing service in areas served by
non-rural carriers. Within the category of ETCs we find competitive
local exchange carriers (CLECs), which are all wired telecommunications
carriers, and wireless carriers. Further descriptions of these entities
are provided below.
52. Wired Telecommunications Carriers. The SBA has developed a
small business size standard for Wired Telecommunications Carriers,
which consists of all such companies having 1,500 or fewer employees.
According to Census Bureau data for 1997, there were 2,225 firms in
this category, total, that operated for the entire year. Of this total,
2,201 firms had employment of 999 or fewer employees, and an additional
24 firms had employment of 1,000 or more. Thus, under this size
standard, the great majority of firms can be considered small.
53. Competitive Local Exchange Carriers (CLECs), Competitive Access
Providers (CAPs) and ``Other Local Exchange Carriers.'' Neither the
Commission nor the SBA has developed a size standard for small
businesses specifically applicable to providers of competitive exchange
services or to competitive access providers or to ``Other Local
Exchange Carriers.'' The closest applicable size standard under SBA
rules is for Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
According to Commission data, 532 companies reported that they were
engaged in the provision of either competitive access provider services
or competitive local exchange carrier services. Of these 532 companies,
an estimated 411 have 1,500 or fewer employees and 121 have more than
1,500 employees. In addition, 55 carriers reported that they were
``Other Local Exchange Carriers.'' Of the 55 ``Other Local Exchange
Carriers,'' an estimated 53 have 1,500 or fewer employees and two have
more than 1,500 employees. Consequently, the Commission estimates that
most providers of competitive local exchange service, competitive
access providers, and ``Other Local Exchange Carriers'' are small
entities that may be affected by the rules and policies adopted herein.
54. Cellular and Other Wireless Telecommunications Carriers. The
SBA has developed a small size standard for Cellular and Other Wireless
Telecommunications Carriers which consists of all such companies having
1,500 or fewer employees. According to the Commission's most recent
data, 1,761 companies reported that they were engaged in the provision
of wireless service. Of these, 1,761 companies, and estimated 1,175
have 1,500 or fewer employees and 586 have more than 1,500 employees.
Consequently, the Commission estimates that most wireless service
providers are small entities that may be affected by the rules and
policies adopted herein.
55. Eligible Telecommunications Carriers (ETCs) that Provide
Service in Areas Serviced by Non-Rural Carriers. Neither the SBA nor
the Commission has developed a definition of small entities
specifically applicable to ETCs. ETC designation allows a carrier to
receive universal service support in accordance with section 254 of the
Act. An entity is designated as an ETC by a state commission or, if
there is no state jurisdiction, by the Commission upon meeting the
requirements of section 214(e) of the Act. Any entity offering services
supported by Federal universal service mechanisms that uses its own
facilities or a combination of its own facilities and resale of another
carrier's services and advertises such charges and rates can seek
designation as an ETC. ETCs are competitive carriers that are not
dominant in the field. The group of ETCs providing service in areas
served by non-rural carriers is composed of mostly CLECs and wireless
carriers. We have indicated above that, pursuant to SBA standards, ETCs
are CLECs or wireless carriers. In addition, we note that the only ETCs
affected by this Order are those that provide service in areas served
by non-rural carriers. If we had no further information concerning the
specific ETCs affected by this rulemaking, we would estimate that
numerous ETCs, which are either CLECs or wireless service providers
that provide service in areas served by non-rural carriers, are small
businesses that may be affected by the rules adopted herein.
56. At this time, however, the Commission is aware of approximately
30 ETCs providing service in areas served by non-rural carriers. We
have determined that at least 9 of these ETCs are subsidiaries of
public companies--not independently owned and operated--and, therefore,
not small businesses under the Small Business Act. We do not have data
specifying whether the remaining ETCs, or other ETCs not accounted for,
are independently owned and operated, and therefore we are unable to
estimate with greater precision the number of these carriers that would
qualify as small business concerns under SBA's definition.
Consequently, we estimate that there are 20 or fewer small entities
that may be affected directly by the proposed rules herein adopted.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
57. The NPRM does not propose specific reporting, recordkeeping, or
other compliance requirements at this time. The NPRM does, however, ask
whether additional rate data should be collected for the purpose of
defining the statutory term, ``reasonably comparable.'' The NPRM also
considers the collection of data to administer a rate-based support
mechanism, in the event that the Commission adopts one. A universal
service support mechanism for non-rural insular carriers, if adopted,
may require reporting, recordkeeping or other compliance requirements.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
58. 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 and 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,
[[Page 1730]]
standards; and (4) an exemption from coverage of the rule, or part
thereof, for small entities.
59. In this NPRM, we seek comment on issues related to universal
service support for non-rural carriers. We note that many, if not all,
non-rural carriers are not small entities. To the extent that there
may, in fact, exist a non-rural carrier that is a small entity, or any
rule that may be adopted by the Commission related to these issues
could affect some other small entity, we have considered and will
consider alternatives to minimize significant economic impact on small
entities.
60. We seek comment regarding several issues related to the high-
cost support mechanism for non-rural carriers that have been remanded
by the United States Court of Appeals for the Tenth Circuit for the
second time. We seek comment regarding the meaning of the statutory
terms ``sufficient'' and ``reasonably comparable.'' Because we
anticipate that the Commission will define these terms in a manner
conducive to creating a viable non-rural support mechanism, we conclude
that defining these statutory terms will not have a significant
economic impact on small entities. We also seek comment regarding how a
universal service support mechanism for non-rural carriers should be
designed, consistent with the statutory terms. We conclude that
adopting a new high-cost support mechanism for non-rural carriers,
including particularly a rate-based support mechanism, or retaining a
modified version of the current mechanism, based on forward-looking
economic cost estimates, will not create a significant economic impact
on small entities. In the event, however, that a commenter proposes
rules that may create a significant economic impact on a small entity,
we seek comment on steps to be taken or possible alternatives that
would minimize the economic impact.
61. We also tentatively conclude that the Commission should adopt
PRTC's proposed interim support mechanism for non-rural carriers
serving insular areas. Pursuant to this proposal, non-rural carriers
serving insular areas would receive universal service support based on
their embedded costs rather than forward-looking economic cost
estimates. Currently, PRTC is the only non-rural carrier serving an
insular area, and it is not a small entity. CETCs (which receive
support based on the incumbent's level of support) serving in PRTC's
service territory would receive additional support, but would not have
any other significant economic impact. Other alternatives to be
considered include retaining the current rules, under which non-rural
carriers serving insular areas receive support pursuant to the same
mechanism as all other non-rural carriers.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
None.
IV. Ordering Clauses
62. Pursuant to the authority contained in sections 1, 4(i), 201-
205, 214, 254, and 403 of the Communications Act of 1934, as amended,
47 U.S.C. 151, 154(i), 201-205, 214, 254, and 403, this Notice of
Proposed Rulemaking is adopted.
63. The Commission's Consumer and Governmental Affairs Bureau,
Reference Information Center, shall send a copy of this Notice of
Proposed Rulemaking, including the Initial Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
List of Subjects in 47 CFR Part 54
Libraries, Reporting and recordkeeping requirements, Schools,
Telecommunications, Telephone.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 06-159 Filed 1-10-06; 8:45 am]
BILLING CODE 6712-01-P